Let’s say you are required to pay a bill of a few lakhs at the hospital during an emergency and you do not have sufficient savings. What is the first thing that comes to your mind? Yes, taking a personal loan.
But what exactly are personal loans? Before stepping ahead to avail it, you must know these things about them.
Personal Loan is an unsecured loan given by banks without asking the purpose of the loan. The bank don’t ask for any security to grant personal loan as personal loan is given banks on the basis of your current financial status, previous credit history and income stability. Availing this loan totally depends upon the situation you are in. If you are in dire need for money but do not have sufficient resources, a personal loan is what you should go for.
Availing a personal loan usually means you do not have to be burdened by any condition imposed by the bank. This is why a Personal Loan is also called an ‘All Purpose Loan’. Availing it is a great option if you are not backed up by any property or like, or if you do not want to mortgage your assets. Personal Loan can be your best friend if you want the money quickly and are ready to pay the little amount of interest that your bank charges you!
Reasons To Take A Personal Loan
Personal loans are flexible and here are some reasons you should consider availing it.
- Marriage Expense
- Business Expansion
- Consolidate Debt
- Hospital Emergencies
- Home Renovation/Repair
- Credit Card Dues
- Traveling Expense
- Car Repair
Features and Benefits of Personal Loan
You do not have to go through the long processes of documentation processing while taking a personal loan, unlike that of car loan or home loan. They are known for their quick availability (in most cases, within 24 hours) which is so useful in emergency situations!
You do not have to spend hours on answering why you are taking it. You can use this money to do almost whatever you want, ranging from shopping for yourself to clearing other debts to clearing bills. Apart from these, you do not need any security to obtain this loan and if you are unable to replay, none of your assets are confiscated which makes personal loans even more alluring.
It is these flexibilities of Personal Loans which is making it increasingly popular among the masses.
You can take a personal loan of upto Rs. 5 lacs, on an average. But this differs from bank to bank.
PERSONAL LOAN INTEREST RATES
If you are searching for the personal loan interest rate, then you are at the right place. We have LoanUncle has merged all the latest interest rates offered by different banks at one place. Please keep visiting this section to get updated personal loan interest rates in India.
Table showing personal loan interest rates and processing fees of various banks and NBFCs*
|Name of the Provider||Interest Rate||Processing Fee||Tenure|
|HDFC Bank||11.49%-20% Per Annum||From Rs. 1500/- Up to 2.5% of the loan amount||12 to 60 Months|
|ICICI Bank||11.49%-22.0% Per Annum||From Rs. 999/ Up to 2.5% of the loan amount and applicable Service Tax||12 to 60 Months|
|RBL bank||14.0%-20% Per Annum||Up to 2.0% of the loan amount and applicable Service Tax||12 to 60 Months|
|IndusInd Bank||11.99% – 23% Per Annum||Up to 2% of the loan amount||12 to 60 Months|
|Kotak Bank||11.50%-24% Per Annum||Up to 2.0% of the loan amount and applicable Service Tax||12 to 48 Months|
|Bajaj Finserv||12.5%-16% Per Annum||Up to 2.0% of the disbursed loan amount||12 to 60 Months|
|TATA CAPITAL||11.99%-19.0% Per Annum||From Rs. 999/- Up to 2.0% of the loan amount and applicable Service Tax||12 to 72 Months|
|Fullerton India||17.25%-35% Per Annum||Up to 3.5% of the loan amount||12 to 60 Months|
|Capital First||14%-35% Per Annum||Up to 2.0% of the loan amount and applicable Service Tax||12 to 60 Months|
|IDFC||12%-18% Per Annum||Up to 1.5% of the loan amount and applicable Service Tax||12 to 60 Months|
*The figures provided in the table are indicative subject to change from time.
TOP 5 FACTORS THAT EFFECT YOUR PERSONAL LOAN INTEREST RATES:
Personal loan interest rates in India depend on various criteria, one being the income level. Different banks have different classifications based on which interest rates are calculated. To start with whether you are working for an employer (salaried) or you are an employer yourself (self – employed). Other factors that affects loan interest rates is as follow.
- Income: If your Income is above a certain limit, Banks believe that your chances of not paying are lesser as you have Income to pay. Most Banks have categories according to income where they give different rates.
As your monthly income goes higher the rate of interest on your personal loan will be lesser.The rates are defined for customers who have income between twenty thousand to fifty thousand and fifty thousand to seventy five thousand.If you have income above seventy five thousand you will get lower rates.
- Your Company Status: Banks define Companies in 3-4 categories.These are Cat A or Elite or Top 500 companies Cat B Cat C or others.
Anyone working in these companies can take Personal loan from Banks.The better category of your company will mean lower rate of interest. Banks classify these companies on the size of company and reputation. Banks believe working customers with better category companies are less likely to default so they give lesser rates to Cat A companies.
So if your company is new and not Categorized in the Banks you are likely to get a higher rate or no loan from the Banks. So all start up company employees expect that your Personal loan will come at a higher rate or you can be refuse.
- Credit and Payment History:Banks follows Cibil scores/rating before deciding giving loans. If your payments for Credit Cards and Loans is not upto mark , you have the most likely chance of being rejected for the loan or the Bank will give you at a much higher rate.
Cibil score is in the range of 0-900. Most Banks prefer customers for Personal loan with score above 750 and if your score is above 800 you can expect a .25% basis drop on your rate for the Personal loan.
- Relationship with your Bank:The Bank where you have your Salary account/Savings account is likely to pass on to you some special rate for your personal Loans or Processing fee. Banks want to retain there customers and will go all out to give lower rates for Personal loan to customers who have accounts or Credit Card with them.
Banks have special schemes for rates of interest for Personal loan for all its customers. So when you are considering to take the lowest rate Personal loan you should always check with your bank who do you have your salaried account.
- Individuals Negotiating Skills:Based on your above points you can always ask Bank to give you waivers on Rates, Fees Etc.
FACTORS EFFECTING SELF EMPLOYED CUSTOMER FOR PERSONAL LOAN RATES:
- Annual Income tax return- If your income is high and you are a large company you can expect rates to be lower for you.
- Type of Business- Banks are ready to give lower rates to sound businesses. So all Manufacturing and sound business professionals get a better rate of Interest on the personal loan.
- Special rates to Self employed professionals- Banks really likely to fund Doctors/Engineers/Ca and Architects. Banks believe these set of customers very rarely default and hence their rates are better from others.
The most beneficial thing about Personal Loans is that you do not have to provide a plethora of documents. However, there is a little amount of it that you have to present to the bank while availing the loan and we have that sorted for you.
Salaried – Personal Loan Documents
- Proof of Identity:- Passport / Driving License / Voters ID / PAN Card (any one)
- Proof of Residence:- Leave and License Agreement / Utility Bill (not more than 3 months old) / Passport (any one).
- Latest 3 months Bank Statement (where salary/income is credited).
- Salary slips for last 3 months.
- 2 Passport Size photographs.
SELF EMPLOYED – PERSONAL LOAN DOCUMENTS
- KYC Documents : Proof of Identity; Address proof; DOB proof.
- Proof of Residence:- Leave and License Agreement / Utility Bill (not more than 3 months old) / Passport (any one).
- Income proof (audited financials for the last two years).
- Latest 6 months Bank statement.
- Office address proof.
- Proof of residence or office ownership.
- Proof of continuity of business.
PERSONAL LOAN BALANCE TRANSFER
Personal Loan Balance transfer: Feeling the interest burden of your existing home loan? Relax! Transfer your personal loan to a lower interest rate with a Personal Loan Balance Transfer. Further, you also have the option of a Top-Up loan over and above the balance you transfer.
Just by switching you existing personal loan from higher interest rates to lower interest rate lender can save you thousands or sometimes in lakhs. And it really don’t mean saving the interest. You can anyway use the same at anything. After all, securing a personal loan is not the end of journey.
Once the balance amount will be transferred to lower interest rates, the EMI will automatically gets lower. Here you go. A penny is saved is a penny earned.
To know how LoanUncle could help you in it. Quick Query – 9999-6636-04 or hi@LoanUncle.org
The eligibility criteria is different in different banks. Personal Loan is a short term loan and is usually granted to be repaid from minimum 6 months to 5 years. However, most banks prefer giving it for 3 to 5 years.
Here are the common factors that determine you are eligible for avail a Personal Loan.
- To apply for a personal loan, you either have to be a salaried employee or a self-employed businessman, earning at least Rs. 17,5000 per month.
- In case of a salaried employee, the minimum age should be 21 years. If you are self employed, you need to be at least 24 years of age.
- At the time of maturity of the loan, You need to be maximum 58 years old if you’re a salaried employee. For a self employed person, the age limit is 65 years.
- A salaried employee needs to be with the institution for at least one year to be eligible for the loan. In case of a self employed businessman, he needs to be in the same profession for at least 3 years.
There are few options to increase the Eligibility:
- Pay off running loans where less number of EMIs are left early to increase loan amount eligibility.
- Never default in paying EMI or any other obligations to increase credit history.
- Transfer your existing loans to a lower rate to reduce existing EMI that would help you get a higher Fresh Loan.
- Timely repayment of previous personal loans helps you negotiate with banks to get higher loan amount.
FREQUENTLY ASKED QUESTIONS – FAQS ON HOME LOAN
Q.What is the minimum and maximum limits while availing a Personal loan?
The range of Personal Loan is from Rs.50,000 to Rs.50 Lakhs In India and are available to both Salaried and Self-employed customer.
Q.How can I take Personal Loan?
Banks get more cautious and selective while giving Personal Loans to customers as Personal loan is an unsecured loan. While granting personal loan, banks ensures stable income, assured sources of earning and good credit history of the customer. If you fulfill this criteria, then you get to choose bank that satisfy your requirements, interest rate charged and re-payment options. You can check the details of the procedure here (hyperlink of the process to be added)
Q.How to get the lowest interest rate on Personal Loan?
The only key to this is comparing every aspect of the personal loan from interest rate to processing fee charged. If you need help, feel free to get free advice from LoanUncle.org’s support team.
Q.What to compare or ensure before taking loan?
Compare Interest Rate offered, processing fees, loan amount disbursal time and ensure about pre-payment and part-payment charges.
Q.What is the maximum personal loan tenure?
Personal Loan is a short term loan. Personal loan is usually granted to be repaid from minimum 6 months to 5 years. However, most banks prefer giving it for 3 to 5 years.
Q.How much personal loan amount can I borrow?
Loan amount eligibility depends mainly over one’s monthly income, stability of income and credit history and of course, your ability to repay the loan. However, loan amount is granted by banks after considering various factors. Banks prefer that the EMI should not exceed 40% of your net salary. Don’t forget to talk to our support team to know how much you can borrow.
Q.Is there are any fees or charges to be paid and when to pay it?
When one takes loan, the loan not only carry the Principal and interest but also other charges as well which may include Processing Fee that bank charges to process loan file and pays it to the processing hubs, charges might vary from 1 to 2% of the loan amount sanctioned by the bank. Apart from this, there is Pre-Payment Charges that loan carries for as a Pre-Closure charge for the Loan. It is always advised to take loan from the bank that charges no penalty for the pre-closure (closing before the tenure ends) of loan as it may happen in the future that you would have enough money to pay your debt to save interest on the same.
Q. When would I get the loan money?
Generally, banks disburse personal loan amount with 4 to 7 working days. However, it is suggested that you provide all the documents asked by the banks including post dated cheques (PDCs) in order to avoid delay in disbursement of loan amount in you account as the amount is transferred only when all the requisite documents in checked.
Q.Can I apply jointly for loan with my parents or spouse?
Yes. Personal Loans can be taken with a co applicant. Co applicant can be your parents or your spouse. Applying with a co-applicant increases your income eligibility so as to borrow bigger loan amount as Banks consider total income while judging your loan amount eligibility.
Q.Do banks offer any relationship discount?
Banks may offer relationship discounts by decreasing the interest rate if you’re a credible and old customer of the bank and has salary account with the bank. One is supposed to ask their bank if they could give some discount for the relation you had with the bank. They may also give you other discount in the form of charging less processing fee and the like.
Q.When do I need to start repaying my loan?
Mostly the EMI starts deducting from the 1st day of every month. Banks, before granting loan, ask all the customers to submit post dated cheques (PDCs) or to give the bank authority to deduct EMI monthly from you savings account directly. It is also suggested to ensure the date of deduction of EMI from Bank.
Q.What is the processing fee charged by the bank?
Up to 2.50% of the loan amount subject to a minimum of Rs. 1,000/- & Maximum of Rs. 25000/- is the average amount charged by the banks.
Some other loans include:
Short Term Personal Loan – Get it if you want to repay personal loan quickly;
Short Term Business Loan – Get this loan for short term and repay within 1 Year;
Business Loan – Get it if you want Unsecured loan to fund your business;
Home Loan Balance Transfer – for when you find a Home Loan with interest rates lower than your existing Home Loan, and use this new loan to pay off the previous one;
Home Improvement Loan – for house renovation;
Home Extension Loan – for when you’re planning to expand your house by, for example, adding a new room or wing;
Land Purchase Loan – for when you want to invest in land, whether to build a structure on it in the future or not;
Loan Against Property – for when you need cash to invest in business or elsewhere against the property you have.
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