Yes you read it correctly. You can do that if you are smart enough. And it’s perfectly legal to do it. No out-of-the-world tricks here.
How is it possible when the rate of interest on Personal Loans generally falls within the same range for all lenders?
The answer is that even though the broad range remains same, it’s possible to decrease the rates on case-to-case basis for lenders. Let’s see how you can do it:
Do not apply for a loan that is beyond your ability to repay with current income. If you do that, it will put your loan application at risk of being rejected. So always apply for a loan that you can comfortably repay with your income. Lenders too will see that since you can pay your EMIs easily with your income, the risk of default is low and hence, a case for rate reduction.
Lenders will check your credit score before they even process your loan application. So if you have already checked your credit score and found it to be good enough (>750), you can use this information to negotiate lower interest rates with your lender. But on the other hand, if you score is low, be ready to pay higher rates on your personal loan.
If you already have an existing relationship with your lender, it matters a lot. All financial institutions want to retain good customers. So if you already are a customer of one of their offerings, they will be more than happy to provide you with other products (personal loan in this case) too. It’s also possible that you might get some loyalty benefit in form of lower interest rate on your loan.
So these are some of the less-known factors that can help you get your personal loan interest rates reduced by the lender. If you are applying for a personal loan, make it a point to run through these factors to see if you can benefit.