State Bank of India offers personal loan of up to Rs. 20 lakh to both salaried individuals and pensioners. These schemes are available to deal with a diverse group of individuals. The interest rate for SBI personal loan starts from 10.35% and varies across the types of loans. In the following sections we will discuss key aspects of SBI personal loan interest rate including rates for various types of personal loans, the method of interest calculation and factors affecting the interest rate.
SBI Personal Loan Interest Rates
Currently, the interest rate starts from 10.35%. Following is a table showing the current interest rate of SBI personal loans as well as those for some of the previous years:
|Month and Year of Announcement||Effective Interest Rate|
|March 2020||10.35% onwards|
|February 2020||10.45% onwards|
|Current (2019- Jan 2020)||10.50% onwards|
|June 2018||10.75% onwards|
|March 2018||11.60% onwards|
|January 2017||11.40% onwards|
|November 2016||11.80% onwards|
|October 2016||12.45% onwards|
Interest Rates for various types of Personal Loans
State Bank of India offers a wide range of personal loan variants suited to the requirements of various groups of individuals:
|Types of SBI Personal Loan||Interest Rate (p.a.)|
|Xpress Elite Scheme Personal Loan||10.35% onwards|
|Pension Loan (including pre-approved pension loan)||11.30% onwards|
|Xpress Credit Personal Loan||11.35% onwards|
|Xpress Power Personal Loan||11.45% onwards|
|Xpress Credit Insta Top-Up Personal Loan||11.45% onwards|
|Xpress Credit Non-Permanent Employees Personal Loan||12.25% onwards|
|Pre-Approved Personal Loan (PAPL)||13.535% onwards|
|Clean Overdraft Personal Loan||16.40% onwards|
|Xpress Credit Personal Loan – IT Employees Scheme||12.75% onwards|
SBI Personal Loan Balance Transfer Interest Rates
Personal Loan Balance Transfer refers to a process using which you can transfer the outstanding amount of your ongoing loan with Bank A to Bank B to save on the overall interest payout. SBI also offers this facility to transfer your personal loan balance with some other banks to get better terms and interest rate. Please note that the interest rate in this case is not fixed, and depends on the individual applicant’s profile.
Method of Interest Calculation for SBI Personal Loan
Interest on personal loan can be calculated using the following two different methods:
- Flat Rate Method: In this method interest is charged on the entire loan amount throughout the loan tenure. As a result, EMI amount remains the same for the entire repayment period.
- Reducing Balance Method: Every EMI you pay has both principal and interest components. Thus, whenever you pay an EMI, part of the outstanding principal amount is paid off while the remainder is used to pay off the interest accrued. In the reducing balance method of interest calculation, interest is charged only on the outstanding loan principal and not the entire amount initially borrowed. As a result, the interest accrued decreases over the loan tenure, and you end up saving on the personal loan interest payable.
SBI follows the reducing balance method of interest rate calculation for personal loans. This means interest is charged on the outstanding loan principal only. Hence, you save on the interest component when you opt for a SBI personal loan.
You can calculate SBI personal loan EMIs and interest payable using Paisabazaar personal loan EMI calculator. Input your desired loan amount, tenure and the interest rate on offer to know the EMI amount instantaneously. Moreover, you can try various combinations of these loan parameters to arrive at the most suitable EMI amount as per your monthly budget. The following are sample EMI payments based on different loan amounts and tenures:
|Loan Amount (Rs.)||Interest Rate (p.a.)||Tenure (months)||EMI (Rs./month)|
SBI Personal Loan Interest Rate Calculation
The following is an illustration of interest calculations for various tenures and interest rates using the reducing balance method:
|Loan Amount (Rs.)||Tenure (years)||Total Interest Payout (Rs.)||Total Amount Repaid (Rs.)||Proportion of Interest in Total Amount Repaid|
|5 lakh @ 11%||1||30,290||5,30,290||6%|
|10 lakh @ 15%||3||2,47,952||12,47,952||20%|
|12 lakh @ 14%||5||4,75,314||16,75,314||28%|
Comparison of SBI Interest Rate with Others
The following is a comparison of SBI personal loan interest rates vs. other top banks and NBFCs in India*:
|Bank Name||Interest Rate|
|State Bank of India||10.35% onwards|
|HDFC Bank||10.75% onwards|
|Yes Bank||10.99% onwards|
|IndusInd Bank||10.75% onwards|
|Axis Bank||12% onwards|
*SBI PL interest rates as well as those of other banks are subject to periodic change.
How to Get Low Interest Rates on SBI Personal Loan?
The following measures constitute the key factors affecting personal loan interest rates. Thus, bear them in mind to get the best possible interest rate for your personal loan.
- Maintain a high credit score: Credit score is a direct reflection of your repayment history for all previous loans/credit cards. It ranges between 300 and 900. Higher the score, better are the chances of getting a low interest rate on your personal loan. You can check your credit score for free at Paisabazaar.com and also get tips and tricks to maintain/improve your credit score.
- Keep credit utilization ratio low: This is the ratio of credit used by the individual to the total credit limit available to him/her. Ideally, this ratio should not exceed 30% in order to get the best personal loan offers.
- Avoid making multiple loan applications simultaneously: This may portray you as a credit hungry. Every time, you apply for a loan, the lender requests for your credit report. This translates to hard enquiries which significantly affect your credit score. Hence, use Paisabazaar.com to compare multiple personal loan offers on a single platform without affecting your credit score.
- Previous relationship with the bank: This may also affect SBI personal loan interest rate. For instance, if you already have a savings account or fixed deposit in good standing with the bank, you may be able to avail the personal loan at a lower rate of interest.
- Employment History: For salaried applicants, the reputation of their employer, the duration of employment as well as the type of employment also affects the personal loan interest rate. Typically government employees with a long employment history (5 years or more) tend to get the best interest rates on their personal loans.
- Maintain low fixed obligation to income ratio (FOIR): FOIR is the ratio of EMIs on your pre-existing loans and credit card dues vs. your total income. A lower FOIR means greater repayment ability and this can significantly affect the SBI personal loan interest rate being offered.
Factors Affecting Interest Rate
The following are some of the key factors that affect the interest rate applicable to your personal loan from SBI:
- Credit History and Score
- Current credit utilization ratio
- Employer and Employment History
- Income of the applicant
- Existing relationship with SBI
Frequently Asked Questions (FAQs)
Q1. What is the current SBI personal loan interest rate per annum?
The interest rate for SBI personal loans starts from 10.35% per annum.
Q2. How have personal loan interest rates been impacted after GST?
Personal loan interest rates are not affected by GST. Thus, SBI personal loan interest rate have remained the same post and in fact dropped post GST implementation. However, charges like processing fee and prepayment penalty now attract GST at 18% as compared to a service tax of 15% applicable during the pre-GST era.
Q3. What is SBI personal loan interest rate for existing customers?
While the interest rate for SBI personal loan starts from 10.35%, some of the pre-existing customers may be able to avail the loan at a lower rate as part of festive and other special offers. Such offers are subject to bank’s discretion and may not be offered to all the pre-existing customers.
Q4. What is the maximum loan amount with respect to SBI personal loan?
SBI offers personal loans up to a maximum of Rs. 20 lakh, which is subject to 24 times of net monthly income (NMI) and applicable EMI/NMI ratio of 50% for all categories of applicants except employees of government aided schools.
Q5. Is SBI personal loan interest rate fixed or floating in nature?
SBI offers personal loan at a fixed rate of interest, linked to 2-year MCLR (marginal cost of funds-based lending rate) of the bank. No floating interest rate personal loans are currently provided by SBI.
Q6. What is the processing fee for SBI personal loan?
The processing fee for SBI personal loan is 1% of the loan amount + applicable GST. Periodically this may be waived as part of special offers.
Q6. Can I prepay SBI personal loan? Are there any charges for SBI personal loan prepayment?
Yes, you can prepay personal loan to foreclose your loan before the due date. However, this will attract a prepayment penalty of up to 3% of the prepaid amount. Please note that the penalty is not applicable if the account is closed with the help of a new loan under the same scheme.
Q7. Can I include my spouse’s income for availing SBI personal loan?
No, you cannot include your spouse’s income to your income in order to avail SBI personal loan. However, the spouse can separately apply for another loan, if he/she fits the eligibility criteria.
Q8. Can I avail SBI personal loan being a pensioner?
Yes, you can avail personal loan even if you are a pensioner. In fact SBI Pension Loan, a type of personal loan that is specifically targeted at pensioners.
Q9. Which method of interest rate calculation does SBI follow?
SBI follows the reducing balance method of interest calculation for personal loan. This method charges interest only on the outstanding loan amount hence helps the borrowers to save on the interest component of the personal loan.