Union Bank, Punjab National Bank offer the lowest rates on personal loans
Union Bank of India’s personal loan rate on a Rs 5-lakh loan with a five-year tenure starts at 8.9 percent
January 06, 2021 / 02:01 PM IST
Like other retail loan categories, state-owned banks lead the race in offering cheapest interest rates on personal loans too. Union Bank of India’s personal loan rate on a Rs 5-lakh loan with a five-year tenure starts at 8.9 percent. It is followed by Punjab National Bank (PNB) and Central Bank of India with 8.95 percent, as per data from Bankbazaar.com.
While the rates seem relatively lower due to benign interest rates in the system, these are still higher than secured loans such as gold loans, where interest rates start at 7 percent, and top-up home loans. So, comparatively, personal loans are expensive as these are unsecured loans. These are best avoided unless you have exhausted all other options of raising funds, including loans against endowment insurance policies, employees’ provident fund (EPF), public provident fund (PPF), stocks and mutual funds.
Assessing the burden after the moratorium
If you have already taken personal loans or opted for the six-month moratorium allowed by the Reserve Bank of India last year, you must take urgent steps to reduce your loan burden. Look at borrowing against such assets to clear your personal loan dues and thus, prevent a slide into a debt trap.
Interest rate on personal loans for all listed (BSE) public and private banks considered for data compilation. Banks for which data is not available on their websites are not considered. Data collected from respective banks’ websites as on December 31, 2020. Banks are listed in ascending order on the basis of interest rates – that is, bank offering lowest interest rate on personal loans is placed at top and highest at the bottom. EMI is calculated on the basis of interest rates mentioned in the table for Rs 5-lakh loan with tenure of five years (processing and other charges are assumed to be zero for EMI calculation). Interest and charges mentioned in the table are indicative and may vary depending on banks’ terms and conditions.