Negotiate a Good Personal Loan Deal with These Tips

4/29/2019 RAWAT 0 Comments

Whenever an individual is purchasing something, it is common for him or her to haggle for a better deal. While most customers believe that the loan deals and policies are carved in stone, the fact is that there is some room for negotiation. It takes a bit of an effort from the applicant.

Of course, with the big lenders personal loan deals are usually very rigid, but even then customers can look for a better option if they follow these simple tips:

#1.Try to Improve Your Credit Score

For any personal loan, be it Abhyudaya Co-Operative Bank Ltd Personal Loan or any other financial institution that one approaches, the credit score plays a vital role in the interest rate and even the loan amount offered to him or her. If the credit score is in the mid-range, the customer can benefit from improving his or her credit score. For any bank, a credit score above 700 is considered good. The higher is this score, the better is the number of personal loan deals available. 

Some tips to improve credit score are as follows:
·         Make sure that the repayments for all loans with other banking institutions are timely and consistent.
·         The lesser is the outstanding loan amount the better is the credit score.
·         Maintaining a balance between secured and unsecured loans in your portfolio is a must. In case you use only unsecured loans, the credit score tends to become lower.
·         Reduce the credit utilization to 30%. This means that the individual must use any sanctioned loan amount wisely. The lesser the loan utilization, the wiser it is.

#2.Look for More Income

The higher the income, the better are the rates offered. The applicant is eligible for a higher loan amount depending on the net income. The net income is the take home salary after all deductions have been made. For instance, with Central Bank of India Personal Loan, the income should be between Rs.4000 and Rs.20000, subject to the city or zone from where the loan is availed.

For most banks, the net income for paying home loan Emi should be between 40-45% of the gross salary. This minimum amount and debt to income ratio ensures that the individual will be able to make repayments towards the loan without affecting his or her monthly expenses. Now, if the applicant is able to show a higher income, the rate of interest will also decrease and the possible loan amount eligibility will also rise.

One option to do so is to look for increments at the workplace or pitch for a promotion. If that is not an option, alternate sources of income such as rent from a property can also be considered to get a better personal loan deal.

#3.Ask for an Interest Reduction after a Few Repayments

Sometimes unexpected expenses can stand in the way of repaying a loan easily. In case the EMI towards the loan is becoming a burden, the customer also has the option of asking for a reduction in the interest rate after having paid a couple of EMIs. The longer the customer has had the loan account, the better are the chances of getting a better interest rate. This depends on several factors such as the relationship maintained by the individual with the bank, the consistency of the previous repayment and the nature of the financial institution as well. It is usually easier to negotiate with smaller lenders than the big ones. It is also possible to get better loan deals with branches that have opened newly as they have steep targets to cover and will be able to provide more loans.

#4.Show Your Current Loans and Liabilities

When Applying for a personal loan there will be a detailed check of the customer’s credit report in any case. In these credit checks if it is found that the repayments have been made on time and that the loan accounts are good, it is a testimony to the fact that the customer is trustworthy. It is advised that customers inform the bank about existing loans before applying for an additional one. This will also determine the eligibility criteria and helps the individual understand if he or she qualifies to avail the loan in the first place.

#5. Provide a Collateral

With most personal loans like Central Bank of India Personal Loan, no security is required on a personal loan. This is what makes them the simplest choice in case of a financial emergency. However, if the loan amount is low and the interest rate is high, you can consider providing collateral. This makes the loan a secured one and guarantees a better deal. With a collateral provided, the EMI reduces and the burden of the loan is lower for the customer.

#6.Apply For a Loan at The End of the Month

This is one tip provided by several financial advisors. However, it does not guarantee a better loan deal. If the customer qualifies for a loan, applying at the end of the month can actually work in his or her favour. If the branch that she has approached has not been able to achieve the loan targets for the month, they are more willing to give out a loan. This puts the applicant in a position where she can ask the bank to consider a better loan amount, a lower interest rate or even an extension on the repayment tenure.