A personal loan is influenced by two important factors: the borrower’s financial status and the bank’s set interest rate which keeps varying depending on the money it has borrowed. Every bank has its own set of criteria when it decides to lend you the loan amount. If you are willing to take one then it is best advised to compare the loan amounts and interest rates from various banks before deciding on one. Some of the factors that the might consider before approving your loan at the agreed interest rates are:
- Source of income: This is one of the biggest deciding factors. The interest rate is proportional to the income that you earn. The higher your income is the lower the interest rates are (to a certain extent). This is mainly due to the fact that the bank will know that you will be able to repay the amount that you have taken on time without any defaults.
- Payment history: Another factor that shows how honest have you been with your past payments and can directly affect the interest rate.
- Where you work: If you work in a very good company the loan and interest rates will be decided and approved without any halts. The banks will have several categories and it is crucial that your firm makes it to the list.
- History with the bank: If you are a very old customer then the bank might also decrease the interest rates depending on the amount of the transaction that you might have made in the past.
- Negotiation: This is a personal skill. The better you are at bargaining the more the chances of benefitting from it. However it must be understood that the interest rates will more or less be the same. They won’t be too different from others.