Personal Loan Interest Rates - HDFC, SBI, Bajaj, ICICI, All Banks

Personal Loan

Personal loans are available for both salaried and self-employed borrowers to help meet their general personal expenses that are urgent and immediate in nature.You should consider this loan if,

• You do not have immediate funds available to bear the expenses during a financial crisis.
• You do not have a collateral to take a secured loan.
• The expense is urgent and you want to avoid the detailed documentation and lengthy loan process.

Purpose of personal loan

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.

Personal loan benefits

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

Personal Loan Eligibility Check

You may be eligible for loan in India from one or more banks if you meet the following eligibility conditions:

How to improve your chances of getting a personal 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 a personal loan approval but also getting low interest 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.
Check Gold Loan Offers of All Banks
• 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 comparison for best 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 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.

Do’s and Don’ts while taking Personal Loan

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

Lowest EMI for Personal Loan

Personal Loan EMI is the amount or instalment that you pay every month to the bank or financial institution in order to repay your loan. EMI is composed of principal amount and interest. Interest component in your EMI is higher in early months and gets reduced with each EMI. Similarly, principal repaid is a significantly small component in total EMI in early months and gets higher with each EMI. EMI Calculator helps you to calculate your monthly EMI at desired interest rate for a particular tenure.

EMI depends upon loan amount, interest rate and loan tenure

• Loan amount – Higher the loan amount taken, higher will be the EMI
• Interest rate - Higher interest rate on your loan leads to higher amount of EMI
• Loan tenure – Longer the loan tenure, lower the EMI and vice versa

Comparison of Personal Loan Interest Rates in India

• Interest rates for personal loans: Banks launch attractive schemes with low interest rates on personal loans 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 best 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 loans to compare and shortlist the best 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.

Illustration on Personal Loan

Checklist and List of Documents for Personal Loan

• Identity proof
• Residence address and ownership proof
• Income proof
• Photo identity proof
• Bank continuity proof
• Bank statement
• 1 passport size photograph
• Latest ITR
• CIBIL Score and report
• Investment proof if you have any Fixed Deposit, Shares, Fixed Assets, etc

Documents Required for Personal Loan

Frequently Asked Questions on Personal Loan