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Interest rates are probably the first thing you consider when opting for a personal loan. The lower, the better, right? However, the answer is not that simple.<\/p>\n\n\n\n
Personal finance interest rates depend on varying factors and are typically subject to fluctuations. Besides, since the loans aren\u2019t secured, interest rates can be higher when compared to home or auto loans. So let\u2019s take a look at what comprises a good interest rate.<\/p>\n\n\n\n
The average interest rate ranges from 12% to 24%. However, the rates can differ depending on a lender\u2019s lending policy, your financial history, repayment capability, and several other factors.<\/p>\n\n\n\n
For personal loan<\/a>, there are two rates- fixed and floating. In the fixed interest rate loan, your lender charges a constant rate throughout your loan tenure. Here, your total interest payable remains fixed.<\/p>\n\n\n\n In floating interest rates, your rates are usually lower initially. But the lender can revise it as per the repo rate, a lending benchmark from the Reserve Bank of India (RBI). So, while your personal loan EMI<\/a> may remain smaller at first, you run the risk of paying higher instalments amounts in the future.<\/p>\n\n\n\n Before applying for personal finance, compare loan offers from multiple lenders. You can look for seasonal or festive deals as well.<\/p>\n\n\n\n Besides, your credit score plays a vital role in securing a good interest rate on personal finance. A higher credit score, preferably over 750, is considered good. The personal loan interest rates<\/a> also depend on your monthly income, as the higher the income, the lower your chances of defaulting.<\/p>\n\n\n\n Additional Read: <\/strong>Why Have Personal Loan Interest Rates Dropped So Low?<\/a><\/p>\n\n\n\n While a lower interest rate is appealing, you should also consider the following factors before choosing a loan offer.<\/p>\n\n\n\n Many lenders levy a processing fee, ranging from a nominal Rs. 500 to about 6% of the loan amount. The processing fee involved in your loan application process ultimately adds to your overall repayment amount.<\/p>\n\n\n\n Reading the terms and conditions is vital before applying for a loan. It not only safeguards you from any hidden charges but also helps you understand your loan terms better.<\/p>\n\n\n\n Hidden charges can include prepayment\/foreclosure charges, penalty on EMI defaults, loan cancellation charges, etc. With Tata Capital, you can pre-pay part of your loan amount any time after 6 months from taking the loan without any additional charges.<\/p>\n\n\n\nHow to get lower interest rates on personal financing?<\/strong><\/h2>\n\n\n\n
How to decide the best personal financing option?<\/strong><\/h2>\n\n\n\n
Processing fee<\/strong><\/h3>\n\n\n\n
Hidden charges<\/strong><\/h3>\n\n\n\n