How to compare Personal Loan interest rate and choose the best option for you

A personal loan has become the go-to financial solution today. It is easy to apply for online, quick to get, and does not require you to risk any of your assets to receive the funds you need.

However, with so many options in the market, choosing the right personal loan can often be difficult.

One of the most important factors to check is the personal loan interest rate that a lender offers. This rate has a direct bearing on how affordable your repayment will be as it affects your EMIs. A lower interest rate will result in a lower monthly instalment and a lower interest outlay and vice versa.

All lenders have their own personal loan interest rates based on internal policies, demand for credit in the market, and the repo rates set by the Reserve Bank of India. So, doing a thorough check is key to your financial well-being and ease of repayment.

Here’s how you can compare personal loan interest rates and choose the best option for yourself.

Check rates on lender’s sites or aggregators

You can take personal loans from banks, non-banking financial companies (NBFCs) or digital lenders via apps. Each of these lenders has their own personal loan interest rates, and there are two ways you can compare them:

·         Go to the website of each lender and visit their personal loan page. Click on the personal loan interest rate and charges tab, and you will find the rate mentioned on the page. This method may be time-consuming but gives you the most recent information on the lender’s interest rates and all other accompanying charges.

·         Visit an aggregator site or financial platform that lists all the current personal loan interest rates in a table. This method is easier and faster and gives you a snapshot of top lenders in one go. It allows you to compare a range of options in a convenient manner. However, once you select your top preferences, do visit the lender’s site to endure the information is up to date.

Use an EMI Calculator to understand rates and their impact on EMIs

Once you have completed your check, shortlist your options. Choose the top 3 lenders offering the most pocket-friendly personal loan interest rates and use an EMI calculator. You can access this free digital calculator on most credit-related websites. 

Keeping your personal loan amount and tenure the same, you can vary the interest rate to see the effect it has on your EMIs and total interest dues. For instance, if you are planning to take a personal loan of ₹1 lakh for 12 months, here’s a table of how different interest rates result in different EMIs.

Interest rateEMITotal interest
11%₹ 8,838₹ 6,058
12%₹ 8,885₹ 6,619
15%₹ 9,026₹ 8,310
20%₹ 9,263₹ 11,161

As you can see, even a small difference of 1% can have an impact on your monthly repayment amount and total interest payment.

How to boost your chances of getting the lowest personal loan interest rate

Keep in mind that lenders vary the interest rate based on your creditworthiness as a borrower too. So, if you and your friend apply for a personal loan of the same amount from the same lender, you may get a lower interest rate on your loan than your friend.

This is based on certain factors that you can control to boost your eligibility. Here is a look at them:

·         Have a good credit score of over 750

·         Meet all the lender’s eligibility terms

·         Have a stable job and steady income

Armed with this information, you can compare various personal loan interest rates before you borrow funds. An easy way to do so is on the Bajaj Markets App. This one-stop financial destination not only has a comparison table listing the top personal loan providers along with the applicable rates, but also makes applying for a personal loan hassle-free. Simply download the app from Google Play or the App Store, compare your options and apply in a click!

Disclaimer: The above information is for general informational purposes only. All information on the Site is provided in good faith, however we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability or completeness of any information on the Site.