Personal Loan Interest Rates- Latest Interest Rate

Personal loans are a type of closed-ended credit that do not require any collateral and can be consumed for a variety of purposes. The borrowed amount is to be repaid over time, typically along with interest.

Every bank levies a monetary charge on the original borrowed amount. The interest is to be paid by the borrower and typically it is expressed as an annual percentage rate. Personal loans have higher interest rates than other secured loans, primarily because there is no form of security involved in it. The higher rate of interest on personal loans acts like a compensation for the banks for bearing the risk.

It is worth mentioning that higher the rates of interest, the more expensive the loan becomes. Consequently it puts additional strain on borrowers and increases the risk of default. Hence a personal loan can be an effective source of aid only when the interest rates are favorable. For the best offers it is important to calculate the interest rate along with the processing fees and other administrative charges.

To help applicants make an informed decision, given below is a table of personal loan interest rates offered by different lenders in 2023.

*These rates keep changing. Please check the website of each lender to confirm the latest rates

The current personal loan interest rates offered by banks usually range between 8.75% and 49.5% per annum. Further, the interest rates on personal loans are based on the applicant’s profile and the lending policy of the bank.

Some Of The Factors That Affect The Interest Rate On Personal Loans Are:

• Income:

Banks mainly review the income of applicants to check their repayment capacity. While applying for a loan, the borrower has to give a letter to the bank, authorising it to run a check on his/her credit history.

• Loan Amount And Repayment Period:

Banks prefer applicants who choose a shorter repayment period. This is because for short-term loans, the loan is cleared off faster and banks do not have to face the risk of it dangling for a longer period of time.

• Nature Of Employment:

Some lenders prefer government banks, government employees, and PSU employees over self-employed individuals or those working in a private company. Similarly, the loan application of an applicant who has a past of switching jobs frequently may also counter difficulties.

• Age:

Most lending institutions prefer giving loans to individuals between 30 to 50 years. Since people above 60 years may have a limited number of working years left, they may perhaps face difficulties to secure a personal loan. Many times their loan applications must be backed up with collateral.

Here Are A Few Factors That Can Help To Get A Personal Loan At A Lower Interest Rate:

• Maintain A Good Credit Score:

A good credit score with a very low income-to debt ratio gives the applicant a higher chance of getting a better loan deal. It is also important to have a healthy mix of both secured and unsecured loan applications in the past for a decent score.

• Maintain A Good Repayment History:

The repayment history of an individual influences the credit score. Credit scores are assigned by credit bureaus that collates a month-on-month record of bill payments and loan repayment equated monthly installments (EMIs)of the past few years.

• Method Of Interest Rate Calculation:

The method of calculating the total interest payable can differ among lenders. The lender may sanction a loan either at a flat interest rate or at a reducing interest rate. Hence, one should understand the method of calculation of the interest payable because a personal loan at a flat interest rate could cost more than a personal loan at a reduced interest rate.

Individuals can also keep looking out for special offers that are offered by banks for a limited period of time during festive occasions.

Conclusion

Personal loans can cover a number of personal expenses like debt consolidation, home repairs, medical treatment, education, and a lot more. The interest rate on a personal loan depends on the credit history, income and occupation of the applicant.

But remember that the lender may not be ready to give a good deal if the applicant has already taken too many loans. So, it is sensible to cross examine the loan terms and interest rates on personal loans offered by different banks before making the final pick.

IIFL Finance, a reputed financial organization, offers its services across India. From IIFL Finance you can get a personal loan for a tenure that fits your needs. Also, if you have an excellent credit score and have maintained a good reputation with the bank, IIFL may offer you personal loans at reduced interest rates. But once you secure the loan, make sure to make timely payments, for better loan deals in the future.