A description on how personal loans work and how interest rates on these are calculated. The relevance and impact of these interest rates is also presented specially in the Indian context with local banks

1. Personal Loan Interest Rates

2. What is Interest
Interest is basically the amount you pay
over and above the principal loan amount
that you take.

3. How do Interest rates vary
Interest rates are dependent on your profile
which would include
Salaried versus self-employed
The company you work
Your Monthly take home salary
Your city you stay in
The type of accommodation
Desired Loan amount
Your past credit history and many more

4. Salaried versus self-employed
Banks have different interest rates for
different working professions
◦ A Salaried
◦ Self Employed Professional – Doctor,
Architect, Engineer, etc
◦ Self Employed Business

5. The company you work
The company that you work for is important.
Banks usually categorise companies into
multiple segments such as Cat A, Cat B and so
on or Platinum, Gold, Silver, etc.The list under
which your company falls could also be a key
factor to determine the ROI offered

6. Your Monthly take home salary
Your monthly take home determines your
eligibility as well as your interest rates. Most
banks have a eligibility cut off on your slary
bracket around (20,000) and in some cases the
higher the salary the lower could be your
interest rate. Do check this with multiple
Banks and NBFC’s such as HDFC, ICICI,
KOTAK, Citi,Axis, Bajaj Finserv,Tata Capital,
Fullerton and so on

7. Your city you stay in
This might not have a affect with some
Banks but your eligibility is based on this.
Some banks however offer better interest
rate based on the city stay (assuming the
cost of living in the city matters). So a
personal loan in Bangalore could be a
little different from a personal loan in
Mumbai vis-à-vis a personal loan in
ahmedabad

8. The type of accommodation
 Own house
 Rented with Family
 Rented with Friends
 PG
The above are the main criteria to determine
the eligibility. Some banks process only if you
have a own house either in the city youstaying
or a verifiable location

9. Desired Loan amount
This is an interesting way for a bank to
ensure you take a higher loan amount. So in
some banks, the higher the loan amount
you take the better the ROI offer you get


10. Your past credit history
This again might not have a direct impact
on your rate of Interest but your CIBIL
could determine your eligibility

11. Best Way forward
Log on to https://cashkumar.com/personal-
loan to check the best offers or call us on
+917795500177