When it comes to applying for an online personal loan, the first thing a borrower will check is the loan interest. Personal loan interest rate in India is offered at competitive rates by loan providers. The interest rates for a personal loan that you are offered depends on your credit history. If you have a low credit score, then you are likely to be charged a high rate of interest.
Here is everything you need to know about personal loans and their interest rates.
What is a Personal Loan?
A personal loan is a type of loan which you can use to fill any kind of purpose. There are two types of personal loans. One is secured and the other is unsecured. A secured loan requires collateral where as an unsecured loan does not require any collateral. You can use a personal loan for multiple purposes such as home repairs, debt consolidation, travel, medical emergency, wedding expenses, etc. It varies from other loans such as a home loan, car loan, education loans. There are many borrowers who prefer availing an unsecured personal loan. As this loan is unsecured, there is no collateral involved.
How do Lenders Decide Personal Loan Interest Rates?
Borrowers are offered two kinds of interest rate. One is fixed and the other is variable. When lenders are deciding on which interest rate to offer, they often use a method called the risk-based pricing method. This helps them determine the interest rates of personal loan and also the terms of the loan.
In this method, the lender is able to determine the extent of risk a borrower can pose. This is based on the borrower’s credit score. If the rate of risk is higher than the APR offered will be high too. If the risk is low, then the APR will be lower too.
The credit history is one of many factors which lenders look at. Other factors can be credit reports, annual income, employment status, loan amount, etc.
Low-Interest Rate for Personal Loans
Online personal lenders can offer low-interest rate charges as they do not have to deal with the overhead costs which can come with brick and mortar branches of lenders. Indiabulls Dhani offers competitive personal loan interest rates. With Indiabulls Dhani, you can avail a personal loan online. The process is hassle free and the documentation is minimum too. You get instant approval and the disbursal happens immediately after.
How Can a Borrower Estimate the Personal Loan Interest Rate?
Mostly all the banks and NBFCs allow you the borrower to see if they can pre-qualify before the application. For this, the borrower may have to fill in basic details such as the Identity and employment details. After a soft credit check, the lender lets the borrower know for how much of an amount they can apply for a personal loan and what will be the interest rate on it.
Low interest personal loan depends on the borrower’s credit history and also on the loan repayment capacity. You can also check the EMIs by using the EMI calculator for personal loans.