There are many banks and NBFCs that offer personal loans, each of them have different set of criteria for loan approval and interest rate. An interest rate makes a difference in the total loan cost. When it comes to a personal loan, you should always take into account the rate applied. Being an unsecured loan, the rates could be a little more as against a secured loan. You can now readily compare online personal loan rates by top banks and NBFCS.
Below mentioned are interest rate charged by leading banks and NBFCs on personal loans.
Given below details are purely informational and to know the updated list of interest rates, you should check with the particular bank/NBFC.
- HDFC Bank charges 11.25%, SBI charges between 10.95% and 15.35%, ICICI Bank charges between 10.99% and 18.49%, Axis Bank charges between 15.75% and 24.00%.
- Interest rates are 8.50% to 13%, 11.55% to 13.20%, 11.90% to 16.90%, 12.10% to 14.10%, 11.75% to 12.75%, 10.85% to 14.35%, and 10.99% to 18.99% by Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Central Bank of India, and CitiBank, respectively.
- Interest rates are 14%-33%, 10.99%-18%, 10.75% onwards, 11.30% to 15.05%, 13% to 18%, 11.75% to 14.65%, and 11% to 14%, 10.99% – 16%, by Fullerton India, Tata Capital, Yes Bank, Punjab National Bank, RBL, Federal Bank, Canara Bank, and Bajaj Finserv, respectively.
- Interest rates are 10.99% to 16%, 13% to 14%, 10.99% to 17.84%, 12.85% to 13.95%, 12% onwards, 12.70% onwards, by IndusInd Bank, Dena Bank, HSBC Bank, Corporation Bank, DCB bank, Karnataka Bank, respectively.
What Affects the Personal Loan Interest Rates?
Personal loan interest rates are influenced by several factors, some of which are listed below.
- Credit Score: The most important factor that decides personal loan interest rates is, credit score of the borrower. If you have 700+ credit score, then you stand a better chance at negotiating the rate and get the loan approved. A credit score will depict your financial behaviour, such as repayment of previous or ongoing loans, payment of credit card dues etc.
- Income: Depending on your monthly income, the loan amount and interest rate will be decided. If you draw a high income and require a low loan amount, then you shall get a better rate of interest. Existing liabilities and low disposable income will make the financial institutions to apply a higher rate of interest.
- Relationship with the Financial Institution: Existing customers of a bank/NBFC may definitely get the best rate available with that particular financial institution. The bank will consider the payment record and other essentials required before determining the rate for regular customers.
- Tenure of the Loan: The rate of interest will also differ depending on the tenure. A higher rate may be charged on a shorter tenure and vice-versa. Tenure of the personal loan can range from a year to 5. Longer the tenure, greater will be the interest payout.
- Amount of the Loan: Loan amount may also influence the rate applied. If the amount is less, a higher rate may apply, and vice-versa. The amount sanctioned will depend on other factors, such as repayment capacity, your monthly net income, credit score etc.
Why to Compare Interest Rate before Applying for a Personal Loan?
Mentioned-below are reasons of comparing personal loan interest rate of all providers before putting ahead the loan application.
- Right Fit to Needs: Interest rate of a loan scheme will inform you, if it is really suitable for your needs. It does not matter how low or high the rate is, but what matters is, if the scheme is perfect for you or not.
- Get an Idea about the Loan Cost: Applicable fees, charges, and interest together will account for the total cost of the loan. Knowing these details will tell you how much EMI you have to pay and the yearly cost of the loan till the end of tenure.
- Take an Informed Call: When you compare the charges, rates, and other costs of the loan, you will be able to take an informed decision. This is why it is a must to weigh your options before applying with a bank/NBFC.
Comparing interest rates for personal loans across financial institutions is important for more than one reason. The above post will help you know the interest rates applicable on a personal loan and what actually influences it.