- How do I choose a personal loan? Compare its features and then choose
- Read the post below and find the factors based on which you should compare personal loans
Personal loans are the type of loans that you can avail without any security. These unsecured loans can be availed from banks or Non-Banking Financial Companies (NBFCs). If you are an existing customer, you can get an instant pre-approved personal loan because of your relationship with the bank. However, if you opt for a personal loan, the expected interest rate is anywhere around 10%-25% per annum. The rate sounds high! The reason for this is its unsecured nature. However, a good income and strong repayment potential can still help you get lower rates on the loan. But shall you consider only the interest rate before taking a personal loan? Maybe you should go further and compare personal loan offers based on loan amounts, processing fees, prepayment charges, etc. Let’s compare personal loans by reading all these aspects in detail.
Factors Based on Which You Should Compare Personal Loans
Your loan carries an interest rate which is dependent on the income, credit history, and the risk associated with the loan amount. If your credit history, income and repayment potential are good, chances of accessing the loan at lower interest rates are high. But any of these three is not up to the mark, the lender can increase the rate. See the table below which shows the personal loan interest rate of the top lenders in India.
|Bank/NBFC||Interest Rate (per annum)|
|State Bank of India (SBI)||9.60% - 13.60%|
|HDFC Bank||11.00% - 21.00%|
|Kotak Mahindra Bank||10.25% Onwards|
|ICICI Bank||10.50% - 18.00%|
|Axis Bank||10.50% - 25.00%|
|IDFC First Bank||10.50% - 25%|
|Standard Chartered Bank||10.75% - 13.00%|
|RBL Bank||17.50% - 26.00%|
|YES BANK||10.75% - 18.00%|
|Bajaj Finserv||12.00% - 16.00%|
|Tata Capital||10.75% - 18.00%|
|Fullerton India||12.00% - 24.00%|
|IndusInd Bank||10.49% - 31.50%|
On What Factors does the Interest Rate Depend?
Your loan interest rate will be decided based on the following factors.
- Credit/CIBIL score: You should check your CIBIL score before applying for the loan. Because if it is low, your loan request will be rejected and it affects your credit report. An ideal score is 750 and above for instant approval from the bank or NBFC.
- Income: The monthly salary or annual income from the business matters in deciding the interest rate. As it helps the lender in knowing your repayment capacity and source of income. You can get a personal loan if you have a regular source of income with valid proofs like an ITR report, salary slip, etc.
- Employer Status: If you are salaried and working in an MNC, Corporate, PSUs, or any public/ private sector company, the lender will check your employment status and the stability it provides to the employee.
- Work Experience: Your work experience also helps lenders gauge the type of work you do and the stability you have. A minimum work experience of 2 years is required for a personal loan with 1-year in the current organization that can vary based on your lender.
The customer should need a high loan amount for his finances and choose the lender that provides the highest loan amount. As it is not defined for single-use, you can use your loan for medical emergencies, wedding management, higher studies, overseas vacation, debt payment, etc. So, have a look at this table below to compare personal loans based on loan amounts.
|Bank/NBFC||Loan Amount (INR)|
|HDFC Bank||Depend on your monthly income and credit history|
|Kotak Mahindra Bank||20 lakh|
|ICICI Bank||40 lakh|
|Axis Bank||15 lakh|
|IDFC First Bank||25 lakh|
|Standard Chartered Bank||50 lakh|
|RBL Bank||20 lakh|
|YES BANK||40 lakh|
|Bajaj Finance Limited||25 lakh|
|Tata Capital||25 lakh|
|Fullerton India||25 lakh|
|IndusInd Bank||25 lakh|
Your lender may charge a one-time processing fee for the personal loan which is 1%-2% of your borrowed amount. The processing fee is deductible from your loan amount. So, after the processing fee is reduced from your loan amount, the net amount will get disbursed to your bank account. For example, if you apply for a personal loan of INR 5 lakh where the processing fee is INR 10,000, the lender will deduct INR 10,000 from the loan amount i.e. 5,00,000. The remaining 4,90,000 will be disbursed to your account. But you will need to pay the EMI on INR 5 lakh. It is an important factor to decide on a personal loan. Because when the processing fee is high it will be difficult for you to manage the financial needs as your loan value decreases. See the table below and compare personal loans in terms of processing fees charged by each of the lenders.
|SBI||NIL-1% of the loan amount|
|HDFC Bank||NIL-2.50% of the loan amount|
|Kotak Mahindra Bank||0.99%-2.50% of the loan amount|
|ICICI Bank||0.99%-2.25% of the loan amount|
|Axis Bank||1.50%-2.00% of the loan amount|
|IDFC First Bank||As applicable by the bank|
|Standard Chartered Bank||NIL|
|RBL Bank||2.00%-2.50% of the loan amount|
|YES BANK||Up to 2.50% of the loan amount|
|Bajaj Finance Limited||Up to 3.00% of the loan amount|
|Tata Capital||0.99%-2.50% of the loan amount|
|Fullerton India||2.00% of the loan amount|
|IndusInd Bank||1.00%-3.00% of the loan amount|
An applicable GST of 18% is applied to your processing fee which you need to pay. So, calculate the processing fee adding the GST amount.
Bank and NBFC process the loan request and take at least 7 days to disburse your loan amount. And if you need a lender that processes your loan faster, then compare and find your ideal personal loan lender. You can compare the bank or NBFC based on the time of processing to disbursal to know which provides you the best personal loan in the shortest period. Here look at the table below and compare personal loans in terms of approval & disbursal time of different lenders.
|SBI||The bank will disburse the loan amount in 7 working days after the approval|
|HDFC Bank||24 hours* from the document submission|
|Kotak Mahindra Bank||Takes 2 days in loan processing which includes document verification. And the loan is disbursed in your account within 3 seconds of the approval|
|ICICI Bank||3 seconds for pre-approved personal loans |
48 hours for others
|IDFC First Bank||It will take 2 business days for loan disbursal.|
|Standard Chartered Bank||7 days after the submission of the documents, it disburses the loan amount|
|RBL Bank||The bank approves your loan in 24 hours when you complete the application process by submitting the documents|
|YES BANK||Within 5 days of the date of receipt of the application, your loan is disbursed to your account|
|Bajaj Finance Limited||The loan gets approved within 24 hours|
|Tata Capital||It takes about 72 hours credit the loan amount in your account|
|Fullerton India||The loan amount will be credited to your bank account within 30 minutes of approval|
|IndusInd Bank||It will take 4-7 working days after receiving the required documents to disburse the loan amount|
You can meet your financial needs with the personal loan you get in your bank account. But if you receive a fat bonus that can help you pay off the loan before its scheduled closure, you can do so and save on interest payment. But lenders will charge some on the same. Compare personal loans and choose the lender which charges the lowest prepayment fee. Look at the table below to know what are the possible charges the lender will ask for while giving you the prepayment facility.
|SBI||NIL-3% of the balance loan amount|
|HDFC Bank||NIL-4% of the outstanding principal amount|
|Kotak Mahindra Bank||5% of the balance amount|
|ICICI Bank||5% of the loan balance amount|
|IDFC First Bank||5% of the outstanding principal amount|
|Standard Chartered Bank||1%-5% of the loan balance amount|
|RBL Bank||3%-5% of the outstanding principal amount|
|YES BANK||NIL-4% of the loan balance amount|
|Bajaj Finance Limited||Up to 3% of the loan amount post 1 EMI payment|
|Tata Capital||4% of the outstanding amount|
|Fullerton India||NIL-4.00% of the loan balance amount|
|IndusInd Bank||As applicable by the bank|
Prepayment is allowed only after you pay the first 12 EMIs successfully. But some lenders can provide even before that. So, before signing the personal loan deal, do check the prepayment clause.