The SBI personal loan interest rate varies with a number of factors. No collateral or security is required for a personal loan, hence, the factors that affect SBI personal loan interest rate include:
1. Market Conditions
- Competitor ROI Policies
Generally, banks are free to determine the personal loan interest rates they wish to charge for loans or pay for deposits, but they must take the competition into account, as well as the market levels for the offered personal loan interest rates.
- Inflation
Higher the inflation rate, the more personal loan interest rates are likely to rise. Thus, Inflation majorly affects the SBI personal loan interest rate levels set by the bank. This happens because lenders will have to demand higher personal loan interest rates on financial services to compensate for the decrease in purchasing power of the money that they will be repaid by the borrower in the future.
- RBI’s Monetary Policies
The Reserve Bank of India influences personal loan interest rates by setting certain rates and stipulating bank reserve requirements. This RBI policy is intended to influence economic activity as well as the health and safety of the overall banking system.
2. Applicant’s Inputs
- CIBIL
The credit score of an applicant is a major consideration in most financial transactions. It has a direct effect on the SBI personal loan interest rate that the applicant is offered. A good credit score speaks for the repayment capabilities of the applicant and makes them appear as trustworthy to the bank, which in turn helps in being offered better interest rates for personal loans. A good credit score and history can assist the applicant in availing the lowest interest rate, or at least a reduced rate of interest on their SBI personal loan.
- Field of Employment
Self-employed individuals will find that they can avail personal loans at a much advanced age as compared to salaried individuals, who cannot apply for loans if they are too close to their retirement age. Similarly, if a salaried individual is working for a well-reputed company, they will find that they will be offered a reduced rate of interest on their SBI personal loan than those whose company is not that well known.
- Bank History
Applicants who already are valued customers of the bank, and have maintained a good relationship, too can negotiate for better personal loan interest rates.
- Income
A higher income plays as a security, ensuring the bank of the loan repayment. Therefore, if the income of the applicant is above a certain limit, banks perceive that your chances of not paying are lesser as you have enough to pay back. As your monthly income goes higher the SBI personal loan interest rate will also be lesser. The rates are defined for customers who have income between Rs.20,000 to Rs.50,000 and Rs.50,000 to Rs.70,000. If you have income above Rs.75,000 you will get a lower rate of interest on personal loans.