Personal loans are primarily meant for expenses that a person may not have anticipated or cannot afford at one go. It lets them spread out the cost over a period of several months with amounts that they can pay easily. Personal loans can fulfil various purposes such as a marriage, starting a business, medical expenses not covered by insurance, etc. They give the borrower a lot of flexibility in terms of how they wish to use the money.
Personal loans are given an unsecured loan, so the risk factor for the lender is high. Therefore, the interest rate on personal loans is relatively high when compared with other loans.
There are many factors that decide whether an individual’s loan is approved or not. The most important considered is the individual’s credit score. The credit rating tells the bank the financial behaviour of an individual including details such as the borrower’s track record of making repayment. A bad score and a poor credit history usually mean that the individual is not going to get approved. Therefore, it is imperative for an applicant to make sure they have a good credit score. A good credit score is virtually a must if you are looking for a low interest rate.
The market for personal loan is quite competitive with many private banks offering lucrative deals and offers. Some of the major players are SBI, PNB, ICICI, HDFC, and Standard Chartered. These are all reputed banks that give personal loans at low interest rates. Therefore, it becomes a hassle when one has to choose a bank for a personal loan. The information provided here will help you decide which bank to choose.
|Bank||Interest Rates||Where to Apply?|
|State Bank of India||Starting from 11.95%||Apply Online|
|Punjab National Bank||11.55% to 14.55%||Apply Online|
|HDFC Bank||15.75% to 20%||Apply Online|
|ICICI Bank||11.59% to 16.65%||Apply Online|
|Standard Chartered Bank||11.25% to 14.49%||Apply Online|
State Bank of India
India’s premier government-owned bank is also the largest bank in the country with more than 14,000 branches all over India. SBI gives personal loans at an interest rate starting at 11.95% for a period of up to 5 years. The loan amount starts at Rs. 50 thousand and extends to Rs. 15 lakh. A processing fee of 1% is charged on the total loan amount.
Punjab National Bank
Punjab National Bank is another premier state-owned bank with almost 7000 branches across India. PNB offer personal loans at interest rates starting at 11.55% to 14.55%. The tenure of the loan can be up to 60 months which works out to an approximate starting EMI of around Rs. 2,250 per lakh. A processing fee of 1.80% plus service tax is charged during the approval process.
The Housing Development Finance Corporation Bank is the second-largest private bank in the country. The bank offers interest rates of 15.75% to 20% per annum on HDFC personal loans. The amount borrowed can be in the range of Rs. 50 thousand to Rs. 15 lakh. The tenure of the loan can be between 12 and 60 months. This means that the EMI starts at around Rs. 2400 per lakh for the maximum period of 5 years. A processing fee of 2.50% of the total loan amount is levied on the borrower.
India’s largest private bank offers some of the lowest interest rates in the market for personal loans. ICICI charges an interest of 11.59% to 16.65% with tenures from 1 year and up to 5 years. The amount borrowed can be between Rs. 50 thousand to Rs. 15 lakh. The EMI starts at around Rs. 2,200 per lakh for the maximum tenure. A processing fee of up to 2% is also levied on the total amount borrowed.
Standard Chartered Bank is one of the few international banks that are quite popular for their personal loans. The bank offers personal loans at interest rates starting at 11.25% to a maximum of 14.49%. The maximum amount that can be borrowed is Rs. 30 lakh. The maximum tenure of their personal loans is 5 years. A major advantage with Standard Chartered is that they charge no processing fee for personal loans.