According to the Axis Bank website, “A personal loan is a financial instrument that helps you obtain funds for a multitude of uses. Like any ordinary loan; when you take out a personal loan, you receive an advance payment. a specific amount of funds at a fixed interest rate and can repay it via a fixed repayment term.
Applying for a personal loan typically involves determining the borrower’s need for money, eligibility for financing, and ability to repay the loan, as it provides an unsecured advance.
Therefore, to be eligible for a personal loan, applicants must generally be employees who provide documentation of their personal and professional information.
5 banks with the cheapest personal loan interest rates
|BANKS||Personal loan amount||Mandate||Return on investment (%)|
|IDBI Bank||>=25000 and||12 – 60 months||8.90% – 14.00%|
|city union bank||>=5000 and||12 months||>=9.50%|
|Indian bank||>=50000 and||12 – 36 months||9.40% – 9.90%|
|Karur Vysia Bank||Up to 10 lakes||12 – 60 months||9.40% – 19.00%|
|National Bank of Punjab||Up to 10 lakes||Up to 60 months||9.35% – 15.35%|
Source: Compiled by ETIG; Data as of July 28, 2022
Minimum CIBIL score required for a personal loan
A credit score is a number you receive from credit bureaus that ranges from 300 to 900 like CIBIL. The higher the score, the more likely your loan application will be approved.
According to the Axis Bank website, “If you have a high credit score, you can also get a higher loan amount or lower loan rates. However, a score below 750 may reduce your chances of getting a personal loan or give you a lower amount or a higher interest rate. If your score is below 600, it is advisable to try to find out why your credit score is low. This may be due to past behavior, such as consistently missing or delaying past IMEs, excessive purchases made on credit, or applying for loans or credit cards from many banks, etc.
Important Personal Loan FAQs According to Kotak Mahindra Bank
How are the personal loan application fees calculated?
The personal loan processing fee is calculated based on the loan amount. For example, say you are granted a loan of Rs.1 lakh and the processing fee for a personal loan is 2.5%, the fee would be Rs.2500 plus GST.
Do I have to pay extra for a personal loan?
You would have to pay a processing fee for a personal loan when you apply for a loan. Other fees would depend on the service demands you raise on the loan.
How are the interest rate, processing fees, pre-closing fees determined on a personal loan?
The personal loan interest rate is calculated on the outstanding balance of the loan amount. Pre-closing fees are also charged against the outstanding amount of the loan as of the date of foreclosure. The processing fee, on the other hand, is calculated on the amount of the loan you have.