Personal loans are among the most effective ways to get funds for emergency and non-essential expenses. They are available to self-employed and salaried people. Nearly all commercial banks, NBFCs (Non-Banking Financial Corporations), and even online lenders provide personal loans in India. But, there are significant differences in rates of interest for different lenders. Therefore, it is essential to evaluate the rates offered by various banks before applying for personal loans.
To make the process easier to make it easier, in this guide, we have listed the personal loan interest rates from the top banks and NBFCs. This list can be used to compare lenders and choose the one that offers you the best deal.
Compare Personal Loan Interest Rates of Banks for 2020
Here’s a list of interest rates major lenders offer for individual loans. But be aware that the interest rate you receive could be a little more significant or less based on your creditworthiness and other aspects.
Note that these rates may alter according to the decision of lenders. Therefore, you should consult your lender of choice for the current rate that applies to you.
Personal Loan Interest Rate Types
The rate of interest for personal loans could be:
- Fixed-rate interest
Fixed rates mean that the interest rate remains constant throughout the loan. In turn, your EMI stays the same throughout the entire loan repayment term. This assists borrowers in planning their daily expenses for the whole loan period.
- A rate of interest that fluctuates
When you have floating rates, the rate of interest that you pay for your loan can fluctuate depending on market conditions. In turn, the EMI can increase or decrease throughout your loan.
Factors that impact the interest rates of personal loans
Although lenders can publish their rates of interest, actual rates they offer to borrowers are contingent on other elements, such as:
- Credit score, as well as the history of the borrower
Credit history, as well as scores on credit, are the determinants of the creditworthiness of a borrower. In general, lenders favor borrowers with high credit scores. A higher credit score means higher chances of approval for loans and lower interest rates you pay.
- The earnings from the lender
Lenders favor borrowers with higher earnings since it implies an excellent repayment capability. In general, higher-yield lenders can get personal loans with lower interest rates.
- Debt to Income Ratio
The ideal ratio of the borrower’s debt to income shouldn’t exceed 30 percent. The lenders prefer borrowers with lower DTI ratios as they indicate more ability to repay. The smaller your DTI, the higher the interest rate you pay.
- Multi-loan applications
If borrowers seek personal loans through multiple lenders, they are viewed by lenders as them to be credit-hungry. In addition, when various lenders ask for your credit score in a row, they can affect your credit rating. When you apply for personal loans, do your homework, research, and compare the interest rates of different lenders, and then only apply with the lender you prefer.
- An existing connection with a lender
The lender will give priority to those who are customers already. For example, if you hold a fixed deposit or a savings banking account, the loan lender may take out personal loans at lower interest rates than those charged to non-customers.
Tips for securing Personal loans with lower interest Rates
- Keep a positive credit score. A higher credit score means a lower rate of interest.
- Reduce your debt-to-income ratio. Reduce the DTI as well as the interest rate.
- Compare the eligibility for loans along with interest rates offered by various lenders. Choose lenders that provide the best rates.
- When choosing lenders, you should contact your banker because you’re more likely to get higher interest rates because of your connection with your bank.
- Furthermore, lenders can offer special interest rates for specific categories of borrowers, such as women pensioners, first-time borrowers, and pensioners. Ensure you meet the requirements in any of these categories and take out personal loans with low interest rates.
EndNote
Compare the Interest Rates before applying for a personal loan
Personal loans are helpful in many circumstances. While they are available, the interest rates can be too high and burden you. Make sure you research, do your research, and then compare the rates of different lenders before signing the contract.
