Personal Loan, a financial instrument to fulfill your short-term as well as long-term personal needs. Lenders offer this unsecured credit at affordable or low-interest rates, based on the eligibility of the borrowers. Lenders consider many factors such as credit history, CIBIL score, income, repayment capacity, and category of the employer before giving personal loan approval or rather deciding the personal loan interest rates. Thus, Salaried individuals should keep in mind to compare lenders on numerous parameters to enjoy the best personal loan interest rates online in 2020.
What are Interest Rates?
An interest rate is what a bank or NBFC charges to a borrower for lending the funds/money. In simple words, if a borrower wants to avail a loan/fund, he/she has to pay a charge in the form of interest rates to a lender. The interest rates are usually calculated and added to the Equated Monthly Installments (EMIs) that a borrower has to pay every month to a lender in order to repay the loan amount. Personal loan interest rates vary from one lender to another and are available at fixed and floating interest rates.
Types of Personal Loan Interest Rates
Fixed Interest Rates: Here, the interest rates are fixed for the entire loan tenure or repayment schedule. The EMIs are static in this case and the Interest is applied on the entire loan amount till the completion of the loan tenure.
Floating Interest Rates: In the case of floating, the interest rates are variable, hence are subject to change from time-to-time. When a personal loan interest rate reduces, the repayment burden(EMI) will also reduce, and vice-versa. Over a period of time, it is considered to be the better option due to the reduction in Interest Payable.
Personal Loan Interest Rates Online, January 2020
|Interest Rates||Starting at 10.99% per annum|
|Loan Amount||Rs.50,000-Rs.50 lakh|
|Tenure||Up to 5 Years|
|Minimum EMI (Per Month)||Rs.1,087-1,08,687|
|Processing Fee||Up to 2.50% of the loan amount+GST|
The above EMI calculation is for a maximum tenure of 5 Years.
Compare Best Personal Loan Interest Rates of All Banks/Lenders in India, 2020
|Lenders||Interest Rates(in per annum)||Loan Amount||Tenure||Processing Fee|
|SBI||11.45%-14.90%||Up to 20 lakh||Up to 5 Years||1% of the loan amount|
|ICICI Bank||11.25%-22%||50,000-20 lakh||Up to 5 Years||Up to 2.25% of loan amount +GST|
|HDFC Bank||10.75%-21.30%||There’s no maximum limit. Your income,|
credit score and repayment capacity will dictate the loan amount
|tUp to 5 Years||Up to 2.50% of the loan amount|
|Bajaj Finserv||12.99% onwards||Up to 25 lakh||Up to 5 Years||Up to 4.13% of the loan amount+GST|
|Kotak Mahindra Bank||Starting 10.99%||Rs.50,000-15 lakh||Up to 5 Years||Upto 2.5% of the loan amount + GST|
|Axis Bank||12%-24%||Rs.50,000-15 lakh||Up to 5 Years||1.50%-2.00% of the loan amount plus applicable GST|
|Punjab National Bank||9.95% – 14.50%||Up to 4 lakh||Up to 5 Years||1.80% of the loan amount plus applicable GST|
|Punjab & Sind Bank||12.45%-12.70%||Up to 3 lakh||Up to 5 Years||1% of the loan amount|
|Yes Bank||Starting 10.99%||Rs.1lakh-Rs.40 lakh||Up to 5 Years||Upto 2.50% of the loan amount +GST|
|HSBC Bank||10.50%-17.84%||Up to Rs.15 lakh||Up to 5 Years||Up to 1% of the loan amount|
|Citi Bank||As applicable at the time of signing the loan agreement||Rs.50,000- Rs.30 lakh||Up to 5 Years||Up to 3% of the loan amount|
|IDFC First Bank||As applicable at the time of signing the loan agreement||Based on borrower’s eligibility||Up to 5 Years||Up to 3.5% of the loan amount|
|Induslnd Bank||11.25%onwards||Rs.50,000-Rs.15 lakh||Up to 5 Years||Up to 2.50% of loan amount+GST|
|Aditya Birla||Starting at 14%||Rs.50,000-Rs.50 lakh||Up to 5 Years||2% of the loan amount|
|Fullerton India||12.99%-36%||Up to Rs.25 lakh||Up to 5 Years||Up to 3% of the loan amount|
Top Factors Affecting Personal Loan Interest Rates
Personal Loan Eligibility Factors: When it comes to giving approval for best personal loan 2020, lenders take into account other eligibility factors like:
- Relationship with a Lender
- Loan Amount
- Purpose of Loan
How to Get Personal Loan at Lowest Interest Rate?
Best Ways You Should Follow
Maintain a Good Credit Score: A credit/cibil score of above 700 out of 900 is considered to be fair enough in grabbing the lowest personal loan interest rates.
And this practice can be done by keeping your credit utilization ratio within the 30%-40% limit. Monitor your spending habits and patterns and try to keep a lid on your extra expenses so that it becomes easy to maintain a good score.
The first-time loan borrowers should be extra careful here as building a score from scratch needs rigorous efforts and ample time(6 or 9 months). As you have no or (-1) credit history, thus it is advisable to keep a fair/minimum amount in the savings bank and avoid cheque bounces. The lenders will judge such applicants based on the factors mentioned above. Thus, keeping them in mind can help in availing a lower personal loan interest rate.
Fair Credit / Repayment History: Pay all your dues in full and on time so that you can have a good credit/repayment history to show. Be it any loan or credit card, make sure you will clear debt or pay EMI on or before the due date. Doing so makes your loan profile looks less risky to lend money at attractive interest rates.
Compare Lenders: A competitive personal loan interest rate can also be availed through comparison. Different lenders offer different interest rates, thus for the best personal loan online always compare them and select a lender, offering the lowest interest rate. However, do not forget to compare lenders on other parameters also:
- Loan Amount
- Processing Fee & Other Charges
- Approval Time
- Loan Disbursal
Nature of Your Employment & Employment: If a loan borrower is a Government Employee or if the company he works comes under CAT, CAT B, listed under Fortune100 or 500, the chances are higher for him to enjoy competitive interest rates. Lenders prefer applicants, belong to these categories and if a combination of both can be found in a borrower, getting an attractive interest rate would be a cakewalk.
Show Job and Income Stability: The more you switch your job, the less income stability you have, hence a thin credit profile. And, this situation can lead to uncertainty, making your loan profile more risky in front of the lenders. Especially, if you are a salaried professional. Thus, show some stability in your financial life and become personal loan ready.
Loan Repayment Capacity & Monthly Expenses: Income plays a crucial role here when it comes to judging a borrower on both factors. If your monthly income is good enough and you manage to spend wisely in a month by savings a fair portion of your income, you are in a healthy state. A good income is an indication of good repayment capacity if your monthly expenses are relatively less than your income. But in case an individual has other financial responsibilities or liabilities such as Mutual Funds(SIPs), Insurance Policies, Credit Card/s, Existing Loan/s, and his income bracket is also less, such a credit profile would be dicey for lenders thus expect a higher interest rate.
Follow these above steps and enjoy a personal loan journey at the lowest interest rates.