When looking for a personal loan, it’s important to understand how the interest rate is determined. Your credit score is the biggest factor, but lenders also look at four other key factors. Here are five Factors That Affect Your Personal Loan Interest Rates:

1. Your credit score is perhaps the most important factor affecting your personal loan rates. A higher credit score indicates a lower risk for the lender, thus usually resulting in a lower interest rate. Conversely, a lower credit score indicates a higher risk for the lender and thus usually results in a higher interest rate.
2. The amount you borrow: The amount you borrow also affects the interest rate on your loan. Typically, the larger the loan, the higher the interest rate.
3. The term of the loan: The term of the loan is another important factor affecting your loan interest rates. Generally speaking, the longer the term, the lower the interest rate.
4. The type of lender: The type of lender you use can also affect the interest rate on your loan. For example, online lenders often have lower interest rates than traditional banks or credit unions.
5. Your financial situation: Your financial situation can also affect the interest rate on your loan. For example, if you have a lot of debt, you may be considered a higher risk and thus offered a higher interest rate. Conversely, if you have a good credit score and a stable job, you may be considered lower risk and thus offered a lower interest rate.

What is an NBFC personal loan?

NBFCs or non-banking financial companies offer low interest personal loan as compared to banks. NBFCs are registered with the Reserve Bank of India and are regulated by it. NBFC personal loan can be used for various purposes, including travel, wedding expenses, home renovation, etc.

NBFCs also offer a personal loan app that makes applying for and tracking your loan easier. These apps usually have a simple application process and can provide instant approval.

Why select NBFC personal loans over banks?

• NBFCs offer better interest rates on personal loans than banks. It makes them a more attractive option for borrowers.

• NBFCs do not require any collateral for personal loans. It makes them a much better option for borrowers with no assets to offer as collateral.

• NBFCs usually have quicker approval than banks. It makes them a more convenient option for borrowers who need the loan amount urgently.

Read Also: Quick Tips to Get the Lowest Personal Loan Interest Rate