Loans for your urgent need of money could be big or small for business needs, buying a house, educational needs and also for your personal needs. Personal needs could be anything to pay for your credit cards, to renovate your house, to meet urgent medical expenses, to pay for a downpayment of a car, to meet vacation expenses, or to meet your wedding expenses.
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This article will take you through the top banks that can provide you with low interest rates on personal loans. It will also include the factors that affect a personal loan’s interest rate and a few points that will help to get a low interest rate on a personal loan.
Banks That offer low-interest rate are as follows –
- State Bank of India – Interest Rate – Starting from 9.60%. Its internet banking portal provides personal banking services through which one can apply for a loan online with minimal documentation and low processing charges.
- BOI (Bank of India) – Interest Rate – Starting from 9.35%. BOI Star Personal Loan. Bank Of India offers loans for marriage expenses, medical expenses, educational expenses, purchase of consumer durables, and much more.
- Indian Bank – Interest Rate – Starting from 9.05%. Indian Bank personal loan is eligible to salaried individuals (IB Clean Loan) and pensioners (IB Pension Loan).
- HSBC – Interest Rate – Starting from 9.99%. The main feature of HSBC Bank is that the Personal Loans are available with flexible tenure of up to 5 years. No requirement of collateral/guarantor.
- Citibank – Interest Rate – Starting from 9.99%.Citibank offers personal loans to salaried and self-employed applicants ex-pats (Expatriate person temporarily or permanently residing in a country out of India)
- UCO BANK (United Commercial Bank Ltd) – Interest Rate – Starting from 8.45%. It is a commercial bank, and its primary motive is to provide loans and advances to the person who needs them.
- Central Bank of India – Interest Rate – Starting from 8.45%. Central Bank of India is an Indian government-owned bank. It is one of the old commercial banks in India. It is based in Mumbai.
- Punjab National Bank – Interest Rate – Starting from 8.95%.Punjab National Bank provides multiple types of personal loan schemes that are for specific types of applicants.
- Union Bank of India – Interest Rate – Starting from 8.90%. Union Banks offers loans up to 15 Lakh Rupees.
- Bank of Maharashtra – Interest Rate – Starting from 9.55%.The bank offers a personal loan scheme called ‘Mahabank Personal Loan.’
Factors Affecting Personal Loan Interest Rates
- Income: More income means greater financial stability, which would result in higher repayment capacity and it may result in a low-interest rate
- Employment Type and History: Those working in a reputed private or government company with good stability result in a preferentially lower rate of interest. The nature of your employment plays an important role as well, whether you are salaried, self-employed, or a pensioner.
- Credit History and Credit Score: The more the credit score(750 or above), the lesser is the rate of interest.
- Fixed Obligation to Income Ratio (FOIR): It is an indicator of loan eligibility. It refers to the ratio of your pre-existing credit card dues and loan EMIs to your income. One needs to have a low FOIR (preferably lower than 50%) which will help you in availing a lower rate of interest on your personal loan.
- Prior Relationship with the Lender: If you have a good prior relationship with a bank, such as a savings or salary account, you have higher chances of getting a lower rate of interest on your personal loan.
How to Secure A Low-Interest Rate on a Personal Loan
- High Credit Score and a Clean Credit History
- Minimal Outstanding Dues and a credit utilization ratio of 30% or lower.
- Stability in Your Finances – Good Reputed Company with Job Stability and Income.
- Applying to a bank with which you have a good relationship.
- Opt for a secured personal loan like a loan against shares, KVP, NSC, LIC, and much more.
- Research for the interest rates of other banks. Compare them and go with the one which suits you best.
Look out for seasonal offers: During the festive season, banks launch attractive schemes offering personal loans at lower interest rates. It might be beneficial to avail loan at such times.
- Check for other aspects of loan as well, not only on the interest rate offered but also on loan tenure, processing fee, prepayment charges, loan amount.
- Loan against security like property, gold, and other collateral security.