Still, paying High Interest on a Personal Loan? Switch banks for lower interest rates

Still, paying High Interest on a Personal Loan

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Personal loans come under the classification of unsecured loans. These could be easily availed and used for meeting requirements like medical emergencies, home reconstruction, weddings, trip packages, and other financial crises. Personal loans require very little documentation and have easy to satisfy eligibility criteria. Personal loans can be issued on the same day of the authorization. People can also expect to get the lowest personal loan interest rate which makes it a viable option. 

It is not manageable for everybody to be prepared to pay for personal loans. The personal loan interest rate is very high because of which most of the people do not prefer opting for it. 

According to some sources, the current personal loan interest rates along with their processing fee of a few banks of India are:

Bank Name Personal loan Interest Rate Processing fee
SBI 9.60% 1%
HDFC Bank 10.50% Up to 2.50% of the loan amount with a minimum of Rs. 1,999
ICICI Bank 10.75% Up to 2.25% of the loan amount
Axis bank 10.49% Up to 1.75% of the loan amount
Kotak bank 10.50% Starting from Rs. 999

Amongst, the others,’Yes Bank’ proposes the lowest interest on personal loans.

The Reserve Bank of India has taken specific steps by the coronavirus pandemic to protect and uplift the falling economy of the country. This is where other banks and financial institutions have come together to reduce the personal loan interest rate. 

Banks that have lowered personal loan interest rate:

Bank of Baroda:

This is one of the first banks to offer one of the lowest interest on a personal loan. The bank made the declaration that it had reduced its so-called repo-linked lending rate or BRLLR by a margin of 75 bps which is huge. This was announced and became effective in March 2020.

It’s repo rate decreased from several 5.15% to 4.40% by the Reserve Bank of India.

Though, there has not been any modification in the markup/base spread or policy premium.

Bank of Baroda conveyed and assured that it would always be opened for its customers and would be ready to extend a helping hand whenever the need arises. Being one of the banks providing the lowest interest on Personal loan, it attracted a lot of public.

It announced that the BRLLR for the fresh floating prices, the personal loan interest rate, and other retail loans of the investment-grade for micro, small, and medium-firm would be 7.25 per cent. This too became effective from March 2020.

Bank of India:

The bank of India too reduced its MCLR or marginal cost of funds lending rates. The deduction took off by 25 bps for those striding from one year to a month. For overnight tenors, the bps reduction was 15. This accounts for 7.95 per cent per annum MCLR for one year.

Bank of India too reduced its superficial standard lending rate. This is linked to the repo rate and the reduction made is by 75 bps, which too, is a huge reduction. This was effective from March 27, 2020, running hand in hand with the Reserve Bank of India. The reduction of the personal loan interest rate was effective from April 1, 2020.

State Bank of India:

Just like the above two banks, the State bank of India too decided to decide to run according to the Reserve Bank of India and hence, announced the reduction in the RLLR or repo-linked lending rate by 75 bps. The revision led to the coming down of the EBR, that is, External Benchmark Lending Rate, and RLLR, that is, Repo Linked Lending Rate by a margin of 75 bps. The EBR fell from a rate of 7.80% per annum to 7.05% per annum.

In addition to this reduction, the equated monthly installment levied on the home loans ( which were linked to EBR and RLLR) got cheaper by a rate of Rs.52 per 1 lakh on the tenure of a 30-year loan.

Talking about the MCLR, the bank decided to pass any announcement only after the ALCO or Asset Liability Committee meeting which was held in April 2020. 

It also stated that the influence which would be brought out as a result of the reduction carried out by RBI would be reflected in the next reviews of MCLR.

The reduction in the personal loan interest rate has helped different kinds of people in different ways. It has made it easier for them to cater to their needs without pondering over other options!

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