Multiple banks. Different interest rates. Call it a "conflict of interest".

Oriental Bank of Commerce (OBC) Personal Loan Interest Rates

Oriental Bank of Commerce offers you personal loans with interest rates as low as 10.95% p.a. You can apply for up to Rs.10 lakh. The maximum tenure available is 60 months (5 years). The bank charges a minimum processing fee of 0.50% of the loan amount subject to a minimum of Rs.500. It offers different loan options for corporate employees, government employees, and retired individuals.

Particulars Loan details
Interest Rate 10.95% p.a. to 12.45% p.a.
Processing Fee 0.5% to 1% of the loan amount plus taxes
Loan?Tenure Up to?60?months (5?years)
Loan?Amount Up to?Rs.10?lakh
Employment Status Salaried individuals
Credit?Score Ideal score – above 700
Lowest EMI per Lakh ?Rs.2,172*
Pre-Payment/Foreclosure Charges None
Overdue EMI Interest Normal lending rate + 2% on the unpaid amount

Note:?*The EMI of Rs.2,172 has been calculated using a principal amount of Rs.1 lakh, an interest rate of?10.95% p.a.,?a tenure of?5?years, and a processing fee of?0.5% of the loan amount.

OBC personal loan schemes

The bank offers 3 loan options each designed for a particular group of people. The three loan options and their respective interest rates are given below:

  • Personal loans for government or PSU employees – 11.45% p.a.
  • Corporate employees – 12.45% p.a.
  • Pensioners – 10.95% p.a.

Factors Affecting Personal Loan Interest Rates

  • Level of income: Every bank will have a minimum income level below which you will not be granted the loan. But earning above this income can benefit you. Earning a high income lowers your risk of loan default. This may cause the bank to give you a better rate of interest.
  • Job stability: Your job profile and the organisation your work for have a say in determining your interest rate. Working for a good company may indicate that you have a stable job. A stable job means a regular monthly income, and hence, a lower risk of loan default. The lower your risk level, the better the rate you may get.
  • Credit score: A high credit score indicates healthy financial practices and timely repayment of debt. Having a high score can help you get better rates from the bank. Low scores attract higher interest rates and may even result in loan application rejection.
  • Loan tenure: Banks may offer lower rates to borrowers who choose longer loan repayment periods. This is at the sole discretion of the bank and may vary from one bank to another.
  • Relationship with the bank: If you’re already banking with OBC, you may get certain special privileges such as better interest rates, pre-approved loans, no extra documentation, and more.

Illustrations

Illustrations can help shed light on how the interest rates work and how loan repayments are to be made. We’ll look at two illustrations for this – one with a monthly income of Rs.25,000 and another with a monthly income of Rs.50,000.

Illustration 1: Sudeep wants to borrow a personal loan of Rs.1 lakh from OBC. He is currently earning Rs.25,000 per month as salary. His total work experience is 3 years. He has a credit rating of 610. The bank offers him an interest rate of 17.50% p.a. since his credit score is low. Sudeep wants to repay the loan over a period of 1 year. The bank charges him a processing fee of 1% of the amount he’s applied for. Take a look at how his loan of Rs.25,000 will amortise over a period of 1 year.

Loan particulars:???

  • Principal – Rs.1?lakh????
  • Interest rate –?17.50% p.a.??????
  • Processing fee – 1% of the loan amount ??????
  • 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 7,686 1,458 9,144 92,314
2 7,798 1,346 9,144 84,516
3 7,912 1,233 9,145 76,604
4 8,027 1,117 9,144 68,577
5 8,144 1,000 9,144 60,433
6 8,263 881 9,144 52,170
7 8,383 761 9,144 43,787
8 8,506 639 9,145 35,281
9 8,630 515 9,145 26,652
10 8,756 389 9,145 17,896
11 8,883 261 9,144 9,013
12 9,013 131 9,144 0
Total 100,001 9,731 109,732 ?

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

Illustration 2: Sagar has been working for a total of 5 years. He earns a monthly salary of Rs.50,000. He wants to take a loan of Rs.1 lakh from OBC. He has a credit score of 856. The bank offers him an interest rate of 12.20% p.a. and charges him a processing fee of 1% of the loan amount. He chooses a tenure of 1 year. Sagar’s loan of Rs.1 lakh will amortise as given in the table below.

Loan particulars:???

  • Principal – Rs.1?lakh????
  • Interest rate – 12.20% p.a.??????
  • Processing fee – 1% of the loan amount ??????
  • 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 7,878 1,017 8,895 92,122
2 7,958 937 8,895 84,165
3 8,039 856 8,895 76,126
4 8,120 774 8,894 68,006
5 8,203 691 8,894 59,803
6 8,286 608 8,894 51,517
7 8,370 524 8,894 43,146
8 8,456 439 8,895 34,691
9 8,542 353 8,895 26,149
10 8,628 266 8,894 17,521
11 8,716 178 8,894 8,805
12 8,805 90 8,895 0
Total 100,001 6,733 106,734 ?

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

FAQs

1. How can I get a better interest rate if I have a low credit score?

If you have a low credit score, the bank is likely to charge you a high rate of interest. You can try and get a lower rate by asking someone with excellent credit to co-apply for the loan with you. The bank will consider your co-applicant’s score as well while processing your application. This may help you get an affordable rate. But keep in mind that if you’re unable to repay the loan on time, the bank will hold the co-applicant responsible for repayment.

2. Which is better – a fixed rate or floating rate?

This has more to do with the risk you want to take. Floating interest rates are lower than fixed rates, but they change every time there is a change in the market rates. Fixed rates, on the other hand, remain constant irrespective of market rate changes. Most borrowers tend to choose floating rates because they are lower.

3. Can I offer collateral to get a lower rate of interest?

Personal loans are typically unsecured loans and do not require collateral. OBC requires a fellow employee or a member of the family to stand as guarantee for the borrower. You can contact the bank for more details on the same.

4. How does my interest rate affect my EMIs?

Your EMI will change in direct proportion to changes in your interest rate. If the rate increases, your EMI will also increase, and vice versa.

5. How can I calculate my EMIs using my interest rate?

You can use BankBazaar’s EMI calculator to find out your EMI. This tool will also show you how your loan will amortise over the chose tenure. Simply input your loan details and get the results within a few seconds.

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