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  • Indian Overseas Bank (IOB) Personal Loan Interest Rates

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  • Indian Overseas Bank (IOB) offers personal loans at an interest rate of 11.90% p.a. You can choose a repayment period of up to 5 years. The bank charges a processing fee of up to 0.40% of the loan amount. You can use the loan amount to buy consumer durables including electronic goods, electricals, and metal and wooden furniture. Some of the details regarding the loan are given in the table below:

    Interest Rate 11.90% p.a.
    Processing Fee 0.40% of the loan amount
    Loan Tenure 1 to 5 years
    Loan Amount Up to Rs.5 lakh
    Salary / Income Minimum Rs.5,000 per month
    Employment Status Salaried
    Credit Score Ideal score – above 700
    Lowest EMI per Lakh Rs.2,219*
    Pre-Payment/Foreclosure Charges Nil
    Part Payment Charges Nil

    *Note: The EMI amount has been calculated based on a principal of Rs.1 lakh, an interest rate of 11.90% p.a., a tenure of 60 months, and a processing fee of 0.40%.

    Indian Overseas Bank Personal Loan Scheme

    IOB offers its customers only one personal loan scheme. Anyone over the age of 21 years can apply for this loan. It has a low income requirement and offers an attractive interest rate and a long tenure. It offers up to 90% financing of the value of the consumer goods you want to buy. The security/collateral requirements include hypothecation of the items you buy using the loan and a guarantee from a third party.

    Factors that affect personal loan interest rate

    The interest rate you get might be different from what another borrower gets. This is because there are a few factors that affect the rate of interest on an individual level. These include the following:

    • Income level and nature of job: If you earn a high level of income, the bank may give you a better interest rate. The same goes for the company you’re working for. If you work for a reputed organization, it means you have a stable job. In other words, a stable monthly income. A high income and a stable job indicate that you are eligible for a larger loan and have the capacity to repay it on time. This means a lower risk for the lender.
    • Tenure of the loan: You are, of course, free to choose any tenure you are eligible for. But, the bank might sometimes give you a lower rate of interest if you choose a longer tenure. The shorter the tenure, the higher your rate might be.
    • Your credit score: Your credit score affects every aspect of your loan, from eligibility to the interest rate, right down to the repayment options. Having a score that’s above 750 can help you get a good interest rate from Indian Overseas Bank. If you have a score below 750, the bank may charge you a higher rate. The higher your credit score, the better your chances are of getting a favourable interest rate.
    • Your relationship with the bank: If you already have an account with IOB, you may get special privileges. Based on how good your relationship is with them, banks tend to give you special benefits such as lower interest rates, easier repayment options, etc.

    Other fees and charges

    Here are some of the other fees and charges that Indian Overseas Bank levies:

    • Loan documentation charges: Up to Rs.500
    • No dues certificate charges: Rs.200
    • SMS alerts: Rs.15 for each quarter
    • ECS mandate: Rs.2 per transaction

    Illustrations

    Let’s look at some illustrations to understand how this process works.

    1. Mr. Akash earns a salary of Rs.25,000 per month. He wants to borrow a loan of Rs.2 lakh from Indian Overseas Bank. He has a credit score of 690. He has a total work experience of 2 years and 6 months. Given that he earns a low income and that his credit score is below 700, the bank charges him an interest rate of 17% p.a. The processing fee is 0.40%. Mr. Akash chooses a tenure of 1 year. Let’s now look at how his loan repayment is calculated.

    Particulars of the loan:
    • Principal – Rs.2 lakh
    • Interest rate – 17% p.a.
    • Processing fee – 0.40%
    • Tenure – 1 year

    The table below shows the amortisation details of Mr. Akash’s personal loan for a salary of Rs.25,000 per month:

    Month Principal Paid(A) (in Rs.) Interest Paid(B) (in Rs.) Total Payment (A+B) (in Rs.) Outstanding Loan Balance (in Rs.)
    1 15,408 2,833 18,241 1,84,592
    2 15,626 2,615 18,241 1,68,966
    3 15,847 2,394 18,241 1,53,119
    4 16,072 2,169 18,241 1,37,047
    5 16,299 1,942 18,241 1,20,748
    6 16,530 1,711 18,241 1,04,218
    7 16,765 1,476 18,241 87,453
    8 17,002 1,239 18,241 70,451
    9 17,243 998 18,241 53,208
    10 17,487 754 18,241 35,721
    11 17,735 506 18,241 17,986
    12 17,986 255 18,241 0

    2. Mr. Anand earns a monthly salary of Rs.50,000. He applies for a loan of Rs.2 lakh from the bank. He has a credit score of 810. His total work experience is 3 years. Since he has an excellent credit score and also earns a good monthly salary, IOB charges him an interest rate of 11.90% p.a. IOB also charges him a processing fee of 0.40% on the loan amount. Mr. Anand wants to repay the loan over a tenure of 1 year. Let’s take a look at how his repayment schedule will be calculated.

    Particulars of the loan:
    • Principal – Rs.2 lakh
    • Interest rate – 11.90% p.a.
    • Processing fee – 0.40%
    • Tenure – 1 year

    The table below shows the amortisation details of Mr. Akash’s personal loan for a salary of Rs.25,000 per month:

    Month Principal Paid(A) (in Rs.) Interest Paid(B) (in Rs.) Total Payment (A+B) (in Rs.) Outstanding Loan Balance (in Rs.)
    1 15,777 1,983 17,760 1,84,223
    2 15,934 1,827 17,761 1,68,289
    3 16,092 1,669 17,761 1,52,198
    4 16,251 1,509 17,760 1,35,947
    5 16,412 1,348 17,760 1,19,534
    6 16,575 1,185 17,760 1,02,959
    7 16,739 1,021 17,760 86,220
    8 16,905 855 17,760 69,315
    9 17,073 687 17,760 52,242
    10 17,242 518 17,760 34,999
    11 17,413 347 17,760 17,586
    12 17,586 174 17,760 0

    FAQs

    1. How can I get a better interest rate if I don’t have a good credit score?

    One of the ways by which you can get a good interest rate is to get a co-applicant to sign on your loan documents along with you. If your co-applicant has an excellent credit score, it will make up for your bad score. This way, you may be able to get a more affordable rate.

    2. How long will the bank take to process my loan application?

    Banks usually process your loan application within a week or so. If you have an existing relationship with them, they may process it faster. If you’ve provided them with all the required documents and filled the application with the correct and complete details, your loan should be processed without any hassle.

    3. Can I track the status of my loan application?

    Yes, you can. You can get in touch with Indian Overseas Bank for the latest update on your loan application. If you have an IOB internet banking account, you should be able to see the details online as well.

    4. How can I calculate the EMI of my personal loan?

    You can calculate your EMI by using an EMI calculator. BankBazaar offers you an online EMI calculation tool to determine your personal loan EMI. It is easy to use, fast, accurate, and gives you your results within a few seconds.

    5. How can I repay my loan?

    Banks usually allow you to repay your loan in the following ways:

    • Standing instructions to auto debit the monthly amount from your account
    • Electronic Clearing System (ECS)
    • National Automated Clearing House (NACH) mandate
    • Post-dated cheques
        

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