A personal loan is the quickest and easiest way to meet your emergency cash needs. Personal loans can be taken for any reason, be it paying off a credit card or covering a financial crisis. Personal loans can also be taken for urgent needs like buying things for your home, your children’s schooling, hospitalization, etc. The loan amount and interest rate vary from bank to bank.
While taking a personal loan, one should keep in mind things like interest rate, processing fee and repayment period. Interest rates may change according to your credit score and loan amount. Therefore, consider all the points carefully before taking a loan.
What is a Personal Loan
Personal loan is also called personal loan. Personal loan comes under the category of unsecured loan because to take a personal loan, a person does not have to give any kind of security. There are many banks and institutions that give personal loans on the basis of less documents. While giving a personal loan, banks or institutions definitely check the credit score of the person. The higher the credit score, the higher the loan amount.
What is The Criteria for Personal Loan
- To take a personal loan, the person must be a permanent resident of India.
- Credit score should be more than 750.
- Monthly income should be more than 20000.
- Age should be between 21 years to 60 years.
- To take a personal loan, the person should be working in the same company for 1 year or if the person is doing his own business, then he should have 2 years of experience.
Documents Required For Personal Loan
If you are a salaried professional then you need to submit your ID proof, address proof and latest 3 salary slips as income proof along with your employer details. If you are already a bank customer and KYC compliant then there is no documentation process for a pre-approved personal loan.
These 5 Banks Are Offering Personal Loans At The Lowest Interest Rates
Axis Bank Personal Loan Interest Rate
Axis Bank personal loan interest rates start from @ 10.25% per annum. There is no need for any guarantee to take a personal loan, so lenders keep in mind factors like credit score, income, age, loan amount, repayment period etc. before deciding the interest rate.
IDFC First Bank Personal Loan Interest Rate
IDFC First Bank is a bank that provides personal loans at the lowest interest rates start at 10.49% per annum. There is no need for any guarantee to take a personal loan, so lenders keep in mind factors like credit score, income, age, loan amount, repayment period etc. before deciding the interest rate.
Kotak Mahindra Bank Personal Loan Interest Rate
Kotak Mahindra Bank personal loan interest rates start from 10.99% p.a. While the bank has not disclosed the interest rates for its various personal loan schemes based on applicants’ credit-score, occupation, income, employer profile and other parameters, most lenders usually consider these factors to determine their personal loan interest rates.
HDFC Bank Personal Loan Interest Rate
HDFC personal loan interest rates start from 11.00% p.a. The final interest rates offered to the loan applicant will vary according to the loan applicant’s credit score, monthly income, job profile, employer profile, etc.
SBI Personal Loan Interest Rate
The interest rates of State Bank of India (SBI) range from 11.45% to 14.60%. However, the interest rate on the loan depends on the customer’s credit-score, occupation, income, employer profile and the loan amount. If the customer has a good credit history, he gets the loan at a lower interest rate.
Personal Loan Processing Fees
The bank charges some administrative fee while disbursing your loan. This is often a nominal amount that varies from bank to bank and usually costs between 0.5% and 2.50% of the total loan amount. Each bank sets a minimum and maximum percentage of loan processing fee that the loan applicant has to pay.
How Personal Loan Interest is Calculated
Talking about how personal loan interest is calculated in India, banks use Reducing Balance Method to calculate interest. For example, the interest on the amount left after paying each EMI is calculated. The first EMI has a higher interest rate and the last EMI has a lower interest rate.
Apart from this, you can also calculate the loan by visiting the website of the company or bank from which you have taken the loan. You will get many options there, from which you can get information like how much will be the EMI of the month, how much amount will have to be paid in total, etc. After this, there is another option, you can also find out from online calculator.
Conclusion
The interest rate on personal loan varies depending on the bank and credit score among other criteria. Apart from this, the interest rate also depends on the amount repayment tenure. Banks keep changing the interest rates. If you have any question regarding this post, then you can tell us by commenting in the comment box given below. Your feedback and suggestions are welcome as always. Thank you.
