What is one thing you often consider when taking a personal loan? It has to be the interest rate or loan charges & fees, right? Interest rates are important as they tell the amount you would be paying apart from the principal amount during the loan tenure. So, in this brief guide, let’s understand everything about personal loan interest rates, ranging from the importance of personal loan fees to how to calculate personal loan interest. You will also learn about the best personal loan interest rates in India provided by different banks.
What is the Personal Loan Interest Rate?
A personal loan interest rate, as the name suggests, is the rate of interest you pay on a personal loan. In other words, it is the cost you pay to the bank or the financial institution for borrowing money. Personal loan interest rates are calculated in percentage and can be either fixed or floating. A fixed interest rate remains constant throughout the loan tenure, while a floating interest rate can change based on market conditions.
Personal Loan Interest Rates in India (Updated 2024)
The personal loan interest rates in India offered by various popular banks and NBFCs in India are:
| Bank/NBFC | Personal Loan Interest Rate Range |
|---|---|
| State Bank of India Personal Loan Interest Rate | 11.25% to 15.40% |
| Axis Bank Personal Loan Interest Rate | Starting at 10.99% |
| HDFC Bank Personal Loan Interest Rate | Starting at 10.50% |
| Kotak Bank Personal Loan Interest Rate | Starting at 10.99% |
| ICICI Bank Personal Loan Interest Rate | Starting at 10.80% |
| PNB Bank Personal Loan Interest Rate | 10.40% to 16.95% |
| Canara Bank Personal Loan Interest Rate | 10.95% to 16.40% |
| BOB Personal Loan Interest Rate | 11.10% to 18.75% |
| IDFC Personal Loan Interest Rate | 10.99% to 23.99% |
| BOI Personal Loan Interest Rate | 10.85% to 14.85% |
| Yes Bank Personal Loan Interest Rate | Starting at 10.99% |
How to Calculate Interest Rate for Personal Loan
Here’s how to calculate personal loan interest:
SI (Simple Interest)= (P×R×T)/100
Where:
P = Principal amount (loan amount)
R = Annual interest rate
T = Loan Tenure (in years)
For example: If you borrow ₹1,00,000 at an interest rate of 10% for 2 years, the interest would be (1,00,000×10×2)/100 = ₹20,000.
Factors that Influence Personal Loan Interest Rates
The most significant factors influencing personal loan interest rates in India include:
- Credit Score: Higher credit scores often provide loans with lower interest rates
- Income: The higher the income the lower the personal loan interest rates in India
- Loan Amount: When you opt for larger loan amounts, you may get lower interest rates.
- Loan Tenure: Shorter tenures usually have higher monthly payments but lower overall interest.
- Employment Status: Your employment status can influence rates positively.
Tips to Avail Personal Loans at Lower Interest Rates
- Always compare offers from various lenders to find the best personal loan rates.
- Opt for a shorter tenure for your loan.
- Make sure to check and improve your credit score regularly.
- Negotiate with the lender for better loan rates.
| Feature | Fixed Interest Rates | Floating Interest Rates |
|---|---|---|
| Stability | Remains constant | Varies as per market trends |
| Predictability | High | Low |
| Cost In Falling Market | Higher | Lower |
| Cost In Rising Market | Lower | Higher |
Note: Floating Interest rates are often lower than fixed rates for home loans.
Also Read: What is a Floating Interest Rate
How to Calculate Personal Loan EMI?
You can calculate the personal loan EMI using the following formula:
𝐸 𝑀 𝐼 = 𝑃 × 𝑅 × ( 1 + 𝑅 )N / ( 1 + 𝑅 )N − 1
Here, P is the principal loan amount, R is the monthly interest rate, and N is the number of monthly instalments.
Personal Loan Processing Fee in NBFC and Banks
Here are the personal loan charges or personal loan fees by various banks and NBFCs:
| Bank/NBFC | Processing Fees |
|---|---|
| CASHe | ₹500 to ₹1200 |
| HDFC Bank | Up to 2.5% (Maximum ₹25,000) |
| SBI | Up to 1.5% (Maximum ₹15,000) |
| ICICI Bank | Up to 2.5% |
| Kotak Bank | Up to 2.5% |
| Axis Bank | 1.5% to 2% |
| IDFC Bank | Up to 3.5% |
Conclusion
It is important to understand personal loan interest rates before you avail a loan as it would decide how much you need to pay during the loan tenure. Meanwhile, if you are looking for an instant personal loan with competitive interest rates, then download the CASHe app today. Enjoy quick approval and hassle-free processing to meet your financial needs.
FAQs
1. Is the interest rate fixed or variable in personal loans?
Personal loan interest rates in India can be either fixed or variable. You can opt for any one of them while taking a personal loan.
2. What factors influence personal loan interest rates in India?
Factors influencing personal loan rates include your credit score, income, loan amount and loan tenure.
3. How can I improve my chances of getting a lower interest rate?
You can get a lower interest rate by improving your credit score, comparing offers from different lenders, negotiating with your lender, or opting for a shorter loan tenure.
4. Do prepayments or early repayments affect the interest rate?
Early loan repayments do not affect the interest rate but can reduce the overall interest paid as it shortens the loan tenure.
5. How does my income determine my personal loan interest rate?
Higher income indicates better loan repayment capacity and hence, reduces the risk for lenders, and this makes you eligible for lower interest rates.
