A personal loan has several unique characteristics. One of the most significant differences from other types of loans is that personal loan interest rates can vary greatly for different borrowers. The interest charged can range from 12% to 24%, based on the borrower’s eligibility criteria.
If you understand factors that affect personal loan interest rates, it can provide clarity on how to get a personal loan online and what to expect.
Interest on Personal Loans is Higher than Other Loans
Expect to pay higher interest rates on a personal loan than you would pay for a car loan or a mortgage on your house. Here are a few factors that govern personal loan interest rates:
- Monthly Income
The primary consideration in deciding the interest rate is your income. A personal loan is an unsecured loan where you don’t provide collateral to the bank. However, the bank needs to have some assurance that you can pay back the loan. If you have a high income, the bank will be convinced you can pay it back quickly and fix a lower interest rate.
- Credit History
Before sanctioning your loan, the bank will check your CIBIL score and credit history. If your credit score is low, your application may be rejected. If you have a high CIBIL score (750 or above), the bank may fix a lower interest rate, anticipating a high likelihood that you will never default.
Type of Employment
The type of job you hold defines the level of job security. A bank will look for employees with the highest level of job security. Hence, a government employee will be preferred over a private employee and can secure lower personal loan interest rates. Likewise, salaried people will have an advantage over those who are self-employed.
- Status of Your Employer
If you work for a reputed company with a powerful brand presence in the market, the bank will favour that type of employer. They will fix a lower interest rate for you rather than for someone who works for an unknown company, like, for example, a start-up.
- Relationship and Negotiation Skills
If you have a good relationship with the bank and have been a customer for several years, the bank will look at you in a favorable light. You can use your long-term relationship with the bank as leverage to negotiate for lower personal loan interest rates.
Apply for an RBL Bank Personal Loan for Better Interest Rates
Getting a personal loan online from RBL Bank, a premier online banking institution, is quick and easy. RBL Bank offers various financial products such as savings accounts, credit cards, fixed deposits, loans, and NRI accounts.
The advantage you get from a personal loan with RBL is that the interest charged is among the lowest offered by reputed banks and lenders. If you earn a minimum of Rs 20,000 per month (Rs 25,000 if you live in Mumbai or New Delhi), you will qualify for a personal loan from RBL Bank.
You need to be aged between 25 and 60 years of age and should have worked in the same company for at least a year with a complete employment history of at least three years.
RBL charges 14% to 23% interest per annum on personal loans. There is a one-time processing fee of up to 4% of the loan amount. The loan processing can be swift, provided you meet all the eligibility criteria. You can choose the term of your RBL personal loan from one year to five years duration.
Additional Read: Personal loan Pre-closure Charges and Procedure
Enjoy Financial Comfort with an RBL Personal Loan
Now that you know the factors that might affect the personal loan interest rates apply them to your circumstances to anticipate your eligibility for the loan, the expected amount you can borrow, and the final rate of interest. If you are amid financial difficulties, take an RBL personal loan to ease your situation.