A personal loan is a loan that does not require collateral or security and you can avail it by providing minimal documentation to the lender. You can use the funds from this loan for any legitimate financial need, stated the HDFC Bank website. And like any other loan, you must repay it accordance to the agreed terms with the bank.
A personal loan availed is to be repaid in equated monthly instalments (EMIs) and you can mandate the lender to directly debit the same through auto debit mandate or if you have an alternate bank account, then it can done through a NACH mandate. Normally this can include a few months to a few years in EMIs.
Also read: Latest loan interest rates in March 2024: ICICI Bank, Canara Bank, PNB, Bank of Baroda, HDFC Bank
Some banks allow you to prepay or foreclose your Personal Loan after the payment of at least one EMI. However, charges (and taxes) will be applicable for foreclosing a personal loan.
The banks will standardise a personal loan pricing matrix, which will be used to calculate interest rates based on each client's individual characteristics.
Personal loan interest rates in March 2024
| PERSONAL LOAN - RATES AND CHARGES | ||||
| 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 Rs 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 | NIL |
| ICICI Bank | 10.80 onwards | 10,821 onwards | 2,164 onwards | Up to 2.50% |
| Bank of Baroda | 11.05-18.75 | 10,884-12,902 | 2,177-2,580 | Up to 2% (minimum Rs 1,000 and maximum Rs 10,000) |
| Axis Bank | 10.49 onwards | 10,744 onwards | 2,149 onwards | Up to 2% |
| Kotak Mahindra Bank | 10.99 onwards | 10,869 onwards | 2,174 onwards | Up to 3% |
| Bank of India | 10.75-14.75 | 10,809-11,829 | 2,162-2,366 | Up to 1% (Maximum Rs 5,000) |
| Canara Bank | 10.95-16.40 | 10,859-12,266 | 2,172-2,453 | 0.50% (Maximum Rs 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 Rs 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 | Up to 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 | Nil |
| IDFC First Bank | 10.75 onwards | 10,809 onwards | 2,162 onwards | Up to 3.5% |
| Bank of Maharashtra | 10.00-12.80 | 10,624-11,325 | 2,125-2,265 | 1% (Rs 1,000-Rs 10,000) |
| Karnataka Bank | 13.43 | 11,487 | 2,297 | Up to 2% of loan amount (Min. Rs 2,500 & Max. Rs 8,500) |
| IndusInd Bank | 10.49 onwards | 10,744 onwards | 2,149 onwards | Up to 3.5% |
| Rates and charges as of 20th March 2024 | ||||
| Source: Paisabazaar.com | ||||
How is personal loan EMI calculated
Your EMI is determined in part by the loan amount, loan period, and payment schedule. Having the appropriate amount, simple EMIs, and adjustable duration all contribute to determining the best loan for an individual. The overall cost of the loan is determined by the interest rate and the processing charge. When choosing a loan, do take these considerations into consideration.
EMI or equated monthly instalments are an important part of a loan. It is the intervallic instalment amount that you pay to clear your loan.
There are three factors that determine your EMI:
- The loan amount
- The interest rate
- The tenure
What is the stamp duty charge for a Personal Loan?
Stamp duty and other charges will vary from one state to another, as the laws of each state tend to differ.
The maximum repayment period is of 6 years or remaining period of service (whichever is lower). The loan can be repaid over a period of 12 to 72 months.
Basic important documents required
- Latest passport size photographs – 2
- Copy of identity card issued by the employer
- Bank account statement if the salary account is not maintained with SBI.
- Last 6 months' salary slip or latest Form 16 (in case of Income Tax Payee)
- Permanent Account Number (PAN).
At least one copy of the Officially Valid Documents (OVDs) mentioned below, as proof of identity and current address:
i. Passport
ii. driving license
iii. Proof of possession of Aadhaar Number
iv. Voter's Identity Card issued by Election Commission of India
v. Job card issued by NREGA duly signed by an officer of the State Government.
v. Letter issued by the National Population Register containing details of name and address
Is it mandatory to buy insurances policy with Personal Loan?
According to the Union Bank of India website, “ This is optional and purely at the discretion of the Borrower. However it is always advisable to get a liability/life insurance cover so that family members don’t suffer in case of any unfortunate event. For the benefit of the borrowers, one time Liability Insurance premium can be added in the cost of the property so that the burden can be reduced. Further, Bank also has tied-up with various Insurance Providers so that suitable products can be available to its customers with reasonable premium.”
