Key Factors That Help You Secure Personal Loans at Lower Interest Rates

Interest rates are determined by lenders based on funding costs and the borrower’s creditworthiness. Below are the major factors that influence personal loan interest rates:

Credit Score

A strong credit score reflects disciplined financial behavior such as timely EMI and credit card payments, limited loan applications, and maintaining a healthy credit utilization ratio.

Income / Salary

Higher income indicates stronger repayment capacity, reducing lender risk. As a result, borrowers with higher earnings often receive better interest rates. However, multiple ongoing EMIs may impact pricing.

Repayment Track Record

Applicants with a consistent and positive repayment history are considered low-risk borrowers and are more likely to qualify for loans at reduced interest rates.

Employment Profile

Stable employment with government bodies, PSUs, reputed MNCs, or established private organizations often results in lower interest rates due to assured income continuity and job stability.