Every now and then we may find ourselves in unenviable situations. This is the time when we realize we might need some extra source of finance to cover up the discrepancies caused due to lack of readily available funds. Aforesaid situations are one of the most common reasons why people take personal loans. Now, there can be other reasons besides the cash crunch in a person’s life. It can be something joyous for which a person wants supplementary sources.
It’s very often that people when in desperate need of financial help tend to be less attentive towards the terms of the loan and especially the personal loan interest rates charged by the bank or NBFC (Non- Banking Financial Companies). You need to be very thorough with the cost attached to the personal loan. Personal loan interest rates form a considerable part of the overall cost of personal loans and your Equated Monthly Instalments (EMI).
There are various critical factors that a bank or NBFC (Non- Banking Financial Companies) takes into account before deciding the rate for you. Some of the factors are as follows:
1. Borrower’s Income
2. Credit or CIBIL (Credit Information Bureau India Ltd.) Score
3. Bank-Customer Relationship
Personal loan interest rates can be of two types. It can be either fixed or floating interest rate.
A fixed interest rate on a personal loan is the standard or uniform rate on the loan for the entire tenure. The floating interest rate is a variable rate of interest on a personal loan where the rate changes throughout the tenure of the personal loan based on the economic condition.
Furthermore, the rates may vary based on the occupation of the person as well. This means that personal loan interest rates are different for salaried employees and self-employed borrowers.
SBI personal loan is available at an interest rate starting from 7.20% p.a.
It depends on the credentials and convenience of the borrower which will help them decide the rates for the loan.
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