Refinancing a personal loan means transferring the outstanding loan to a new lender. This strategy will help you save money only if you know how personal loan interest and EMI management works. You can also download a personal loan app from an online marketplace for better loan management.
There are multiple reasons for refinancing an existing loan with a small personal loan. For example, you can change the loan terms to lower your EMIs, consolidate debt, secure additional funds, etc. However, borrowers consider refinancing mainly for lower personal loan interest. If an existing loan has a high rate of interest, it makes perfect sense to switch to a new loan that offers to pay off the outstanding loan amount in exchange for a lower interest rate. Although this is a smart option to consolidate debt and save money, it will only work if you can secure a lower interest rate on your new loan. While an online interest rate calculator can surely help, there are more factors to learn about!
Read on to find out how you can refinance your personal loan at a low interest rate!
1. Maintain Your Credit Profile
A high credit score will go in your favour. If you have a good repayment history and loan management track record, you will get a good CIBIL credit score. Lenders consider the credit score while sanctioning loan amount, rate of interest, and other loan application nuances. To get the lowest possible interest rate on your personal loan you need to have your CIBIL score near about 750 or above.
2. Calculate All Interest Rates
Use an online interest rate calculator to calculate and compare the new loan’s fees with that of your existing one. It is important to determine whether switching to the new loan will bring down your EMIs or enable you to save in the long run.
3. Carefully Choose Your Repayment Tenor
Interest Rates depend on loan terms. For instance, if you go for a longer repayment tenor, your EMIs will be lower. Conversely, a shorter tenor will give you a lower rate of interest on your personal loan. Take the help of an interest rate calculator if you need it, but carefully choose a tenor that suits your needs.
4. Avoid Multiple Loan Applications
Multiple running loans with different lenders will affect your credit score. This will ruin your prospects of obtaining a personal loan at a low-interest rate.
5. Shop Around
Although it is easy to secure a small personal loan, you must not hurry before finalizing any agreement. Look around for offers from the various lending organization and select the one that gives you the most profitable offer. Leading finance companies offer digital loan management through their online portals. You will also get a personal loan app there. Make use of this online tool for quickly accessing loan offers and loan management on the go.
Pre-qualifying with multiple lenders to compare loan terms will not affect your credit score. It will allow you to see personal loan interest rates and help you choose the best suitable lender. Bajaj Finserv offers pre-approved offers on their various products, such as personal loans, home loans, credit cards, and more. You can check your eligibility by simply submitting your name and contact details on their online portal or download their personal loan app.
Whether you are pursuing a small personal loan or trying to pay off a high-interest loan, refinancing your personal loan at a lower rate of interest is a smart decision.