As name indicates,Loan is available for personal obligations like:
- Wedding
- Vacation.
- Fees towards child education
- similar personal obligations.
Important Features of Personal Loan:
- Personal Loan is mostly for short-term period ranging from 24 months – 60 months.
- Mostly upper limit for personal loan is around 15 lakh and can change from bank to bank.
- All banks as well Non-Banking finance companies offer personal loans.
- Mostly no security is required . If you have accounts like salary accounts ,ongoing home loan with the bank or documentation is easy in such cases.
- Loan also available against securities like National Saving Certificate(NSCs), Kisan Vikas Patra (KVP),RBI Bonds,Surrender value of insurance policy Etc. with discounted interest rates.
- Drawback of personal loan is high interest rates , processing charges and prepayment rates.Currently personal loan rates are in the range of 14-22%.
- Bank may ask you to purchase the insurance cover / accident cover to protect the loan under the conditions of disability or death.
- Personal Loan rates are depends type of individual Viz.Salaried or self-employed.
Sample Personal Loan Interest Rates:
| Bank Name | Min.Personal Loan Interest Rate** |
| SBI – Personal loan against security like NSC/KVP/Insurance policy | 14.20% |
| IDBI Bank | 14.25% |
| Bank of Baroda | 14.75% |
| HDFC Bank | 15.75-22% |
| ICICI Bank | 14-19% |
** Personal loan interest rates depends on different factors like loan against security,income source,personal liability relation with bank like long term home loan etc.
Sample Personal Loan EMI:
Only interest rates are changed in the table below ranging from 13-18%…Please note than some variation in EMI amount is possible.
| Loan Amount Rs. | Interest Rate % | Loan Period | Loan EMI*** |
| 500000 | 13 | 5 Yrs | 11,376 |
| 500000 | 14 | 5 Yrs | 11,634 |
| 500000 | 15 | 5 Yrs | 11,895 |
| 500000 | 16 | 5 Yrs | 12,159 |
| 500000 | 17 | 5 Yrs | 12,426 |
| 500000 | 18 | 5 Yrs | 12,696 |
*** Banks may charge processing charge in the range 2-3%.
One can view that variation in EMI is not as much large for period of 60 months.Personal loan is popular and good option to fulfill the needs of short term purpose.
