When we are short on cash and require the money right away, a personal loan can come in handy. An unsecured loan from a lender is a personal loan. Unlike a gold loan, when gold jewellery is used as security by the lender, this loan does not need the potential borrower to submit collateral or security against it.
It would be wise to borrow from a lender offering relatively lower rates with shorter terms because personal loan interest rates are among the highest (Higher the tenure, higher the interest outgo). Banks also give customers with outstanding credit scores the lowest interest rates.
Banks offering lowest personal loan interest rates
| BANKS | Personal Loan Amount | Tenure | RoI (%) |
| IDBI Bank | >=25000 and =5 Lacs | 12 – 60 Months | 8.90% – 14.00% |
| Punjab National Bank | Upto 10 Lacs | Upto 60 months | 9.35% – 15.35% |
| Indian Bank | >=50000 and =5 Lacs | 12 – 36 Months | 9.40% – 9.90% |
| Karur Vysya Bank | Upto 10 Lacs | 12 – 60 Months | 9.40% – 19.00% |
| State Bank Of India | >=25000 and =20 Lacs | 06 – 72 Months | 9.80% – 12.80% |
Complied ETIG; data as on June 23, 2022
Fixed or floating interest rate
When applying for a loan, one should confirm with the lender whether the interest rate being given is fixed or floating. Changes in the bank’s MCLR will not affect the amount of your equivalent monthly instalment (EMI) if the interest rate is fixed. Additionally, keep in mind that because personal loans are unsecured, their interest rates are typically substantially higher than those charged on home loans or loans secured by gold.
Who offers personal loan
Although one can ask friends and family for a personal loan, lending organisations like banks and non-banking financial corporations (NBFCs) provide personal loans in a more organised and ‘on-tap’ format. In addition to NBFCs like Tata Capital and Bajaj Finserv, banks including State Bank of India (SBI), HDFC Bank also provide personal loans
Charges in personal loan
A bank or NBFC will charge fees for processing, stamp duty, and other statutory costs when you apply for a personal loan. Each lender has a different set of fees.
Additionally, a lender has the right to collect pre-closure or pre-payment fees. Check the various costs that may be imposed before accepting a loan from the lender.
Personal loans’ term
Lending institutions like banks often give personal loans for a maximum of five years. The tenure may, however, differ from one lender to another.
Important FAQs on personal loan as per SBI
1. What are my loan limits?
A. Minimum Loan amount: –
Term Loan: Rs 25,000
Overdraft: Rs 5.00 lacs: The Overdraft will be subject to monthly reduction in Drawing Power so that Drawing Power becomes NIL in 72 months
B. Maximum Loan amount: –
Rs 20.00 lacs subject to 24 times Net Monthly Income (NMI) and applicable EMI/ NMI = 50% for all categories [except employees of Govt. Aided Schools where it is 12 times Gross Monthly Income (GMI)]
2. What are the important documents that I need to provide?
A. You will need to furnish only the following documents along-with Loan Application Form:
Latest passport size photographs – 2
Copy of identity card issued by the employer
Bank account
Last 6 months’ salary slip or latest Form 16 (in case of Income Tax Payee)
(a) Permanent Account Number (PAN).
(b) At least one copy of the Officially Valid Documents (OVDs) mentioned below, as proof of identity and current address:
i. Passport
ii. Driving license
iii. Proof of possession of Aadhaar Number
iv. Voter’s Identity Card issued by Election Commission of India
v. Job card issued by NREGA duly signed by an officer of the State Government
v. Job card issued by NREGA duly signed by an officer of the State Government
vi. Letter issued by the National Population Register containing details of name and address
3. Do I have to pledge some form of security?
A. No security is required.
4. What is the repayment schedule like?
A. The maximum repayment period is of 6 years or remaining period of service (whichever is lower).
