A personal loan is one of the easiest ways to arrange funds when you need money in your account for anything to address your urgent financial needs. It helps you avail funds for multiple things as there are no restrictions on using money. You can apply for a personal loan with a bank or other financial institutions where you think you can get the required amount.
Since a personal loan is unsecured, the lender performs due diligence on the applicant’s financial profile, such as his income, age, existing liabilities, and credit score, among others. One of the key advantages of a personal loan is that it is quickly processed and disbursed within a few days, depending on your eligibility and fulfilment of other criteria.
You can take personal loans for meeting different expenses, including weddings, foreign trips, higher education, medical emergencies or even renovation of your house. A personal loan can come in handy for expanding your business or opening a new business if you are self-employed. You also don’t need to pledge any asset as collateral with the lender while applying for a personal loan.
One of the most important things while applying for your loan is your credit score. It is a three-digit number ranging between 300 and 900. If your score exceeds 700, you hardly face any issue obtaining a personal loan, but the loan amount will be based on your income and repayment capacity. You also need to ensure that you only borrow as much as you can comfortably pay back through EMIs without delaying or defaulting on it.
However, you must evaluate your need carefully and check the amount you need. Avoid borrowing more than what you cannot pay back within a stipulated time. Choose the loan tenure carefully. Often it is between 12 months and 60 months, but some institutions may even offer a longer tenure.
It is critical to choose the tenure wisely, considering your capacity to repay. The longer tenure means a higher interest rate, but the shorter tenure would mean you need to pay higher EMIs. So, factor in your income and take a decision accordingly.
Another important factor that influences your borrowing is the interest rate. You need to compare different lenders and choose the one that gives you the lowest interest rate. Also, you can consider the factors like the disbursement time, prepayment charges, processing fee and other services which will make your loan journey smooth.
Avoid delay in repayments. Defaulting on your loan would mean a blow to your credit score and difficulties in borrowing in the future. A financial discipline is needed to ensure you make the most out of your loan fund.
The table below compares the latest interest rates of more than 20 banks and EMIs for 5 lakh loans for 3 years. You can check and decide basis your requirements.
Interest Rates & EMI on Personal Loan
Compiled by BankBazaar.com
Note: Interest rate on Personal Loan for all listed (BSE) Public and Pvt Banks considered for data compilation; Banks for which data is not available on their website are not considered. The table consists of the lowest interest on personal loans (irrespective of the loan amount). Data collected from respective bank’s website as on 09 Aug 2022. Banks are listed in ascending order on the basis of interest rate i.e. bank offering lowest interest rate on Personal loan is placed at top and highest at the bottom. EMI is calculated on the basis of interest rate mentioned in the table for Rs 5 Lac Loan with a tenure of 3 years (processing and other charges are assumed to be zero for EMI calculation); Interest and charges mentioned in the table is indicative and it may vary depending on bank’s T&C. *^for senior citizens;
^^For Govt employee and defence personnel; *for doctors.