When a person applies for a Personal Loan, then he or she will select that plan which has a less interest rate and is giving maximum benefit to the borrower.
This type of loan is generally taken by middle-class family members who want to take some financial help to clear the payment for anything they desire to buy, or if one of their family members is a businessman, then they can take a business loan.
Before the loan is given, the amount is chosen by the borrower, and the lender checks their repayment method and credit score and then allows them the amount according to his or their choice.
These are the ways to get a better interest rate:-
- Maintaining a good credit score: – In order to have a lower rate of interest, you will need to have a good credit rate.
In order to have a good credit score, you will have to pay off any debt remaining in the given period of time to increase your credit score.
If you have a credit score of 750 or more than it is confirmed that you will be given a lower rate of interest as you have paid for the loans and debts earlier also.
- Maintaining a good repayment history:- If you have a credit card, then you should try to pay off any debt remaining on it so that you can have a good history on the charts.
You will also have to clear and pay off your monthly EMI (Equated Monthly Installment) of any other loans that have been taken by you or the borrower.
If you clear your EMI early and on time then it will increase your repayment history which will allow you to negotiate on the interest rate.
- Compare different interest rates:- The borrower should look for a loan directly by going to a bank or a financial institution, and also they have to check the different interest rate online on different websites.
There are many websites available online which can tell you different interest rates available in the Singaporean market.
- Look for seasonal offer:- Borrower should try to take a loan from the bank during a festival as banks give out a special offer during festivals to the public to attract them to invest in their bank.
- Check interest calculation method:- You might think that whenever you are taking a loan, an interest rate is lower than other, but you will eventually end up paying more interest than other lenders.
So after looking at the scheme borrower should always calculate the interest themselves to check whether it is the right amount or not.
- The credibility of employer:- If a borrower is working with or in a multinational company, then he or she will get the consideration of lower interest rate depending upon the reputation of their business.
7 Common reasons why people apply for a personal loan
One of the biggest advantages of personal loan is that you can take the loan for whatever reason you want, unlike other loans which are taken for a particular reason like automobile loan, student loan, mortgage loan etc.
Instead of getting the money at the time of making a payment you get the while lump sum amount at the starting when you have finally applied for the loan and all the process has been done and the loan has been approved to you.
There is not much information on why people take a personal loan, but experts and analysts say that these are the seven common reason why people take a personal loan for.
Here is the list of reasons with a better credit score:-
- Dealing with debt:-
A study on 9 September 2019, made by the company Experian said that the people who were taking a personal loan for the first time were usually taking it to pay off any debts.
Debt consolidation means that whenever you have taken a loan earlier and you want to pay it back and in the personal loan you can do so by paying monthly instalments.
- Home improvement project:-
In the study made by Experian, it stated that almost 35% of the people take a loan to pay for the improvement of their home status.
According to loan advisor, it said that in 2018 it was a robust year for those people who take home improvement loan because many people had taken the loan and spent almost $7000 on basic improvement, average home improvement is $1100 and emergency spending was $410 that comets to a total of $9000 used in 2018 on home improvement.
- Purchasing big items:-
Another study stated that around 27% of the people took a personal loan to make a big purchase like they wanted to buy a refrigerator, Television, Air conditioning and also a washing machine for their home use.
A study stated that around 23% of the people take a loan to pay for the expenses occurred while they want to travel or go and spend a vacation at someplace.
Another study stated that almost 52% took a loan to travel.
- Medical bills:-
Health care cost is not included in the study of any company as it is a personal matter of that person’s family.
Many people take this loan after they have suffered from a major disease like cancer, accident etc.
- Starting a business:-
Those people who stay home and want to start a company need funds to finance their project so that they can work on it and make it useful and better.
- Unexpected expenses:-
These type of expenses can occur at any time and also the costing of getting it fixed instantly will be higher than the normal prices.
So a survey says that many people take a personal loan to recover from a huge payment that will be made on anything that is present at their home which requires urgent fixing like AC in summer whenever it breaks down.