Finding the best personal loan in India is more complex than just opting for the lowest interest rates. You also need to consider other aspects like processing fees, prepayment terms, and loan tenure, which can significantly impact your borrowing experience.
In this article, we'll explore top personal loan plans, crucial factors before choosing a loan, and tips to secure the best terms. From understanding different types of loans in banks to identifying which bank is best for personal loans, we've got you covered with this comprehensive guide.
What is a Personal Loan?
A personal loan is an unsecured loan - a loan that doesn't require any collateral or security and is provided with minimal documentation. You can use this loan for various legitimate financial needs like an unforeseen medical bill, a vacation, or consolidating debt.
However, with this flexibility comes responsibility. Interest rates and repayment tenure are terms associated with personal loans that vary significantly between lenders. So, you must go through your contract well.
You pay the loan back in fixed EMIs over a period that can range from months to years. That's why it's crucial to set clear financial goals before taking out a loan.
Best Personal Loans: Top Plans in India 2024
You can find the best personal loan based on your financial needs, credit score, and the bank's terms.
Let's see the top 10 personal loans provided by banks in India based on their interest rates:
| S. No. | Personal Loan | Details | |
|---|---|---|---|
| 1 | State Bank of India Personal Loan | Loan amount | Up to ₹15 lakh |
| Age | 21 to 60 years | ||
| Interest rate | 9.60% to 15.30% per annum | ||
| Processing fee | 1% of loan amount + applicable tax | ||
| Minimum income requirement | ₹5,000 per month | ||
| Loan tenure | 6 months to 72 months | ||
| 2 | ICICI Bank Personal Loan | Loan amount | Up to ₹50 lakh |
| Age | 22 to 60 years | ||
| Interest rate | 10.50% to 16.00% per annum | ||
| Processing fee | Up to 2.50% of loan amount + applicable tax | ||
| Minimum income requirement | ₹30,000 per month | ||
| Loan tenure | 12 months to 84 months | ||
| 3 | HDFC Bank Personal Loan | Loan amount | Up to ₹40 lakh |
| Age | 21 to 60 years | ||
| Interest rate | 10.50% to 24% per annum | ||
| Processing fee | Up to ₹4,999 | ||
| Minimum income requirement | ₹25,000 per month | ||
| Loan tenure | 3 months to 72 months | ||
| 4 | Kotak Mahindra Personal Loan | Loan amount | Up to ₹40 lakh |
| Age | 21 to 60 years | ||
| Interest rate | 10.99% per annum | ||
| Processing fee | 3% of the loan amount + applicable tax | ||
| Minimum income requirement | ₹25,000 to 30,000 per month | ||
| Loan tenure | 12 months to 72 months | ||
| 5 | Axis Bank Personal Loan | Loan amount | Up to ₹40 lakh |
| Age | 21 to 60 years | ||
| Interest rate | from 10.49% per annum | ||
| Processing fee | Up to 2% of the loan amount + applicable tax | ||
| Minimum income requirement | ₹15,000 per month | ||
| Loan tenure | Upto 60 months | ||
| 6 | Citibank Personal Loan | Loan amount | Up to ₹30 lakh |
| Age | Above 18 years | ||
| Interest rate | 10.75% to 16% per annum | ||
| Processing fee | Up to 3% of the loan amount | ||
| Minimum income requirement | - | ||
| Loan tenure | 12 months to 60 months | ||
| 7 | Bajaj Finserv Personal Loan | Loan amount | Up to ₹40 lakh |
| Age | 21 to 80 years | ||
| Interest rate | 11% to 37% per annum | ||
| Processing fee | 3.93% of the loan amount | ||
| Minimum income requirement | ₹25,000 per month | ||
| Loan tenure | Up to 96 months | ||
| 8 | Bank of Baroda Personal Loan | Loan amount | Up to ₹10 lakh |
| Age | 21 to 65 years | ||
| Interest rate | 12.40% to 17.75% per annum | ||
| Processing fee | 2% of the loan amount + applicable tax | ||
| Minimum income requirement | ₹20,000 per month | ||
| Loan tenure | 12 months to 60 months | ||
| 9 | Standard Chartered Personal Loan | Loan amount | Up to ₹50 lakh |
| Age | 22 to 58 years | ||
| Interest rate | 10.50% to 17% per annum | ||
| Processing fee | Up to 2.25% of the loan amount | ||
| Minimum income requirement | ₹22,000 per month | ||
| Loan tenure | 12 months to 60 months | ||
| 10 | Tata Capital Personal Loan | Loan amount | Up to ₹35 lakh |
| Age | 29 to 60 years | ||
| Interest rate | 10.99% to 35.00% p.a. | ||
| Processing fee | Up to 3% of the loan amount | ||
| Minimum income requirement | ₹15,000 per month | ||
| Loan tenure | 12 months to 72 months | ||
(Interest Rates as of October 19, 2023)
Factors To Consider Before Choosing a Personal Loan
Selecting the best personal loan isn't just about finding the "lowest interest rate for personal loan." You need to be prepared with the following first:
1. Documentation: Getting a personal loan requires certain documents, such as income statements, bank statements, and ITR returns. Make sure you have these in order, as they're crucial for your loan approval process.
2. Interest: While low-interest personal loan options are appealing, rates generally range from 10-22% and are tailored based on your credit score and income - critical factors in determining your personal loan interest rates.
3. Tenure: Personal loans offer a longer repayment period, usually between 1-6 years. However, it's a double-edged sword - a longer loan tenure means smaller EMIs but a higher overall interest payout.
4. Loan Amount: The amount you can borrow varies widely. It depends on your credit history and income. Ensure the loan amount aligns with your repayment capacity to avoid future financial strain.
5. Funds Disbursement: The loan amount is usually disbursed in a lump sum directly to your account. So, plan accordingly, as the entire loan becomes due for repayment as per your agreed schedule.
6. Charges: Be aware of additional charges like processing fees or late payment penalties. These can sneak up on you and unexpectedly increase the cost of your loan.
Understanding these factors ensures you're not caught off guard and can make an informed decision about the best personal loan for your needs.
Things to Do Before Selecting Personal Loan
Selecting the "best personal loan online" requires more than just responding to the first attractive offer you see. Doing some preliminary research and groundwork can save you from future hassles and ensure that your chosen loan is truly beneficial in the long term. Here's a structured approach:
| Action | Description |
|---|---|
| Bank/NBFC Relationship | Start by checking offers from banks or NBFCs where you have existing relationships, like deposit or credit card accounts. Often, these institutions provide preferential interest rates to existing customers. |
| Compare Interest Rates | Different banks/NBFCs offer varied interest rates. These depend on factors like credit score, income, and the employer's profile. Especially during festive seasons, some lenders might have special rates. Remember, a good credit score (above 750) can fetch you better rates. |
| Evaluate Processing Fees | Lenders charge fees (processing or admin/login fees) to cover the costs of evaluating your loan application. These can sometimes make up a significant portion of your loan, so always compare these among various lenders. |
| Understand Prepayment Terms | Some lenders have restrictions on prepayments or charge fees for the same. You should pay attention to these terms, especially if you plan to settle your loan earlier than the set tenure. |
| Check Disbursement Time | If you're in a hurry, the speed of loan disbursement matters. Online processes usually promise quicker disbursals, and some banks also offer rapid approvals for pre-approved loans to certain customers. |
| Assess Repayment Tenure | The loan tenure impacts your monthly EMIs. Choose a term that aligns with your financial capacity. While most offer up to 5 years, some might extend even longer. |
Key Takeaways
Finding the right "personal loan" in India doesn't have to be complicated. Here are some clear, easy-to-remember points that can guide you through the process:
1. Comparing offers is crucial. Don't rush, even if you're looking for a quick personal loan.
2. Your credit score significantly influences the personal loan interest rates you receive.
3. Lowest interest rate personal loan offers are appealing but make sure you understand all associated fees and terms. Reading the fine print can save you from unexpected charges and future complications.
4. Your credit score plays a major role; maintaining a score above 750 improves your chances of securing a personal loan with favorable interest rates and other terms.
5. Assessing your repayment capacity before choosing a loan tenure is essential to avoid financial strain.
Interested in more insights on managing your finances effectively? Don't miss out on our detailed guides on "What is CIBIL Score and Why it Matters?" and "How to Block a Debit or Credit Card."
Can I get a personal loan with a low credit score?
Yes, but it might be challenging. A low credit score can limit your options and result in higher interest rates. Some lenders specialize in offering loans to individuals with low credit scores, but these may come with stringent terms.
How do I find the best personal loan online?
Compare different lenders' offers, read reviews, and understand the terms and conditions. Look for competitive interest rates, low fees, and flexible repayment terms to find the best personal online loans.
What is the minimum interest rate on personal loans?
The minimum interest rate on personal loan offers varies among lenders and is influenced by market conditions and your financial profile. Rates can start as low as around 10% but can vary significantly.
Which bank is best for a personal loan?
The "best bank for personal loan" differs for everyone and depends on factors like interest rates, processing fees, loan tenure, and customer service.