For just about any reason like debt consolidation, unexpected expense bill, vacation, etc., a personal loan can be your one perfect match. Usually for two or five years, with annual installments, a personal loan can be repaid. Oak Park Loans are also widely referred to as unsecured loans because they are not backed by collateral. When applying for a personal loan, there are several points to follow, but choosing the one that best suits your needs with a low interest rate is the smart strategy here. And taking the same into account, public sector banks tend to lead the way in trying to offer cheaper interest rates on loans across segments compared to major private sector banks in India. Here we have taken the cheapest interest rates on personal loans of Rs 5 lakhs which are currently provided by major Indian banks.
Tips for getting a personal loan at the lowest interest rates
Here are some considerations you can follow to get the lowest interest rates on a personal loan when applying:
- A strong credit history plays an important role when applying for a personal loan. Banks and financial institutions support borrowers who have good credit with the lowest personal loan interest rates. Therefore, before applying for a personal loan, you must review your credit score. You should consider options to increase your credit score if it is below 750. If your credit score is above 750, there are more possibilities for you to have a personal loan at the cheapest rate.
- Your credit score can be negatively affected if you miss a loan or credit card repayment. Typically, lenders consider debt history before agreeing on interest rates for a personal loan. Lower interest is usually applied to those who have paid their previous IMEs and credit card payments on or before the deadline.
- During festive periods, banks and financial institutions usually offer attractive interest rates for a short period. It is therefore planned to apply for a personal loan during the holiday season to obtain the lowest rates.
- It is necessary to compare the interest rates of personal loans provided by different NBFCs and banks before applying for a personal loan from a specific bank. It will allow you to benefit from a personal loan at a reasonable interest rate.
- You can receive the lowest interest rate if you are a current customer of a bank or if you have a positive relationship with the lender.
Factors That Influence Personal Loan Interest Rates
- When determining the rate of interest, loan providers first and foremost consider the income stream of the individual. People with a high salary can get a personal loan at the lowest possible rate.
- Credit institutions can grant borrowers different interest rates depending on whether they are self-employed or salaried.
- The age of the individual can also have an effect on the interest rate provided by the lender. A higher rate of interest may be applied to people entering retirement age.
- At the time of personal loan application, current customers of a bank / financial institution may benefit from a lower interest rate, provided they have a strong relationship with the loan issuer.
Facts to consider when applying for a personal loan
There are a few other considerations to keep in mind when choosing a personal loan with a low interest rate and they are:
- One-time fees known as processing fees are charged by loan providers, and just because you are paid low interest, transaction fees charged by multiple lenders need to be looked at and compared.
- If you pay off the outstanding loan balance before the loan repayment period expires, some banks may charge you a pre-closing fee. Thus, it should be checked whether there is a pre-closing fee charged by the bank / financial institution you are applying to.
- You should review the open customer service networks before submitting your loan application and the responsiveness of the provider to assist you on request.
- Although low interest personal loans can be offered by a bank or financial institution, you should make every effort to verify that you meet the eligibility rules stated by the lender. You must confirm that you are checking whether your salary is within the limit set and whether you meet the age criteria indicated for this reason.
- If you are applying for a personal loan due to an emergency, it is necessary to consider the duration of the loan disbursement.
- Although the lender may charge you a slightly higher interest rate, processing fees, default fees, prepayment fees, loan cancellation fees, stamp fees, bank statement fees. double, etc. are the fees you need to check.
Personal loan interest rates
The cheapest personal loan is given by the Union Bank of India at a rate of 8.9% per annum, followed by the Punjab National Bank at 8.95%. The Federal Bank and HDFC Bank, the highest in the table below, cost 10.49% and 10.5% respectively in private sector banks. The interest rate obtained on the websites of the respective banks as of February 4, 2021. Banks are ranked according to the interest rates in ascending order, that is, the banks offering the interest rate on the cheapest are placed at the top and the highest at the edge. Based on the terms and conditions of these banks, the interest rates listed below may differ. As an applicant, if your credit history is poor, you might receive a much higher rate depending on certain aspects, such as your salary, occupation, and age.
|No Sr.||Banks||ROI in% pa|
|1||Union Bank of India||8.90|
|2||National Bank of Punjab||8.95|
|3||Central Bank of India||8.95|
|5||Bank of Maharashtra||9.55|
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