Loans in India are ubiquitous. You can get loans for all purposes. When you wish to avail a loan, lenders offer you two choices – secured and unsecured.
The secured loan depends on collateral security and hence, takes a longer time to get approved. An unsecured loan, however, does not require collateral and gets approved quickly.
Unsecured loans, like a personal loan, are the most preferred choice for Indian borrowers, as it provides a low-interest rate, high loan amount, long repayment tenure, flexible repayment options, relaxed eligibility criteria, and minimal documentation. However, the interest rates on unsecured loans are dynamic, which means the interest rates depend on many factors, and there is no guarantee that every borrower will get the same rate of interest.
This blog shows you the top-5 fool Proof ways to get the best deal on unsecured personal loans.
5 Fool Proof Ways to Manage the Best Deal from an Unsecured Loan:
- Keep Your Credit Score High and Bad Debt Low
The most important personal loan eligibility criteria is a high credit score. As it is an unsecured loan, lenders give more weightage to the creditworthiness of the borrower while evaluating the merit of the loan application. Generally, a score of 750 and above is considered as a healthy credit score.
Sometimes, credit score falls because of not paying credit card EMIs on time. Also, when you apply for too many loans, your credit score takes a hit. Hence, if you want to get the best deal in unsecured loans, take steps to increase your credit score in advance.
- Apply For a Joint Loan
There are times when, even after doing everything you can, the credit score just does not increase. In such cases, it is better to apply for the unsecured loan with someone else, whose credit profile is more robust than yours.
By looking at the credit profile of the borrower, the lender tries to determine the repayment capability of the borrower. Applying with a co-borrower increases your personal loan eligibility and increases the odds of loan approval.
- Disclose the Repayment Strategy
While it is true that lenders approve unsecured loans quickly, you can get the best interest rates by showing how you plan to repay. You may create a budget plan which would show your income and monthly expenses. The idea is to show the lender that you have taken steps to ensure that you do not default during the repayment period.
The interest rates will also go in your favor if you show stability in income. Too many job changes in too short a time may impact your creditworthiness negatively.
- Choose a Lender With Transparent Terms
Due to an increase in the number of lenders in the Indian market, the financial services industry is witnessing tough competition. Everybody is trying to outsmart others by relaxing the personal loan eligibility criteria, offering lower than ever interest rates, loyalty benefits, and whatnot. But, quite often, they do not disclose the charges outright, which may result in higher costs when the repayment begins.
As a prudent borrower, you should take out the time to read the terms before availing unsecured loans. Carefully evaluate the various charges and compare it with a no-string-attached loan provider. Remember, the best lenders always display everything on their website.
- Do Not Lose Hope if the Unsecured Loan Application Gets Rejected
There are times when unsecured loans may get rejected due to various reasons, like a low credit score, below-par income, citizenship issues, fake document submission, previous cases of default, or a lack of income stability. Do not lose hope, as it happens quite often.
If, unfortunately, your unsecured loan application gets rejected, do not hurry to apply for a new loan, at least not before six months. The chances are high that when one lender found out flaws in your personal loan eligibility, the other lenders would also do the same. And, when you apply for a loan too frequently, your credit score comes down.
Applying for an unsecured loan is simple. However, getting the best interest rates is not easy. Only by following the steps mentioned above can you get the best interest rates and attractive terms.