Typically, leading private sector lenders begin their personal loan interest rates at 10.49% p.a. However, certain public sector banks may provide even lower rates for their loan offerings. Lenders determine interest rates for personal loans based on factors like their cost of funds, net interest margins, and the credit risk evaluation of applicants.
Securing personal loans at low rates
Here are a few pointers for securing the most favourable personal loan interest rates:
- Explore your options and assess rates: Avoid settling for the initial lender you encounter. Obtain quotes from various banks, credit unions, and online lenders. Utilise comparison platforms to analyse rates offered by the country’s different lenders.
- Take into account your credit score: Your credit score plays a pivotal role in determining the interest rate you’ll be presented with. A higher credit score typically translates to a lower interest rate you’re eligible for. Hence, it’s crucial to review your credit score before embarking on loan shopping and undertake measures to enhance it if needed.
- Consider additional charges: Apart from the interest rate, a personal loan may incur other fees like origination fees, processing fees, and late payment fees. Ensure you account for all these charges when assessing different loan options.
- Only borrow what’s necessary: While it may be tempting to borrow extra funds, it’s crucial to stick to borrowing only what you can comfortably repay. Remember, the more you borrow, the greater your monthly payments and overall interest costs will be.
Personal loan interest rates in March 2024
|
Name of the lender |
Interest rate (in %) |
|
Karnataka Bank |
13.43% |
|
South Indian Bank |
12.85-20.60% |
|
UCO Bank |
12.45-12.85% |
|
Federal Bank |
11.49% onwards |
|
Union Bank of India |
11.35-15.45% |
|
Bank of Baroda |
11.05-18.75% |
|
State Bank of India |
11.15-15.30% |
|
Bajaj Finserv |
11.00% onwards |
|
Kotak Mahindra Bank |
10.99% onwards |
|
Tata Capital |
10.99% onwards |
|
Canara Bank |
10.95-16.40% |
|
ICICI Bank |
10.80% onwards |
|
Bank of India |
10.75-14.75% |
|
Punjab & Sind Bank |
10.75-13.50% |
|
IDFC First Bank |
10.75% onwards |
|
HDFC Bank |
10.50% onwards |
|
Axis Bank |
10.49% onwards |
|
IndusInd Bank |
10.49% onwards |
|
Punjab National Bank |
10.40-17.95% |
|
Bank of Maharashtra |
10.00-12.80% |
|
HSBC |
9.99-16.00% |
| Source: PaisaBazaar | |
Factors affecting personal loan rate of interest
Determining the optimal personal loan interest rate hinges on your creditworthiness. However, here are some pointers to assist you:
- Standard rates: In India, personal loan interest rates generally fall within the range of 10.50% to 24.00% per annum.
- Rate determinants: The interest rate you’re offered is influenced by factors such as your credit score, income level, employer status, and various other considerations.
Online personal loan EMI calculator
Personal loan interest rates and equated monthly installments (EMIs) are closely connected. To start with, EMIs are computed utilising a formula that takes into account the principal amount (the loan amount borrowed), the interest rate, and the loan tenure (the repayment period).
The majority of banks and financial institutions provide online EMI calculators on their websites. These tools enable you to input the loan amount, interest rate, and tenure, helping you estimate your monthly EMI.
By grasping the concept of interest rates and utilising EMI calculators, you can gain a clearer understanding of the affordability of a personal loan before committing. Following competitive personal loan interest rates becomes manageable if you’re willing to compare personal loans online and make decisions accordingly.
Frequently Asked Questions (FAQs)
Q. What is the relationship between personal loan interest rates and EMIs?
The EMI is directly impacted by the interest rate. A higher interest rate leads to a higher EMI for the same loan amount and duration, while a lower interest rate results in a lower EMI. You can utilise an EMI calculator to observe how adjustments in the interest rate affect your EMI.
Q. Are there any additional charges apart from the personal loan interest rate?
Processing fees, origination fees, and prepayment penalties could be linked with a personal loan. Make sure to include these in your comprehensive loan cost comparison.
Q. Is it preferable to prioritise a low personal loan interest rate or a low loan EMI?
Opting for a lower personal loan interest rate can lead to long-term savings. However, a lower EMI might better suit your monthly budget. Take into account both aspects and utilise an EMI calculator to assess the total loan cost across various scenarios.
Q. What does a personal loan calculator do?
Online personal loan calculators are handy tools designed to assist you in estimating your monthly EMI by considering factors such as the loan amount, interest rate, and loan term. These calculators enable you to explore various combinations of loan amounts, interest rates, and terms to understand their impact on your EMI. Crucially, they provide valuable insights into affordability before you proceed with your loan application.
Q. How reliable are online personal loan calculators?
Online personal loan calculators offer estimations, and the actual EMI may vary slightly. This variation can occur due to additional fees associated with the loan that the calculator might not consider.
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Published: 28 Mar 2024, 06:15 PM IST
