With a personal loan, you can get the money you need to go on vacation, give your kids the best education, fix up your home, and more. The lowest interest rate for a personal loan in market is 10.49% p.a. But each lender has different personal loan interest rates and fees. Let’s look at the interest rates and fees different lenders charge for personal loans. Before you go to a bank to get a personal loan, you can use this information to compare their offers.
Types of Interest Rates on Personal Loans
Fixed Interest Rate: In this case, the interest rate charged on the personal loan amount will stay the same throughout the time it takes to pay it back. At the beginning of the term, you know how much your loan EMI will be, which lets you plan your monthly budget.
Floating Interest Rate: In this case, the interest rate could change if the Marginal Cost of Lending Rate (MCLR), the base rate that the RBI sets for banks, changes. When the MCLR changes, the interest rate on loans also changes. When the interest rate is lower, so is the amount you must pay back. On the other hand, if interest rates go up, your EMI payment will also go up. If the interest rate on your loan changes, it’s hard to know your monthly payment.
Things that affect the interest rates on personal loans
- Personal loan interest rates depend on several things. If you know enough about these things, you’ll be able to get the best interest rates on the personal loan application.
- Stable income: If you have a steady income, the bank knows you will be able to pay back the loan on time. The more money you make, the more likely you can get a personal loan with a low-interest rate.
- Repayment History: If you have a good history of paying back loans, it will help you get a suitable personal loan. Your history of loan payments shows that you can pay back the loan on time and won’t miss payments. This can make getting a personal loan much more accessible and help you get a lower interest rate on personal loan.
- Relationship with Bank: The personal loan rate can also be affected by how well you know the bank. Having a bank savings account can be an added benefit. Depending on your relationship and credit score, you may be able to negotiate better deals. Also, if you have a good relationship with the bank and are good at negotiating, they may be willing to give you a low-interest personal loan.
- Payment and Credit History
If you apply for a personal loan and your payment history isn’t good, many banks won’t even look at your profile, and if they do, they’ll give you a higher interest rate. Also, if you have a good CIBIL score, your application for a personal loan may be approved. You can check your credit score and determine if you qualify for a personal loan.
- Negotiation skills
You have kept a good relationship with a bank if you have had an account there for a long time. So, if you talk with the bank about interest rates, fees, etc., and try to get the best deal, you should negotiate. Depending on how good you are at negotiating, you may be able to get special deals and extra benefits with personal loans.
Personal Loan Charges
Aside from the interest rate, you should also check the other fees that come with your loan.
- Processing Fees: You must pay the processing fee, which is non-refundable. Up to 3% of the loan amount can be charged as a fee, and up to 1.50% of the loan amount can be charged as a fee. The tax that applies is charged on its own.
- Part Payment Fees: After paying the first EMI, you can choose to pay in parts. The fee is 2% of the amount of the loan still owed.
- Foreclosure Fees: You can choose this option if you want to pay off the rest of the loan before the end of the term. You can choose to close the loan early for a penalty of 4% of the amount still owed. After the first EMI is paid, the bank can start the foreclosure process.
- Other Fees: Along with the loan agreement, the NBFC will give you a list of the loan fees. Processing fees can’t be avoided, but other fees can happen in certain situations, such as when an EMI check bounces, when a payment is late when a loan is cancelled, and so on.
