Personal loans have multiple benefits and drawbacks as wells. The one benefit that draws us all to it like moths to a fire must be the ease of which you can get it sanctioned. You do not need to give an explanation as to what you need the money for. Chances are that you will get the cash you need very quickly and easily. The biggest drawback must be the interest rate. In general, it is much higher than loans like education and auto loans.
The interest rate that you get for a personal rate can vary depending on various factors which are explained here:
You can always talk to and negotiate with the bank to get the best possible deal. Always make sure that you check out your credit report well before you apply for a personal loan. Sometimes correcting small mistakes in your credit report could end up saving you a lot of Pesos.
The interest rate that you get for a personal rate can vary depending on various factors which are explained here:
- Your level of income: The higher your income, the lower the interest rate that banks will charge you.
- Your credit history: Your credit history is the most important factor that decides the interest rate that banks will expect from you. Your credit history will prove to the bank how responsible you are as a borrower, based on past repayment behavior. They will take into consideration the pattern of repayment of your past account past and/or current loans.
- Before you apply for a personal loan you must first see what your credit score is so that you know what to expect when banks start offering so called ‘low interest rate.
- The reputation of the organization you work at: If you work at a reputed, large organization, it will be that much easier for you to get a low interest rate. This is because banks will deem you to have a stable career if you are in a reputed company, thus a prospective responsible borrower who will pay back debts on time.
- Your relationship with the bank: If you happen to open savings accounts and fixed deposits in one bank, you will become a loyal customer which means that you share a relationship with the bank, which will earn you a much lower interest rates when you look for a personal loan. The fact that you have a prior relationship with the bank makes you more trustworthy than a new, unknown person. Your bank will try to retain you as a customer by offering you the best rate possible.
You can always talk to and negotiate with the bank to get the best possible deal. Always make sure that you check out your credit report well before you apply for a personal loan. Sometimes correcting small mistakes in your credit report could end up saving you a lot of Pesos.