Life is full of surprises and sometimes they come with unexpected expenses. Whether it is for medical issues, home repairs, or an emergency trip, emergency expenses come unannounced.
That is when an instant Personal Loan becomes a lifesaver. However, getting money fast is not everything; saving on the interest of your loan is also crucial. Here is how you can do it.
What is an Instant Personal Loan?
An Instant Personal Loan is instant approval within minutes and disbursal into your account within a few hours. Unlike instant loans, traditional loans come with a lot of paperwork, collateral, and other requirements. You just need to apply, get assessed based on your creditworthiness, and receive the money directly into your bank account.
How to save on interest rates on instant Personal Loans
Check your credit score before applying
Your repayment ability is evaluated by the lender through credit score reports. An above-average credit score (generally above 750) indicates that lending to you is low risk, which would ultimately result in lower interest rates for you.
Extensive debts should be cleared, credit card dues should be paid on time, and do not apply for too many loans simultaneously.
Compare lenders on interest rates
The terms offered are not uniform across all lenders; some may work with higher Personal Loan Interest Rates than others, with corresponding repayment benefits. Do not accept the first offer you receive! Be patient: explore different lenders and use online loan comparison websites to find the best deal.
The lower the interest rate, the lower the EMIs, which means fewer responsibilities in the long run.
Choose a shorter loan term
Longer loan terms may seem appealing since they reduce the monthly instalment you pay. However, on the downside, the longer you take to pay back, the more interest you will incur over that term. If you can manage a slightly higher EMI, opt for a shorter term. This will help you pay off the loan sooner and save significantly on interest.
Look for pre-approved offers
If you have a good relationship with your bank or financial institution, ask if they have any pre-approved instant Personal Loan offers available for you. The reason behind this is that, as a customer for some time, the lender accepts your profile with minimal effort, thereby lowering rates even further and speeding up processing to compensate.
Fixed vs. Floating Rate: Make an informed choice
There are fixed Personal Loan interest rates or those with a floating interest rate that fluctuates according to market conditions. If you need stability, a fixed rate is what you should seek; it makes your EMIs very predictable. However, if you believe that interest rates may decrease in the future, a floating rate might be the smarter choice for saving money down the line.
Do not neglect charges and other processing fees
A lower interest rate is excellent, but you must be careful to check for hidden fees. Some lenders charge loan processing fees, while others impose significant costs in the form of prepayment penalties or default fines. Read and review loan agreements thoroughly before signing them.
Conclusion
It is easier than ever to obtain an Instant Personal Loan, but do not let that rush you into making a hasty decision. Check your credit score, compare various interest rates, choose the tenure wisely, and always be cautious of additional fees. A little extra time and effort could land you not only a speedy loan but also an affordable one.
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