Are You Aware About the Cheapest Personal Loan in India?

Category: Loans 61 0

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 India10.90%
HDFC Bank11.25%
ICICI Bank10.99%
Bajaj Finserv10.99%
Citibank10.99%
IDFC Bank11.50%
Axis Bank16%
Tata Capital11.25%
Fullerton India20.00%
IndusInd Bank11.25%
Kotak Bank10.99%
RBL Bank14.5%
IIFL13%
HDB Financial13.99%
Karur Vysya Bank13.90%
PNB12.00%
Vijaya Bank12.90%
Union Bank of India12.60%
Syndicate Bank14.20%
Standard Chartered Bank11.99%
Indian Overseas Bank12.45%
Andhra Bank12.85%
Bank of Baroda11.60%
Bank of Maharashtra12.95%
Canara Bank14.10%
Corporation Bank12.90%
Dena Bank11.60%
Federal Bank10%
IDBI Bank12.50%
Allahabad Bank12.80%
Indian Bank14.20%
Yes Bank10.75%

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 –

NameLoan AmountTenureInterest RateEMI
Ms. MansiRs 1,00,0003 years10.99%Rs 3273
Mr. JadhavRs 1,00,0003 years18%Rs 3615
Mr. KhannaRs 1,00,0003years14%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 ScoreGrade
750 +Very Good
700-750Good
650-700Fair
550-650Poor
550 and belowBad

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?

  1. Pay dues on time
  2. Avoid withdrawing cash from ATMs
  3. Settle your card balance via a personal loan
  4. Don’t make too many credit inquiries for loan
  5. Get your CIBIL report verified
  6. Keep a check on credit utilization ratio (It should not be more than 50%)
  7. Keep your oldest credit card running
  8. 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 IndividualsSelf-employed Individuals
Identity, Age & Address Proof – PAN card/driving license/passport/voter ID/Aadhaar CardIdentity, Age & Address Proof – PAN card/driving license/passport/voter ID/Aadhaar Card
Bank statement for the past 6 monthsBalance sheet of the last 3 years along with profit & loss account
Salary slips for the last 3 monthsITR income details
Personal loan statement from the current lenderPersonal loan statement from the current lender

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