How to get lowest interest Personal Loan
1) Shop around for interest rate – it pays to shop around and get the lowest interest rate. Many borrower rushes to make a huge purchase, not knowing that they are paying much more interest than others. Make a 2 hours effort to call different banks and financial institutions to check on their promotional rate and make a decision
2) Reduce your loan tenure – The shorter the loan tenure, the lesser interest you pay to the bank.
Example:
Mr Tan monthly income is $2500 and took a $10,000 personal loan from Bank A at an interest of 4%. He chooses repayment tenure of 5 years.
Yearly Interest = 4%
5 Years Interest = 4% x 5 years = 20%
Total interest paid to Bank A for 5 years tenure = Total personal loan approved x total interest of loan tenure = $10,000 x 20% = $2000
If Mr Tan chooses a repayment tenure of 2 years instead of 5 years,
2 years interest paid = 4% x 2 years = 8%
Total interest paid to Bank A for 2 years tenure = $10,000 x 8% = $800
Total difference of $1200
3) Borrow only what you need – This is a very important yet frequent neglected lesson by borrowers. Generally, banks and financial consultants have a monthly target to hit, thus, they often want borrower to borrow the maximum possible.
However, the more you borrow = the more interest you are paying to the bank!
4) Pay off Personal Loan Asap – Once you got extra cash, it is always recommended to pay off your personal loan. The reason is due to the high interest. However, please understand your personal loan terms and condition before you do so as some might have an early repayment penalty. Always contact the bank or the financial consultant for such issue, as some terms are not easy to understand if you do not have financial background.
