Fast and hassle-free disbursement of loans, a greater loan amount and no need to pledge collateral render private loans one of the country's most favoured financing tools. The fact that these all-purpose loans are currently accessible at interest rates that are just marginally higher than those comparable to securitized loans, such as gold loans. For instance, the State Bank of India (SBI) currently provides the country's cheapest gold loan rates, starting at 7.50 percent p.a., whereas personal loans starting at 8.9 percent p.a. and 8.95 percent p.a. are provided by the Union Bank and Punjab National Bank respectively. In particular, gold loans starting at 8.75% p.a. are provided by the Punjab National Bank. That is just 20 basis points lower than the cheapest accepted interest rate on a personal loan. Such affordable rates make personal loans a great option for borrowers that don't own or do not want to pledge the collateral in order to avail a loan.
Personal loans are therefore the alternative for borrowers whose loan requirement is greater than the value of the security of their loan. However, with a stable income and a strong credit score, borrowers can avail the best personal loan interest rates for their emergency or personal needs. Therefore, you might not be eligible for a personal loan if your credit score is less than 750, and that even if you do, the effective rate of interest is expected to be higher than that provided to borrowers with credit scores relatively higher than 750-800. Hence, if you're hunting for a personal loan below we have covered India's largest banks including SBI, HDFC Bank, ICICI Bank, Bank of India, and Axis Bank that are currently offering lower interest rates on personal loans.
|Bank||ROI p.a. in %|
|Union Bank||8.90 to 12.00|
|PNB||8.95 to 11.80|
|SBI||9.60 to 13.85|
|Bank of Baroda||10.10 to 15.45|
|HDFC Bank||10.75 to 21.30|
|Kotak Mahindra Bank||>=10.75|
|ICICI Bank||11.25 to 21.00|
|Canara Bank||11.25 to 13.90|
|Bank of India||11.35 to 12.35|
|Axis Bank||12.00 to 24.00|
Remember that the lender will determine the applicable interest rate on the basis of certain variables, such as the credit score of the borrower, loan amount requirement, age, gender, type of profession, monthly income, and so on. Even, for salaried and self-employed loan borrowers, the documentation requirements would be slightly dissimilar. Before getting started with a loan, it is always important to check the alternatives for the cheapest rates according to your eligibility and get full clarification on documentation requirements to eliminate any unwanted complications later. Even, don't hesitate to review other charges to get full clarification, such as processing fees and pre-closure and part-prepayment charges. Experienced borrowers must also verify whether they are eligible for their banks' pre-approved personal loan promotions, as these may entail zero or lowest possible paperwork and accelerated disbursement of loan. Finally, and most notably, borrowers must confirm that they have a repayment schedule to repay their loans in a reasonable timeframe, as any inflexibility in this respect could lead to additional interest charges, debt accumulation and a credit score that is significantly affected.