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Business News/ Money / Personal Finance/  Know personal loan interest rates by various banks
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Know personal loan interest rates by various banks

It is essential to compare the personal loan interest rates offered by various lenders before completing your loan application. This guarantees that you discover the most suitable option with a highly competitive interest rate, potentially leading to significant savings over the loan tenure.

Various banks and NBFCs offer personal loans at varied interest rates to their customers.Premium
Various banks and NBFCs offer personal loans at varied interest rates to their customers.

The interest rates for personal loans from leading private sector lenders typically commence at 10.49% per annum. Nevertheless, certain public sector banks might provide more competitive rates for their loan programs. The determination of interest rates by lenders offering personal loans is influenced by myriad factors including

  • Creditworthiness: Maintaining a high credit score, typically exceeding 750, is essential to secure a more favourable interest rate.
  • Loan size: Generally, smaller loan amounts may entail higher interest rates when contrasted with larger loans.
  • Loan duration: Extended repayment periods frequently accompany slightly elevated interest rates in comparison to shorter durations.
  • Lending institutions: Various banks and financial entities provide different interest rates, influenced by their policies and risk assessments.

The interest rate of a personal loan doesn’t inherently provide a direct benefit. Instead, it represents a cost, hence a lower interest rate is what you’re seeking. The advantage lies in having a reduced overall borrowing cost. This enables better financial management and allocates resources for other necessities.

Divergent banks and NBFCs don’t present personal loans at identical interest rates. The substantial discrepancies in personal loan interest rates among various lenders stem from the risk-based pricing model utilised by both banks and non-banking financial companies (NBFCs). It’s advisable to scrutinise interest rates from various lenders before settling on a loan to secure the most favourable deal.

Initially, make use of online loan comparison platforms. These platforms enable you to evaluate interest rates, loan terms, and other features from multiple lenders conveniently in one location. Connect with individual lenders directly by reaching out to various banks and NBFCs to obtain customised quotes tailored to your profile.

Take into account factors beyond interest rates. While the interest rate is crucial, also consider processing fees, prepayment charges, and other associated costs when comparing different loan options. The following table illustrates the personal loan interest rates offered by various banks.

Name of the bank

Interest rate range 

SBI Personal Loan Interest Rate

11.15% – 15.30%

HDFC Personal Loan Interest Rate

10.50% onwards

Axis Bank Personal Loan Interest Rate

10.49% onwards

ICICI Personal Loan Interest Rate

10.65% onwards

BOB Personal Loan Interest Rate

11.05% – 18.75%

PNB Personal Loan Interest Rate

10.40% – 17.95%

Bajaj Finance Personal Loan Interest Rate

11.00% onwards

Canara Bank Personal Loan Interest Rate

10.95% – 16.40%

IDFC Personal Loan Interest Rate

10.99% onwards

Yes Bank Personal Loan Interest Rate

10.99% onwards

Navi Personal Loan Interest Rates

9.90% – 45.00%

Union Bank Personal Loan Interest Rates

11.35% – 15.45%

Indian Bank Personal Loan Interest Rate

10.00% – 15.00%

Bank of India Personal Loan Interest Rate

10.75% – 14.75%

Tata Capital Personal Loan Interest Rate

10.99% onwards

Kotak Personal Loan Interest Rate

10.99% onwards

Bandhan Bank Personal Loan Interest Rates

11.55% onwards

Source: PaisaBazaar

Numerous banks and lenders host personal loan calculators on their websites, while online financial platforms also offer this tool. Simply search for "personal loan interest rate calculator" to locate them.

These calculators typically require three primary inputs:

  • Loan amount: The sum of money you wish to borrow.
  • Loan term: The duration over which you intend to repay the loan (usually in months or years).
  • Interest rate: This could be an estimated rate, or you can opt to leave it blank if you're seeking to compare rates across various scenarios.

Frequently Asked Questions (FAQs)

Q. Should you contact individual lenders directly before applying for a personal loan?

While including direct communication with individual lenders in your research process is an option, it might not be the most efficient or recommended approach before applying for a personal loan. This is due to the following reasons.

  •  Consumes time: Reaching out to each lender individually can be a time-consuming process, particularly when evaluating multiple options.
  • Numerous hard inquiries: Every instance where a lender conducts a hard credit inquiry on your credit report to evaluate your creditworthiness has the potential to marginally decrease your credit score.
  • Restricted perspective: Directly contacting lenders may confine you to the loan options provided by that particular lender alone. This limitation diminishes your capacity to compare rates and terms across a broader spectrum of lenders, potentially causing you to overlook better deals available elsewhere.

Q. What other options exist instead of reaching out to individual lenders?

Exploring various options beyond the conventional method of reaching out to individual lenders can be beneficial when in search of a personal loan.

  • Loan comparison websites on the internet: These platforms gather loan proposals from multiple lenders, enabling you to juxtapose interest rates, terms, fees, and other aspects conveniently. This efficient process saves time and offers a thorough understanding of the available choices without affecting your credit score.
  • Financial aggregators: These online platforms or applications provide a unified space for overseeing diverse financial products, encompassing tasks such as loan comparisons and acquiring quotes from multiple lenders.
  • Mortgage brokers: Commonly linked with home loans, mortgage brokers may also handle personal loans. They can secure competitive rates and negotiate on your behalf using their extensive network of lenders.

Q. What red flags should you watch out for before applying for a personal loan?

Borrowers must be vigilant about the following warning signs before submitting a personal loan application. These include:

  • Implausible interest rates: If the promoted interest rate appears excessively attractive, exercise caution. Be vigilant about lenders presenting rates that are notably lower than the prevailing market rates corresponding to your credit profile.
  • Concealed charges: Be alert to concealed fees such as processing costs, prepayment penalties, late payment fees, and annual charges. These hidden fees can substantially raise the overall cost of the loan. Ensure that you comprehend all the fees linked to the loan before initiating the application process.
  • Brief repayment durations: Although shorter terms may appear enticing for a quicker debt resolution, they can result in elevated monthly payments, potentially straining your budget. Verify that the repayment term aligns with your capacity to comfortably settle the loan.
  • Absence of reputation or digital presence: A lack of credible information about the lender on the internet raises significant concerns. Trustworthy lenders typically maintain a professional website containing transparent details about their offerings, services, and contact information.
  • Rushed application pressure: Reputable lenders provide sufficient time for you to assess your choices and thoroughly examine the loan agreement before applying. Exercise caution when dealing with lenders who push you to make quick decisions.
  • Absence of credit check: Ethical lenders consistently conduct a credit check to evaluate your creditworthiness and verify your ability to repay the loan. If a lender proposes a loan without performing a credit check, it is probably a fraudulent scheme.

Q. What steps can you take to avoid falling victim to personal loan scams?

Recognising prevalent personal loan scams in India relies heavily on possessing financial literacy.

  • Assured loans: This notion is false. Respected lenders won't jeopardise their funds by providing loans without assessing your credit score and repayment capacity. A comprehensive verification process is undertaken before approving a loan.
  • Misspelt hyperlinks: Inadequate language proficiency in written communication – banks and other financial institutions are known for their meticulous attention to detail in all interactions with current or potential clients.
  • Limited offer: This type of messaging aims to induce urgency, diminishing your capacity to scrutinise the offer and its terms thoroughly. Subsequently, this can be exploited to your detriment with severe repercussions.
  • Advance fee: When a lender requests an upfront fee, such as processing charges or other administrative fees, be wary. Exercise caution in such situations.

Q. What precautions and verification steps you must take before applying for a loan?

Before assuming the responsibility of borrowing funds, it is essential to adhere to recommended practices and perform comprehensive checks to ascertain the genuine necessity of the loan and its compatibility with your financial circumstances.

  • Examine the details carefully.
  • Avoid making any upfront payments.
  • Confirm the particulars of the company.
  • Protected website.

 

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Published: 04 Mar 2024, 08:03 PM IST
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