Summary: You can qualify for a low interest personal loan, if you maintain a good credit score and stabilise your income.

A lowest interest personal loan can save you money if you qualify for it. Do you know how to qualify for low interest rates? Lenders offer loans at reduced interest rates to people with a good credit score. A good credit score shows creditworthiness and reliability. If you can convince lenders of timely payments, you can also get affordable loans.

Let’s discuss ways to prove your creditworthiness

1. Maintaining Minimum Credit Score

If you maintain a minimum credit score of 700, you can easily qualify for low interest rates. Things you can do to maintain a minimum credit score are reducing your reliance on credit cards, paying your credit card bills on time, and closing loans. If you can increase your credit score, it will be an additional help to secure a lower interest rate.

2. Stable Income Source

If you have a stable source of income, you can easily obtain a low interest personal loan. A stable income demonstrates your ability to repay the loan easily. It assures lenders of timely return and convinces them to reduce interest rates. Stable income is proof of a secure investment for lenders. For a stable income, you can find a new job or strengthen your business.

3. Reduce Your Debt-to-Income Ratio 

If a large part of your monthly income goes to repaying debts, your debt-to-income ratio is poor. You should bring it down by repaying your loans quickly. Another way is to minimize your use of credit cards and loans. It is advisable to close smaller loans before applying for a new loan.

4. Leverage Your Relationship    

You can rely on your bank or a lender whom you have taken a loan from in the past. Your bank can offer a low interest personal loan, depending on your account statements. Similarly, a lender can give another loan if you have a good relationship with the lender.

5. Shorter Loan Tenure

Lenders are often ready to reduce their interest rates for short tenure loans. A shorter tenure ensures quick recovery. Lenders offer a discount to encourage borrowers to choose a shorter tenure. You can also try this method.

6. Compare and Negotiate

When you shop around for a low interest personal loan, you get bombarded by multiple offers. However, you shouldn’t settle for the first offer. It is advisable to get maximum quotes, compare those quotes, and negotiate the best interest with lenders.