How To Bargain For Better Interest Rates In Personal Loan
Personal loan is a kind of credit provided to a person for his private use
. Personal loans are not secured and fall on the borrowers honesty and capacity to repay the same. Personal loans are one of different kinds of loans that can be borrowed from a bank. Such loans are all-purpose loans that can be utilised at the individuals prudence. The eligibility criteria for availing personal loans differ from bank to bank but these can be differentiated in 3 basic categories:
Employed cum Salaried Individual
Self Employed Individuals
Self Employed professionals
The interests rates for repayment of Personal Loans in India are of 2 types Fixed and Floating. These interest rates depend on the prevalent Market Conditions and the norms as set by the RBI. But more or less still can be bargained and if you are one of the lucky few who knows the tricks of bargaining you can also get them at rates cheaper than others. Few useful guidelines which can be used for bargaining interest rates on personal loans:
1.Keep yourself updated with the recent trend
Get in touch with a lot of lenders/agents and try and understand their requirements the interest rate of repayment they are offering you and their formalities and let this be a basis for your decision making. The more a person does his homework better more useful shall it become for him.
Taking an example banks mostly entice customers with so called flat rates on personal loans, which are never flat in its literal meaning as you generally pay interest on reducing balance method; wherein with every EMI, principal amount of the loan keeps coming down. Here, they play on the ignorance of customers, which you will eliminate with your knowledge to get a best deal.
2.Leverage the credit score
In recent times, all bank looks at borrowers creditability before sanctioning any kind of loan. If the present credit rating is great, it puts the person in the drivers seat straight-away in negotiating on loan interest rate, processing fees, pre-payment penalty and other charges. Its due to the reason that with sound credit rating, banks sees more chances of repayment of their dues and reduces chances of NPAs. Again, do negotiate with at least 3-4 banks, with the help of brokers.
3.Resourceful formalities
Getting a well-organized loan is about like compelling a bank to see how verifiable a persons income and repayment capacities are. One must clearly state details of his or her existing debts, if any inclusive of the credit card and past pay back to all lenders. Always bear in mind that banks shall check the same with Credit Bureau anyways, to know about the already available financial position. So, making complete disclosure about your existing borrowings makes sense and can actually be used to negotiate further. The document filing is also an important step in this process as it is highly unlikely for a bank/lender to offer you best possible quote until the documents are submitted. In other words, it would not be wrong to say that fully disclosing your actual financial position will give you more chances of securing lower interest rates.
4.Larger the group the more merrier it is
The larger the group of people for loan request the better the opportunity for the bank to provide for loans and they would be keen to negotiate on the loan interest rate as they would get a bulk of business at the end of day with less time taken for the paper work for each person separately at different times.
Interest Rates Comparison:
Find out best interest rates on offer, in home loan and personal loan segments
Barclays Bank Interest Rate -14.0-21.0%
Citibank Interest Rate -15.0-20.0%
HDFC Bank Interest Rate -15.5-22.0%
SBI Interest Rate - 16.75%
Bank of BarodaInterest Rate - 16%
by: Andy Smith
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