Personal Loan

Which Bank Gives the Cheapest Personal Loan in India?

13 Oct 2019 5 min read
Personal Loan: Which Bank Gives the Cheapest Personal Loan in India?

Festival seasons are just ahead, and you must be planning to celebrate with much enthusiasm like every year. However, you have recently invested all your savings and are left with none to splurge on additional expenditures. ICICI, HDFC or SBI which one should be your go-to option for Personal loan to obtain additional funds at a cheaper rate?

Let’s take an example -

Ms. Mansi, an engineer, took a Personal Loan to remodel her kitchen from ICICI Bank at an interest rate of 10.99% p.a.

Mr. Jadhav, a store manager receives a salary in cash. He managed to avail a Personal Loan at an interest rate of 18% p.a.

Mr. Khanna, a dentist by profession availed a personal loan to renovate his clinic at an interest rate of 14% p.a. from HDFC Bank.

The table below shows the variable EMIs, with Varying Interest Rates

Name

Loan Amount

Tenure

Interest Rate

EMI

Ms.Mansi

Rs 1,00,000

3 years

10.99%

Rs 3273

Mr.Jadhav

Rs 1,00,000

3 years

18%

Rs 3615

Mr.Khanna

Rs 1,00,000

3years

14%

Rs 3417

So, in the above cases, you can evaluate how the interest rates and the respective EMI vary with an individual’s profile. The interest rate depends on your income, company status, credit & payment history, existing relationship with the bank, and individual negotiation skills. If you have a stable job and all the documents are in proper place, then you can apply for SBI, HDFC or ICICI Personal loan at Afinoz platform. For those who don’t have salary slips or bank statement, Afinoz has competitive loan options. Afinoz helps in connecting you to the right lender, offering affordable interest rates.

Below is the table to let you find out which is the cheapest personal loan lender in India. 

SBI

10.90%

HDFC Bank

11.25%

ICICI Bank

10.99%

Bajaj Finserv

10.99%

Citibank

10.99%

IDFC Bank

11.50%

Axis Bank

16%

Tata Capital

11.25%

Fullerton India

20.00%

IndusInd Bank

11.25%

Kotak Bank

10.99%

RBL Bank

14.5%

IIFL

13%

HDB Financial

13.99%

Karur Vysya Bank

13.90%

PNB

12.00%

Vijaya Bank

12.90%

Union Bank of India

12.60%

Syndicate Bank

14.20%

Standard Chartered Bank

11.99%

Indian Overseas Bank

12.45%

Andhra Bank

12.85%

Bank of Baroda

11.60%

Bank of Maharashtra

12.95%

Canara Bank

14.10%

Corporation Bank

12.90%

Dena Bank

11.60%

Federal Bank

10%

IDBI Bank

12.50%

Allahabad Bank

12.80%

Indian Bank

14.20%

Yes Bank

10.75%

 *Rates are subject to periodic change. Interest rates, fees and charges vary from individual and are subject to regular reviews. 

Varied cases call for varying interest rates

Among several factors, one of the major factors impacting an applicant’s personal loan interest rate is his/her credit score.  You can avail a personal loan at a cheaper interest rate, if you have a good credit score. 

The table below will help you understand what is a good credit score.

Credit Score

Ratings

750 and above

Very Good

700-750

Good

650-700

Fair

550-650

Poor

550 and below

Bad

CIBIL score is a 3-digit numeric summary which ranges from 300-900. Your credit rating is better, if your credit score is higher.

The CIBIL or The Credit Information Bureau India Limited is the most popular of the four credit information companies which are licensed by RBI to operate as credit information companies. Three others are Equifax, Experian, and Highmark.  

How does CIBIL score affect your borrowing capacity?

The first factor which creates or deteriorates the impression of the borrower in the eyes of the lender is the CIBIL score. Typically, a score of 750 and above is considered to be good, for the banks to approve the loan application. Applicants with lower scores may find a tough time in getting the loan application into consideration. There are high chances the bank may even reject the application at the very first instance.

How you can improve the CIBIL score?

It is vital to keep an eye on your CIBIL score from time to time and make efforts to bring to the range of 700 and above. However, if the score falls below the optimum range, it is wise to practice financial cautiousness.

Never default on debts, pay the loan EMIs on time, timely payment of Credit Card bills, using credit wisely.

How to opt for a cheaper personal loan, if I am already paying a personal loan EMI?

The answer is

Balance Transfer on a personal loan. It is the perfect way to lower interest rates on your existing EMIs

A balance transfer is a process, where you can transfer your existing Personal loan to another lender offering a lower interest rate on the outstanding amount. The primary reason for the Balance Transfer is to lower the burden of an outgoing instalment amount.

Let’s take an example to better understand the concept.

Mr. Rajat has an ongoing personal loan from IIFL at 13% p.a. He has already paid 6 instalments of the loan. Now one of his colleague, educates him about the personal loan from SBI Bank which is being offered at 10.90% p.a. The difference in the outgoing instalment amount is substantial and hence Mr.Rajat decides to transfer his existing personal loan with the SBI Bank. He pays the foreclosure amount and transfers his loan. Now he is paying considerably less EMI than the previous one. On average he is saving a good amount which was being paid as debt. 

Just like Mr.Rajat, you too can save on the extra amount which you are paying as debt, by transferring the outstanding loan amount at a lower interest rate.  

Eligibility criteria for Balance Transfer

If you are planning to transfer your outstanding loan amount to a different lender to reduce the burden of the debt, you will have to check if you are meeting the eligibility criteria for the same. 

  • The new lender will evaluate the past record of the existing loan, whether all the instalments have been paid or not. It is vital for you to ensure that there should not be any missing payments.
  • The current outstanding loan amount should be a minimum of Rs 50,000 to initiate the process.

Benefits of Balance Transfer

  • Tenure of the loan amount 

 You can negotiate the tenure of your loan with the new lender as per your convenience. Extended tenure can lower the monthly burden of instalments but will have an increased payout of interest. Whereas shorter tenures impose higher individual payments with an overall decrease in interest rates.

  • Better Features 

After evaluating the past record of your loan amount, the new lender may offer you additional features such as processing fee waiver, better loan features, waiving of last EMI, etc. You can also get a top-up loan amount if you are in need of additional funds at a competitive interest rate.

  • Enhanced Interest Rate

Your burden on the loan amount will decrease when you will transfer your outstanding loan amount to a new lender. It will help in saving the outgoing amount as debt. 

So, after analyzing meticulously all the details shared above, you can go ahead to apply for the cheapest personal loan in India.