How To Get The Best Interest Rate On Your Personal Loan

By BankBazaar | May 13, 2016

How To Get The Best Interest Rates On Personal Loans?

Design Credits: Vishnu Madhav

Personal Loans are the instant noodles of the finance world. They are one of the fastest disbursed loans and require minimum documentation. Hence, they are the go-to loans in almost all emergencies. If you are looking for a Personal Loan, we suggest that you compare offers from multiple banks before applying for one. This will aid you in getting a Personal Loan at competitive rates.

Let us tell you a secret about Personal Loan interest rates. While the rate of interest on Personal Loans broadly falls within the same range for all banks, a discount or a premium can be applied on a person-to-person basis depending on the individual’s profile. Here’s how you can get a favourable rate of interest on your Personal Loan.

  1. Don’t bite off more than your can chew
  2. Your credit history is your report card
  3. Relationships matter
  4. Know your brand value
  1. Don’t Bite Off More Than You Can Chew 
    How To Get The Best Interest Rates On Personal Loans?
    Don’t bite off more than you can chew. What we mean is don’t apply for an amount that is more than what is available for your salary bracket. Don’t confuse the ease of getting a Personal Loan with getting a free rein on the loan amount. This puts your loan application at the risk of being rejected. Ask for an amount which will fit comfortably with your salary and won’t make the banks think twice about it. If you are not sure of the maximum loan amount you can apply for, ask the bank. It’s better to be safe than sorry.
  1. Your Credit History Is Your Report Card
    How To Get The Best Interest Rates On Personal Loans?
    Your credit history is your financial report card. It tells lending institutions about you money-management skills. If you have been good at repaying your debt in the past, your report card will reflect a good grade. A CIBIL score of 750 and above is good and will make lending institutions give you a Personal Loan readily. Keep in mind, when you apply for a Personal Loan that banks will scrutinise your CIBIL records to assess your credit worthiness.

If your Credit Score makes you sigh, take the following steps to fix it:

  • Find out what hurt your Credit Score – a late EMI payment or a build-up of Credit Card bills? Take responsibility for your debts and make sure you start making payments on time. A few timely payments will give your Credit Score that much-needed boost.
  • Having your Loan or a Credit Card application rejected due to a bad CIBIL Score is like rubbing salt in a wound. If your applications are being rejected, we suggest you stop applying and focus on improving your Credit Score. Once your score is in the required range, you can apply for a loan.
  • Watching movies back-to-back is fun. But applying the same rule to loans is bad for your Credit Score. Don’t apply for a fresh loan immediately after closing one. This indicates that you are not good at maintaining liquidity.
  • The maximum limit on your Credit Card might be as big as the Grand Canyon, but don’t exhaust all of it. Maxing out your Credit Card limit or using too little of it hurts your Credit Score. Maintain a healthy ratio of Credit Card usage.
  1. Relationships Matter
    How To Get The Best Interest Rates On Personal Loans?
    Sometimes, the thing you are searching for everywhere is right under your nose. This is true of Personal Loan interest rates as well. You are likely to get a discount on your Personal Loan interest rate if you hold an account with a bank of your choice. One reason being they would like to retain you as a customer for all their offerings. Second, as your bank, they are aware of your credit behaviour. If you are in their category of good and responsible customers, they might reward you with an attractive interest rate on a Personal Loan. In addition to being an account holder, having a good interpersonal relationship with your bank officials could help you bag a good rate of interest. The next time you visit your bank, smile and say, “Hi!”
  1. Know Your Brand Value 
    How To Get The Best Interest Rates On Personal Loans?
    Just the way you would value Louis Vuitton over a local brand, banks extend a warm welcome to those customers who work for big-banner companies. Working for a company of repute speaks volumes about your income and job stability. Sometimes, banks offer Personal Loans at discounted rates of interest to employees of some well-known companies. If you are applying for a Personal Loan, ask the bank about their corporate tie-ups. Your company might have made it to the list. Talking about the company, your designation and income play big roles in helping the banks determine an interest rate for you. The better your designation and higher your income, the lower is the interest rate. A fat pay cheque assures the bank that you are less likely to default on your payments.

Now you know about the 4 important tricks to get a good rate on a Personal Loan. For more information on Personal Loans, click here.

Additional Reading: Personal Loans To Match Your Expectations

The table below lists Personal Loan interest rates for some popular banks.

BANK NAMES INTEREST RATES
Aditya Birla Finance Personal Loan 14.00% to 16.25%
Capital First Personal Loan 13.00% to 20%
CitiBank Personal Loan 12.75% to 15.75%
Fullerton Personal Loan 19.50% to 37%
HDFC Bank Personal Loan 12.75% to 20%
ICICI Bank Personal Loan 11.49% to 17.50%
IndusInd Personal Loan 12.99% to 19%
Kotak Personal Loan 11.50% to 18%
Standard Chartered Bank Personal Loan 12.50% to 17%
Tata Capital Personal Loan 13.49% to 19.50%
All information including news articles and blogs published on this website are strictly for general information purpose only. BankBazaar does not provide any warranty about the authenticity and accuracy of such information. BankBazaar will not be held responsible for any loss and/or damage that arises or is incurred by use of such information. Rates and offers as may be applicable at the time of applying for a product may vary from that mentioned above. Please visit www.bankbazaar.com for the latest rates/offers.

6 thoughts on “How To Get The Best Interest Rate On Your Personal Loan

  1. AvatarAmritha

    Thanks for providing detail information on how to get a best interest for our personal loan. Even I am looking to get personal loan with best interest.I was searching from past 1 hour now your blog gave me good knowledge on Personal loan.

    Reply
    1. AvatarTeam BankBazaar

      Hi Amritha,
      We appreciate your feedback. Keep reading! If you want to apply for a Personal Loan either now or in future, click here.

      Cheers,
      Team BankBazaar

      Reply
  2. AvatarSamantha Jenkins

    Ticking items off your bucket list isn’t something that happens every day. When you get an opportunity, embrace it! If a personal loan will help make that happen, contact us to learn more about how we can make your dreams reality.

    Reply
  3. AvatarDark

    Suppose I’m applying for a Personal loan of about 8L INR for a period of 5yrs with floating interest rate, will I suffer loss at the end when compared to fixed interest rate personal loan? My bank ICICI doesn’t offer floating interest rate, but it offers fixed interest rate of about 10.99% as I’m a salaried employee. Hoping to hear your opinion on this.

    Reply
    1. AvatarTeam BankBazaar

      Hi Dark, Both fixed and floating interest rates have their benefits and disadvantages and the selection must be done as per your convenience. A fixed rate of interest on a loan would mean that the EMIs would remain constant over the tenure of the loan. For floating interest rates on the other hand, the EMIs would fluctuate as per the market dynamics, that is, when interest rates increase or decrease. Cheers, Team BankBazaar

      Reply

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