Most people take out personal loans to meet their various financial needs. All banks provide personal loans to customers at different interest rates. But, these rates also keep changing according to the customers. Interest can be charged more than normal for a personal loan from someone, and one can get a personal loan at a cheaper rate too. The personal loan interest rate depends on many factors. It includes many things, like credit history, and score. Today, let us know the factors that determine the interest rate of your loan.
Before giving a loan to anyone, the bank looks at how capable that person is of repaying it. For this, the source of income is examined first. Based on this, the bank or financial institution decides how much risk it takes to give that person a personal loan. The bank then decides the interest rate of the personal loan by considering both the amount that has been asked for as a personal loan and the income.
Importance of CIBIL Score:
The CIBIL score is prepared by looking at the accounts of loans, credit cards, etc. taken by the applicant earlier. With this, the bank decides how much money can be given to that person as a loan. The higher the CIBIL score, the better the chances of getting a loan at affordable rates. As per reports, a CIBIL score of 750 or higher is considered the best. That’s why it is important to maintain a good CIBIL score at all times.
Economy and Loyalty:
The interest rates of all banks are affected by the repo rate of the RBI. The effect of an increase or decrease in the repo rate can also be seen in the interest rates of banks. This also affects your personal loan interest rate. Apart from this, if you already have a loan, then it is also seen how much more debt you can bear. While giving a loan, it is also seen how your previous relationship with the concerned bank or financial institution has been. Apart from this, the condition of the country’s economy and other factors in the market also affect the personal loan interest rate.
