How To Calculate Personal Loan Interest Rates in 2023?

Aug 22nd 2023
Loan
How To Calculate Personal Loan Interest Rates in 2023?

How To Calculate Personal Loan Interest Rates in 2023? In today’s fast-paced world, people are running after money and it should come as no surprise for most of us. The reason behind this is this money has become central to everything around us. From buying groceries to transportation, shopping, education, healthcare, and other elements, it is difficult to live a happier life without money. And, it is also true that no matter how much you earn, you will always think that you need money. In most cases, when we come across the need of funds, personal loans emerge as the most wonderful and easier way to secure funds. Since personal loans come at a specific interest rate, the borrowers are supposed to pay the borrowed amount in the form of Equated Monthly Installments (EMI).

The interest rates on a personal loan are largely governed by the Reserve Bank of India (RBI). Any kind of increase or decrease in the repo rate directly affects the EMI paid by a borrower. However, in order to combat inflation, the RBI has made no changes in the repo rate which has kept the personal loan interest rates of a majority of financial institutions unchanged.

Personal Loan Interest Rates of Major Banks in 2023

If you are looking to avail a personal loan in Delhi, you must need to know Baninterest rate charged by all the leading banks and financial institutions from the borrowers. For your references, we have highlighted the personal loan interest rates of all top lenders.

Read More- How To Calculate EMI In Advance And EMI In Arrears?

Bank Personal Loan Interest Rates

List of Banks/Lenders

Personal Loan Interest Rates

Allahabad Bank

10.00% - 15.00%

Andhra Bank

11.80% - 15.50%

Axis Bank

10.49% - 21.00%

Bajaj Finserv

11.00% Onwards

Bank of Baroda

10.90% - 18.25%

Bank of India

10.35% - 14.85%

Bank of Maharashtra

9.50% - 12.80%

Canara Bank

11.75% - 16.25%

Central Bank of India

12.30%

Citibank

10.49% Onwards

Corporation Bank

11.80% - 15.50%

Dena Bank

10.90% - 18.25%

DCB Bank

13.00% - 25.00%

Federal Bank

10.49% - 17.99%

HDFC Bank

10.75% - 14.50%

HSBC

9.75% - 16.00%

ICICI Bank

10.75% - 19.00%

IDBI Bank

10.50% - 13.25%

IndusInd Bank

10.25% - 26.00%

Jammu & Kashmir Bank

12.20% - 13.20%

Karnataka Bank

13.49%

Karur Vysya Bank

12.20% - 13.20%

Kotak Mahindra Bank

10.99% Onwards

Lakshmi Vilas Bank

11.55%

Oriental Bank of Commerce

11.40% - 16.95%

Punjab & Sind Bank

11.15% - 12.75%

RBL Bank

14.00% - 23.00%

Punjab National Bank (PNB)

11.40% - 16.95%

State Bank of India (SBI)

11.00% - 14.00%

Standard Chartered Bank

11.49% Onwards

Syndicate Bank

11.75% - 16.25%

UCO Bank

12.80%

United Bank of India

11.40% - 16.95%

Vijaya Bank

10.90% - 18.25%

YES BANK

11.05% - 20.25%

Tata Capital

10.50% - 24.00%

Fullerton India

11.99% Onwards

 

How Do Personal Loan Interest Rates Work

If you have ever applied for a loan, you can easily understand that banks and financial institution charge a certain percentage on the disbursed loan amount and the borrowers need to repay the same as Equated Monthly Installments (EMIs). This is because lenders usually work by lending the money to borrowers and earn the interest as their source of income.

The higher interest rate a bank charges, the more profit it would make. There are several factors that play a role in determining the interest rate that is levied by the banks from the borrowers. For example, your credit score, loan repayment tenure, and amount borrowed helps the lenders decide the specific interest rate they should charge against the borrowed amount.

Factors Affecting Personal Loan Interest Rates

As a borrower, you need to have thorough knowledge of various factors that affect the interest rate for a personal loan you take from a bank or financial institution.

Employment Details and Employer’s Profile

A majority of banks and financial institutions pay consideration to borrower’s employment history, his current organization, job stability, residential status, etc. Lenders use this information along with fixed obligation to income ratio (FOIR) to determine the interest rate they should levy for your loan application. In most cases, government employees gets more weightage than private sector employees due to their job stability and employer’s profile.

However, this is not always true as several multinational corporate have excellent reputation among banks which means if you are working in a reputed private organization, your personal loan application is highly likely to get approved by all top lenders in India.

Comparison of Loan Offers

At present, there are large numbers of aggregator platforms accessible that can help borrowers in choosing the best loan offer. After determining your eligibility and required documents, you may choose one of the many portals available today that compares various personal loan offers at one place.

Do not hesitate from following their endorsements if you have a feasible record of good communication with your bank. They might be able to present an offer specifically for you that meets your needs the best.

Read More About Different Topics-

7 Factors Personal Loan Requirements In 2023

Comparative Analysis: Best FD Rates Offered by Banks in 2023

How Interest Is Calculated?

If possible, try to get into the details of interest rate determination. Different lenders may offer you varying interest rates, and while some may appear lower at first because of how they are calculated, you can wind up paying a greater interest towards the end of the term.

Credit Score and Repayment Records

A CIBIL score of 750 or above is considered good for a majority of banks. The best thing about having a good credit score is that it may help you in securing a personal loan at a lower interest rate as compared to those with low CIBIL. If you don’t apply for credit cards and direct loans, you may be able to keep your credit score high.

Making on-time loan payments helps building your credit rating, which further impact the interest rate a lenders offers you. You are perceived as a respected and secure borrower if you pay your credit card bills always on time and pay monthly instalments responsibly.

Fixed vs Variable Interest Rates And Difference Between Them

There are primarily two types of interest rates – fixed and floating. As its name indicates, fixed interest rates refer to set interest rates that remain constant throughout the loan repayment tenure. On the other hand, floating interest rate may change given different parameters, particularly the repo rate set by the Reserve Bank of India (RBI).

You may think that floating interest rate is better than fixed rate, but it is not. But, according to experts, fixed rate loans are always a better idea as you would know, that no matter the market situation, your interest rates will not increase.

Repayment Tenure Meaning

If you borrow money is borrowed for a prolonged tenure, interest rates tend to be higher. This is so because the lender is bearing more risk. For those looking to save on interest rates, it is suggested for borrowers to take a personal loan for a shorter time.

Therefore, it is advisable to compare interest rates from different lenders. As you can easily witnesses, there are several elements that affect the interest rate, including time, whether the loans are secured or unsecured, whether the repayment schedule is set or variable, your credit score and payback history, whether you have a consistent income or not, and many more.

FAQs

1. How Much Time Is Taken By Lenders To Disburse A Personal Loan?

Most lenders take 1-3 days for loan disbursal once the loan application is approved.

2. What Does EBLR Mean?

EBLR, or external benchmark lending rate, is the correct acronym. Most lenders choose the repo rate as the external benchmark to connect its variable rate personal loans.

3. What Is the Personal Loan Interest Rate?

The interest rate might be as high as 35% or as low as 10%. The interest rate varies from lender to lender and is based on a variety of variables, such as the loan amount, period, and credit score of the borrower.

The Conclusion

Whether you want to take a personal loan in Delhi for short term or long term, it is necessary to pay close attention to the interest rates being levied by the lender. Ideally, you should compare the loan offers made by different lenders and choose the one that gives the best deal.

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