Festival seasons are going on, and you must be planning to celebrate with much enthusiasm like every year. However, you have recently invested all your savings and are left with none to splurge on additional expenditures. ICICI, HDFC, Axis, Punjab National Bank, IIFL or SBI – which bank will you choose for a personal loan?
All of these have varied interest rates. This is because the offering of the rate depends on your income, company status, credit & payment history, existing relationship with the bank, and individual negotiation skills. If you have a stable job and all the documents are in proper place, then you can apply for Personal Loan from SBI Bank, HDFC or ICICI Bank Personal loan with ease.
Again these banks offer personal loan at very competitive interest rate. For your convenience, hereby we are mentioning the personal loan interest rate of several prominent lenders
|State Bank of India||10.90%|
|Karur Vysya Bank||13.90%|
|Union Bank of India||12.60%|
|Standard Chartered Bank||11.99%|
|Indian Overseas Bank||12.45%|
|Bank of Baroda||11.60%|
|Bank of Maharashtra||12.95%|
Now, let us find out how interest rate varies for varied profiles.
Let’s take an example –
Ms. Mansi, an engineer, took a Personal Loan to remodel her kitchen from ICICI Bank at an interest rate of 10.99% p.a.
Mr. Jadhav, a store manager receives a salary in cash. He managed to avail a Personal Loan at an interest rate of 18% p.a.
Mr. Khanna, a dentist by profession availed a personal loan to renovate his clinic at an interest rate of 14% p.a. from HDFC Bank.
The table below shows the variable EMIs, with varying Interest Rates –
|Name||Loan Amount||Tenure||Interest Rate||EMI|
|Ms. Mansi||Rs 1,00,000||3 years||10.99%||Rs 3273|
|Mr. Jadhav||Rs 1,00,000||3 years||18%||Rs 3615|
|Mr. Khanna||Rs 1,00,000||3years||14%||Rs 3417|
So, in the above cases, you can evaluate how the interest rates and the respective EMI vary with an individual’s profile.
One of the instrumental factors that can help you avail personal loan at better rate of interest is good credit score.
What is a good credit score?
|Range of Credit Score||Grade|
|750 +||Very Good|
|550 and below||Bad|
As evident from this diagram, 750+ credit score helps you make a winning personal loan application. Along with that, you will able to get a personal loan at better rate of interest.
Why CIBIL Score for evaluation?
Among the four credit information companies, the Credit Information Bureau India Limited (CIBIL) is the most popular one. It is licensed by RBI to operate as a company. The three other credit companies are Experian, Equifax and Highmark.
How you can improve your CIBIL score?
- Pay dues on time
- Avoid withdrawing cash from ATMs
- Settle your card balance via a personal loan
- Don’t make too many credit inquiries for loan
- Get your CIBIL report verified
- Keep a check on credit utilization ratio (It should not be more than 50%)
- Keep your oldest credit card running
- Don’t take too many debts at one time
How is CIBIL transunion score calculated?
The score is calculated on the basis of the following factors –
- Credit exposure = 25%
- Past performance = 30%
- Credit type & duration = 25%
- Other factors = 20%
How can a person switch over to a cheaper personal loan?
The answer is balance transfer. Suppose you took a personal loan of Rs 200000 at the rate of 12% interest rate for tenure of 3 years. The effective EMI is Rs 6642.
However, after 1 year, if you switched to another lender at the rate of 11% p.a. for tenure of 2 years, your savings will be more than Rs 2000.
Personal loan Balance Transfer is an excellent way to lower interest rates on your existing EMIs.
Who are eligible for a personal loan Balance Transfer?
|Salaried Individuals||Self-employed Individuals|
|Identity, Age & Address Proof – PAN card/driving license/passport/voter ID/Aadhaar Card||Identity, Age & Address Proof – PAN card/driving license/passport/voter ID/Aadhaar Card|
|Bank statement for the past 6 months||Balance sheet of the last 3 years along with profit & loss account|
|Salary slips for the last 3 months||ITR income details|
|Personal loan statement from the current lender||Personal loan statement from the current lender|