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How to Compare Personal Loans?

Highlights

  • 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.

Apply Personal Loan @ 10.75%* Rate

Factors Based on Which You Should Compare Personal Loans

Interest Rate

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/NBFCInterest Rate (per annum)
State Bank of India (SBI)9.60% - 13.60%
HDFC Bank10.75% - 21.30%
Kotak Mahindra Bank10.75% - 17.99%
ICICI Bank10.75% - 18.49%
Axis Bank12.00% - 24.00%
IDFC First Bank10.99% - 22.00%
Standard Chartered Bank7.99% Onwards
RBL Bank17.50% - 26.00%
YES BANK10.45% Onwards
Bajaj Finserv10.99% - 16.00%
Tata Capital10.99% - 18.00%
Fullerton India14.00% - 24.00%
IndusInd Bank11.00% Onwards

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.
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Loan Amount

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/NBFCLoan Amount (INR)
SBI20 lakh
HDFC BankDepend on your monthly income and credit history
Kotak Mahindra Bank20 lakh
ICICI Bank40 lakh
Axis Bank15 lakh
IDFC First Bank25 lakh
Standard Chartered Bank50 lakh
RBL Bank20 lakh
YES BANK40 lakh
Bajaj Finance Limited25 lakh
Tata Capital25 lakh
Fullerton India25 lakh
IndusInd Bank25 lakh

Processing Fee

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.

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Bank/NBFCProcessing Fee
SBINIL-1% of the loan amount
HDFC BankNIL-2.50% of the loan amount
Kotak Mahindra Bank0.99%-2.50% of the loan amount
ICICI Bank0.99%-2.25% of the loan amount
Axis Bank1.50%-2.00% of the loan amount
IDFC First BankAs applicable by the bank
Standard Chartered BankNIL
RBL Bank2.00%-2.50% of the loan amount
YES BANKUp to 2.50% of the loan amount
Bajaj Finance LimitedUp to 3.00% of the loan amount
Tata Capital0.99%-2.50% of the loan amount
Fullerton India2.00% of the loan amount
IndusInd Bank1.00%-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.

Turnaround Time

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.

Bank/NBFCDuration
SBIThe bank will disburse the loan amount in 7 working days after the approval
HDFC Bank24 hours* from the document submission
Kotak Mahindra BankTakes 2 days in loan processing which includes document verification. And the loan is disbursed in your account within 3 seconds of the approval
ICICI Bank3 seconds for pre-approved personal loans
And
48 hours for others
IDFC First BankIt will take 2 business days for loan disbursal.
Standard Chartered Bank7 days after the submission of the documents, it disburses the loan amount
RBL BankThe bank approves your loan in 24 hours when you complete the application process by submitting the documents
YES BANKWithin 5 days of the date of receipt of the application, your loan is disbursed to your account
Bajaj Finance LimitedThe loan gets approved within 24 hours
Tata CapitalIt takes about 72 hours credit the loan amount in your account
Fullerton IndiaThe loan amount will be credited to your bank account within 30 minutes of approval
IndusInd BankIt will take 4-7 working days after receiving the required documents to disburse the loan amount
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Prepayment

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.

Bank/NBFCsPrepayment Fee
SBINIL-3% of the balance loan amount
HDFC BankNIL-4% of the outstanding principal amount
Kotak Mahindra Bank5% of the balance amount
ICICI Bank5% of the loan balance amount
Axis BankNIL
IDFC First Bank5% of the outstanding principal amount
Standard Chartered Bank1%-5% of the loan balance amount
RBL Bank3%-5% of the outstanding principal amount
YES BANKNIL-4% of the loan balance amount
Bajaj Finance LimitedUp to 3% of the loan amount post 1 EMI payment
Tata Capital4% of the outstanding amount
Fullerton IndiaNIL-4.00% of the loan balance amount
IndusInd BankAs 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.

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  • Personal Loan Interest Rates October 2020
    Fullerton India14.00% - 33.00%
    HDFC Bank10.75% - 21.45%
    ICICI Bank10.75% - 18.49%
    IndusInd Bank11.25%
    Kotak Bank10.99% - 20.99%
    RBL17.50% - 24.00%
    Standard Chartered Bank11.00% - 15.00%
    Tata Capital10.99% - 18.00%