Many people opt for a personal loan when they are in need of finances. Since they are ‘unsecured loans’, banks do not enquire after the reason of requirement, nor do they ask for any collateral. Due to this, the interest rates for personal loans tend to be slightly higher, and vary from bank to bank. There are a few key factors that can impact lenders’ decision regarding the rate to be levied. These have been enumerated below.

Income from abroad

Net Income

One of the first things that a bank will look into during the approval period is your annual net income. Each bank has a set minimum net income level for a personal loan application. The minimum depends on whether you are a salaried or a self-employed person, your age, and the overall tenure of employment. Coincidentally, those within a lesser pay bracket are charged a higher interest rate of 16%-20%, whereas those with more income per month (or per annum) can get a personal loan on 12% interest.

Employing Organisation

The organisation which you work for goes a long way in determining the rate of interest on your personal loan. Banks will take into account the reputation of your company, or of your employer. If the organisation is deemed to be financially stable, then it is assumed that you, as a result, have a stable career. This can lead to a comparatively low interest rate of around 13%. In doing so, the bank presumes that you receive your salary on time, and therefore, will be able to repay the loan in a timely manner. Check out for more information.

ALSO READ  How Commercial Lines of Credit Help Grow Your Small Business


Credit History

Credit history is undoubtedly one of the most crucial things that come under review when you apply for a personal loan. Since a personal loan is unsecured, your credit history is used by the lending bank to judge your debt repayment pattern. Your previous loan and credit card bill repayments are carefully scrutinized in the form of ‘Credit Score’. If your credit score is high, then inversely, the interest rate levied will be low, and vice-versa for a low credit score.

Customer-Bank Relationship

The last factor that is looked into during the appraisal is your relationship with the bank. Being a pre-existing customer helps in deciding a favourable rate of interest. It further helps if you have multiple accounts for saving or investment purposes in the same bank. In doing so, you are identified as a loyal customer and receive a reduced personal loan interest rate.

If you are planning to apply for a personal loan from IndusInd Bank, keep the aforementioned points in mind and enjoy competitive interest rates beginning at 11.49%.