Get the Tata Capital App to apply for Loans & manage your account. Download Now

Blogs

SUPPORT

Menu  
 
Apply Now
Apply Now

Tata Capital > Blog > Factors affecting personal loan interest rates

Personal Use Loan

Factors affecting personal loan interest rates

Factors affecting personal loan interest rates

According to TransUnion CIBIL, personal loans showed a growth rate of 28% in the second quarter of FY 2019-2020. Personal loans are increasingly being viewed as a financial tool of choice for funding expenses. However, since no collateral is involved while availing one, the interest rates are usually higher than on secured loans like home and car loans. Therefore, before you apply for a personal loan, you should understand the different factors that affect personal loan interest rates. 

Income

The interest rate on your personal loan will be lower if you fall in a high-income bracket. The higher your income, the lesser are the chances of you defaulting on your personal loan. With a high salary, the loan provider will consider you to be more reliable. 

Credit history

The lender is liable to report any default that you make on your existing loans to the credit bureau. On the other hand, every timely payment positively reflects on your credit score. If you have been consistent with your repayments, your credit history will remain sound. This will help you enjoy lower personal loan interest rates.

Employer’s reputation

When you work for a credible organization, you are viewed as a safe individual with a secured career and better ability to repay your debts. The higher the reputation and stability of the organization you work for, the lower will be the interest rate you are charged on your loan. 

Employment nature

The nature of your employment is crucial in determining the rate of interest charged on a personal loan you apply for. Salaried employees and self-employed business owners are charged significantly different personal loan interest rates.

Debt-to-income ratio

If you already have several ongoing loans and multiple credit cards, the Equated Monthly Installments (EMIs) you pay towards the repayment of such liabilities may eat up a portion of your salary. In such cases, you will be considered a high-risk individual. It can affect not just the interest rate you are charged but your personal loan eligibility as well.    

Your customer relationship with the lender

Loyalty to the financial organization in the form of existing savings accounts, credit cards, other loan accounts, fixed deposits, etc., improves your chances of getting additional benefits and deals. You can leverage your status as a trusted customer and entice the lending company not to lose you as a client to a competitor. This can help you fetch competitive discounts on interest rates when you avail of a loan from them.

Conclusion

Before you apply for a personal loan, look around for the several deals and offers available in the market. Different lending organizations offer different interest rates and terms on personal loans. Researching online can be a good way to find the most suitable pick. You can also avail an instant personal loan for up to an amount of Rs. 25 lakh at an interest rate of 10.99% and ease your financial worries.

Apply for a Personal Loan Now

Get an Instant Personal Loan for all your needs !

Apply now
Popular Searches
loan without cibil personal loan for 15000 salary Loan for ring small cash loan on aadhar card pre approved personal loan What To Buy On Dhanteras Personal loan when self employed how to increase cibil score form 15g for pf withdrawal how to download aadhar card
More About Loans
personal loan personal loan eligibility personal loan interest rate pre approved personal loan overdraft loan small loans flexible personal loans personal loan documents personal loan procedure personal loan emi calculator prepayment of personal loan
Disclaimer

Most Viewed Blogs

Trending Blogs

Calculator

Personal Loan EMI Calculator

Personal Loan EMI Calculator
Home Loan EMI Calculator

Home Loan EMI Calculator
Business Loan EMI Calculator

Business Loan EMI Calculator
Used Car Loan EMI Calculator

Used Car Loan EMI Calculator
Two Wheeler Loan EMI Calculator

Two Wheeler Loan EMI Calculator
Loan Against Securities Calculator

Loan Against Securities Calculator
Loan Against Property Calculator

Loan Against Property Calculator
More Tools