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What are the factors that affect personal loan interest?

A personal loan comes to everyoneu2019s rescue in financial emergencies. But a personal loan has a cost known as the interest rate that borrowers have to play along with the principal amount. Hence, borrowers conduct research about rates and terms associated with the loan. Such as what are lenders offering?

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What are the factors that affect personal loan interest?

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  1. Personal loan EMAIL Info@afinoz.com

  2. What are the factors that affect personal loan interest? • A personal loan comes to everyone’s rescue in financial emergencies. But a personal loan has a cost known as the interest rate that borrowers have to play along with the principal amount. Hence, borrowers conduct research about rates and terms associated with the loan. Such as what are lenders offering? What are their terms and condition regarding the personal loan? It is natural that you would choose a lender who is offering a lower interest rate. • However, before choosing a lender with the lowest rate of interest, you need to know the factors determining the rate of interest. These factors will help you improve your financial profile to increase the chances of qualifying for the loan and getting lower interest rates. Here are some of the important factors that affect the interest rates applicable on a personal loan.

  3. The lender and the credit score • The repayment history - It accounts for 35% of the CIBIL score. If you have missed loan payments, the credit score will be severely hit. Do not miss a payment, and if it is possible for you, enable the autopay system to avoid any delay. • Credit Utilization - It accounts for 30% of the CIBIL score. Credit utilization means how much you are spending out of your credit limit. Ideally, lenders prefer a borrower who has kept the credit utilization below 40 or 45%.

  4. The debt to Income ratio The next factor is the debt to income ratio. In simple words, the ratio is the debt divided by the monthly income. For example, if your monthly debt is Rs 10,000 per month and your salary is Rs 20,000. We would say the debt to income ratio is 50%. • The income, employment, and work experience A lender will prefer a borrower with a steady income and employment. The minimum monthly salary to get a personal loan is Rs 15,000. However, it is for one or two lenders. In general, lenders require a minimum income of Rs 25,000 per month, depending upon the physical location. • The loan repayment tenure The loan repayment tenure also decides the interest rate. If you are taking a loan for the short term (From 1 year to 3 years), the interest rate will be higher. Sometimes, it may be low by a couple of points, depending upon the borrower’s financial profile, but generally is high.

  5. Thank you……… Info@Afinoz.com https://shrutikeshre.kinja.com/what-are-the-factors-that-affect-personal-loan-interest-1845177831

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