The personal loan interest rate is one of the key aspects that borrowers want to be double sure before applying for the same. It is because personal loans are unsecured and carry a higher rate of interest. The final rate at which the personal loan is offered is dependent on your credit score, age, loan amount and the tenure. Other than negotiating the loan rate, you should also check the way the interest rate is calculated. Personal loan rates are calculated on flat interest and reducing balance. If you wish to know about the flat interest rate on the personal loan, you should go through this post! What is the flat interest rate on personal loans? As the name suggests, the flat interest rate gets calculated on the entire amount and for the whole tenure. It denotes that they do not consider the EMIs which bring down the principal amount gradually. As a result, the effective rate of interest is higher than that of the flat rate quoted initially. But, in the reducing balance interest rate, the interest is calculated on the outstanding loan value. Compared to the diminishing rate of interest, the interest rates get fixed at a lower percentage in the flat rate calculation method. Before you apply for the personal loan, you should check your lender’s method of interest calculation. It is vital to know that in advance as it may impact your finances. It is also good to compare all available flat interest rate offers online and pick one that is best for your needs and repayment capacity. Bajaj Finserv offers pre-approved personal loans and also deals on home loans and more to simplify the loan processing and other formalities. You can share your basic details like name and mobile number to check out your pre-approved loan offers today. Must Read: You Must Know About Flat Interest Personal Loan
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AuthorAman Khanna is an experienced financial advisor who is well known for his ability to foretell the market trends as well as for his financial astuteness. He has an MBA in finance from Toronto University as well as years of experience delivering seminars on sound financial practices and debt management. |