Personal loans are an unsecured type of loan; it is multi-purpose in nature and therefore, can be used for various purposes. Moreover, there is no restriction on the amount borrowed and can be used for kinds of financial goals. As personal loans come with high-interest rates, this is because this loan is not a secured loan, and any asset does not back it. But since the lockdown situation, the new normal has led to banks and lending institutions offering personal loans at low-interest rates. The RBI’s lending rate cuts gave a flip to the economy. As a result, now banks and NBFCs are offering loans at a low range of 8.35 to 8.90 per cent based on your credit profile.
Here’s a list of top 10 banks ranked according to their interest rate offers onpersonal loans:
|Punjab National Bank||8.80%11.65%|
|Bank of Baroda||10.10%15.10%|
|Union Bank of India||9.30%-13.40%|
|State bank of India||9.60%-15,655|
|Indian Overseas Bank||9.60%-12.05%|
|Central Bank of India||8.35%-10.20%|
|Bank of Maharashtra||9.70%10.70%|
With lenders like Bajaj Finserv Personal loan, you can get a personal loan at an interest rate of 12.99% to 15.50%, with lowest rates offered to existing customers of the bank with a strong CIBIL Score and for those working with reputed corporate with a stable employment history. Bajaj Finserv also runs special schemes for defence, armed forces and government employees. The personal loan interest rate for government employees and defence personnel is different from private salaried employees.
Factors Determining Personal Loan Interest Rates
You can get affordable personal interest rates subject to an assessment of your loan amount, salary, other obligation company you work with and loan tenure. The following factors determine the interest rate charged on personal loan:
- Loan Amount: The amount borrowed by a borrower from the bank. Generally, banks offer lower interest rates for a personal loan with a higher amount.
- Employer Category: Most lenders have an internal list of companies falling into categories that are ranked from high to low company categories based on the company’s size, reputation and existing relationship with the bank. Employees that work with the companies in higher company categories get attractive discounts and low-interest rate loans.
- Income: Your income defines your capacity to repay the loan on time. An individual with a higher salary bracket is offered loans at lower interest rates. The interest rate charged of the bank varies with your net monthly income.
- Repayment Capacity: Before giving a loan to the borrower, the lender checks with the repayment capacity of the borrower. The bank verifies the repayment capacity of the customer through CIBIL as it has the repayment track record of previous loans taken. CIBIL also captures information of credit card bills payment.
- Relationship with the Bank: If you have a good relationship with the bank, you can get access to special rates, offers and charges to the existing account holders of the bank. Individuals that have managed their accounts and made all the payments on time in past will get the benefit of a low-interest rate.
- Loan Tenure: Personal loans are of shorter tenure ranging from 12 months to 60 months as they are taken to meet their immediate requirements.
Documents Required for Personal Loan
When applying for a personal loan, the borrower has to submit a specific set of documents. The documents required for personal loan may vary from lender to lender. Given below are the documents required for a personal loan:
- Identity proof of the applicant
- Documents for Proof of Address
- Employment Proof
- Income Proof
- Passport size photographs
For a smooth personal loan verification process, you need to make sure the documents are error-free. Once all the documents are submitted along with the application form, a verification process takes place where a representative from the bank or NBFCs investigation team visits the applicant’s place of residence to verify the address mentioned in the documents. They might also see the applicant’s workplace to verify the authenticity of the employment details. Verification of other documents like PAN Card, Aadhaar Card, or Passport is done using online portals. If the personal loan verification process is successful, the lender then processes the loan for disbursement. You can use the Finserv MARKETS personal loan app to apply for loan in quick and easy steps.