All About Personal Loan Interest Rate
What is a Personal Loan?
A personal loan is an easy way of overcoming your financial problems. It is the best way to get a loan since there is need of your personal documents only. As the name suggests, Personal Loan is for personal use and that may be any reason, for example, any medical issue, education purpose or wedding or to fulfill any of your other individual needs.
It is an unsecured loan. Keep reading below to know more about the benefits and the interest rate about a Personal Loan.
Some key points about Personal Loan
- Fixed amount is to be paid every month to the bank of your loan amount
- You can now get easy and quick disbursal of loan within 24 hours also depending on your loan amount and your bank record
- Always maintain your bank accounts, because banks they always consider your accounts as your stability to bear the loan amount
- Never try to take an amount of loan which you think will not be possible to repay to the bank in that fixed time period
- Must maintain your personal documents means your profile is what speaks for yourself, so try not to mess with your personal documents while submitting them to the bank
- Most of the rejections for a Personal Loan are done on the basis of the documents that you provide and your current location also matters a lot while opting for a loan
- Try to keep your documents as simple as possible. Provide genuine documents
- CIBIL Score plays a very important role in this type of loan. By tracking your credit history the bank decides whether you have a financial stability or not
What is the best way to get a Personal Loan at low Interest Rate?
According to the comparison of different banks in India who offers personal loans, YES bank provides the lowest rate of interest on personal loans. The price provided by YES bank is 10.75%. Many reasons depend on your interest rate, for example, the type of company in which you are working (in case of the salaried applicant) or position that your company holds in the market (in case of self-employed applicants).
Try looking out for banks like YES bank, HDFC bank, PNB, SBI bank, AXIS bank for instant loan disbursal within 1-2 days. This option helps people get money in their accounts more quick and save people who are in financial crisis.
There is a change in the rate of interest as you go from bank to bank, and hence the range is from 10.75% to 16%. RBI makes all the changes including the rate of interests, so make sure to get appropriate knowledge about all the banks and their terms and conditions before you opt for a loan.
Dialabank helps you to choose the best option of banks by providing you the comparison of different banks so that you can make the right choice. Once you fill a simple form, which is basically to know your capability, our customer relationship managers will have a word with you and help you choose the right option.
You will get a call from our customer champions within 2 days so you can ask all your queries to them and they will try their level best to solve them.
Eligibility criteria for Personal Loan
- CIBIL Score: It is the summary of your credit history. The score is derived using a CIBIL report, which is also known as (CIR) Credit Information Report. All the previous payments regarding loans and credit card history are checked through that.
- Salary: The bank decides the loan amount based on your net pay. So, make sure to think wisely while considering the amount of loan that you want to take.
- Location: It is yet another primary concern while opting for a loan. You can get a loan only if there is a branch of the bank near your current living location.
- Tenure of the loan: All banks have a different tenancy for giving a loan. So you need to decide for how long you want a Personal Loan.
- Age: A person between the age of 21-60 years can avail a Personal Loan. The condition applies to both salaried and self-employed people.
- Company’s Profile: For salaried people, it means that your company’s background is checked whether it comes under the list of banks or not. For self-employed people, the age of the company is taken into consideration along with how much profit it makes on an annual basis.
- Special Discounts: It is not always necessary that the bank in which you have your current salary account is going to offer you the best loan interest rate. So try to explore more in this case that which bank has to provide what. There might be other banks as well who can give you some other interesting and attractive loan schemes. Don’t get into a trap.
- Processing Fee: Last but not least, all banks charge you some rate of processing fee while sanctioning of your loan amount.
- Capability: Only apply for the amount which you can repay to the bank quickly.
- Avoid Multiple Loans: When you take multiple loans (means more than one loan from the same bank or different banks), then the bank thinks that you might not be able to repay the amount of to be sanctioned loan timely. Make sure that you are under no multiple loan schemes to avoid rejection for your loan.
- Avoid Reapplication: There are several banks that do not provide loan to applicants who have applied earlier in the past 6 months. Try to keep a gap of at least 6 months for reapplying to take a Personal Loan.
- Stability: Always ensure that you must have the capability of repaying the money to the bank for which you need to be more stable if you are working in a corporate sector and in case of self-employed people your company must earn a handsome amount of profit and must be sustainable in the market.
- Loan Amount: Only apply for the amount you think you are eligible for.
Required documents for a Personal Loan
Always keep in mind that whenever you submit your documents to the bank, make sure to cross check them all by yourself first. The purpose of doing this is that there are very high chances of your loan rejection on the basis of the documents that you provide to the bank, so to ensure that all the documents that your show to the bank are genuine.
Keep the following documents with you:
Documents Required for Salaried Applicants:
1. Last three months salary slips so that the bank knows you are financially stable and able to pay the loan amount.
2. Six months old bank statements are considered, to check whether you have a good credit history with the bank or not.
3. PAN Card is must as it indicates your Permanent Account Number.
4. Adhar Card is required so that the bank knows your identity.
5. Residence Proof (Owned/Rented/Company provided) is necessary to know where exactly you are living.
6. Two passport sized photographs for filling up your application form.
*NOTE: In case of rented apartments, rent agreement is to be attached.
Documents Required for Self-Employed Applicants:
1. All financials are considered, which includes the essential documents of the company and ITR files.
2. PAN Card
3. Adhar Card
4. Residence Proof
5. Two passport sized photographs
Personal Loan Interest Rate for all banks
All banks have different schemes for attracting their customers to opt for loans with them. The main criteria runs behind the amount of interest every bank charges while providing a loan to applicants who apply for it. The best thing banks can offer is the best rate of interest on the loan amount so that they don’t lose customers.
Take a look at the table below (updated 2019), so that you get a clear picture of all interest rates that different banks offer on personal loans.
|Bank of Baroda||13.00%|
|United Bank Of India||13.45%|
|Bank of India||12.87%|
HDFC Personal Loan Interest Rate: This bank offers the lowest rate of interest on personal loans, so while considering a loan try to go for banks who give low interest. HDFC bank The minimum rate that this bank provides to its customers is 10.75%.
1. Easy Disbursal: There is an easy disbursal involved in the process of Personal Loan. You can now get the loan disbursed in just one-two days and sometimes within one day only.
2. No need of any guarantor: The best thing about this type of loan is that you don’t have to show or keep any confidential papers.
3. Personal Documents: When you go for this loan, make sure that all your documents are genuine as your documents speak for yourself.
4. Simple Application Process: Your few documents, along with your passport-sized pictures, are required for filing your application form for a Personal Loan.
5. Hassle-Free Process: There is no need to get confused while the process is ongoing as the bank executives help you with all your queries in one go. Just sit back and relax while the bank is doing all the formalities.
What is CIBIL Score?
CIBIL Score is the history of your payments that you have done to the bank. Depending on your bank statements and payments, the bank decides how your CIBIL Score level is. The CIR (Credit Information Report) is the history of your credit score which checks your account’s history for different loans that you have taken (if any) and the credit card history (if you have). It is essential to maintain your CIBIL Score while taking a loan because your loan sanctioning depends a lot on your credit history.
Look at following table that will give you an idea about how banks decide your loan application procedure.
|650 or below||Bad|
|650 – 700||Delay in money|
|700 – 750||Normal|
|750 – 850||Good|
|850 – 900||Excellent|
Influence of CIBIL Score on your loan:
Rejection of loans can happen based on your CIBIL Scores as well, so let us have a look at how they influence our loan application’s acceptance or rejection.
a) 650 or below – If your credit score is 650 or below than that then the bank considers the applicant now eligible for the loan.
b) 650 – 700 – The applicant must have skipped one or more than one payment with any bank, or he was not able to pay the amount to the bank at a given time. So this is again a primary reason for rejection of your loan application.
c) 700 – 750 – Banks always go for the applicants who have a normal or above standard CIBIL Score.
d) 750 – 850 – This level of score history comes under a suitable category. Hence people who have scores between this gets their loan approval quite quickly.
e) 850 – 900 – An excellent score level that is maintained by people have negligible chances of getting a rejection.
What is an EMI?
EMI is the Equated Monthly Installments that you pay to the bank for your loan amount. The borrower (an applicant) pays a fixed amount to the moneylender (the bank) at the end date or start date of every month.
The EMI is calculated based on your work profile (net salary) and the amount of loan you have to take from the bank. The scheme of EMI has been introduced by the banks so that the person can repay the loan amount by giving a fixed due every month, and there is less burden on the applicant.
How to calculate your monthly EMI?
Now it is effortless to calculate your own EMI with the help of EMI Calculator. You don’t have to rely on the banks anymore for calculating your monthly installments. EMI calculator is the easiest way to know how much you are going to pay monthly.
Also with the help of EMI Calculator, you will be able to know that whether you are eligible for the loan amount you want or not.
Basic FAQs about Personal Loan Interest Rate
When it comes to taking a loan from the bank, our primary concern is the rate of interest being charged by the banks on the loan amount. So let’s have a look at different questions that arise in people’s mind while going for a Personal Loan.
1. Which bank has the best and low rate of interest?
Well, if we consider the reports then YES bank is offering the lowest rate of interest on Personal Loan to its customers. There might be other banks as well who provide interest rate close enough to YES bank, so you have to be careful while choosing the right bank according to your budget and stability.
2. Who can apply for a Personal Loan?
Anyone who is an employee of a company or owns a company can take a Personal Loan. All you need is your details for verification by the bank.
3. Does only a bank provide Personal Loan?
When a person is not able to get a loan from any bank due to any reason, then NBFCs (Non-Banking Financial Company) come into play. They provide financing to people who need immediate money and fail to get loan from bank. So, a bank is not the only option that you have while taking a Personal Loan. Many different NBFCs are there to provide loans. NBFCs like Bajaj Finserv and Fullerton India are popular and are known for their best quality service to its customers.
4. How can I apply for a Personal Loan?
Anyone who needs fast money can opt for this type of loan as it gets quickly disbursed within1-2 days. You can go to the nearest bank branch, meet their customer relationship executives and ask them to help you get a loan or you can simply fill a form online on our website, and get in touch with one of our customer relationship managers who will give you the right knowledge.
5. For how long does a Personal Loan lasts?
Personal loans have minimum tenure of 1 year that goes up to maximum tenure of 5 years.
6. Are there any other charges included for a Personal Loan?
- Pre-closure amount: If a person is able to earn or save enough money that now he can repay the remaining loan amount in one go only (which leads to closing of a loan), then every bank has its own procedure. Banks charge maximum of 5% of the loan amount if you want to pay all the money back to the bank and hence close your loan account. The percentage of charge of the pre-closure amount on the loan amount varies from bank to bank and also on the duration of the loan.
- Processing Fee: Every bank charges some fee while sanctioning of your loan amount. Banks have different processing fees depending on your bank type and your loan amount.
7. How do I avoid rejection for my loan?
Make sure that all your ID proofs and documents are well verified and accurate before the bank’s verification. Your history is being checked by the bank officials that where else have you applied for a loan or are there any rejections, is so then why.
8. What if I’m not able to repay the loan amount?
If a person fails to repay the amount of loan, then he is charged with penalties and a higher rate of interest, but no one can arrest in this case. Your CIBIL Score is affected a lot if this situation arises. So try to make monthly payments on time to avoid the disturbance in your credit history. You eventually land up in civil debts.
9. Can I return the money to the bank all at once?
Yes, of course, you can. When you have sufficient money in your savings then surely you have the right to replay all the amount in one go only. But remember that whenever this situation arrives, prepare yourself for the fact that the bank will charge some amount of interest on the loan amount that you have taken from the bank.
10. Can I take more than one Personal Loan at a time?
No, you cannot opt for another Personal Loan while you already have one loan active. The main reason behind this clause is, the bank thinks that you will not be able to take so much of burden of more than one loan at a time. But, there are many other factors also on which depends your sanctioning of the loan matters. So, read all terms and conditions very carefully while opting for this loan.
11. How important is to maintain your CIBIL Score?
It is a vital part of loan processing. Your CIBIL Score is checked every time you want to opt for a loan, be it a personal loan, education loan, car loan, etc. The main reason behind the idea of checking the CIBIL Score is that the bank wants to be sure about your financial stability.
12. If my CIBIL Score is not up to the mark, then can I get a rejection for my Personal Loan?
Yes, why not! If the bank feels that you do not have a solid financial background, then you might get rejected based on your credit score. CIBIL Score is basically the credit history that shows all your loans (if you already took a loan/loans). It keeps track of all your credit card payments (if you have a credit card) and your bank statements just to ensure that when you take a loan, then you are capable of repaying it to the bank.
13. What are the processing charges?
Processing charges are mandatory and is deducted by every bank which offers a personal loan. The processing fee ranges from 1.50% to 2%, and the costs are to be paid by the applicant to the bank while the loan disbursal procedure is going on.
14. What are the things that are covered in your gross salary?
Gross Salary is the total amount that is paid to an employee prior any deductions by the employer.
a) Base/Basic Salary
b) HRA (House Rent Allowance)
c) TDS (Tax Deduction at Source)
d) PF (Provident Fund)
Table of Contents
- 1 All About Personal Loan Interest Rate
- 1.1 What is a Personal Loan?
- 1.2 What is the best way to get a Personal Loan at low Interest Rate?
- 1.3 Eligibility criteria for Personal Loan
- 1.4 Required documents for a Personal Loan
- 1.5 Personal Loan Interest Rate for all banks