October 6, 2022
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Finance

Will Personal Loans Get More Expensive in 2022?

A personal loan is a favoured choice among the borrowers. Flexible terms and low-interest rate makes it more alluring. The independence of using the loan amount and requirements without interference from the lender is an added advantage. The loan amount borrowed can be used to finance education, wedding, vacation, home improvement, starting up a business, and aiding medical-related expenditures. A personal loan is also helpful for consolidating multiple debts.

A personal loan has been a relief during the last two years. The onset of the pandemic took away the jobs of many in the service industry. Businesses were affected too. Many people resorted to personal loans to manage their financial difficulties. Lenders also offered the loan at a low-interest rate with easy eligibility criteria and minimal requirement of documents. Personal loans were a blessing for the people during those difficult times. While some used the loan amount to support their business, others used it for meeting medical expenses and taking care of day-to-day expenditures. 

With things going in a forward direction now, the lenders are tightening their offers. A personal loan may cost more expensive in 2022. 

Inflation has badly hit countries across the world. To balance the economy, the central banks of many nations have hiked the repo rate. 

The Reserve Bank of India (RBI) has increased the repo rate by 40 bias points, increasing the loan interest rates. The borrowers will have to shell out more interest every month now, EMI of loans has increased. Leading public and private sector banks have hiked the lending and deposits rate. In short, loans like SBI personal loans have become expensive as the lenders will charge more interest now. On the other hand, one can get more returns on savings. 

New borrowers seeking a personal loan pay a higher interest rate. Borrowers who have opted for the floating interest rate for their ongoing loans will also be affected. 

However, the borrowers can still get a low-interest rate deal. The credit score of the borrower plays a key role. A good credit score ensures a low-interest rate deal. A personal loan is unsecured and puts lenders at a higher risk. A good credit score of over 750 points indicates a borrower’s creditworthiness and shows their regular repayment of past debts. A bad credit score defines the poor repayment credentials of the borrower. Lenders will willingly offer a personal loan with a low-interest rate to borrowers with good credit history. Making timely repayments is thus very important to enhance one’s credit score.

Another aspect to consider if seeking a low-interest deal is to compare different lenders before zeroing on one. Lenders have varied eligibility criteria and terms and offer interest rates and loan amounts based on these aspects. One can visit the online portals of several lenders to check the details. Or, instead of hopping from one website to another, the borrower can also go on comparative online platforms provided by Fintechs like LoansJagat. By doing so, one can chalk out a comparison among different lenders on account of their offerings of the loan amount, interest rates, processing fees, EMI, loan tenure, etc. and zero in on the one which best suits their requirements. Their portal also allows for loan applications and the upload of documents. Processing personal loan through their portal is faster and more convenient. Apply for a personal loan in Pune or other cities across the country and grab the lowest interest rate.

If you have an ongoing loan, strive to make the repayments on time to enhance your credit score. Now is the time to apply for a personal loan before the interest rates further shoot up.