Personal loans are unsecured in nature and thus are available at a higher cost compared to other credit schemes. Therefore, people applying or planning to apply for a personal loan will always try and negotiate the cost of borrowing. How? Generally speaking, there are only a few ways the cost of borrowing can be lowered down.
1. Initially, the borrower can try to avail the loan at the lowest interest rate possible. This is only possible if they qualify all the eligibility conditions with flying colors. In addition, a lower interest rate is subject to the state of credit score and credit history of the loan applicant. For instance, people apply for a personal loan having a good credit score and a convincing repayment history are likely to get approved for a lower-interest-rate loan. On the other hand, people taking a loan for the first time or applying with a poor credit score etc. are likely to be saddled with a higher interest rate.
2. Take loans with a lower processing fee. Some lenders charge 2% of the loan amount as processing fee and then there are lenders who charge less than that. In order to ensure the lowest cost of lending, you have to get approved for schemes with a lower processing fee.
3. and Lastly, you can apply for personal loan balance transfer which would allow you to switch to a different lender offering the personal loan with less interest rate. This would automatically lower your interest obligation.
Read Also: 5 Ways to Minimize the Cost of your Personal Loans
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