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  • Karnataka Bank Personal Loan Interest Rates

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  • Karnataka Bank offers personal loans at an interest rate of 13.15% p.a. The minimum loan amount is Rs.1 lakh and the maximum amount is Rs.25 lakh. You can choose a maximum tenure of up to 24 months (2 years). The loan can be used towards any personal expense of your choice. The minimum salary you must earn per month is Rs.10,000. The processing fee is 0.50% of the loan amount subject to a minimum of Rs.250.

    Particulars Loan details
    Interest Rate 13.15% p.a.
    Processing Fee 0.50% of the loan amount (minimum of Rs.250)
    Loan Tenure Up to 60 months (5 years)
    Loan Amount Maximum Rs.5 lakh
    Employment Status Salaried individuals
    Credit Score Ideal score – above 700
    Lowest EMI per Lakh Rs.2,283*

    Note:*The EMI of Rs.2,283 has been calculated using a principal amount of Rs.1 lakh, an interest rate of 13.15% p.a., a tenure of 5 years, and a processing fee of 0.50% of the loan amount.

    Other features and benefits of this loan scheme

    • You can use the loan to pay for expenses including:
      • Buying consumer durables and household requirements
      • Medical expenses
      • House repairs
      • Marriage and other social events
    • The maximum amount of loan you can get is up to 10 times of your monthly salary or Rs.5 lakh, whichever is lower
    • To get the loan, you need to have a work experience of at least 3 years
    • Your minimum age must be 21 years

    Factors affecting Karnataka Bank personal loan interest rates

    • Relationship with the bank: If you already have an account with the bank, you may get certain privileges that new customers may not. These include better interest rates, faster processing, pre-approved loans, etc.
    • Credit score: Having a high credit score can help you get better rates from the bank. Since a high score indicates regular repayments and optimal credit usage, your risk of loan default is lower. Banks prefer borrowers with low risk profiles.
    • Stable job and high income: A stable job indicates a regular monthly income. Also, working with a reputed company indicates job security. If you earn a higher income, your risk of loan default is considered to be lower. All these can get you a lower rate of interest.
    • Loan tenure: Choosing a longer loan repayment period may sometimes help you get a lower rate.

    Illustrations

    Let’s look at two examples to understand how all these factors work when it comes to your interest rate and loan repayment.

    Illustration 1: Ashish has a total work experience of 3 years and currently earns a salary of Rs.25,000 per month. He has not been regular in paying his credit card bills. Therefore, his credit score is 630. He wants to borrow Rs.1 lakh from the bank and repay it over a tenure of 1 year. Since he has a low credit score, the bank charges him an interest rate of 18.5% p.a. He also has to pay a processing fee of 0.50%. The table below shows how this loan of Rs.25,000 will have to be repaid over the chosen tenure of 12 months.

    Loan particulars:

    • Principal – Rs.1 lakh
    • Interest rate – 18.5% p.a.
    • Processing fee – 0.50%
    • Tenure – 1 year (12 months)
    Month Principal Paid(A) in Rs. Interest Paid(B) in Rs. Total Payment (A+B) in Rs. Outstanding Loan Balance in Rs.
    1 7,650 1,542 9,192 92,350
    2 7,768 1,424 9,192 84,582
    3 7,888 1,304 9,192 76,694
    4 8,009 1,182 9,191 68,684
    5 8,133 1,059 9,192 60,552
    6 8,258 934 9,192 52,293
    7 8,386 806 9,192 43,908
    8 8,515 677 9,192 35,393
    9 8,646 546 9,192 26,747
    10 8,779 412 9,191 17,967
    11 8,915 277 9,192 9,052
    12 9,052 140 9,192 0
    Total 99,999 10,303 110,302

    Note: The figures in the table are taken only for illustrative purposes. The actuals may vary. Please contact the bank for the correct figures.

    Illustration 2: Santosh is earning Rs.50,000 per month as salary. He has a total work experience of 5 years and works for a reputed organisation. He wants to borrow an amount of Rs.1 lakh from the bank. He has a credit score of 845 and due to this, the bank is offering him an interest rate of 13.15% p.a. He chooses a tenure of 1 year and his processing fee is 0.50% of the loan amount. Let’s look at how Santosh has to repay his loan of Rs.50,000 over a tenure of 12 months.

    Loan particulars:

    • Principal – Rs.1 lakh
    • Interest rate – 13.15% p.a.
    • Processing fee – 0.50%
    • Tenure – 1 year (12 months)
    Month Principal Paid(A) in Rs. Interest Paid(B) in Rs. Total Payment (A+B) in Rs. Outstanding Loan Balance in Rs.
    1 7,843 1,096 8,939 92,157
    2 7,929 1,010 8,939 84,228
    3 8,016 923 8,939 76,212
    4 8,104 835 8,939 68,109
    5 8,192 746 8,938 59,916
    6 8,282 657 8,939 51,634
    7 8,373 566 8,939 43,261
    8 8,465 474 8,939 34,797
    9 8,557 381 8,938 26,239
    10 8,651 288 8,939 17,588
    11 8,746 193 8,939 8,842
    12 8,842 97 8,939 0
    Total 100,000 7,266 107,266

    Note: The figures in the table are taken only for illustrative purposes. The actuals may vary. Please contact the bank for the correct figures.

    FAQs

    1. Can I use a co-applicant to get a better interest rate for my personal loan?

    Usually, banks allow you to get a co-applicant to apply for the loan along with you. This way, even if you have a low credit score, you can get good rates provided your co-applicant has an excellent score. Before you apply, ask the bank if you have such options.

    2. Fixed interest rate of floating interest rate – which option should I choose?

    This depends on what you prefer. A fixed rate does not change even if the market rate changes. A floating rate, on the other hand, is likely to change every time the market rate changes. Floating rates are usually lower than fixed rates.

    3. Is it important to calculate my EMI before applying for the loan? How can I calculate my EMI?

    Yes, it is important to calculate your EMI before you submit your loan application. This will show you whether you will be able to afford the loan at the given interest rate or not. You can use BankBazaar’s online EMI calculator to find out your EMI.

    4. If I choose the longest possible tenure, will the bank give me a lower interest rate?

    You may get a lower rate if you choose a longer tenure. But this varies from one bank to another. You can get in touch with Karnataka Bank for the latest information on this. Do keep in mind that a longer tenure will keep you in debt for a longer period. As such, you may end up paying more interest in total. Calculate your total repayment amounts before you choose your tenure.

    5. Does Karnataka Bank charge any other fee on its personal loans?

    For information on other fees and charges, you can contact the bank directly.

        

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