Banks That Offer Low Interest Personal Loans – Before you take out a personal loan, compare interest rates with other factors. A low rate will help you drastically reduce your EMIs in a rising rate regime
New Delhi-based software specialist Nibedita Sharma has long dreamed of renovating her home. The only obstacle was money. There were always expenses that needed immediate attention, pushing the renovation into the background. Until he noticed a leak from the ceiling and could no longer delay the renovation. The nervous 40-year-old Sharma decided to take a personal loan. He was pleasantly surprised at how many banks, non-banking finance companies (NBFCs) and fintech firms lined up to offer loans in seconds. He only had to click on a few buttons and the money was credited to his account. “My good credit score and long-term relationship with the bank allowed me to get a personal loan at 11 percent [interest] in a matter of minutes. I will pay monthly EMIs (equal monthly installments) over a two-year period,” He says.
Banks That Offer Low Interest Personal Loans
Like Sharma, many Indians are impressed by the easy availability of personal loans. Access to money is no longer limited to people living in metropolitan areas or with good credit scores. With fintech companies filling the field, even people with low or zero credit scores now have a higher chance of getting personal loans.
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Although personal loans are easy to find, how can we get them cheaply? Shop for the lowest rates and choose a flat rate loan as interest rates rise. The lower the speed, the smaller your EMI. There are many factors that lenders look at, including credit score and credit profile.
There are several ways that offer personal loans. Some charge you low interest rates, while others offer flexible repayment options. Choose the one that suits you best. If your credit score is good, banks give general loans with the lowest interest rates. A long and sustained relationship with the bank makes this even easier. In the case of a pre-approved loan, you don’t even need any documents. The only downside is the lack of flexibility. Banks generally do not allow partial prepayment.
NBFCs can be your second option. “NBFCs have been active advocates of the use of technology in lending, and as such, they offer speed along with convenience, making it their biggest USP. Offers on loan amount, interest rate and maturity are competitive as banks and adjusted to the client’s Risk profile. Another big advantage is flexible repayment options and fully transparent fees, says Manish Chaudhary, chairman and chief of staff at Poonawalla Fincorp, a Pune-based NBFC. Some of the popular names include Bajaj Finserv and Home Credit , among others.
Another option is fintech companies like Navi Finserv and LoanTap. They are popular with millennials and the self-employed due to less stringent eligibility criteria. But there are downsides. “Not everyone is technically literate. Not everyone has a smartphone. “And it can be addictive,” says Mel Gerard Carville, non-executive director and board member at Home Credit NV, a global consumer finance provider.
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Increasing demand for personal loans is reflected in CMIE’s latest Economic Outlook report. It is stated that between December 2021 and March 2022, unpaid personal loans increased between 2.4 percent and 4 percent. With the economy emerging from the shadow of Covid-19, the demand for credit is increasing. The CMIE says a resurgence in bank loan demand, which according to analysts is likely to continue in FY23, began in the second half of fiscal 2222.
The increase in credit card expenses, among individual loan types, and the increase in housing loans, vehicle loans, durable consumer loans and other consumer loans are effective in this increase. Together, these account for more than 90 percent of outstanding personal loans – increased by Rs 57, 165 crores on a monthly basis in April 2022. However, monthly growth reached 1.7 percent, the lowest level in five months. This figure may come under further pressure, as high inflation that has affected consumer demand has seen the Reserve Bank of India (RBI) double the repo rate to 4.9 percent in just 36 days. With personal loans growing, is it the right time to get one? Here are some reasons to consider.
In this rising interest rate scenario, it is important to compare the interest rates offered by lenders before applying for a personal loan, as the lowest rate will shrink your EMIs. Your credit score is also directly linked to the interest rate. And credit rating is the only factor in borrowers control that affects interest rates.
A credit score is a three-digit number assigned to an individual on a 300-900 point scale. It is based on the unique algorithm of each bureau; A score of 750 and above is considered good. “To get a cheap consumer loan, make sure you maintain a good credit score because a bad score means higher interest rates… If you have a credit score above 750, your chances of getting a consumer loan increase significantly,” says Satyam . . Kumar is the CEO and co-founder of LoanTap, a fintech company for online delivery of retail asset products. Another factor that determines the price of your loan is your profile. In addition to your income level, your occupation also affects interest rates.
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Low interest rates should definitely be your only criterion when choosing a general purpose loan. Experts say that it is always preferable to choose fixed rate personal loans during the rising interest regime. “Retail lenders with floating interest rates will be impacted by increased repo rates,” said Sahil Arora, senior director of Paisabazaar, a fintech company.
Arora adds that public sector banks (PSBs) usually offer personal loans with variable interest rates, whereas most private banks offer personal loans with fixed interest rates. Also, banks with a good CASA ratio should be preferred because such lenders tend to increase their rates more slowly than banks with lower rates. CASA is the ratio of the deposits in the current account and savings account to the total deposits of the bank.
There are other variables to look at, such as transaction fees, legal costs, criminal charges and even upfront costs. Similarly, personal loan borrowers should confirm whether the interest rate, transaction fees, term of use, prepayment, foreclosure fees and other personal loan specifications written in the personal loan agreement are the same as those communicated during the onboarding process. Surprises after getting the loan.
Before taking a personal loan, research other options available in the market. For example, if you want to take personal loans for furniture or electrical equipment, it may be a better deal to avail the free EMIs offered by many stores for usage periods ranging from six to 12 months. So, be patient and compare all offers from all available lenders before taking the plunge.
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It is very important that you get personal loans from sources managed by the RBI, not from unscrupulous lenders who charge you astronomical interest rates and resort to harassment in case of default. “As a consumer, you should be aware of the remedies offered by sectoral regulators. Like in this case, RBI so you can forward it to the relevant authorities,” says Kumar of LoanTap.
Historically, in an emergency, people would borrow money from close friends and family or from local lenders. With the rise of fintech applications, you can now get loans from any source. But be careful when choosing them. “All the new sources and regulators have been a little slow to bring it all in. One argument I always have is that if you’re borrowing, investing money or buying an insurance policy, you don’t have to worry about who the supplier is, because I Buy from supplier A rather than supplier B. “You don’t need to think I’m at a big risk. Regulation should be about the product, not the provider. Therefore, I should have equal protection as a consumer,” says Carville.
Sharma stopped the leaky ceiling by choosing to borrow from regulated sources. Don’t be tempted by easy money with credit flowing like water; Choose the right financing option and make your dream come true like it. One is a payday loan. Applying for this type of loan is easy, but it can be very risky. Payday loans charge high interest rates and often have hidden fees. This makes it very easy to fall into a debt trap where it becomes very difficult to repay your loan, even if you only borrowed a small amount to begin with.
Another option is a personal loan. These loans are a bit more complicated to apply for but have much lower interest rates than advance loans. Therefore, personal loans are often used to consolidate debt and are a much safer way to access credit.
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