Personal loans interest rates may depend on:
The higher the level of your income, the lower your interest rate may be. This is because you are perceived to be a lower risk to lenders and your high income may offset the risk.
Your credit and repayment history
How well you manage your credit is a large determining factor. This is an indicator of how well you repay your debts and will show lenders how reliable you and how much of a risk you are.
Individuals who are permanently employed are less likely to be charged high personal loans interest rates.
The amount you wish to borrow
The loan amount for which you are applying will determine your level of interest. The higher this amount, the greater the chance of you getting an interest rate that is proportionate.
The type of loan- fixed or variable, secured or unsecured
Interest rates on unsecured loans are generally higher than secured loans. Loans with a variable rate have instalments that fluctuate according to changes in the prime interest rate.
When you apply for a personal loan, prospective lenders will request your credit report to assess your credit rating. Lenders may be unwilling to approve a personal loan to an individual with poor credit.
Lenders typically vary in their methods of determining eligibility as well as what interest rates they’ll charge.
When you apply for a personal loan, the lender will charge you an interest rate relative to your individual creditworthiness. By having a positive credit history, income and employment, the lender is going to be more willing to negotiate with you on your interest rate.
The lender will want to see that you have a low debt-to-income ratio in order to charge lower personal loans interest rates.