The city of Bhopal is fast-growing and modern. Living and working in this vibrant metropolis may need additional funds from time to time, for expenses like medical emergencies, wedding costs, etc. At times like these, taking out a temporary personal loan in Bhopal, instead of selling assets etc. would be a viable option. The Indian finance space is well-developed and many companies offer attractive loan products. Among these, Hero FinCorp stands out as a loan provider of repute offering customizable products to suit a variety of needs. The rate of interest charged on a personal loan is one of the most important aspects to consider when finalizing a loan product.
What affects the interest rate on a personal loan?
Income –
All individuals applying for a personal loan should have a monthly income of at least Rs. 15,000/-. If the income is high, then a lower interest rate could be offered to the applicant. In the scenario where a single applicant’s income is insufficient, a co-applicant could be added and the application would be re-evaluated with both the incomes.
Credit Score/ Report –
Since the lender does not ask for any collateral while granting a personal loan, they accept a high risk of default. To mitigate this risk the lender has to carefully scrutinize the applicant’s credit report for red flags such as defaults, high debt to income, many outstanding loans, etc. since this would increase the possibility of loan defaults. In the case of an applicant with a low credit score, a guarantor would be required. On the other hand, a high credit score can result in being offered a lower rate of interest for a personal loan.
Age –
Any Indian citizen between the ages of 21 to 58 years is eligible to apply for a personal loan with Hero FinCorp. However, a younger applicant may get a benefit of a lower rate of interest as they have more income earning years ahead compared to an older applicant.
Loan amount –
An applicant who has applied for a high loan amount could be offered a higher rate of interest as compared to similar loan applications with a lower amount. This is because in the case of higher amounts the risk the lender is undertaking is higher.
Reputed Employer –
The employer status also can work in the borrower’s favor when the lender considers the loan terms. Working for a government organisation or an MNC is a plus point as these employers do not delay or default in making salary payments to their employees, consequently, this reduces the possibility of the borrower defaulting on a loan payment.
Occupation Status –
A lower rate of interest could be offered to the salaried applicants as they would have more income stability as compared to self-employed individual.
Existing Relationship with the lender –
Applicants already having a financial relationship with the lender could be offered discounted rates on fresh loan applications, as the lender needs to perform fewer checks.
Festive Discounts –
The applicant should take advantage of discounts offered by lenders during holidays and festive seasons.
The highest interest rate that is charged on a personal loan in India is 25%, but processing fees and other charges levied by the lender should also be factored in while evaluating the total cost of the loan. Individuals applying for a personal loan in Bhopal should also check Hero FinCorp’s online EMI calculator available on their website. This helps in evaluating different parameters when deciding on the level of their monthly debt.