Personal Loan Interest Rates
Banks In India
Indian Nationalized Banks
What Is a personal loan?
Everyone could do with a little credit in the form of a personal loan at some point or other in life. A personal loan can come to your rescue in difficult times like a financial shortfall. Be it for home improvement, to pay for your dream vacation, to buy your significant other that much coveted gadget, or to cover a temporary loss in income or to cover medical costs, a personal loan comes in handy for all kinds of needs. You can fulfil your financial obligations without worry with the help of a personal loan. There are no restrictions on how you should spend the loan amount. You have the freedom to use the money in any way you want, as long as its legitimate.
A personal loan is an 'unsecured loan', meaning you are not required to provide any security to the lender in the form of cash, shares or any other assets. This might make it more attractive to some customers who may not be able to provide any asset as collateral. Unlike many other kinds of loan, there is no restriction on how the borrowed amount is used – the borrower has full freedom to use the money for any purpose they want.
Since a personal loan is a no-collateral loan, lenders - in an attempt to safeguard their money - will offer it at a higher interest rate. This is why personal loans are one of the costliest loans in the retail market. Personal loan interest rates are generally on the higher side compared to other consumer loans.
What is the typical amount and loan period of a personal loan?
Personal loans are short-term loans and the tenure can range from 1-5 years.
Personal loan amount can range from few thousands to many lakhs of rupees. While applying for a personal loan, the amount that you apply for must be proportionate with your income which reflects your ability to make repayments. Of course, the final loan amount that is approved depends on the lending criteria used by the lender and how they evaluate your ability and willingness to repay the loan.
|HDFC Bank||11.49%-20% Per Annum||From Rs. 1500/- Up to 2.5% of the loan amount|
|RBL bank||14.0%-20% Per Annum||Up to 2.0% of the loan amount and applicable Service Tax|
|Bajaj Finserv||12.5%-16% Per Annum||Up to 2.0% of the disbursed loan amount|
|Kotak Bank||11.50%-24% Per Annum||Up to 2.0% of the loan amount and applicable Service Tax|
|Fullerton India||17.25%-35% Per Annum||Up to 3.5% of the loan amount|
|TATA CAPITAL||11.99%-19.0% Per Annum||From Rs. 999/- Up to 2.0% of the loan amount and applicable Service Tax|
|Capital First||14%-35% Per Annum||Up to 2.0% of the loan amount and applicable Service Tax|
|IndusInd Bank||11.99% - 23% Per Annum||Up to 2% of the loan amount|
|IDFC||12%-18% Per Annum||Up to 1.5% of the loan amount and applicable Service Tax|
|ICICI Bank||11.49%-22.0% Per Annum||From Rs. 999/- Up to 2.5% of the loan amount and applicable Service Tax|
Note: The above interest rates and other charges are subject to periodic review. The final pricing, while remaining within the range mentioned above, will be based on your income, loan amount, loan tenure, the bank’s internal policies and the applicable rates at the specific time.
When should I choose a personal loan?
Keep in mind that taking out a personal loan comes with its own set of financial obligations and you should not take it in haste. Only if you need money quickly and for a relatively short term—and you have a plan on how to repay it—can a personal loan be a good option for you.
The loan disbursal process is relatively quicker than for most other loans since you do not have to provide documentation for the purpose the loan amount will be used for. Also, the loan application is processed quickly, because of the reduced documentation.
Personal Loan Rate of Interest
The main disadvantage of a personal loan is the higher interest rate, when compared to other loans. It could range anywhere from 11% to as high as 32% per annum. Since the lenders do not have any security against payment default, they charge high interest rates to cover their lending risk.
India personal loan interest rates – factors influencing interest rate for personal loans
Personal loans incur the highest interest rates since they are 'unsecured', and the bank/NBFC has no safeguard against default. The interest rate on a personal loan is influenced by a few factors including the following:
Loan amount compared to your annual income: If your loan amount is a small percentage of your annual income, then your interest rate will tend to be lower. On the other hand, if your loan amount is a high percentage of your annual income, lenders might not be confident about your ability to repay and might insist on a higher interest rate on the loan.
Credit History: Since this is an unsecured loan, lenders are particular about knowing about your past repayment behavior in order to evaluate your ability and willingness to pay. In general, the higher your credit score, the better the interest rate you will get. A good credit score means you are responsible with credit.
Debt to income ratio: If you have too many current loan obligations, potential lenders might be nervous about your ability to take on more repayments with your existing income.
Personal loan interest rates comparison
Whether you are thinking about getting a personal loan, or are shopping for personal loans, the most important and deciding factor is the personal loan interest rate. It becomes doubly important to compare and contrast different features of a personal loan before zeroing in on one.
As mentioned before, in order to land the best deal on a personal loan, you need to make sure you have a healthy credit score. Only a credit score of 750 and above would ensure you land the lowest interest rate for personal loan.
Once you ensure you have a good credit score, you can use an online personal loan comparison website in order to contrast and compare various personal loan offers. Don’t just rely on one site for comparison. Go to several trustworthy websites and do a basic search and comparison. If you are an existing customer of a bank and have a good relationship with them, then they would be your first choice since they might be willing to offer you a good rate. Make sure to check with your lender before approaching new lenders. Generally,<> low interest rate personal loansare offered to existing customers.
Before you decide on a personal loan, do your homework thoroughly so that your application is not rejected. It is helpful to use a personal loan interest calculator, which can help you to compute the amount you pay towards your EMIs and help with your personal budgeting. You only need to input the loan amount, tenure and the interest rate on personal loan. Once you have a good idea of the various offers, you can judge which offer suits your financial situation and requirements the best.
Apply for low interest personal loan
There are several ways you can apply for a loan. You can apply directly online at the lenders website; or you can go in person to the branch to apply for a loan; go through online comparison websites; or you can contact a direct sales agent.
If you want to apply for a personal loan suited to your budget and needs, CreditMantri can match you with the most suitable loan offer for you on the market, best suited to your credit profile.