Factors affecting personal loan interest rate

1. Short Term Personal Loan:5 Factors Affecting It’s Interest Rate

2. What is aShort Term • Personal Loan?

3. A short term personal loan is a loan of smaller amount, not more than Rs. 2 Lac and it is scheduled to be repaid in a shorter period of 1 year or maximum 2 years. • A small amount personal loan is generally taken to finance short-term money requirements.

4. While Applying For A Personal Loan, Certain Factors • Need To Be • Taken Care Of:

5. Formalities associated with Loan Disbursement • Formalities associated with Loan Approval • Repayment Terms Application Process Eligibility • Interest Rate

6. Interest rate for both long and short term personal loans may vary from: • Applicant to Applicant • Lender to Lender

7. 5 Factors that impact personal loan interest rate for an individual: • Applicant’s Income • Applicant’s Credit Score • Loan Amount & Duration • Reputation of Applicant’s Employer • Applicant’s Debt to Income Ratio

8. Applicant’s Income • The income of an individual is directly related to his/her loan repayment capacity. • People with higher income are considered capable of repaying the loan on time and hence get the benefitof a lower interest rate.

9. Applicant’s Credit Score • The credit score reflects the credit-worthiness of an individual based on his/her repayment history and overall financial activities. • Applicants with a credit score above 700 are levied a lower interest rate, which increases proportionately as the credit score decreases.

10. Loan Amount & Duration • A higher loan amount with longer repayment duration comes with a lower interest rate and vice versa. • If the lenders consider a borrower to be a high-risk option, they might levy a higher interest rate even on bigger loan amounts to be repaid over a really long duration.

11. Reputation of Applicant’s Employer • People working for reputed organizations tend to strictly adhere to their repayment schedules resulting in a lower interest rate.

12. Applicant’s Debt to Income Ratio • Applicants with a higher debt-to-income ratio are considered to be a risky option by a majority of lenders.

13. For more details, visit: https://www.moneyinminutes.in/