In India, which bank offers the cheapest personal loans?
Personal Loans can be offered to you at rates as low as 10%. However, you need to earn it based on some pre-conditions. Such pre-conditions are often set by the credit evaluation teams of financial institutions:
1. Whether you are a salaried or self-employed individual–Self-employed customers are perceived to be more prone to defaulting on a loan and hence, they generally receive higher interest rates than salaried individuals.
2. The organization you work for –A very highly reputed brand would show stability of employment and hence, will lead to lower interest rate offerings.
3. Whether you own a house, car or some fixed asset –This again shows stability, intent to build assets and thereby, lesser chances of defaulting and hence, lower interest rates.
4. The amount of loan you want –Usually, the higher the loan amount you are eligible for, the lower the interest rate can get. Lenders perceive that high value loans have lesser chances of defaulting.
5. How much you earn –The higher your income, the more capability you have to repay the loan.
6. Your credit worthiness –If you already run loans and have been servicing them regularly, you are deemed to be a steady customer and can be given at lower rates. Also, higher
credit scores (from credit bureaus like CIBIL) indicate both, the ability and willingness to pay.
7. Some other demographic parameters –Your education background, whether you’re married, have kids etc., indicate that you will not willfully default.
8. Whether you are an existing customer for the lender –Existing customers get preference and sometimes, even higher eligible loan amounts.
9. Lender’s cost of funds –
Cost of funds are the rate at which the lender organizes its funds to lend to customers. The more efficient the bank, the lower its cost of funds and cheaper its loans. Typically PSU Banks SBI, Canara, PNB have low cost of funds. So do large private banks like HDFC, ICICI, Axis Bank.
With the advancement in analytical decision making and more information being available about individuals, pricing a loan has become more and more complicated. It warrants carefully providing all the details about yourself and finding out which lender likes your profile and offers you the best rates.
Find out more about getting the best interest rates here -
How To Get The Best Interest Rate On Your Personal Loan
Personal Loan On Your Mind?
If you have any other personal finance queries, feel free to reach out -Adhil Shetty
Category: Bank loan