1 / 3

Here is Why You are Paying a Higher Interest on Your Personal Loan

Interest rate of a personal loan is usually higher than the other loans and this is because of the risk factor involved in it. A personal loan is an unsecured loan which doesn't need to be backed up or covered with collateral and guarantors. The interest rate of a personal loan also depends on the applicant's credit score and other personal factors, such as debt to income ratio, income and so on. <br>For More Info visit: https://bit.ly/2OTUg8q<br><br>You can also connect with us<br>https://financebuddha.com/insta-loan<br>https://www.facebook.com/financebuddha<br>https://twitter.com/financebuddha<br>https://www.linkedin.com/company/finance-buddha/

amritaagarwal12
Download Presentation

Here is Why You are Paying a Higher Interest on Your Personal Loan

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Here is Why You are Paying a Higher Interest on Your Personal Loan Interest rate of a personal loan is usually higher than the other loans and this is because of the risk factor involved in it. A personal loan is an unsecured loan which doesn't need to be backed up or covered with collateral and guarantors. The interest rate of a personal loan also depends on the applicant's credit score and other personal factors, such as debt to income ratio, income and so on. Apart from the lenders quoting different rates for different loan products, you may notice the same lender quoting different interest rates for the same loan to different applicants. Here we are providing you the details because of which you may be paying more interest on your personal loan.

  2. Low Credit Score Your credit score and credit history is a major factor which will not only affect your eligibility to get a personal loan but it also affects the interest rate of your loan. +700 is considered as a good CIBIL score and a borrower having such a CIBIL will get their loan approved at the nominal rates. On the other hand, if an applicant's CIBIL is less than 700 then the lender will consider it a bit risky to lend them and to be at a safer side lenders charges a bit higher rate to such customers comparatively. Unstable Career When you apply for a loan, lenders will for sure check for your career stability. In case you don't have a stable career as in you were frequently switching your job or changing your profession, then there are chances that you will be charged a bit higher rates as compared to a borrower having a stable job and profession. Uncertain Income Income is the most important thing on which a lender decide your repayment capacity. If you don't have a stable income, lenders will be worried about the repayment and hence they will charge a higher interest rate to be at a safer side. Income to Debt Ratio In many cases, borrowers have multiple loans such as- education loan, home loan, car loan, personal loan etc. In that case, the income to debt ratio is high. Let’s understand this with an example- Suppose a person is having 3 loans on him, his total EMI cost him 50K and his total income is 80K per month. In this situation, if he applies for another personal loan. The lender will definitely look for the income to debt ratio as he is having less money left with him to pay the EMI and for his livelihood. There the borrower will be charged a higher interest rate.

  3. Lack of Proper Research Regarding your Loan There are number of providers for a personal loan and their eligibility criteria, interest rate and other charges slightly varies depending upon their policies and offers. Hence, when to decide to have a personal loan, first you should have a proper research finding the best option regarding the interest rate, other charges, and best offers available. Probably one of the above mentioned may be the reasons because of which you are paying a Higher Interest on Your Personal Loan. Find yours! And if you are planning to have a personal loan, knowing these reason can help you to get you a lower interest rate.

More Related