What is the Interest Rate on a Personal Loan?

How to get the lowest personal loan interest rate?

If you want to apply for a personal loan, here are a few tips to help you make use of a lower interest rate:

Improve your credit score

A high credit score shows you are worthwhile. Banks and financial institutions offer applicants with a high credit value the lowest interest rates. So before applying for a personal loan, you should check your credit score. If your credit score is less than 750, find ways to boost it. There are more opportunities for you to get a low-interest personal loan if your credit is over 750.

Avoid missing repayments

If your credit scoring is adversely affected if you miss a loan or credit card repayment. Loan providers typically take into account the repayment history before assessing the interest rate for a loan. The lower interest is presumably applied to those who paid their past EMIs and credit card bills on time.

Keep an eye out for tenders

Banks and financial institutions generally offer special interest rates during festivities for a limited period. If you apply for a loan during the course of an offer, a lower interest rate can be offered.

Compare interest rates

It is necessary to compare interest rates charged by different NBFCs and banks before applying for a particular bank’s personal loan. This helps you to make use of a personal loan at a competitive rate.

Negotiate with the lender

You may negotiate for a lower rate if you’re a current customer of a bank or have a good relationship with the lender. In doing so, a formal written application is advisable to the loan provider.

Factors impacting interest rates on personal loans

Income

Loan providers take into account the revenue of the applicant when deciding the interest rate. Persons with high incomes present a lower risk for the bank and may therefore be given a lower interest rate. Those with less annual revenue, on the other hand, may have to pay a higher interest rate.

Employer details

The bank / financial institution is more likely to give you a lower interest rate while working with a reputable company.

Employment nature

The loan providers can provide applicants with different interest rates, depending on whether they are self-employed or employed.

Age

The applicant’s age may also affect the interest rate quoted by the loan provider. Persons approaching the retirement age may be charged a higher rate.

Loan Provider Relationship

Existing bank / Financial institutions customers can be given a lower interest rate at the time they apply for a personal loan, if they have a good relationship with the loan provider. However, at the discretion of the bank, a preferential interest rate is not offered to all existing customers.

What does the decrease in the rate of interest on personal loans mean?

If you use a flat interest rate on your personal loan, the interest shall be measured on the entire amount of the loan over the loan repayment period. When you have an interest-rate loan / balance arrangement reduction, interest is paid only on the unpaid loan sum. For this situation, the interest of the remainder of the loan term is based on the remaining loan balance when you make a monthly repayment.

Things to Consider

There are several other things you should remember when picking a personal loan with a low interest rate:

Processing Fee

Loan providers charge a one-time fee called the processing fee, which may raise the loan rate. Even if a low interest rate is paid, the processing costs levied by different borrowers need to be reviewed and compared.

Pre-Closure Fees

Other banks that charge you a pre-closure fee if you pay the loan balance before the loan repayment period is completed. Be sure to check that the bank/financial institution you apply for pre-closure levies.

Customer Service

A provider that provides excellent customer service must be extended for an excellent borrowing experience. Until submitting your loan application, review the available customer service channels and how easily the lender will support you if necessary.

Criteria for Eligibility

While a bank or financial institution can offer low interest rate personal loans, you should point to checking if you meet the criteria for eligibility specified by the lender. In order to do so, you should ensure that your income exceeds the defined limit and that you satisfy the stated age requirements.

Loan Disbursal Time

It is important to take account of the loan disbursement period in case of an emergency. A number of leading banks and financial institutions pay the loan in a matter of seconds.

Other Fees

while a lender can charge you a marginally higher loan rate, you can make savings on the total loan fees, if processing, default charges, prepayment fees, loan termination fees, check / EMI bounce charges, instrument return fees, stamp duty charges, duplicate declaration issuance fees, swap fees, double depreciation fees, etc. Therefore, ensure that you assess the different charges imposed by the lender before you apply for a personal loan.

Discounts

While a high interest rate might have been set by the bank / financial institution, you may seek to negotiate with the bank for the lowest interest rate. Lenders often give existing customers and those who have a healthy relationship with them a discount.

Special offers

Some lenders will charge you a lower interest rate during holidays.

Compare Best interest rate on Personal loan

Lenders Interest Rate* Loan Amount
Allahabad Bank 10.65% onwards 50,000-20 lakhs
Axis Bank 12-24% 50,000-15 lakhs
Bajaj Finserv 12.99% onwards Up to 25 lakhs
Bank of Baroda 11.40-16.40% 50,000-10 lakhs
Bank of India 10.50% onwards Up to 10 lakh
Bank of Maharashtra 10.85-11.85% Up to 10 lakh
Citibank 10.50-18.99% 50,000-30 lakhs
Early Salary 24% to 30% 8,000 – 2 lakh
Fullerton India 12-36% Up to 25 lakhs
HDFC Bank 10.75-21.30% 50,000-40 lakhs
Home Credit 24% to 49% 25000 – 2.40 lakh
ICICI Bank 11.25% onwards 50,000-20 lakhs
IDBI Bank 12% – 14% 25,000-10 lakhs
IDFC First 11.50% onwards 1 lakh-25 lakhs
IndusInd Bank 10.75% onwards 50,000-15 lakhs
Kotak Mahindra Bank 10.99-24% 50,000-15 lakhs
Kreditbee 12.24% onwards 1000 – 2 lakh
Moneytap 1.25% p.m. onwards Rs. 3000 to Rs. 5 lakh
Moneyview 1.33% p.m. onwards Rs. 10,000 to Rs. 5 lakh
Muthoot Finance 14.50% onwards 50,000-10 lakhs
Punjab National Bank RLLR+2.15 to RLLR+6.70% 50,000-10 lakhs
RBL Bank 12-23% 1 lakh-20 lakhs
Standard Chartered Bank 10.99% onwards 1 lakh-30 lakhs
StashFin 11.99% to 59.99% 500 – 5 lakh
SBI 10.50% onwards Up to 20 lakhs
TATA Capital 10.99% onwards 75,000-25 lakhs
UCO Bank 10.95% onwards Up to 10 lakhs
Union Bank of India 10.10% onwards Up to 10 lakhs
Yes Bank 10.99% onwards 1 lakh-40 lakh

 

 



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