Personal Loan Interest Rates and Other Charges

Posted On Wed, March 31, 2021, 5:46 PM
Factors that Affect the Personal Loan Interest Rates

The availability of a personal loan would accomplish your dreams of going on a vacation, offering top-quality education to your children, property renovation, marriage, medical emergencies, etc. It acts as a relief to the borrowers owing to the absence of collateral security.

At present, a personal loan features multiple benefits such as minimal documentation, instant approval, and quick disbursal of loan. But, whenever you are applying for a personal loan, pay close attention to the interest rates and additional charges. Below find out important factors that affect personal loan interest rates and other charges.

Factors that Affect the Personal Loan Interest Rates

  • Income: Maintaining a steady source of income provides the banks an assurance that he/she will be able to repay the loan amount. The higher the monthly income, the better will be the possibility of obtaining the loan at a fair interest rate.

  • Repayment History: If you have an exceptional record of repayment would assist you in obtaining a good personal loan. It indicates that with a good repayment history, an individual will be able to repay the entire loan amount within a stipulated period. 

  • Relationship with the Bank: The type of relationship with a concerned bank will have an impact on the personal loan interest rate. Therefore, it is better to open a savings bank account. Based on the credit score and relationship, you may negotiate for a fair loan deal. They might consider lowering the interest rates based on your negotiation skills.

  • Details of the Employer: If you are working in a reputed organization, the concerned financial institution is more likely to provide a lower rate of interest.

  • Nature of Employment: Lenders grant personal loan interest rates based on whether they are salaried professionals or self-employed.

  • Age: Age plays a crucial role when it comes to borrowing a personal loan from a lender. Those individuals who are on the verge of retirement might be charged with a higher interest rate.

Fixed Interest Rate vs Floating Interest Rate

Fixed Interest Rate and Floating Interest Rate are the two main types of personal loan interest rates. The fixed involves a constant rate of interest throughout the loan repayment period. This helps plan your monthly payouts as well as budget accordingly. On the other hand, Floating Interest Rate is based upon the Marginal Cost of Lending Rate (MCLR) which is a prefixed rate for banks by the Reserve Bank of India (RBI). 

Interest Rates for Various Applicants

Personal loan interest rates are based upon the applicant's profile including monthly income, credit history, relationship with the lender, etc.

  • Salaried/Self-employed Individuals: Those people who fall under this category have a higher chance of obtaining a personal loan at an attractive interest rate. This is primarily because salaried professionals have a steady source of income. They can repay the loan amount with a stipulated period without default payments.

  • Women: To empower women and assist them to become financially stable, most banks, as well as Non-banking financial companies, are offering a personal loan to women at a lower rate of interest.

  • Pensioners: Even pensioners do have the option to apply for a personal loan at a competitive rate of interest. However, this facility could be accessed with a lender whose pension is interlinked.

Different Banks & NBFCs Latest Interest Rates on Personal Loans

  • State Bank of India: SBI is one of the biggest lenders in the country who provide a diverse range of personal loan schemes. They provide personal loans under 4 categories namely SBI pension loan, SBIXpress Credit personal loan, and SBI festive season loan. The repayment period is up to five years. The maximum loan amount provided is 15 lakhs.

  • HDFC bank: Obtain instant approval within just five minutes at a lower rate of interest. The repayment period is up to five years. The maximum loan amount provided is around 40 lakhs. HDFC personal loan assists you in covering medical expenses, traveling expenses, weddings, renovation or purchase of property, etc.

  • Axis Bank: Axis Bank personal loan helps you meet all personal requirements. Loans are provided starting from Rs. 1 lakh to Rs. 20 lakhs. The documentation process is a minimum and quick disbursal of the loan without any hassles.

  • Bajaj Finserv: Bajaj Finserv provides a loan amount of 25lakhs with a maximum tenure of 72 months. The processing fee charged is around 2%. However, you are required to submit supporting documents like ID/Income proof/Address proof while applying for a loan.

  • Money View Loans: Money view has multiple benefits while making sure to avail of a personal loan in a hassle-free manner. Loan amounts range from Rs, 5,000- Rs, 5 lakh, and flexible repayment tenure.

  •  Dhani: Dhani is a one-stop-shop solution to meet financial and health care needs. You will obtain instant loans, travel bookings using a Dhani wallet or card. The loan amount ranges from Rs. 2500- Rs. 1lakh @0% interest rate and payable in 3 months.

Bank

 

Interest Rate (p.a.)

Processing fees

 

  State Bank of India

 

9.6% p.a. - 15.65% p.a.

 

Up to 1.50%

 

  HDFC Bank

 

10.75% p.a. - 21.30% p.a.

 

Up to 2.50%

 

  Axis Bank

 

12% p.a. - 24% p.a.

 

Up to 1.5% - 2%

 

CIBIL Score Range for Personal Loan

CIBIL ratings 

Credit score 

Chances of being approved for a personal loan

 

Poor

Less than 600

 

Not eligible for a personal loan

 

Average

Between 600 and 750

 

A loan might be approved, but with a high-interest rate

 

Good

Over 750

 

Approval of loan likely with a lower interest rate

 

Excellent

Between 800 and 900

 

The loan with a low-interest rate, quick approval, and huge loan amount

 

Hidden Charges Associated with a Personal Loan

  • Processing Fees: It is one of the most popular hidden charges which are related to the personal loan. The upfront cost is involved or sometimes even reduced from the disbursed loan amount. It is non-refundable and the fee is between 2% and 3% of the total amount. Such costs enhance the repayment amount instead of easing financials.

  • Cancellation Charges: It does not matter what type of service you avail like flight/train bookings or applying for a personal loan, cancellation charges are included. It begins from Rs. 1000 to Rs. 3000 along with an extra 18% GST. However, charges might differ based on the institution.

  • Default Payment Charges: He/she will be penalized for not repaying the loan amount within a stipulated period. In such a case, late repayment fees are charged i.e. 2-3% of the EMI amount. It implies that you are required to pay additional interest on the late fee to that of the actual loan amount.

  • Repayment Mode Swapping Charges: If in case the mode of payment is suddenly swapped, i.e. payments through cheque to auto-debit feature, he/she will be charged.

  • GST: It was previously service tax and VAT which were included in loan-related services. Although it is barely disclosed amidst loan documentation procedure, it suddenly pop-up during payment. 

Conclusion:

Remember one thing, consult credible sources, fetch maximum information and carry out comprehensive research before applying for a personal loan. This is helpful for you to choose the best loan option.

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Contact Information:
Saahil
reddysaahil@gmail.com

This press release is posted under categories Banking, Private Sector, India, Business, Finance, Digital

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