Currently, personal loans are available at interest rates that are just slightly higher than the rates applicable to securitized loans like gold loans.
Unlike a home or a car loan, a personal loan is not secured against any asset, hence, the borrower does not put up collateral to avail it as it is an unsecured loan.
Quick and hassle-free loan disbursal, larger quantum of loan and no requirement to pledge collateral make personal loans one of the most preferred financing facilities in the country. What’s better is the fact that currently these all-purpose loans are available at interest rates that are just slightly higher than the rates applicable to securitized loans like gold loans.
The State Bank of India (SBI), for instance, is currently offering the lowest gold loans rates in the country, starting at 7.50% p.a., while the Union Bank and Punjab National Bank are offering personal loans starting at 8.9% p.a. and 8.95% p.a., respectively. In fact, the Punjab National Bank is offering gold loans starting at 8.75% p.a. which is just 20 basis points cheaper than its lowest advertised personal loan interest rate.
These competitive rates make personal loans a good fit for borrowers who do not possess or don’t want to pledge the required collateral to get a loan. Personal loans are also the choice of those borrowers whose loan requirement is higher than the value of their loan security, according to BankBazaar.
That being said, the best personal loan interest rates are reserved for borrowers with a steady income and a stellar credit score. Meaning, if your credit score is way lower than 750, you might not be eligible for a personal loan and even if you do, the applicable interest rate is likely to be much higher than those offered to borrowers with credit scores over 750-800.
Do note that the applicable interest rate would be ascertained by the lender based on several factors like the borrower’s credit score, loan amount requirement, age, gender, type of occupation, monthly income, etc. Also, the documentation requirements would be slightly different for salaried and self-employed loan applicants. It’s always better to compare your options for the best rates according to your eligibility and get complete clarity on documentation requirements before signing up for a loan to avoid any unpleasant surprises later.
Also, don’t forget to check other charges like processing fee and pre-closure and part-prepayment penalties to get complete clarity. Aspiring borrowers should also check whether they’re eligible for any pre-approved personal loan offers from their banks as those could involve zero to minimal documentation and quick loan disbursal, as per BankBazaar.
Lastly, and most importantly, borrowers must ensure they have a repayment plan to timely pay back their loans as any laxity in this regard could lead to additional interest penalties, accumulation of debt and an adversely impacted credit score.
So, if you’re looking for a personal loan, here are the 10 lowest offers currently being extended by India’s largest banks, including SBI, HDFC Bank, ICICI Bank, Bank of India, and Axis Bank.
Personal Loan Interest Rates Currently Being Offered By 10 Top Banks (By Asset Size)
Disclaimer: Data collected from respective banks’ websites as on 5 November 2020. The interest rates are based on regular personal loan products for salaried individuals. Banks are shortlisted based on asset size as per the latest publically-available information and its accuracy is not warranted. Compiled by BankBazaar.com