Personal Loan Interest Rates Offered By NBFCs In 2022
How Does GST On Personal Loans Work?
16 February 2022
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16 February 2022Have you ever been in a situation where you wanted to take a loan but did not want to deal with the extensive and stringent borrowing procedures at banks? Fortunately, in the last decade, many new financial institutions have entered this lending game.
Among them are non-banking financial corporations (NBFCs), which offer faster approval and disbursal of loans. With the competitive and attractive personal loan interest rates from NBFCs, you can meet any of your urgent cash requirements.
Navi is one of the top NBFCs in India, offering personal loans up to Rs. 20 lakh. To obtain instant personal loans at attractive and flexible interest rates, download the Navi app.
Also Read: How To Avail No Credit Check Personal Loans?
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Top 5 NBFCs in India and the Interest Rates offered by Them
With rising competition, all NBFCs are offering instant personal loans with lucrative interest rates and extended loan tenure. Some of the top NBFCs offering the most attractive personal loan deals are as follows:
| NBFCs | Maximum Loan Amount | Interest Rate (p.a.) | Loan Tenure |
| Bajaj Finserv | Up to Rs. 25,00,000 | 13% onwards | Up to 60 months |
| Navi | Up to Rs. 20,00,000 | Between 9% and 36% | Up to 84 months |
| Tata Capital | Up to Rs. 25,00,000 | Starting at 10.99% | Up to 72 months |
| Fullerton India | Up to Rs. 25,00,000 | Starting at 11.99% | Up to 60 months |
| Aditya Birla Capital | Up to Rs. 50,00,000 | 11.75% onwards | Up to 84 months |
Advantages of Choosing NBFCs for Personal Loans
There are some attractive features of NBFCs that banks cannot offer. You should prefer NBFCs for personal loans because of the following reasons:
Instant approval and disbursal process
Reputed NBFCs work with technology-driven platforms, which help them to streamline the approval process and drastically reduce the disbursal time. Navi ensures a completely paperless loan application procedure, which involves minimal documentation. After the verification process is complete, you can get access to funds within minutes. Download Navi’s mobile app to initiate the personal loan application procedure.
Minimal documentation
When you visit a bank to obtain a personal loan, you always get buried in paperwork. Whereas most NBFCs operate online and offer paperless procedures, reducing the documents required. Some NBFCs, like Navi, only require your KYC documents (PAN and Aadhaar card), and your selfie.
Online application and approval process
The introduction of NBFCs revolutionised and modernised the lending process. One of their prime benefits is their online presence. Many of them offer 100% digital application and approval processes. You do not have to visit any branch physically, and you will get all the funding from the comfort of your home.
How is the Personal Loan Interest Rate offered by NBFCs Calculated?
Keeping aside the various ways you can use a personal loan, calculating the interest rate helps you make a suitable financial plan and choose a desirable NBFC. Upon calculation, you can find out the amount you need to repay monthly and save yourself from falling into a debt trap.
Interest on personal loans and the amount payable can be calculated using this formula:
EMI= [P x R x (1+R)^N]/[(1+R)^(N-1)]
EMI= Equated monthly instalment
P = Principal amount
R= Rate of interest
N= Loan tenure
Let’s say that Radhika applied for a personal loan of Rs. 10 lakh from an NBFC at an interest rate of 11%. She has to repay this loan in 5 years. Thus given the formula, Radhika has to pay an EMI of Rs. 21,742.
Now, the total amount she has to pay is EMI amount x 60 months = Rs. 13,04,545.
Thus, the total interest that Radhika pays is —
Rs. 13,04,545 (Total Amount) — Rs. 10,00,000 (Borrowed Amount) = Rs. 3,04,454.
What Factors Affect Interest Rates of Personal Loans?
Before you opt to take a personal loan, you should learn the factors based on which NBFCs decide the applicable interest rate.
1. Credit score
CIBIL score reveals your financial history and indicates your ability to repay the loan. Every lender checks this score to determine your creditworthiness and to see if you have a history of defaults. If you have a credit score less than 650, then getting a loan can be difficult but not impossible. You can get a personal loan, but you have to pay a higher interest rate.
2. Income level
The higher your income, the more confident the lender will be regarding your repayment capability. Thus, the financial institution will impose a lower interest rate on your loan. However, if you fall in the lower-income bracket, the lender will consider you more likely to default on payments. In that situation, you will have to pay high interest.
3. Loan tenure
A shorter repayment period reduces the likelihood of defaulting on monthly payments. Furthermore, with more frequent EMI payments, the burden of interest rates gets lower.
4. Relationship with the lender
If you are a trusted customer of an NBFC, then the lender can be more lenient with your interest rates. By proving your loyalty and having a good credit score, you can also negotiate for a higher loan amount with a much lower interest.
Also Read: Mistakes To Avoid While Applying For Personal Loan
Final Word
The growing popularity of personal loans has made numerous financial institutions across India start offering these loans. Non-banking financial corporations might not hold a bank licence, but they have revolutionised the lending world.
Personal loan interest rates from NBFCs can make your financial life easy and affordable. Moreover, the added benefits of flexible loan tenure and EMI amount are desirable features for all borrowers looking to solve their short-term cash crunch.
Frequently Asked Questions
Ans: Even though NBFCs and banks offer a lot of common services, there are some key differences. The former can only lend and make investments but cannot accept demand deposits or issue self-drawn cheques. They are also not involved in a country’s transaction services.
Ans: As the lending feature of NBFCs and banks is quite similar, both can levy a processing fee on your loan. This fee varies across NBFCs, and a borrower’s profile can also impact the amount of fee applicable. Generally, the processing fee is between 0.5% and 2.50%.
Ans: No, under no circumstances can an applicant get a refund after paying the processing fees. This fee is a one-time non-refundable payment. So, if you are charged a processing fee of 2% on your personal loan of Rs. 10 lakh, then you will have to pay Rs. 20,000, and it will be non-refundable.
Ans: Yes, personal loans can be used for just about anything. Unlike other loans, there is no end-use restriction. Even though most borrowers opt for this loan during an emergency, you can use it to go on a foreign trip, arrange a wedding or pay utility bills.
Ans: With the paperless and online procedure, NBFCs do ensure fast approval and disbursal of the loan amount. If your documents are in order and you pass the eligibility criteria, most NBFCs will try to transfer the amount almost instantly. However, if document verification takes time, the disbursal time gets delayed.
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