#1: Maintain a good credit score

Your credit score is one of the most critical factors in determining your loan interest rate. Lenders typically favour scores of 750 or higher, which indicates a low risk of default. Regularly checking and improving your score through timely payments and low credit utilisation can significantly increase your chances of securing a lower rate. The better your score, the more negotiating power you have to ask for competitive terms.

#2: Showcase a good repayment history

Lenders prefer borrowers with a consistent track record of timely repayments. If you have a history of paying off loans or credit cards on schedule, it demonstrates financial responsibility. Providing proof of a solid repayment history can strengthen your application and potentially lower the interest rate offered. This aspect is often reflected in your credit report, so maintaining this behaviour is key to long-term benefits.

#3: Keep an eye on seasonal offers

Many lenders roll out special offers during festive seasons or promotional periods, with interest rates that are temporarily reduced. Timing your loan application to coincide with such offers can help you secure a more favourable rate. These discounts may also include reduced processing fees or added perks. Keeping track of these periods by monitoring the lender’s announcements can be a smart way to save on interest.

#4: Compare multiple lenders

It’s always wise to shop around and compare offers from different banks or financial institutions. Even a slight difference in the interest rate can result in substantial savings over time. Consider using online comparison tools or visiting multiple lenders to explore your options. By knowing what various lenders offer, you are better equipped to negotiate for the best possible rate.

#5: Display all streams of income

Lenders assess your repayment capability by looking at your income. Showing proof of all income sources, including part-time jobs or passive income, can strengthen your profile. A higher and more stable income assures lenders of your ability to handle loan repayments. If you can prove consistent earnings that exceed the minimum requirements, you might be able to secure a lower rate due to perceived lower risk.

#6: Fulfil the eligibility criteria

Meeting all the eligibility criteria can improve your chances of securing a favourable rate. Most lenders require applicants to be within a certain age range, often between 23 and 55 years and to meet minimum income thresholds. Understanding and meeting these requirements will signal to the lender that you are a suitable candidate, which can impact the interest rate offered.

#7: Check for a pre-approved loan 

Pre-approval can be an effective way to secure a lower interest rate on your personal loan. Many lenders offer pre-approved loans based on your credit history, income and other financial factors, which often come with more favourable rates. Since the lender has already assessed your eligibility, they may offer better terms to attract you as a borrower.