Personal loan: Check lowest interest rates

A personal loan is a type of loan that is designed to help for any personal purpose such as medical treatment, home renovation, wedding or buying an article. It is an unsecured loan, and therefore, the lender does not need any collateral. Some lenders often give personal loans after instant approval. The processing time and disbursal of a personal loan is quicker than other loans. This makes it an attractive option for those who want funds quickly.

Eligibility

Every lender that gives personal loans has its own set of eligibility criteria and policies that they adhere to. However, the basic eligibility criteria for personal loans may be similar.

— The borrower must be between 20 to 60 years of age.

— Both salaried and self-employed individuals can apply for personal loans.

— The borrower must have a good credit score, preferably above 750.

Loan amount

The loan amount will depend on the borrower’s annual income and credit score. Most banks offer a minimum of Rs 50,000 as personal loan while certain NBFCs can lend smaller amounts too. The credit score will also determine the maximum loan and corresponding interest rates that will be charged by the bank.

Interest rates

Since a personal loan is a collateral-free loan, the rate of interest will be higher compared to other loans. The repayment duration for personal loans can be between one to five years. The interest rates vary bank to banks. Lower interest rates mean lower financial burden for the borrower.

According to paisabazar.com, UCO Bank and Central Bank of India are offering cheapest personal loan with interest rates starting from 8.45% per annum. Union Bank of India (UBI), another public sector bank, in the second position. They are taking a minimum of 8.90% interest on personal loans.

Punjab National Bank and Indian Bank offer 8.95% and 9.05% interest rates on personal loans respectively.

Bank of India in the sixth position in the list with 9.35% rate of interest.

State Bank of India, country’s largest lender, offers personal loans at 9.60% interest to its customers.

Take a quick look at the nine cheapest personal loan interest rates now:

— UCO Bank: 8.45% onwards

— Central Bank of India: 8.45% onwards

— Union Bank of India: 8.90% onwards

— Punjab National Bank: 8.95% onwards

— Indian Bank: 9.05% onwards

— Bank of India: 9.35% onwards

— IDBI Bank: 9.50% onwards

— Bank of Maharashtra: 9.55% onwards

— State Bank of India: 9.60% onwards

Credit score

Banks can demand a guarantor for personal loan if they are not confident of the borrower’s repayment capacity. In case the primary borrower misses the EMIs, it will negatively impact the guarantor’s credit score too.