Personal loan Interest rates can vary due to a lot of reasons. Financial institutions in Australia offer interest rates in the range of 11.99% to 24%. You will obviously want the best interest rate that you can get on your personal loan. However, there are some factors that can affect the interest rate of your personal loan.
1. Your Credit Score
Your credit score plays a crucial role in determining the interest rate of your personal loan. Financial institutions in Sydney and Melbourne for e.g., use your credit score to determine whether you have the capacity to repay the debt in time or not. If you have a credit score of 750 or above, it indicates that you have a good credit history and the lender may offer you a better interest rate.
The Personal Loan interest rates is one of the best according to industry standards. There are institutions in Australia that provide pre-approved offers for availing loans with ease. Numerous financial products including secured home loans and even unsecured credits like business loans and personal loans come with such offers. Check your pre-approved offer by just providing your name and phone number.
2. Your Income Level
Your level of income can be a very crucial factor in determining the rate of interest you might get. Financial institutions, such as those in Sydney or Melbourne consider your income level as a sign of stability and they can provide you with better interest rates and benefits if your income level is reasonably high.
As per industry trends, if your monthly income is up to a certain amount, you are likely to be charged an annual interest rate between 16% and 20%. Furthermore, you can be charged an interest rate of as low as 12% for a higher income. You can use an online personal loan interest rate calculator to see the rate of interest you are likely to get.
3. Your Repayment History
If you are having a good repayment history, you are likely to enjoy low interest personal loan provided you hold a credit score over 750. On the other hand, you will get a moderate interest rate if you possess a good credit score but not a good enough repayment history.
Financial institutions in Australia usually check your credit score for the past 12 months before approving your personal loan.
4. Your Employment Status
The rate of interest might get affected due to your organisation’s reputation. You will enjoy a lower rate if you work in a more stable and reputed company in Australia. Financial institutions consider the employees of a reputed organization, such as those in Sydney or Melbourne, to have a stable career and a stable inflow of money that will help them repay the debts conveniently.
5. Your Loan Amount And Duration
Your loan amount and duration can have a huge impact on the personal loan interest rates you will have. Your personal loan interest rate will rise with the increase in your loan amount and its duration.
Borrowing a large amount of loan will mean larger instalments which makes repayment troublesome. Taking a loan with a long tenor makes it more vulnerable to inflation and that too can create problems in repayment. You can negate these factors by determining the amount you really need to borrow and the shortest possible time in which you can realistically pay off the debt.
You can use an online loan EMI calculator to determine how much EMI you can pay off realistically every month. It will help you determine the exact tenor you need to have to pay off the debt.
Follow these guidelines to enjoy the lowest possible rates while availing a personal loan in Sydney, Melbourne or anywhere in Australia.