Are Personal Loan Interest Rates Fixed or Floating?
Last Updated : April 9, 2020, 8:21 p.m.
Personal loan interest rates are offered on both fixed and floating rate basis. The interest rate will remain the same throughout the tenure on a fixed rate loan. Whereas, the interest rates will vary as per the market movement in a floating rate loan. Since these loans are given for not more than 5 years, you may not want much fluctuation in your repayment that a floating rate can bring. That’s why many borrowers prefer a fixed rate instead of a floating rate when it comes to personal loans. But some go with floating rate loans too. So, let’s check out the list of lenders offering personal loans on both fixed and floating rates.
Apply Personal Loan @ 10.75%* Rate
Lenders Offering Personal Loans at Fixed Rate
| Lenders | Interest Rate | Processing Fee | Maximum Loan | Maximum Repayment Period Allowed | Prepayment Charges |
|---|---|---|---|---|---|
| HDFC Bank | 10.75% - 14.50% | NIL-2.50% of the loan amount | No maximum limit, depends much on your repayment capability | Upto 5 Years | NIL-4% of the principal outstanding |
| ICICI Bank | 10.75% - 19.00% | INR 999-2.25% of the loan amount | Upto INR 40 Lakh | Upto 5 Years | Upto 5% of the principal outstanding |
| Axis Bank | 10.49% - 21.00% | 1.50%-2% of the loan amount | Upto INR 15 Lakh | Upto 5 Years | NIL |
| Bajaj Finserv | 11.00% Onwards | Upto 3% of the loan amount | Upto INR 25 Lakh | Upto 5 Years | 2% of the principal outstanding |
| Kotak Mahindra Bank | 10.99% Onwards | 0.99%-2.50% of the loan amount | Upto INR 20 Lakh | Upto 5 Years | 5% of the principal outstanding |
| IndusInd Bank | 10.25% - 26.00% | 1%-3% of the loan amount | Upto INR 15 Lakh | Upto 5 Years | 4% of the principal outstanding |
Lenders Offering Personal Loans on a Floating Rate Basis
| Lenders | Interest Rate | Processing Fee | Maximum Loan | Maximum Repayment Period Allowed | Prepayment Charges |
|---|---|---|---|---|---|
| State Bank of India (SBI) | 11.00% - 14.00% | NIL-1% of the loan amount | Upto INR 20 Lakh | Upto 6 Years | NIL-3% of the principal outstanding |
| Bank of Baroda (BoB) | 10.90% - 18.25% | 2% of the loan amount Minimum - INR 1,000 Maximum - INR 10,000 | Upto INR 10 Lakh | Upto 5 Years | NIL |
| Punjab National Bank | 11.40% - 16.95% | Upto 1.80% of the loan amount | Upto INR 10 Lakh | Upto 5 Years | NIL |
| Bank of India | 10.35% - 14.85% | 2% of the loan amount | Upto INR 10 Lakh | Upto 5 Years | NIL |
| Canara Bank | 11.75% - 16.25% | 0.50% of the loan amount | Upto INR 3 Lakh | Upto 5 Years | NIL |
Note – The processing fee and prepayment charges will also include 18% Goods and Services Tax (GST) for both fixed and floating rate personal loans.
So, Which is Better – Fixed or Floating Rate Loan?
Floating rate loans often come as a better option compared to their fixed rate counterparts when it comes to long term loans such as home loans. For a short term loan like a personal loan , the benefit may either be too small or won’t exist with a floating rate system, courtesy lesser repayment period. In case the market rates rise continuously for a fairly greater length of time i.e. 1-2 years, banks will be forced to up the personal loan rate in that proportion. This will increase the interest quantum, and even if that drops when the market rates ease, the eventual benefits would feel negligible!
So, if you don’t want the thrill of fluctuation, better opt for a fixed rate personal loan. Plus, with the floating rate, the loan tenure can increase beyond your chosen time in case the interest rates rise continuously for 1 year or so. With rates going up, the principal will occupy a far lesser proportion of the EMI, which remains the same throughout. This will leave a lot of outstanding for you to clear out, increasing the lifetime of the loan by some months and your burden at the same time. However, if you do go with a floating rate loan and see rates going up continuously, increase your Equated Monthly Installment (EMI) amount in an agreement with the concerned lender. This will not only curtail the tenure but also the interest outgo. But ensure the new EMI is within your reach.