Current Personal Loan Interest Rates – October 2021
|Lenders||Interest Rate (p.a.)||EMI/5 lakh for 5 yrs. (Rs.)|
|State Bank of India||9.60% – 13.85%||10,525-11,595|
|HDFC Bank||10.25% – 21%||10,747-13,527|
|Punjab National Bank||7.95% – 14.50%||10,126-11,764|
|ICICI Bank||10.50% – 19%||10,747-12,970|
|Bank of Baroda||9.10% – 15.35%||10,403-11,987|
|Union Bank of India||8.90% – 13%||10,355-11,377|
|Axis Bank||10.49% – 24%||10,744-14,384|
|Bank of India||9.35% – 12.35%||10,464-11,211|
|Indian Bank||9.05% – 13.65%||10,391-11,544|
|Kotak Mahindra Bank||10.25% onwards||10,685 onwards|
|Central Bank of India||8.45% onwards||10246 onwards|
|IndusInd Bank||11% onwards||10871 onwards|
|IDBI Bank||9.50% – 14%||10,501-11,634|
|Indian Overseas Bank||11.30% – 12.05%||10,946-11,135|
|Yes Bank||10.99% onwards||10,869 onwards|
|UCO Bank||10.05% – 10.45%||10,636-10,735|
|Federal Bank||10.49% – 17.99%||10,744-12,694|
|Bank of Maharashtra||9.45% – 12.80%||10,489-11,325|
|IDFC FIRST Bank||10.49% onwards||10,744 onwards|
|Bajaj Finserv||13% onwards||11,377 onwards|
|RBL Bank||14% onwards||11,634 onwards|
|Muthoot Finance||14% onwards||11,634 onwards|
|Citibank||9.99% – 16.49%||10,621-12,290|
|Tata Capital||10.99% onwards||10,869 onwards|
|Standard Chartered Bank||11% onwards||10,871 onwards|
|HSBC||9.50% – 15%||10,501-11,895|
|StashFin||11.99% onwards||11,120 onwards|
|Fullerton India||11.99% onwards||11,120 onwards|
|Faircent||12% onwards||11,122 onwards|
|KreditBee||12.24% onwards||11,183 onwards|
|MoneyTap||12.96% onwards||11,366 onwards|
|Dhani Loans & Services||13.99% onwards||11,632 onwards|
|(Formerly known as Indiabulls Consumer Finance Ltd.)|
|Money View||15.96% onwards||12,148 onwards|
|PaySense||16.80% onwards||12,373 onwards|
|EarlySalary||18% onwards||12,697 onwards|
|Home Credit||24% onwards||14,384 onwards|
|CASHe||27% onwards||15,268 onwards|
|HDB Financial Services||Up to 36%||Up to 18,066|
Get a Personal Loan online at lowest interest rates Apply Now
Interest Rate for Different Types of Applicants
Most lenders consider a number of factors when deciding the interest rate applicable to personal loan applicants. One of these is the applicant type. The following are some insights regarding how personal loan interest rates tend to vary depending upon the type of applicant:
- Salaried and self-employed: Whether the applicant is salaried or self-employed can significantly impact the interest rate applicable to a personal loan. Generally, salaried employees with a stable employment record working with reputed organizations tend to get a personal loan at a lower rate of interest than self-employed. This is because salaried employees working with a reputed company have greater job security, and in most cases better ability to repay their loan. However, self-employed applicants with a stable source of income can also avail personal loans from banks and NBFCs at competitive interest rates.
- Women: Certain banks and NBFCs, such as Bajaj Finserv and Fullerton India offer preferential rate of interest to women. This is in an attempt to promote salaried women, entrepreneurs and professionals to fulfill their dreams and be financially stable.
- Pensioners: Pensioners can avail special personal loan specifically meant for them at a relatively lower rate of interest from banks like State Bank of India (SBI) and Punjab National Bank (PNB). In most cases, preferential (lower) interest rate on pension loans is available in case, the pension account is held with the chosen lender.
- Beyond the applicant type, interest rate depends on the individual applicant profile. People with a stable source of income, good credit history and high credit score tend to receive a loan at a lower rate, irrespective of their category.
- Borrowers with an average credit score (less than 750), lower income and repayment capacity, are less likely to be approved for a personal loan. If they do, the loan is likely to be offered by only select lender NBFCs at an extremely high interest rate. In certain cases, the interest rate can be over 25% p.a.
- Also, such borrowers, who are seen as a risk to lend to by Banks and NBFCs, may get approved only for smaller loan amounts. It’s highly unlikely that a lender would offer high ticket size personal loans to borrowers with damaged credit history and weak repayment capacity.
Check Free Credit Report before you apply for personal loans Check Now
Factors Affecting Personal Loan Interest Rates
Lenders fix interest rates of personal loans primarily on the basis of their cost of funds and the credit risk evaluation of their loan applicants. Here are some of the factors that can influence your personal loan interest rates:
- Credit Score: Many lenders have started factoring in the credit scores of their loan applicants while setting their interest rates. Those having higher credit scores are offered personal loans at lower interest rates than others. Hence, try to maintain credit scores of 750 and above. Good financial habits like repaying your credit card bills and EMIs by their due dates, avoiding multiple loan or credit card applications within a short period and maintaining credit utilisation ratio within 30% would help you maintain higher credit scores.
- Income: A higher income indicates a higher capacity to repay the loan. This leads to lower credit risk for the lender. Thus, many lenders offer lower personal loan interest rates to those having higher income.
- Employer: Many lenders consider the employer profile of their personal loan applicants while setting their interest rates. Salaried individuals are usually charged lower interest rates than the self-employed ones due to the former’s higher income certainty. Among salaried applicants, government and PSUs are usually offered lower interest rate due to their higher job security and income certainty. Then, comes the personal loan applicants employed with MNCs and reputed private sector organizations as such companies are usually considered to have higher chances of withstanding economic downturns than other private sector organisations.
- Existing lending or banking relationship with the Lender: Many lenders offer personal loans at concessional interest rates to applicants having existing banking or lending with the lender. Hence, those planning to avail personal loans should always contact the banks/NBFCs with whom they already an existing lending or banking relationship for personal loan offers.
How to Avail a Personal Loan at Low Interest Rate?
- Try to maintain credit scores of 750 and above.
- Check out personal loan offers, if any, available from banks or NBFCs/HFCs with whom you already have existing banking, credit card or lending relationships.
- Check out for pre-approved personal loan offers offered by other lenders.
- Check out the special interest rate offers during the festive season.
- Visit online financial marketplaces like Paisabazaar.com to compare the personal loan offers available from a diverse set of banks and NFBCs, based on your credit score, monthly income, employer profile, location, etc.
Frequently Asked Questions (FAQs)
Q. How can I check the total interest payout for my personal loan?
Ans. You can check both your monthly EMI and total interest payout using the personal loan EMI calculator. All you need to provide are the loan principal, the interest rate and the loan tenure to get instant results.
Q. Do government employees get special low interest rates on personal loans?
Ans. Many leading banks in India do currently offer special interest rates on personal loans to government employees. This is due to the higher job stability typically associated with those in government service as compared to private sector employees. To know the details of such offers and whether you qualify, you should contact the prospective lender.
Q. Do women borrowers get a lower interest rate on personal loans?
Ans. Yes, to encourage salaried women, professionals and entrepreneurs to become financially stable and fulfill their dreams, certain banks and NBFCs do offer preferential rates of interest on personal loans to women.
Q. What is a good interest rate for personal loans in India?
Ans. In the case of personal loans, the lower the interest rate, the better. As of October 1, 2021, the lowest personal loan interest rate on offer is 7.70% p.a. from Punjab National Bank. However, a majority of lenders are currently offering their personal loans in the 9.00% p.a. to 11.00% p.a. range.
Q. What is the difference between fixed and floating personal loan interest rates?
Ans. In the case of fixed interest rate loans, the rate remains unchanged over the entire tenure of the personal loan. In the case of floating rate loans, the rate can change periodically due to changes in market interest rates. Currently, most personal loans are offered at fixed rates as most of these loans have a relatively short tenure of up to 5 years.
Q. My salary is Rs. 20,000 per month. What is the maximum personal loan I can get?
Ans. Each bank utilises its unique method to calculate the maximum personal loan amount based on monthly income. Some banks calculate the maximum personal loan using the Gross Monthly Income or Net Monthly Income criteria.
For example, Indian Bank offers a maximum personal loan amount equal to 20 times the gross monthly income of the applicant. So for a monthly income of Rs. 20,000, the maximum loan amount offered by Indian Bank is Rs. 4 lakh (20×20,000).
However, lenders do consider additional criteria such as existing debt obligations, job stability, number of dependants, city of residence, etc. to determine the maximum loan amount for a specific applicant.
Q. I already have a savings account with the State Bank of India. Will I get a low interest rate if I apply for a personal loan with SBI?
Ans. Having a prior banking relationship such as a savings or current account in good standing with a prospective lender can help you get a lower interest as compared to other prospective borrowers. However, this benefit is not guaranteed and you will have to get in touch with the State Bank of India to know if you are eligible for this benefit.
Q. Can offering collateral help me avail a good interest rate on my personal loan?
Ans. The interest rate offered on your personal loan depends upon the level of risk you pose for the lender. Collateral serves as a security against default on repayments and minimizes the risk for the lender which may help you get an affordable interest rate on your personal loan. However, do remember in case you fail to repay your loan on time, the lender can liquidate your collateral to recover the loss.
Q. How do I benefit if the interest on my personal loan is calculated using the reducing balance method?
Ans. Unlike the flat rate method, the reducing balance method involves calculating interest only on the outstanding loan principal amount, which decreases as successive monthly EMIs are paid off. As a result, the EMI amount decreases and does not remain fixed as in the case of the flat rate method. Thus, this method of interest calculation also helps you save on the total interest payout of the loan.
Q. How do my employment history and experience play a role in determining the personal loan interest rate?
Ans. Being employed with a reputed company for long signifies that you have a relatively stable source of income and you pose less risk to the lender. Thus the lender may provide you lower interest rate.
Q. Can a bank change the rate of interest during the loan tenure?
Ans. In case you have taken a loan that has a fixed interest rate, the bank will not change your rate of interest in the middle of the tenure. However, if you have opted for a floating type interest rate, the bank may change the rate of interest whenever there is a change in MCLR.