Blogs
Things you Should Compare Before Finalising a Personal Loan Lender
22 Jan 2020 | 5 min read
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 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:
|
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:
|
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.