Personal loan can fund your dreams of going on a vacation, providing the best education to your children, refurbishing your home, and more. On Bajaj Markets, the lowest interest rate on personal loan is 10.49% p.a. However, interest rates and charges vary from lender to lender. Let us take a look at the current personal loan interest rates and applicable charges from various lenders. This information will help you compare different banks' personal loans before applying for a personal loan.
Providers |
Interest Rates |
Processing Fees |
13.5% p.a onwards |
1% of the loan amount + GST |
|
12% p.a onwards |
Between 0% - 6% of the loan amount |
|
14% p.a onwards |
2% - 2.5% of the loan amount + GST or ₹500 + GST (depends on whichever is higher) |
|
10.49% p.a onwards |
Up to 2% of loan amount |
|
14.50% onwards |
2% - 4% of loan amount |
|
30% p.a onwards |
₹1,200 or 2% of loan amount, whichever is higher + GST as applicable |
|
14% p.a onwards |
Starting from ₹399 + ₹100 stamp duty |
|
15% p.a onwards |
From ₹500 to up to 6% of the loan amount |
|
10.99% p.a onwards |
From ₹1499 to 2.50% of loan amount |
|
21% p.a onwards |
2%-4% of the withdrawal amount |
|
24% p.a. onwards |
Processing fee: Rs. 50 to Rs. 200 + 18% GST depending on the loan amount with maximum APR of 48% |
|
16.50% p.a. onwards |
2.50% - 4% of the loan amount + GST |
|
1.50% p.m. onwards |
Up to 4% of the loan amount with a minimum of ₹500 |
|
11% p.a. Onwards |
Up to 2% of principal outstanding + applicable taxes |
The basic formula to calculate personal loan interest rate is:
Interest = Principal amount x Interest rate
For instance, suppose a borrower avails a personal loan amount to Rs. 10 Lakhs at an interest rate of 12% per annum, with repayment tenure of 12 years. The interest, in this case, will be:
You can further calculate your EMIs using this formula:
Here, P = principal amount, R = rate of interest, N = tenure
Applying this formula, your EMI will be Rs.88,849.
Further, for the next month, your interest will be calculated on the balance amount, i.e., loan balance – principal repaid.
There are two kinds of personal loan interest rates: Fixed and Floating.
Fixed Interest Rate: Here, the interest rate charged on the personal loan amount will remain constant throughout the loan repayment period. You know your personal loan EMI obligation at the start of the tenure, allowing you to plan your monthly budget accordingly.
Floating Interest Rate: Here, interest rates could change depending on changes to the Marginal Cost of Lending Rate (MCLR), the base rate set for banks by the RBI. With changes in MCLR, the interest rate on loans also gets revised. With a lower interest rate, the repayment amount is also reduced. On the other hand, your EMI obligation will also increase if the interest rates increase. A floating personal loan interest rate makes it difficult for you to ascertain your monthly financial obligation.
Maintain a good credit score, i.e. above 750
Maintain an excellent credit history with timely repayments
Compare interest rates and look for offers before availing of a loan
Check the interest calculation method to ensure you are paying low interest
The employer's credibility is an important factor to get you favourable deals
Your employment history and stability help in building a good credit score which greatly influences the interest rate
Various factors affect the rate of interest on personal loans. Having a fair idea about these factors will help you get the best personal loan interest rates.
Income Stability: Having a stable source of income assures the bank that you will be able to pay the loan on time. Higher the income, the higher your chances of getting a personal loan with a low interest rate.
Repayment History: An excellent repayment history helps you fetch a good personal loan. Your repayment history shows that you can service the loan in the stipulated time period without defaulting. This can significantly increase your personal loan eligibility and help you get a lower interest rate on your personal loan.
Relationship with Bank: The kind of relationship you share with the bank can also affect the personal loan rate. Having a savings account with the bank can be an added advantage. Depending on your credit score and relationship, you can negotiate for better deals. Also, based on your relationship and negotiation skills, the bank can consider a low interest personal loan.
Apart from interest rate, you have to pay a few additional fees and charges to your bank. They are:
Processing fees
Prepayment and foreclosure charges
Verification charges
Penal interest
Documentation charges, and more
Note that it is crucial you assess these associated charges beforehand, as they can substantially affect your overall cost of borrowing.
To lower your overall cost of borrowing, it is advisable to opt for a personal loan with a low interest rate. However, the rate you get will depend on your eligibility parameters and CIBIL score among other factors.
Your income is one of the most crucial factors that depicts your repayment capacity. In this regard, if you have a higher income, the lender might disburse you the corpus at a lower interest rate. This is because a higher income can increase your creditworthiness.
The processing fee on a personal loan can be up to 3%-4% of the loan amount.
The pre-closure charges for a personal loan can be from 0% to 5% of the outstanding balance.
Repo rate forms the basis for determining personal loan interest rates for many financial institutions. Typically, personal loan rates are anywhere between 2-4% above the Repo rate.
Variable or floating interest rate changes whenever the Reserve Bank of India (RBI) revises their repo rate.
The reducing balance interest rate is a system under which the payable interest is calculated on outstanding personal loan principal amount every month. The EMI amount calculated under this method is made up of a principal component and interest component calculated on the outstanding personal loan principal amount.
While approving a loan application, one of the first factors that lenders consider is the borrower’s credit score. A higher credit score will ensure you fulfil the eligibility parameters. As a result, you may be able to obtain a personal loan at a lower rate of interest, thus lowering your cost of borrowing.
A collateral may help you obtain a personal loan at a reduced rate of interest. However, note that since personal loans are unsecured, the acceptance of collateral to reduce the interest rate happens at the discretion of the lender.
If you borrow with a fixed interest rate, the bank cannot change the interest rate during loan tenure. However, if you have obtained a personal loan at a floating rate of interest, your bank can change the interest rate as the MCLR changes.