Personal Loan Interest Rates

A personal loan interest rate is a charge levied by the lender on the amount you borrow. It is determined by factors like your credit score, income, loan amount, and repayment history, helping the lender assess the risk of lending to you. You can get a personal loan at interest rates starting from 9.99% p.a. on Bajaj Markets. Before applying for a loan, be sure to check the various interest rates and other applicable charges offered by multiple lenders to make a wise decision.

Here are some things which may have a major impact on the interest rate levied on your personal loan:

• CIBIL Score: A higher score of usually 750 or more leads to lower interest rates

• Income Level: Higher income reflects your repayment capacity, leading to lower rates

• Debt-to-Income Ratio: A lower ratio indicates better financial health, leading to lower rates of interest

• Employment Stability: Job security signifies stable earnings and repayment capacity resulting in favourable personal loan interest rates

• Loan Amount: Larger loan amounts typically attract higher interest rates due to the increase in the associated risk for the lender

• Lender’s Policies: Different lenders have varying risk appetites and operation costs, which influence the rates offered

• Relationship with the Lender: Existing customers of a bank or NBFC may be offered a lower rate on their personal loans

• Economic Conditions: Market trends and inflation affect the interest rates lenders offer

• Type of Interest Rate: Depending on whether you opt for a fixed or floating interest rate, there will be a difference in the rate and associated calculations

Personal loan interest rates are of 2 types, floating and fixed interest rates. Let’s understand how these differ and affect your loan repayment costs.

To get a complete understanding of your loan repayment costs, it is essential to be aware of the different charges applicable to a personal loan. Alongside the interest rate, here are some other charges you are required to pay on a personal loan:

Processing Fee

The processing fee is a one-time charge levied by lenders for processing your loan application. It is usually a set percentage of your loan amount.

Documentation Charges

For the verification and processing of the paperwork submitted, lenders usually charge a documentation fee

Loan Cancellation Fee

Post approval, if you wish to cancel the loan before the amount is disbursed, you need to pay a small charge known as the loan cancellation fee

Bounce Charges

A bounce charge is a penalty applicable to failed EMI payments caused by insufficient balance in your bank account

Late Payment Fee

In case of delayed or missed EMI payments, you need to pay a late payment fee to the lender

Prepayment Charges

You can make lump sum payments to service a portion of the loan’s principal amount by paying a prepayment charge

Foreclosure Charges

To close your loan before the end of the set tenure, you must pay a foreclosure charge, which is a percentage of the outstanding loan amount

Here are some tips you can use to get a lower interest rate on your personal loan:

• Leverage Pre-approved Offers: Lenders often provide lower interest rates to existing customers with good credit. So, regularly check for such pre-approved offers.

• Apply During Special Promotions: Some lenders offer low interest rates during festive seasons or special events. Timing your application can help secure better rates.

• Negotiate with Your Lender: If you have a high credit score and stable employment, try negotiating for a lower rate based on your past financial behaviour

• Opt for Secured Loans: Offering collateral like fixed deposits, gold, etc. can sometimes lead to a lower interest rate on personal loans

• Check with NBFCs: NBFCs often provide more competitive rates than traditional banks

• Use Employer Tie-ups: Some companies have partnerships with lenders that offer lower rates for employees, so inquire about this benefit with your HR department

• Keep Credit Utilisation Low: Maintaining a low credit utilisation ratio can positively influence your credit score and result in better rates

• Compare Offers: Consider checking the offers from different lenders to find an option that suits your needs. You can easily compare loan offers from over 20 personal loan partners on Bajaj Markets.

Interest on a personal loan is usually calculated by lenders via one of the two methods mentioned below:

• Reducing Interest Method: Herein, the interest charge is calculated on the outstanding balance of the loan after each EMI payment. In this case, the interest component of the EMI is usually higher during the initial tenure. As the tenure progresses, the interest charge reduces and the principal component increases.

• Flat Rate Method: The interest is charged on the borrowed amount and remains the same across the tenure. This usually results in higher overall loan costs compared to the reducing interest calculation method.

Reference of all T&C necessarily refers to the terms of the Partners as regards to pre-approved offers and loan processing time amongst other conditions.