Personal Loan Interest Rates

Personal Loan

Personal loans are unsecured loans available for both salaried and self-employed borrowers to help meet their general personal or private expenses that are urgent and immediate in nature. Unsecured loans are loans without any security that can be availed quickly. The rate of interest on personal loans is higher than that on secured loans. There are multiple personal loan providers in India which offer cheap and quick loans. You need a new loan only if:

• You are in the midst of a financial crisis and need immediate funds.
• You do not have a collateral to take a secured loan.
• You do not have time to go through detailed documentation and loan process.
• You need a short term loan of not more than five years.

Benefits of taking a personal loans are : -

• Unsecured in nature with no requirement of collateral or a security
• Fast turnaround with loan approval in as quick as a few hours. Banks now offer instant personal loans as well.
• Minimum documentation with approval based on basic KYC, quick background checks, CIBIL score and income proofs

How to Get the Best Personal Loan Interest Rates?

As per the current rates, Yes Bank offers the lowest interest rate of 10.75%. You can get best personal loan depending upon the company you are working with, loan amount you have applied for and your repayment capacity. Higher the loan amount, lower will be the rate of interest.

HDFC Bank, Tata Capital, IIFL, RBL Bank, Citibank, ICICI Bank are the best banks for personal loan, if you are looking for an instant personal loan with in 1-2 days. The interest rates of these banks are in the range of 10.99% to 16%. These loans providers offer online lending process. You can get instant personal loan approval from these banks online at MyLoanCare and check eligibility without having to submit paper documents. Post approval, in case you are an existing bank account holder or existing loan customer of HDFC Bank, Tata Capital, IIFL, RBL Bank, Citibank, ICICI Bank, you may be eligible for instant disbursement without any documents. In other cases, you may upload a few documents on mobile app or submit them physically to a bank loan officer who will visit you at your place before loan disbursement.

To get lowest personal loan interest rate online, read the do’s and don’ts mentioned below.

Do’s	Don’ts
Check best discount and offers for salaried customers – Always check current offers and loan interest rates offered to employees of large reputed companies	Do not apply for loan amount more than what you are eligible for – Applying for an amount higher than your eligibility may lead to rejection of your loan application. Always check eligibility and your credit score
Compare personal loan rates based on loan amount – Some banks offer low interest rate at higher loan amount	Do not apply with multiple banks for your personal needs - Simultaneous loan applications gets recorded in your CIBIL report and can hurt your chances of getting a loan
Check for tenure based discount – Banks may offer lower rates on personal loan for certain tenure and if possible, opt for tenures with lower interest rates	Your salary bank may not offer the cheapest personal loan – Various banks keep offering attractive schemes to acquire premium customers. Hence, the offer from your salary bank may not be the best option

Compare Personal Loan Interest Rates of All Banks

You should do a detailed comparison of personal loan interest rates and charges of all banks before chosing the best bank for personal loan.

• Interest rates for personal loans: Banks launch attractive schemes with low interest rates on a regular basis, especially for individuals working with large reputed companies. Rate of interest varies based on the categorisation of your company in the internal categories of banks which can vary from bank to bank. Hence, always check for personal loan offers from multiple banks to get the cheapest rates
• Personal loan processing fees – Most banks charge a processing fees of Rs. 999 to upto 2% of loan amount, whichever is higher. Since these loans are short tenure loans, higher processing fees can result in significantly high cost on loans. Hence, it is important to compare the All Inclusive Rates (AIRs) for personal finance loans to compare and shortlist the top offer. Get detailed comparison on interest rate, processing fees and attractive cash back offers by applying online through MyLoanCare.
• Insurance premium - Since these are unsecured loans, banks request the borrower to take an insurance policy when availing a loan. However, the premium varies from bank to bank depending upon the risk coverage under various policies. So, check the loan sanction letter carefully to know the coverage and premium. You may also want to do a comparison of various insurance policies to be able to choose a policy which gives you adequate coverage at lowest premium.
• Personal loan prepayment and foreclosure – Nobody wants to keep paying interest on a loan when you have surplus money available to repay it. Sometimes you may want to repay a part of your loan before time which is called part prepayment. In case you decide to pay the entire loan amount before time, it is called foreclosure. Banks typically levy prepayment or foreclosure charges on personal loans ranging from nil to up to 5%. So, check carefully if the low interest rate personal loan you are getting comes with high prepayment or foreclosure charges. Some banks, might not allow you to prepay your loans before few months and the same needs to be considered while taking a loan.

Quick Guide on Personal Loan

• Purpose: Some of the basic purposes for which this loan is granted include vacation or travel, higher education, wedding, medical treatment, credit card payment and many more. Banks specify the purpose for which they are willing to grant this loan.
• Key Features:
• Age of the borrower: Loan available for both salaried and self-employed profesionals within the age group of 21 and 60 years
• Loan Amount: In the range of Rs. 50,000 to Rs. 50 Lakh.
• Loan Tenure: Can range from 3 to 60 months.
• Interest rates: Personal Loan Interest Rates starting from 10.75%.
• Personal Loan EMI: Lowest EMI of Rs. 2,162 per lakh.
• Work Experience: Up to 3 years of total experience.
• Processing Fees: Up to 2% of loan amount.
• Documents Required: Address Proof, Identity Proof, Income Documents.
• Special Schemes: Banks offer customized personal loan interest rates and schemes for salaried borrowers working in government, defense, private or MNC companies. Banks offer personal loan to self employed professionals like Doctors, CA, CS, Architects. Top banks has also launched special loan schemes to pensioners up to an age of 76 years.

Watch this video to know the best personal loan for you.

How to Improve Your Chances of Getting a Personal Finance Loan

These loans are mostly unsecured in nature, banks have a pre decided set of rules (credit policies). Many loan applications get rejected as the borrower do not fulfil the basic set of rules of banks for approval of personal loan. Hence, it is important that the borrower works on improving his or her chances of getting a loan using some simple tips.

• Calculate your credit score and improve it - Always check and calculate your credit score before applying for loan. Credit bureaus operating in India such as CIBIL, Equifax, Experian and CRIF High Mark usually help in providing personalised credit report within 24 hours of applying. Low credit score implies that there are higher chances of defaulting on loan payments whereas a high score not only increases the chances of getting loan approval but also getting low interest personal loan rates for borrowers. So, it’s necessary to improve your score above 750 to get the loan approved.
• Identify options for bad credit loans - In case your credit score is less than 750, you might want to wait for a few months and work on improving your credit score. However, if you are not in a position to wait, you should look for NBFCs or banks that provide loan for a lower credit score as well. In such situations you can also take gold loan or loan against fixed deposits which do not take into account your past credit score.

• Identify the right product for you - You should carefully compare and select the right bank for loan as different banks have different interest rates and eligibility criteria. Always, make a personal loan comparison for interest charges and other loan terms such as tenure, foreclosure charges and other hidden charges before finalising the loan. Approaching banks through online market places may provide you a quick and detailed comparison of key loan offers and help you make the right choice.
• Avoid multiple loan applications - Sometimes, customers in a hurry to get a loan, apply for a loan with multiple banks to improve their chance of getting a loan on time. However, applying for multiple personal loan applications increases the probability of the loan being rejected as each query gets captured in your credit report and multiple queries can adversely impact your CIBIL score.
• Try to keep a gap of minimum 6 months between personal loan applications - Most of the banks do not grant a new loan to a borrower who has availed an unsecured personal loan in the last six months. In such cases, banks may doubt that you will not be able to bear the burden of additional EMI payments. There should always be a gap of 6 months between two loan applications.
• Be honest and provide accurate information - Always be honest by providing accurate details to the bank. This makes the process easy and convenient for both lenders and customers. Lenders verify the information provided by you. They also call to confirm your personal data and if they feel it’s incorrect, they may reject the loan application.
• Maintain job stability - Lenders require that the customer has at least two years of work experience in a particular job. So, avoid switching jobs if you want to improve your chances of getting a personal loan.
• Apply for a loan amount based on your repayment capacity - Before applying for loan; determine the loan amount that you will be able to repay in future. Use online eligibility calculators to calculate your loan amount eligibility. Requesting for loan amount higher than your eligibility might increase the chances of rejection of the loan application. Banks also calculate the ratio of fixed expenses to income ratio of a potential borrower to estimate the amount of loan that can be serviced by the potential borrowers. Lower the ratio, higher the chances of loan being approved.

Last, but not the least. Practice a healthy credit discipline regimen to maintain a healthy score and improve the chances of getting a loan. This regimen includes paying EMIs on time (every late payment reduces your credit score), restricting the number of credit cards, reducing the limit usage on credit cards, resort to taking a secured credit, wherever possible and regularly checking your credit report to ensure timely course corrections.
So, follow the above tips to get your loan application being approved easily and reduce the chances of rejection.

Documents Required for Personal Loan

Documents Required	Individuals	Firms, Partnerships
Signed Application Form	Required	Required
Identity Proof	PAN card, Passport, Driving License, Aadhar Card, Voter id, Govt issued i-card	PAN card, Passport, Driving License, Aadhar Card, Voter id, Govt issued i-card
Certificate and Proof of Business Existence		PAN , sales tax/ excise/ VAT/ service tax registration, Copy of partnership deed, Trade license, certificate of practice, registration certificate issued by RBI, SEBI
Address Proof	Passport, Driving License, Election ID card, Electricity/ Telephone/ Mobile bill/ bank statement (not more than 3 months old)	Bank statement, utility bill, Registry copy, lease or rent agreement, TAN allotment letter
Age Proof	PAN card, Passport, Driving License, Voter id card, Birth certificate, Employee ID card (only for PSU/ Government employees), School/ college leaving certificate	PAN card, Passport, Driving License, Voter id card, Birth certificate, Employee ID card (only for PSU/ Government employees), School/ college leaving certificate
Income Proof	Last 2 years Form 16, last 6 months salary slip, last 6 months' bank account statement showing salary credit	Last 2 years ITR, last 6 months bank account statement

Maximum Annual Percentage Rate (APR)

10.75% to 22%

Representative example of the total cost of the loan, including all applicable fees

Here is an illustration of the total cost of the loan: Total amount borrowed: Rs. 1 Lakh Time period: 12 months to 60 months Personal Loan Interest Rate: 10.75% to 22% Processing Fee payable : Upto Rs. 2,000 Fee payable to MyLoanCare: NIL Total Monthly Cost – From Rs. 2,162 for a months Rs. 1 Lakh loan at 10.75% (lowest rate, longest time period) to Rs. 9,359 for a 12 months Rs. 1 Lakh loan at 22% (highest rate, shortest time period). This is inclusive of principal repayment. Annual Percentage Rate (APR) of charge including all applicable fees: 10.75% to 22% Total cost payable over loan tenure: Rs. 14,313 for 12 months loan to Rs. 31,708 for 60 months loan

FAQs on Personal Loan