Personal Loan Interest Rates in India March 2023

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Our Top Picks

Best Overall - IndusInd Bank

One of India's most user-friendly loan-providing banks is IndusInd Bank, which enables you to apply for personal loans to handle sudden financial needs. You can obtain up to Rs. 5,00,000 within 1-2 days for up to 5 years at an interest rate of as low as 10.49%.

Fast Processing - ICICI Bank

All your desires and aspirations can be satisfied with an ICICI Bank personal loan. ICICI Bank offers a hassle-free, quick personal loan of up to Rs.50 lakhs for any purpose. You can complete the straightforward process in the comfort of your own home. 

List Of Banks With Personal Loan Interest Rates

List Of NBFCs With Personal Loan Interest Rates

Eligibility For Best Personal Loan With Low-Interest Rates

Factors That Affect Personal Loan Interest Rates

• Income: When setting the interest rate for a loan, lenders consider the applicant's income. High-earning people may have a reduced interest rate since they are a more negligible risk to the bank. Conversely, those with lesser yearly salaries might be required to pay a higher interest rate.

• Employer Details: The bank or financial institution is more likely to give you a cheaper interest rate if you work for a reputable company.

• Nature of the Employment: Depending on whether a borrower is salaried or self-employed, loan providers may give them various interest rates.

• Age: The loan provider's quoted interest rate may vary depending on the applicant's age. A greater interest rate might be applied to people getting close to retirement age.

• Relationship with the Loan Provider: When applying for a personal loan, existing clients of the bank or financial institution could be given a lower interest rate as long as they have a solid working connection with the lender. However, the bank reserves the right to decide whether to provide a favourable interest rate to all current customers.

Documents Required For Best Personal Loan With Low-Interest Rates

• PAN Card, Voter ID, Driving License, Aadhaar Card or Passport (as proof of identity)

• Voter ID, Driving License, Aadhaar Card or Passport or Utility Bill (as proof of residence)

• Appointment Letter, Employee ID Card (as proof of employment)

• Latest salary slips, Form 16 (as proof of income)

• Rent Receipts/Lease Deed, Ownership Document, Income Tax Return (ITR), audited balance sheet and profit & loss account for the last 3 years (as proof of business continuity)

• Last 3-6 months' bank statement

• Signed application form

• Latest passport size photograph

Fixed Interest Rates Vs Floating Interest Rates

How To Choose A Personal Loan?

There are a few additional factors to take into account when choosing a personal loan with a low-interest rate:

Processing Fee: The processing fee is a one-time fee assessed by loan providers that can raise the cost of the loan. Even if the interest rate is modest, you should check and evaluate the processing fees levied by various lenders.

Pre-Closure Charges: If you pay off the remaining loan sum before the loan repayment term is over, certain banks may charge you a pre-closure fee. Verify whether the bank or financial institution you are applying to charges a pre-closure fee.

Customer Service: Applying to a lender that provides exceptional customer service is crucial if you want a positive borrowing experience. It would help if you investigated the customer support options before completing your loan application and the lender's responsiveness to your needs.

Eligibility Criteria: Even though the bank or financial institution may offer personal loans at cheap interest rates, you should always make sure you match the lender's requirements for eligibility. To this aim, you must make sure that you determine whether your income is within the established limit and whether you are the required age.

Loan Disbursal Time: It is crucial to consider the loan disbursal time if you need a personal loan urgently. Several prestigious banks and financial organisations disburse the loan amount in a couple of seconds.

Other Charges: If the processing fee, default charges, prepayment charges, loan cancellation charges, check/EMI bounce charges, instrument return charges, stamp duty charges, duplicate statement issuance charges, swap charges, duplicate Amortisation schedule issuance charges, etc., are low, you may be able to reduce the total cost of the loan even though the lender may charge you a slightly higher interest rate. Thus, before applying for a personal loan, compare the various fees assessed by the lender.

Discounts: You can attempt to bargain with the bank for the lowest interest rate even though the bank or financial institution may have stipulated a high-interest rate. Lenders frequently offer discounts to long-term clients and people who have maintained good relationships with them.

Special Offers: Certain lenders might offer you a cheaper interest rate during holidays.

How To Calculate EMI On Your Loan?

The interest rates for personal loans range from 8.75% p.a. to 49.5% p.a. The interest rate on your loan is determined by the amount you have borrowed, your credit score, and the length of time you have to repay it. The interest rate on your personal loan may be reduced if you keep a solid credit score and work well with the bank.

Formula To Calculate Personal Loan EMI

EMI is calculated as [PxRX(1+R)N]/[(1+R)N-1], where P stands for the loan amount, R for the monthly interest rate, and N for the total number of payments.

Illustration

The 33-year-old IT expert Mr Mehta is attempting to seek a personal loan to cover his wedding costs. He plans to apply for an Rs. 10 lakh loan with a 36-month repayment schedule. He anticipates paying 14% p.a. in interest on the borrowing.

He will need to go to either a bank/NBFC website or a third-party website with an EMI calculator tool to figure out the EMI for the personal loan. The loan amount, which is Rs. 10 lakhs, the loan term, which is 36 months, and the interest rate, which is 14% p.a., must then be entered.

The EMI payable, which is Rs. 34,178 per month, will be shown after inputting this information. In his situation, the total sum owed is Rs. 12,30,395, and the entire amount payable includes Rs. 2,30,395 in interest.

A significant consideration is the interest rate that applies to your loan. We've compiled a few common queries borrowers have about personal loan interest rates on this page.

What Is Meant Of Reducing Interest Rate About Personal Loan?

When you obtain a personal loan with a fixed interest rate, the interest is calculated on the entire loan amount throughout the loan repayment period. However, the interest on a loan with a decreasing interest rate/declining balance rate structure is only calculated on the balance that is still outstanding. Therefore, in this case, when you make a monthly repayment, the interest for the remaining loan term will be computed on the outstanding loan amount.

What Are Some Of The Other Fees And Charges Levied By Lenders?

A few more fees are included in your cost in addition to your loan rate. They consist of the following:

• Processing charges 

• Verification charges 

• Government taxes 

• Late payment fees

• Prepayment fees

• Foreclosure fees 

Frequently Asked Questions

Can I get an interest rate lower than what is advertised by the lender?

Yes, you can negotiate an interest rate lower than the lender advertised. Negotiation is crucial in this situation. You might receive a good rate if you can successfully haggle with the lender.

How is my prepayment fee calculated?

Two methods are typically used to determine the prepayment fee:

• As a proportion of the sum you want to advance.

• As a proportion of the outstanding principal balance at the time of prepayment.

What is the average interest rate on personal loans?

Most banks have annual percentage rates for personal loans that range from 10.50% to 24%. Your interest rate will change depending on various criteria, including your age when applying for the loan, income, employment status with the organisation, and credit score. Therefore, before requesting a personal loan, examine the interest rates offered by several lenders.

How does a balance transfer help you get a lower interest rate?

The procedure by which a borrower transfers their outstanding loan debt from their current loan provider to a new loan provider is known as a personal loan balance transfer. The main advantage of doing this is moving the unpaid loan balance to a bank or financial institution that charges a cheaper interest rate, lowering the total amount of interest you will have to pay throughout the loan.

How often does the variable or floating interest rate change?

Each time the Repo-linked Lending Rate (RLLR) changes, as and when determined by RBI, banks will adjust the variable/floating interest rate.

Are personal loan interest rates fixed or floating?

Depending on your preferences and the possibilities offered by the lender, you can choose between a fixed interest rate and a fluctuating interest rate.

How much will I have to pay if I miss paying an EMI?

Your lender will assess a late payment fee if you don't make your EMI payment on time. The loan agreement will include information on this cost. In addition, there may be a late payment penalty that you must pay.

Can I avoid paying prepayment fees?

If your lender waives it or doesn't charge you for making prepayments, you may avoid paying this cost.

Is there any relationship discount on interest rates?

You may be given a favourable interest rate if you currently have a good relationship with the loan provider, which means you are an existing customer of the bank or NBFC, or you previously took out a loan and made all of your payments on time. This does not imply that all current clients who apply for a personal loan will be given a deal on the interest rate.

How does my credit score impact the cost of my loan?

A high credit score is a sign that you manage your money responsibly. This maintains your low-risk rating. You'll probably be given favourable treatment if your credit score is 750 or higher.

What is the lowest interest rate available on personal loans?

HSBC Bank offers personal loans starting at 9.75% p.a. at competitive rates. The interest rate, however, may differ from one customer to the next depending on several variables, including the customer's credit history and banking relationship, to mention a couple.

How do I benefit if the interest is calculated on a daily/monthly reducing balance?

When you pay an EMI on loan with a monthly repayment schedule, the principal amount is decreased, and the interest is solely computed on the remaining balance. In the case of daily lowering loans, the principal is reduced every day, and interest is applied to the outstanding sum. A monthly or daily interest reduction personal loan is advantageous for you as the borrower because you will pay less interest overall.

Can I get a low-interest rate even if my credit score is bad?

It is possible to obtain a personal loan with a poor credit score. Getting a co-applicant with good credit to apply with you can help you get a favourable rate. Obtaining a credit-worthy guarantor to support you is another option.

Can banks change the interest rate during the loan tenure?

If you choose a personal loan with a fixed interest rate, the interest rate won't fluctuate throughout the loan's term. When the MCLR changes, the bank may adjust the interest rate if you choose a variable interest.

Conclusion

You have more possibilities for fast cash loans because so many personal loans are available, making the process easier for you. By conducting a quick internet search for personal loans in India and comparing the many personal loan portals in India, one can find many possibilities, from payday loans in India and fast loans in India to salary advance loans. The rapid personal loan app installation makes obtaining a personal loan more accessible than it already is.