A personal loan is usually taken to meet short term needs. Generally, the purpose of this loan is to pay off credit card debts, family vacation, and wedding expenses or to meet a medical emergency. A Personal Loan is availed by individuals on the basis of specific criteria, like level of income, employment history, credit score, and scope for repayment.
Personal loan can be availed from a banking institution or a non-banking financial company (NBFC). Borrowers can apply online for personal loans and can also use online tools like the Personal Loan EMI Calculator, to assess the monthly installments, EMIs, throughout the tenure before applying for a personal loan.
Before applying for a personal loan, make sure to compare the rates of interest offered by various banks, NBFCs and loan aggregators. Different banks offer personal loans at different rates of interest. Compare the various personal loan products and their rates of interest. Use the online EMI calculator to get a clearer picture of the monthly installments. The EMI calculator helps ensure that the monthly installments fit your budget.
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Lenders offer borrowers a range of fixed and variable rates on a personal loan. The lenders often use a method called risk-based pricing to determine the interest rate and terms of the loan. The risk-based pricing method tries to determine how much risk the borrower poses to the lender, based on your credit scores and other factors. Lenders may use this method along with other information to determine the borrower’s APR.
In case the applicant’s credit history suggests a lower credit risk, then it is likely that the personal loan offered will probably have a lower APR. If the application and credit history of the applicant suggests a higher credit risk, then the lender is likely to offer a higher APR on the personal loan.
In addition to the credit scores, lenders may also take into account the applicant’s credit history, credit reports, annual income, employment status, other debt and the loan amount while determining the rates of interest.
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As personal loans are unsecured loans, they do not come at lower interest rates. An unsecured loan is a type of financial borrowing, where the borrowers do not need to keep an asset as security against the money borrowed. Sometimes, banks or lending institutions might offer a personal loan at a lower rate of interest against a security or due to high credit score of an individual.
Online loan aggregators may provide personal loans at a lower rate of interest than traditional banks. However, it is advisable to compare the personal loans online as different lenders have different risk tolerance and underwriting criteria.
As per the current rates, Yes Bank offers the lowest interest rate of 10.75% on personal loans. However, to get best deal on personal loans, you can go through online loan websites as well. The rate of interest on personal loans also depends on factors like the company you are working with, loan amount you have applied for and your repayment capacity. Higher the loan amount, lower will be the rate of interest.
Most banks and lending institutions in India offer personal loans. In case you are looking for an instant personal loan within 1-2 days, you can apply for instant personal loan online. The interest rates of these banks and online loan aggregators are in the range of 10.99% to 16% a year. You can get instant personal loan approval online and check eligibility without having to submit paper documents. Post approval, in case you are an existing account holder in the bank or existing loan customer, then you may be eligible for instant disbursement without any documents.
Personal loans are sanctioned based on the repayment capacity and the credit score of the borrower. Given below are a few points that you must follow to avail best possible interest rates on personal loan:
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