Express Money: Ask Us

My friend and I were in need of personal loans and we both got them but at different interest rates. How is this possible with the same amount and tenure?

—Punya Patra, Delhi

Personal loan interest rates need not be the same for every individual. One key factor that determines your interest rate is your credit history, which is basically a record of your past repayment of loans and credit card bills. Before approving your loan a financial institution always checks with CIBIL on your loan repayment track record. A good repayment track record has its benefits. It could fetch you a higher loan amount at a lower interest rate as it is standing proof for your money management capabilities. In case of a bad repayment record, you will be charged high interest rates and you could also find it difficult to obtain a loan.

I took a personal loan 3 months back but I am struggling to make payments due to job loss. What should I do in this case?

—Manusi Batra, Mumbai

Do approach your bank without delay and keep them informed of the situation. To solve your immediate problem, you could try to pledge any security you have like gold, shares, and obtain a loan on them to repay your personal loan. After you obtain a new job, you can repay the loan and reclaim your pledged assets. Else, you can negotiate with the bank to try and recommence your personal loan EMIs once you land a job. You could also approach a credit counseling center for assistance. They will evaluate your finances and help you figure out a way to repay the loan; else they will try and negotiate with the bank on your behalf to come up with a solution feasible to both you and the bank.

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