Interest Rate Range
19% to 30% p.a.
How to Calculate Personal Loan Interest Rate Online?
If you are having trouble calculating your personal loan interest rates and EMIs manually, then consider using Hero FinCorp’s personal loan rate of interest calculator. A rate of interest calculator for a personal loan helps borrowers to determine their EMI beforehand by using just three variables—principal amount, interest rate, and loan tenure. Once you input all three variables and click on the submit button, you will receive a loan amortisation schedule detailing your interest rate as well as EMI.
What is the Personal Loan Interest Rate?
A personal loan is a one-stop solution for all of your urgent financial needs such as a medical emergency, wedding expenses, higher education fees, and more. It is an unsecured form of financing, which means you do not need to put up any asset as collateral. When you avail of a personal loan, you need to repay the principal amount along with interest over a set period. However, before applying for a personal loan, you must be aware of the different types of interest rates on personal loans as well as the factors that influence the rate of interest of personal loans.
Personal Loan Interest Rate and Charges
Personal Loans are unsecured loans that don’t require collateral. The interest rates are determined by factors such as the applicant’s age, creditworthiness (including credit score), and repayment capacity. At Hero FinCorp, the Personal Loan interest rate starts at 1.58% per month. Processing fees are approximately 2.5% plus GST, and foreclosure charges are 5% plus GST (on the reducing balance interest rate). There are no prepayment charges. The cheque bounce charges are Rs 350.
How to Calculate Rate of Interest on Personal Loan?
Your personal loan rate of interest in India can be calculated using two different methods. One is a flat interest rate, and another is a personal loan reducing rate of interest. Let us look at both methods in detail:
- Flat Interest Rate
Under this method, the applicable personal loan interest rate is charged on the total principal loan amount throughout the tenure. To compute your interest rate using this method, use the following formula:
Total Interest Payable = (Principal × Rate of Interest × Loan Term) / 100
Once you know the total interest payable, you can easily compute your EMI by using the below formula.
EMI = (Principal＋Total Interest Payable) / Total Loan Tenure in Months
- Reducing Balance Method
Under this, the personal loan interest rate is computed on the outstanding principal balance. It implies that every time you pay your EMI, the interest on the remaining balance is recalculated. To calculate the EMI using this method, use the following formula.
EMI = [P x R x (1+R)^N] / [(1+R)^ (N-1)]
Where,
E is the EMI
P is the Principal Loan Amount
R is the Rate of Interest
N is the Loan Tenure in months
How to Get the Best Personal Loan Rate of Interest?
Improve Your Credit History
If you are looking for a personal loan at the cheapest rate of interest, improve your credit history. To boost your creditworthiness, make timely EMI payments and pay off any outstanding debts.
Avoid Skipping EMIs
Sometimes people tend to skip their EMIs despite the availability of funds. In doing so, they not only impact their credit history but also negatively affect their future borrowing capacity including the interest rate on future loans.
Compare Lenders
Different financial institutions offer personal loans at different rates. Explore all options before making a decision. Choose the lender who offers the minimum rate of interest for a personal loan in India.
Negotiate
If you have a strong credit history and a decent profile, you can negotiate the personal loan interest rate with your lender. This way, you may even get the lowest interest rate on a personal loan.
Points to Consider while Availing of a Personal Loan
Besides low rates of interest for personal loans, other factors to consider include:
- Processing Fee: It is a one-time fee that covers the costs of processing your loan application. Even though the fee is nominal, borrowers should still consider it.
- Pre-closure Fees: If you pay off your outstanding dues before the binding due date, the lender will levy a foreclosure fee. Read the pre-closure terms and charges before signing the loan document.
- Eligibility Criteria: Before applying for a personal loan, check the eligibility criteria on the lender's website. Choose a lender whose qualifying conditions matches your profile and makes you eligible for the lowest personal loan interest rate.
- Special Offers: Check the availability of special festive offers and discounts.
- Disbursal Time: In the face of a crisis, every minute matters. If you are availing of the personal loan to meet some urgent financial needs then do not forget to check the lender’s loan disbursement time. This, usually, varies from lender to lender. Choose a lender who offers instant personal loan approval.
Once you receive the loan offer, review it carefully, accept it to complete the formalities, and get disbursal in 2 days.
Factors That Influence Personal Loan Interest Rates in India
If you want to get a low-interest personal loan, you first need to learn about the factors that affect your interest rate.
Income
When you apply for a personal loan, the first thing we assess is your income. Having a high monthly income makes you a low-risk borrower and you might get a personal loan at a low interest rate.
Employer Status
Your organisation plays a crucial role in determining your interest rate on a personal loan. Working for a reputable MNC or government organisation may qualify you for a low rate of interest for personal loans.
Occupation Status
Lending to salaried and self-employed individuals involves different levels of risk. Thus, when determining the interest rate on a personal loan, we also consider your occupation status and creditworthiness as key factors.
Age
Your age determines your earning potential. Compared to retired individuals, young people have greater earning capability. Therefore, if you meet all the eligibility requirements for the personal loan, your age can help you get a better interest rate. The younger you are, the lower your personal loan interest rate could be.
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Frequently Asked Questions (FAQs)
You can compute the personal loan interest rate manually by using the following mathematical formula:
Interest = Principal × Interest Rate × Tenure / 100
You may also calculate it online using the rate of interest on a personal loan calculator.
Hero FinCorp’s Personal Loan interest rate starts at 1.58% per month, depending on factors such as age, income, and credit history of the applicant.
Your income reflects your repayment capacity. If your current personal loan interest rate is on a higher side, it could mean you don't earn enough income and the lender considers you a high-risk borrower.
When evaluating your personal loan application, the lender calculates how much of your income goes toward existing debt payments. If you spend more than half of your income on debt repayment, the lender will either deny your loan application or charge you a higher interest rate.
Working for a reputable company ensures job security and stable income. Also, your work experience reflects your employment stability. Therefore, you may get a personal loan with a lower interest rate if you work for a reputable company and have sufficient work experience.
Yes, you may acquire a low-interest personal loan if you apply with a co-applicant who has a good credit history. Another alternative is to find a creditworthy guarantor.
Follow these tips to obtain a low-interest personal loan:
Improve your credit history
Make timely EMI payments
Negotiate with your lender
Explore the offers with different financial institutions
At Hero FinCorp, our interest rate for Personal Loan 1.58% per month or 19% to 30% per annum. However, your Personal Loan interest rates may vary according to your eligibility, credibility, and repayment capacity. We look at your income, financial obligations, employment, work experience, age, credit score, and other factors to determine your eligibility and offer you an appropriate Personal Loan interest.
The interest rate for Personal Loan at Hero FinCorp starts from 1.58% per month or 19% to 30% per annum. However, it may vary depending on several factors we consider before sending you a loan offer. These include the following:
Income: You must be earning enough to repay your loan’s Equated Monthly Instalments (EMIs) conveniently.
DTI Ratio: You must not be already indebted heavily, which might make the EMI repayment challenging for your finances. Ideally, your Debt to Income (DTI) ratio should not exceed 40% of your monthly income.
Age: You must have good earning years in your career to repay the EMIs without hassle. We consider applicants aged 21-58 years.
Employment: To determine your interest rate, we want to ensure stable employment with minimum monthly income of Rs 15,000.
Work Experience: We consider salaried applicants with a work experience of at least six months in the same job. Self-employed professionals should have in their business for over two years.
Credit History: We check your credit score to evaluate your repayment habits and see how responsibly you handle credit.
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