Things you Should Compare Before Finalising a Personal Loan Lender

26 Oct 2020 5 min read
Personal Loan: Things to Compare Before Availing a Personal Loan Lender

Minimal documentation, quick approval, unsecured nature and no restriction on end-use make personal loans an ideal consideration for borrowers in financial exigency. Borrowers are often swayed by the ease of availing funds and overlook some important aspects of a personal loan that can help them secure the best deal as per their requirements and eligibility. To get a personal loan on very favourable terms, you should compare personal loan interest rates, eligibility criteria, repayment period, EMI options, processing charges, and prepayment/foreclosure charges.

Interest rates

Interest rates impact the overall cost, instalment amount and even the repayment tenure of a personal loan. With multiple banks and NBFCs (Non-Banking Financial Companies) offering personal loans at competitive interest rates ranging from 10.50% to 27%, it is important to compare the interest rates from all of them. You should apply with a lender where you can get the best interest rates as per your requirement and eligibility.

Eligibility criteria

Eligibility criteria basically include age, credit score, salary/income, employment status, and sometimes city of residence of the borrower. Each lender has its own eligibility criteria. While some lenders are willing to extend personal loans to low-salary applicants, others offer to salaried professionals with a higher salary only; the minimum age required to get a personal loan is often 21 years for salaried employees, but there are lenders that offer a personal loan for individuals aged above 25 years.

Loan amount

The loan amount varies from lender to lender, typically ranging from Rs. 50,000 to Rs. 30 lakh. The quantum of personal loan you can get depends on your age and repayment capacity. You must compare the minimum and maximum loan amounts offered by multiple lenders. As per your eligibility and requirement, apply with a lender that is willing to offer the amount you are searching for at the most favourable terms. 

Repayment tenure

Repayment tenure is the time period over which you are allowed to pay off the loan along with the interest rate. Repayment tenure also varies from lender to lender. Typically, you can get a personal loan for a flexible tenure ranging from 12 months to 60 months. It is important to compare the repayment tenure of different lenders to find out the suitable tenure over which you can repay the loan comfortably. 

Processing charges

Processing charge is a fee that you have to pay banks or NBFCs you get a personal loan from for credit checks, documentation and underwriting. It is a one-time fee that is usually paid upfront - it is deducted from your loan amount. Usually, the processing fee is charged only after your personal loan application is approved.

Lenders charge a processing fee ranging from 0.50% to 5% of the principal loan amount + GST for a personal loan. As a processing charge is one of the most important parts of the cost of the personal loan, you must compare the processing charges before applying for a personal loan. 

Lender

Interest Rate

Processing Charge

Loan Amount

Repayment Tenure

HDFC Bank

10.75% to 21.30% p.a.

Up to 2.50% of the loan amount

Up to Rs. 15 lakh

12 months to 60 months

ICICI Bank 11.25% to 22.00% p.a.

Up to 2.25% of principal + GST

Up to Rs. 20 lakh

12 months to 60 months

State Bank of India

Depends on loan schemes 

11.7% to 16.60% p.a.

Up to 1% of the principal

Up to Rs. 15 lakh

Up to 84 months

Punjab National Bank

12% to 15% p.a.

Up to 1.8% of the loan amount

Rs.10 lakh or 20 times the monthly net income

Up to 60 months

Axis Bank

12% to 24% p.a.

1.5% to 2% of the principal + GST

Up to Rs. 15 lakh

Up to 60 months

Kotak Mahindra Bank

10.99% to 24% p.a.

Up to 2.5% of the principal + GST 

Up to Rs. 15 lakh

Up to 60 months

Tata Capital

Starts at 10.99% p.a.

Up to 2.5% of the principal + GST

Up to Rs. 25 lakh

Up to 72 months

Bajaj Finserv

12.99% p.a. onwards

Up to 4.13% of the principal

Up to Rs. 25 lakh

Up to 60 months

IDFC First Bank

11.00% to 14.50% p.a.

Up to 3.5% of the principal

Up to Rs. 25 lakh

Up to 60 months

Fullerton India

12.99% - 36% p.a.

Up to 3% of the principal + GST

Up to Rs. 25 lakh

Up to 60 months

IDBI Bank

12% to 14% p.a.

1% of the principal

Up to Rs. 5 lakh

Up to 60 months

Citibank 

10.50% to 20% p.a.

0.50% - 3.00%

Up to Rs. 30 lakh

Up to 60 months

IndusInd Bank

11% to 31.50% p.a.

Up to 2.50% of loan amount plus tax

Up to Rs. 15 lakh

Up to 60 months

Yes Bank

10.99% p.a. onwards

Up to 2.50% of the loan amount subject to a minimum charge of Rs.999

Up to Rs. 40 lakh

Up to 60 months

Dhanlaxmi Bank

Depends on the applicant’s eligibility

2% of the principal outstanding + + ST

Up to Rs. 15 lakh

Up to 60 months

IIFL

13% p.a. onwards

Up to 2% of the loan amount + GST

Up to Rs. 25 lakh

Up to 60 months

South Indian Bank

11.60% p.a. onwards

Up to 2% of the loan amount

Up to Rs. 25 lakh

Up to 60 months

Note: The interest range is indicative and final rate will be calculated on the basis of your credit profile, loan amount, tenure, company you work for, etc.

Prepayment or foreclosure charges

Personal loan prepayment or foreclosure charge is a fee that you have to pay to your lender for paying the loan in part or full, ahead of the loan tenure. Each lender has its own prepayment policy. Some lenders have a lock-in period of, say 6 months or 1 year, during which prepayment charges will be applicable on any kind of payments made prematurely. After the lock-in period is over, multiple lenders allow part or full prepayment without any penalty. Whereas some lenders allow part-prepayment or even foreclosure without any charges from the beginning of repayment tenure.

Hence, you must compare prepayment fees charged by various lenders. If you think you could pay off the loan at any point in the future, you must apply for a personal loan that has no prepayment charges.  

The prepayment charges are based on a percentage of the outstanding balance. Here is a list of foreclosure penalties charged by top lenders on a personal loan in India.

Lender

Foreclosure charges

Prepayment period

HDFC Bank

Foreclosure charges are as under:

  • Loan closed between 13 - 24 months - 4% of principal outstanding

  • Loan closed between 25 - 36 months - 3% of principal outstanding

Loan closed after 36 months - 2% of principal outstanding

Part or full prepayment is not allowed before the repayment of 12 EMIs

ICICI Bank

5% on principal outstanding + GST

Any time during the loan tenure

State Bank of India

3% on prepaid amount

No pre-closure charges, if the repayment out of a fresh from SBI

Terms and conditions apply

Punjab National Bank

Prepayment charges are not applicable

As per terms and conditions of the lender’s policy

Axis Bank

No prepayment charge on Axis Bank personal loans

Foreclosure will be allowed only after all outstanding dues are cleared 

Kotak Mahindra Bank

5% of principal outstanding + GST 

Foreclosure will be allowed after 12 months from the date of first EMI

1-month prior intimation is compulsory

Tata Capital

4.5% of the principal outstanding + GST 

Foreclosure will be allowed only after six months of disbursal

Bajaj Finserv

4% of the principal + applicable taxes 

After 1 month from the date of the loan disbursal

IDFC First

No foreclosure charges within 6 months of the loan disbursal

Charge of 5% of the outstanding principal will be applicable after 6 months of the loan disbursal 

As per the terms and conditions of the lender

Fullerton India

Foreclosure charges are as under:

  • Loan closed between 7 – 17 months – 7% of principal outstanding 

  • Loan closed between 18 – 23 months – 5% of principal outstanding

  • Loan closed between 24 – 35 months – 3% of principal outstanding

  • Loan closed after 35 months – Nil

Foreclosure will be allowed after 6 months from the loan agreement date

IDBI Bank

Foreclosure after 6 months of disbursal may not have chargers

2% of the outstanding principal on a foreclosure before 6 months of disbursal  

Foreclosure will be allowed after 6 months of the loan disbursement 

Charges will be applicable on foreclosure before 6 months

Citibank 

Up to 4% of the outstanding principal 

As per loan disbursal policy 

IndusInd Bank

4% of the principal outstanding

Salaried individuals are allowed to foreclose the loan after the payment of 12 EMIs

Self-employed individuals are allowed to foreclose the loan after the payment of 6 EMIs

Yes Bank

Yes Bank personal loan prepayment charges are as under:

  • Loan closed between 13 – 24 months - 4% of principal outstanding

  • Loan closed between 25 – 36 months - 3% of principal outstanding

  • Loan closed between 37 – 48 months – 2% of principal outstanding

  • After 48 months - NA    

Foreclosure of personal loans will be allowed after repayment of 12 EMIs

Dhanlaxmi Bank

2% of the principal outstanding + GST

As per terms and conditions of the lender’s policy

IIFL

6% of the principal outstanding 

After six months of the loan disbursal

South Indian Bank

4% of the outstanding balance within 1 year of disbursement 

After 1 year – 2% of the outstanding principal

As per the terms and conditions you have negotiated with the bank

You should not give way to the temptation of ease of availing funds. First compare features like interest rates, eligibility criteria, EMIs, foreclosure charges etc. By comparing rates and terms & conditions, you can save a lot of money in the form of interest rate, avoid rejections and avoid post disbursal harassment.   

personal loan
compare personal loan interest rate
Check your Eligibility
To check how much loan you can get.
Verify

Didn't receive otp? Resend


blognews
Helpline Number
+91-11-23978046
Covid 19
Global
0
Covid 19
India
0