If you are one of those who are ready to consider applying for an Islamic personal loan from Saudi banks, you should know that just like with your credit card, you can use a personal loan to finance almost any purchase, whether it is furniture, home improvements, or even a much-needed summer vacation. But unlike credit cards, the interest rate you charge on a personal finance will be fixed, so your ongoing monthly payments on this loan will be predictable. Also, interest rates on loans are much lower than credit cards and sometimes personal loans are even better for paying off debts. But while personal loans tend to offer competitive interest rates to borrowers, it is still worth doing what you can to secure the lowest possible rate. Here’s how.
Increase your credit score
Personal loans are unsecured, so they are not linked to a specific asset. As such, the higher your credit score, the more competitive the personal loan earnings ratio you are likely to get stuck on.
If your credit score is in the high 700s or higher, then you are in a very good position to secure the lowest interest rate offered by a bank. But if your credit score is a little low, you can boost it by paying all your bills on time and checking your credit report for errors.
Paying off some of your existing credit card debt can also increase your credit score. But if you are looking to get a personal loan, this is a sign that you may not have a pile of cash available to do so.
Search carefully and compare financing offers
Each bank that offers personal finance sets its own rates and closing costs. It’s a good idea to research a personal loan rather than accept the first offer you get.
You may be in a hurry to get some money. But remember that personal loans tend to close very quickly – sometimes within days. So it’s worth doing some research.
Choose a shorter repayment period
It is common to pay off a personal loan in five years, and some lenders may give you more time to pay off your loan. But if you are able to pay off your loan in a shorter period of time — say, two years — you may get a lower interest rate as a result. This is because the less time you borrow, the less risk the lender will have to bear.
These days, personal loan rates have gone up across the board because almost all types of consumer loans have become more affordable. This is why it is very important that you do what you can to secure the lowest possible interest rate on one of these loans. Doing so may result in you spending less money on the things you love.