Factors Affecting Personal Loan Interest Rate

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apply for a Personal Loan online

The Personal Loan interest rates are not the same for all financial institutions. For a borrower, the interest rate affects the amount of the EMIs. A higher rate leads to bigger EMIs and vice versa.

Multiple factors that affect the Personal Loan interest rates in India.

Income: Income is an essential deciding factor for Personal Loan applications—the greater the income, the lower the interest rates. 

Credit History: NBFCs evaluate the applicant's credit score before approving loans. It helps them to view their credit history and ensure efficient loan management and timely repayment. 

Employment: Full-time salaried employees working for renowned organisations have higher chances of receiving low-interest rates on Personal Loans.

Financial Obligations: Current financial obligations are crucial in determining the Personal Loan interest rates. The higher the regular commitments, the higher the interest rates.

Existing Relationship: A history of responsible credit behaviour and timely payments with the existing lending institution makes people loyal customers. Their loyalty to a lending institution fetches attractive interest rates.

The factors discussed above largely influence the Personal Loan interest rates in India. Before applying, you can use a Personal Loan interest rate calculator to finalise the best loan plan.

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