Not so long ago, personal loans used to be the last option people would opt for when it came to dealing with financial issues. However, the present times have seen a transition in the history of loans, making personal loans one of the fastest-growing consumer lending forms in India. Despite the Covid-19 pandemic that made the economy go haywire, personal loans have sustained against the odds and have continued to grow at a rapid pace in India.
According to the Reserve Bank of India (RBI), personal loans today account for 28% of total bank credit. The RBI also reported that there had been a steady growth in the lending practices of unsecured loans in recent years, personal loans being an integral part of it. Personal loans are now known to offer financial assistance for various needs and requirements such as buying a car, funding your vacation trips, debt consolidation, and so on.
According to the reports, credit growth in metropolitan branches of banks decelerated 3.3 per cent on a year-on-year basis. However, rural, semi-urban and urban branches have compensated for it. “Personal loans registered a decelerated growth of 9.3 per cent in October 2020 compared with 17.2 per cent growth in October 2019. Within this sector, vehicle loans continued to perform well, registering accelerated growth of 8.4 per cent in October 2020 vis-a-vis a growth of 5.0 per cent in October 2019.”, the RBI said.
Based on the recent report released by an Indian digital company, people are availing personal loans more frequently in recent times, especially to meet medical emergencies. With the gradual upsurge and growth of personal loans, it has become a highly reliable financial solution that is amongst the quickest to apply for and easiest to avail.
With the growing financial needs and increasing demands of people, personal loans have become incredibly popular in the past few years. It has helped the Indian households bridge the gap between their income and expenses and consider the present situation. The growth-graph of personal loans is only expected to rise. Keeping in mind this steady growth phase of personal loans, here are a few things you need to know before you apply for a personal loan just so that you can get a better interest rate on a personal loan.
- Maintain a good credit score. If you have a high credit score, chances are high of easily availing the personal loan at a lower rate of interest.
- If your repayment history is good, it contributes to your credit-worthiness. It thereby makes you a desirable loan candidate based on which you can negotiate for a lower interest rate. Many financial institutions also provide customers with an excellent repayment history and top-up loans at lower interest rates. Thus, you need to make sure you never miss or delay the EMI payment.
- Comparing offerings from various lenders based on how you fit within their eligibility criteria and latest offers can also ensure you get lower interest rates.
Personal loans now offer a great deal of flexibility and are a convenient option available in times of need. With digitalization, financial institutions allow you to get a personal loan online, and this often comes with additional perks such as lower interest rates and quick disbursal. And with the ongoing pandemic resulting in pay cuts, irregular pay, and many people losing their job, the Personal Loan Market is only expected to grow further at a rapid pace in India.