Personal Loan Interest Rates
Current Personal Loan Interest Rates in India
Personal Loan is a very convenient mode of arranging finance for short-term without providing any security. The avenue of personal loans can be used for the purpose of meeting various needs like education, vacation, marriage, medical expenses, furnishing of home or any unexpected financial urgency.
Personal Loan Interest Rates are primarily dependent on the profile of the borrower and his past repayment track record. The profile of the employer where the borrower is working also has a huge bearing on the personal loan interest rate. Being an unsecured loan, the lender is taking a big risk in lending you money and to cover that risk, the lender charges you a higher rate of interest than those charged on any other secured loans.
Due to higher risk Usually personal loan interest rates are higher than the interest rates offered on loan taken against collateral securities like gold, life insurance policy with surrender value, NSC and KVP etc. It is always advisable to get in touch with as many lenders as possible and get them to make loan offers to you. This will help you in negotiating on the processing charges and the rate of interest as well.
Do not get fooled by the personal loan rate conveyed to you by the lender. Some lenders calculate personal loan interest rate on monthly reducing basis and some on annual basis. It is always advisable to opt for monthly reducing basis, because when a portion of principal amount is paid, the next month interest will be calculated on balance principal outstanding for the subsequent month whereas it is done once a year in case of annual basis. So effectively you pay interest on the principal, which you have paid during the year.
Beware of floating type of interest rates, because if the Base Rate / PLR rise, your rate of interest will also rise with it.
Last but not the least; it is advisable not to go for personal loan unless you are in dire need of money. In case you are able to provide any security, please offer to pledge that so that you will be able to get the loans at the lower rate of interest than what is applicable in case of personal loans.