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A Handy Guide to Personal Loans

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When you need funds, you can avail a personal loan from a bank or an NBFC.  The terms and conditions of the loans vary from lender to lender. Financial institutions usually charge a certain interest rate on your loan amount, which you would need to consider while repaying the loan. Some of them can even let you choose the frequency of EMIs as per your convenience, without charging anything.

To ensure that you understand all the terms and conditions, here are some things you should know:


Understanding Interest Rates

Interest rate is a fixed percentage that is charged on the loan amount by the lender. It is an important consideration in calculating the amount you would be paying for the personal loan repayment. These interest rates might vary in different banks and would also be impacted by the market changes.

Assessing the Total Cost

In addition to the personal loan interest rate, you should also consider expenses like prepayment charges, processing fees and penalties. Some banks impose reducing balance interest rates, which lower the liability over time as some amount from EMI is paid towards repaying the principal amount. Whereas, fixed rates are evaluated on principal amount for a fixed period.


You can get loans on lower interest rates if you have higher credit ratings. Additionally, there is a minimum amount of income criteria for every loan as banks need to ensure that they have security of loan repayment. If borrowers default in paying off the loan, the credit rating also gets affected.

Annual Percentage Rate

Annual Percentage Rate (APR) is the end amount you would be paying including personal loan interest rate and any additional costs. It is calculated considering the borrowed amount, interest rate and processing fees.  Even after lower interest rates, the APR can increase if the processing fee is higher.

Personal Loans are Unsecured

Secured loans are the type of loans where borrower keeps an asset as collateral. Personal Loans are unsecured as they do not require any collateral. They usually have a higher rate of interest since they pose higher risks for banks.

Calculating EMI

Personal Loan EMI calculators let you calculate how much EMI you would be able to handle. Any penalties, debt amounts, or risk factors can be evaluated by using an EMI calculator. It ensures you are in control of your loan repayment.

You can avail personal loans of different tenures ranging from 12 months to 60 months. However, this is calculated according to your credit history and capability to repay. Be sure to choose the tenure carefully, because lower tenure means you would be paying higher amounts in every EMI.


You can also visit YES BANK's website to know more about their Savings Account, NRI Savings Account and Fixed Deposit Accounts.

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