When unexpected expenses come knocking, while your savings fall short, reaching out to a bank to seek personal loan can be a saviour. Choosing the right lender, therefore, is crucial to avoid high-interest rates that can make repayment burdensome and at times – unaffordable.
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The good news is that looking around can lead to significant savings, especially if you have a good credit score. Borrowers with high credit scores often enjoy lower interest rates, making it imperative to compare offers from different banks.
Today we will explore the top banks offering the lowest interest rates on personal loans, helping you make an informed decision and secure the best deal. Whether you’re planning a major purchase, consolidating debt, or facing an emergency, knowing where to find the most competitive rates can save you money and reduce financial stress.
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Let’s dive in and see which banks top the list for affordable personal loans:
| Name of lender | Interest rate (p.a %) | EMI (Rs) Loan amount- 5 lakh Tenure – 5 years | EMI (Rs) Loan amount- 1 lakh Tenure – 5 years | Processing fee (% of loan amount) |
|---|---|---|---|---|
| HDFC Bank | 10.50 onwards | 10,747 onwards | 2,149 onwards | Up to ₹4,999 |
| Tata Capital | 10.99 onwards | 10,869 onwards | 2,174 onwards | Up to 5.5% |
| State Bank of India | 11.15-15.30 | 10,909-11,974 | 2,182-2,395 | 1.50% (Minimum ₹1,000 to Maximum ₹15,000) |
| ICICI Bank | 10.80 onwards | 10,821 onwards | 2,164 onwards | Up to 2% |
| Bank of Baroda | 11.10-18.75 | 10,896-12,902 | 2,179-2,580 | Up to 2% (minimum ₹1,000 and maximum ₹10,000) |
| Axis Bank | 10.99 onwards | 10,869 onwards | 2,174 onwards | Up to 2% |
| Kotak Mahindra Bank | 10.99 onwards | 10,869 onwards | 2,174 onwards | Up to 3% |
| Bank of India | 10.85-14.85 | 10,834-11,856 | 2,167-2,371 | 0.50%-1% (Minimum ₹250 and Maximum ₹10,000) |
| Canara Bank | 10.95-16.40 | 10,859-12,266 | 2,172-2,453 | 0.50% (Maximum ₹2,500) |
| Punjab National Bank | 10.40-17.95 | 10,772-12,683 | 2,144-2,537 | Up to 1% |
| HSBC Bank | 9.99-16.00 | 10,621-12,159 | 2,124-2,432 | Up to 2% |
| Federal Bank | 11.49 onwards | 10,994 onwards | 2,199 onwards | Up to 3% |
| Union Bank of India | 11.35-15.45 | 10,959-12,013 | 2,192-2,403 | Up to 1% (Maximum ₹7,500) |
| Bajaj Finserv | 11.00 onwards | 10,871 onwards | 2,174 onwards | Up to 3.93% |
| Punjab & Sind Bank | 10.75-13.50 | 10,809-11,505 | 2,162-2,301 | 0.50%-1% |
| South Indian Bank | 12.85-20.60 | 11,338-13,414 | 2,268-2,683 | Up to 2% |
| UCO Bank | 12.45-12.85 | 11,236-11,338 | 2,247-2,268 | Up to 1% (Minimum ₹750) |
| IDFC First Bank | 10.99 onwards | 10,869 onwards | 2,174 onwards | Up to 2% |
| Bank of Maharashtra | 10.00-12.80 | 10,624-11,325 | 2,125-2,265 | 1% ( ₹1,000- ₹10,000) |
| Karnataka Bank | 13.43 | 11,487 | 2,297 | Up to 2% of loan amount (Min. ₹2,500 & Max. ₹8,500) |
| IndusInd Bank | 10.49 onwards | 10,744 onwards | 2,149 onwards | 1.5% -3.5% |
Source: Paisabazaar, Rates as of 22nd May 2024
How can you secure a personal loan with a poor credit score?
Securing a personal loan with poor credit is challenging but possible with strategic measures. You can start by reviewing your credit report for inaccuracies and addressing them.
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Understand your credit score impact on your loan eligibility and interest rates. Consider your debt-to-income ratio and strive to lower it by paying off existing debts. Determine a manageable monthly payment by budgeting your income and expenses.
When applying for a loan, compare banks which specialise in bad credit and beware of predatory practices. Obtain prequalification to understand potential loan terms without affecting your credit score.
Adding a co-signer with good credit can significantly improve your approval chances and secure better rates. By following these steps and borrowing responsibly, you can enhance your prospects of securing a loan despite a poor credit score.
