HDFC Bank vs ICICI Bank vs SBI vs Axis Bank vs PNB: Personal Loan Interest Rates Comparision
Personal loans are short-to-medium term unsecured loans granted to an individual to meet emergency needs such as medical costs, home renovation, among other requirements. Flexibility, minimal documentation and quick processing make personal loans a preferred financing option. These loans are usually offered for a period between 1 year and 5 years. Personal loans interest rates may vary from lender to lender, which also depends on the loan worthiness of the customer.
While taking a personal loan, one must compare rates offered by various banks. HDFC Bank, ICICI Bank, SBI Bank, Axis Bank, and Punjab National Bank among all other banks, offer personal loans at competitive rates. Even loans at 50 basis point cheaper rate can make a big difference in installments. Therefore, it is always advisable to compare all the available options in the market.
HDFC Bank vs ICICI Bank vs SBI vs Axis Bank vs PNB: Compare Personal Loan Interest Rates
|Details||HDFC||ICICI||SBI||Axis Bank||Punjab National Bank|
|Interest Rates||10.75% to 21.30% per annum||11.25%- 22.00% per annum||10.35%-14.75% per annum||12%-24% per annum||9.20%-12.05% per annum|
|Loan Amount||Rs.50,000-15,00,000||Up to Rs.20,00,000||Up to Rs. 20,00,000 lakh||Rs.50,000-15,00,000||Up to Rs.10,00,000|
|Tenure||Up to 5 Years||Up to 5 Years||Up to 7 Years||Up to 5 Years||Up to 5 Years|
|Processing Fee||Up to 2.50% of the loan amount||Up to 2.25% of loan amount +GST||Up to 1.50% of the loan amount+GST||As applicable by the bank||Up to 1% of the loan amount|
|Per Lakh EMI||Rs.2,162-2,722||Rs.2,187-2,762||Rs.1,678-1,916||Rs.2,224-2,877||Rs.2,086-2,227|
HDFC Bank: The bank offers personal loans at interest rates between 10.75% to 21.30% per annum to salaried people. The bank offers personal loan for a loan amount of up to Rs.15 lakh for a tenure of upto 5 years. The individuals must be working in the private limited companies, employees from public sector undertakings, including central, state and local bodies are eligible to apply for the loan. Also, individuals need to have a job for at least 2 years, with a minimum of 1 year with the current employer. The loan is available at a processing fee of 2.50% of the loan amount.
ICICI Bank: The bank offers personal loans at interest rates between 11.25% and 22.00% per annum. The loan amount offered by the bank is up to Rs.20 lakh for a tenure of up to 5 years. Both salaried and self-employed individuals are eligible to apply for the loan. The salaried applicant needs to have 2 years of total experience in a job/profession. Whereas, self-employed individuals need to have 5 years of business stability. While availing the loan, an applicant needs to pay a processing fee of up to 2.25% of the loan amount.
State Bank of India: The bank offers personal loans at interest rates between 10.35%-14.75% per annum depending upon the credit history of the customers. SBI offers loan to salaried employees and pensioners under the products known as SBI Xpress Credit and SBI Pension Loan respectively. The loan amount offered by the bank ranges up to Rs.20 lakh for a tenure of up to 7 years. The bank charges a processing fee of up to 1.50% of the loan amount.
Axis Bank: The bank offers personal loan starting from Rs 50,000 up to Rs 15,00,000 for a tenure of up to 5 years. The interest rates it charges are between 12%-24% per annum. The bank offers loan to salaried applicants and doctors. Employees need to work in public and private limited companies. Government sector employees including Public Sector Undertakings, Central and Local bodies are eligible to apply for the loan.
Punjab National Bank: The bank offers personal loan to the public and pensioners at an interest rate of between 9.20%-12.05% per annum. The loan amount offered by the bank goes up to Rs.10 lakh for a tenure of up to 5 years. The loan can be availed at a one-time processing fee of up to 1% of the loan amount.
To help you in selecting the best bank for availing a personal loan, here are a few tips:
1. Do an EMI Calculation
Before applying for a personal loan with a lender, try to know the approximate EMI which needs to be paid for the loan availed. So, you can compare the EMI’s and choose that suits you the best. Doing this also helps you in preparing a monthly budget based on income and expenses.
2. Compare the Interest Rates
Always compare the available personal loan offers. There are many online tools available which you can use for the comparison. This is an important step in the process of choosing the best personal loan. Interest rate comparison can enable you to get the best personal loan.
3. Know about all Costs & Penalties involved
Before applying for a personal loan, it is essential to think pretty much about all costs and charges associated with the loan procedure.
4. Check for Documentation Process
The best personal loans can be considered those that you can get with minimal documentation. With online loans, you don’t need to do that, and you can apply for a personal loan online while sitting at your home.
5. The Loan Amount
The best bank for a personal loan can be one that is ready to offer you the exact amount you required.
6. Check the Eligibility
Check the personal loan eligibility criteria of the bank before applying for it. In case a loan application gets rejected, it can harm your credit score. It also helps in increasing the chances of loan approval.
Types of Personal Loan Interest Rates
There are basically two types of Interest rates applicable on a personal loan, these are:
- Fixed Rate of Interest
- Floating Rate of Interest
a) Fixed-Rate of Interest: In this case, the rate of interest remains constant throughout the loan tenure. Consequently, the monthly EMI amount also remains fixed throughout the loan repayment period. This may help you plan your monthly expenditure in the long term.
b) Floating Rate of Interest: It depends on either the internal benchmark set by the lender or as current market conditions. As a result, the floating interest rate is liable to change periodically which leads to an increase/decrease in loan tenure or monthly EMI payouts depending on whether the rate moves upwards or downwards.
Interest Rates for Different Applicant Types
Most lenders consider a number of factors when deciding the interest rate applicable to personal loan applicants. One of these is the applicant type. The following are some insights regarding how personal loan interest rates tend to vary depending upon the type of applicant:
- Salaried and self-employed: Whether the applicant is salaried or self-employed can significantly impact the interest rate applicable to a personal loan. Generally, salaried employees with a stable employment record working with reputed organizations tend to get a personal loan at a lower rate of interest than self-employed. This is because salaried employees working with a reputed company have greater job security, and in most cases better ability to repay their loan. However, self-employed applicants with a stable source of income can also avail personal loans from banks and NBFCs at competitive interest rates.
- Women: Certain banks and NBFCs offer preferential rates of interest to women. This is in an attempt to promote salaried women, entrepreneurs and professionals to fulfill their dreams and be financially stable.
- Pensioners: Pensioners can avail special personal loan specifically meant for them at a relatively lower rate of interest from many banks. In most cases, a preferential (lower) interest rate on pension loans is available in case the pension account is held with the chosen lender.
Note: Beyond the applicant type, the personal loan interest rate depends on the individual applicant profile. People with a stable source of income, good credit history and high credit score tend to receive a loan at a lower rate,i rrespective of their category.
How to Get a Low-Interest Rate on Personal Loan?
Follow the below-mentioned tips to get low-interest rate on your personal loan:
- Maintain a high credit score.
- Keep a low credit utilization ratio.
- Do not apply for a personal loan with multiple lenders at the same time.
- Opt for your personal loan from a bank/NBFC with which you already have a relationship, such as a savings account or a fixed deposit.
Factors Affecting Personal Loan Interest Rates
- Credit History and Credit Score: Your credit history and credit score are reflective of your creditworthiness. The higher your credit score, the greater are your chances of getting approved for a personal loan at a low rate of interest.
- Income: Higher income typically indicates at a higher repayment capacity which often translates into a preferentially lower rate of interest for your personal loan.
- Credit Utilization Ratio: This refers to the ratio of credit used to the total credit available to you. Ideally, this should not exceed 30%. A lower credit utilization ratio typically indicates a higher repayment capability.
- Multiple Loan Applications: You should never apply for a personal loan with multiple lenders at the same time, as this portrays you as credit hungry. If multiple enquiries of your credit report are conducted within a short time, it negatively affects your credit score and lowers the chances of getting approved for a personal loan at a low-interest rate.
- Pre-existing Relationship with the Lender: Having a previous relationship with a lender also impacts the personal loan interest rate. For example, if you already have a savings account or a fixed deposit with the bank, chances of getting a lower rate of interest on your loan increases.