Personal Loan Interest Rates: Compare Interest Rates and Charges
share
Applying for a personal loan? Have you compared the personal interest rates and processing fees?
Before you apply for a personal loan from a particular bank, financial institution or Non-Banking Financial Company, check and compare the personal loan interest rates and other fees. Keep reading!
Personal Loan Interest Rates in India (Updated 2022)
| Financial Institutions | Interest Rates |
| Navi Personal Loan | 9.9% p.a. onward |
| HDFC | 10.50% p.a. |
| Kotak Mahindra | 10.25% p.a. |
| IDFC FIRST | 12.50% p.a. |
| Yes Bank | 13.99% p.a. |
*This table is for illustrative purposes only.
Factors that Influence Personal Loan Interest Rates
Here are some of the factors that could influence personal loan interest rates:
1. Good Credit Score
To get a low-interest personal loan, it is a must for the borrower to have a credit score of 750 or above. Having a good credit score gives you negotiating power as a borrower. The higher the score, the better the chances of getting the best interest rate.
2. Monthly Income
Lenders always check your monthly income before approving your loan application. If your monthly income is above Rs.15,000, you can get a loan from most financial institutions. However, the quantum of loan and the interest rate offered will depend on how much you earn – someone earning Rs.50,000 will get a bigger quantum and better rates than someone earning Rs.20,000 per month.
3. Debt-to-Income Ratio
Let’s say, you‘re earning Rs.80,000 in a month. However, about 80% of your salary goes toward your existing debt repayments. This means that your debt ratio is on the higher side and as a result, it can affect the final interest rate offered.
4. Employment Status
Lenders check if you’re employed or unemployed before servicing a loan. Applicants with a stable source of income (salaried or self-employed) can get better deals on interest rates than applicants not having a steady monthly income.
Also read: How To Improve Your Credit Score
How to Get the Lowest Interest Rate On a Personal Loan?
You can lower the interest rate offered by the lender through the following options:
- Improve your credit score: Make timely repayments to keep your credit score above 750. Ensure that you’re paying your EMIs on time. Set up auto-debit to make sure smooth EMI payments.
- Check offers: Always keep an eye out for personal loan offers. Lenders often introduce new loan offers with lower interest rates to attract customers.
- Negotiate with the lender: Negotiation happens in two scenarios – if you have an excellent score or if you have built a business relationship with the lender. If you have either of these two or both, grab the opportunity to negotiate with the lender.
- Make repayments on time: Keep paying your EMIs on time. Lenders often evaluate your financial discipline before deciding on the final rate.
Also Read: How To Get Instant ₹20000 Personal Loan Without Collateral
Fixed Vs Fluctuating Interest rates – Which One is Better?
Here are some of the primary differences between fixed and fluctuating interest rates:
| Category | Fixed Interest Rate | Fluctuating Interest Rate |
| Interest amount | The interest amount remains constant throughout the loan repayment tenure. It does not change irrespective of market conditions. | The interest amount is bound to change, i.e., either reduce or increase as per the market situation. |
| EMI payments | EMI payments will not change in the case of a fixed interest scenario. It will help individuals to plan their monthly budget and investments accurately. | EMIs will vary as per the changing interest rates. This might make it difficult for borrowers to plan their monthly budget. |
| Prepayment charges | Borrowers are required to pay prepayment charges in case of foreclosure of loans when they are under a fixed interest rate regime. Lenders charge a percentage of the loan amount as charges or fees for early repayment. | As per the guidelines set by the Reserve Bank of India, lenders cannot charge any prepayment penalty from their customers under the floating rate system. |
In addition to the differences that have been discussed above, the interest levied by the fixed-rate system always tends to be higher than the floating system. Therefore, the burden of repayment is always higher in a fixed interest rate system rather than a fluctuating one.
How to Calculate Personal loan EMI?
Use a personal loan EMI calculator to check your repayment obligations. Just enter the loan amount, interest rate offered and tenure. You will get an idea of your monthly EMIs.
Alternatively, you can use this formula to calculate personal loan EMI.
EMI = [PxRX(1+R)^N]/[(1+R)^N-1], wherein P represents the loan amount, R is the interest rate charged per month, and N indicates the total number of monthly instalments.
Personal Loan Processing Fee in NBFC and Banks
| Bank | Processing Fee |
| Navi Personal Loan | Nil* |
| SBI | Up to 1.5% (Max. Rs.15,000) |
| Axis Bank | 1.5% – 2% |
| ICICI Bank | Up to 2.5% |
| HDFC Bank | 2.5% (Max Rs. 25,000) |
| Kotak Mahindra | Up to 2.5% |
| Tata Capital | Up to 2.75% |
| IndusInd Bank | Up to 3% |
| IDFC First Bank | Up to 3.5% |
| Bajaj Finserv | Up to 4% |
*For loans of Rs.50,000 or above
Also Read: Instant Personal Loan Apps: Features, Benefits, And Eligibility
Final Word
A personal loan could be helpful during a financial emergency. If you want to apply for a personal loan, it is best to compare the interest rates offered by banks and NBFCs. This will help you get the best deal and enable you to be able to pay back your loan on time. For hassle-free, paperless and instant personal loan disbursal, download the Navi app. You can get instant loans up to Rs.20 lakh with Navi Personal Loan.
FAQs on Personal Loan Interest Rates
Ans: If you have been using a credit card of a particular provider, you may be offered a lower interest rate on your existing loan. This helps the lender retain their existing customers, in this case, you. A balance transfer offers the remaining loan balance at a lower interest rate so that it is easy for you to repay the amount.
Ans: Apply for a personal loan on the Navi Instant app starting from Rs. 5000 to Rs. 20 lakh. It is a completely contactless personal loan process, from filing the loan application to document verification. The loan tenure starts from 3 months onwards. The interest rate ranges from 18 to 36%
Ans: You can get personal loans starting at 9.9% p.a. with Navi. However, the final rate depends on a host of factors including your credit score, repayment capacity, relationship with the lender, etc.
Ans: Though you may still get a loan with a low credit score, the interest rate offered could be on the higher side. Hence, it’s always advised to have a credit score above 750.
Ans: The other fees and charges may include processing fees, late payment fees, prepayment charges, GST, etc. Navi doesn’t charge any additional fee in case you want to foreclose your loan.
Ans: You can get better deals if you have compared different lenders, a good credit score, a good business relationship with the lender, etc. That way you can even get rates lower than the advertised rates.
Ans: Lenders usually charge a late payment fee in case you miss EMI payments. It’s usually 2% per month on the overdue amount.
Ans: PAN and Aadhaar
Ans: Higher the income, lower the risk for the lender to lend the amount. It gives them a guarantee that you will be able to repay the loan EMI amount every month. On the other hand, lower-income and high loan amounts may become a cause of concern for the lender.
Before you go…
Looking for instant 🚀 personal loans 24*7 anywhere, anytime? Get personal loans up to ₹20 lakh starting at 9.9% p.a. Install the Navi app now!
Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
Trending Blogs
Latest Webstories
