Taking Personal Loan is becoming a norm for the middle class Indian nowadays. With higher expenditures and salaries moving at a slower pace, there is little that an individual can do to evade the debt of personal loans. Thus, it is significant to know the repayment options and to understand how the rate of interest on personal loan, are calculated.

Personal Loan for Self-Employed and Salaried Individuals

Individuals, who are self-employed or salaried and can show a substantial flow of income, advising the high possibility of repayment, can apply for a Personal Loan. The status of the firm where an individual is working, credit record of the person applying for the personal loan and his/her association with the bank sanctioning the personal  loan are the few other factors for getting loan approval. The most excellent part of a Personal Loan is that it can be acquired without the need for any type of collateral or security.

Personal Loan Rates Are Varied

Personal loan rates vary among different banks. There are various methods of computing interest rates on loans. The different ways of computing rate of interest on personal loan are:

Flat rates – Obtaining a personal loan on a flat rate of interest is paying back much more than one otherwise would. Since, in a flat rate computation, the interest is computed on initial principal amount during the term of the loan, the outstanding amount of loan is never reduced. Therefore, one ends up repaying much more amount than one would from different types of interest rates used for computation.
Reducing balance interestReducing balance interest is suggested to go for, as it is cheaper than the flat interest rates. In this procedure, the interest rate on the personal loan amount continues reducing as it gets computed on the frequently reduced principal amount.
Floating rate – The floating interest rate changes according to the market analytics. It is a high risk repayment technique – one can end up giving much more or much less than the sum of the amount budgeted for. Though, floating interest rates are offered at lower rates than fixed interest rates. Therefore, a personal loan borrower at a floating interest would extremely benefit if the market dynamics make the rate of interest go lower.

Moreover, there are additional charges on the Personal Loan. Prepayment charges and processing fees are a part of every loan; whether it is a personal loan chandigarh or any other type of loan.

Based on the bank one deals with, one’s needs and the relationship one maintains with the bank, the best personal loan chandigarh interest rates can be established.


Gaurav Khurana is an expert on Personal Loan.  He is the Founder Director of WWW.DIALABANK.COM and Ex National Sales Head – ING Investment Mgt India and Vice President Citibank N.A