Get the Tata Capital App to apply for Loans & manage your account. Download Now

Blogs SUPPORT
Loans For You
Loans for Business
Investment
Insurance
Apply

Quick Links for loans

Quick Links for Insurance

Investment

Offers Quick Pay
Back

Equipment Finance

Avail Digital Equipment Loans
up to Rs. 1 Crore

  • Attractive ROIs
  • Customizable Loan tenure
Know More
Back

Equipment Leasing

Avail Leasing solutions
for all asset classes

  • Up to 100% financing
  • No additional collateral required
Know More
Back

New Commercial Vehicle Financing

  • First time user
  • Retail and strategic Clients
Know More
Back

Used Commercial Vehicle finance

  • Repurchase
  • Refinance
  • Top up
  • Balance Transfer
Know More
Menu  
 
Apply Now

Tata Capital > Blog > Personal Use Loan > Why Have Personal Loan Interest Rates Dropped So Low?

Personal Use Loan

Why Have Personal Loan Interest Rates Dropped So Low?

Why Have Personal Loan Interest Rates Dropped So Low?

It’s a fact that personal finance interest rates are always subject to fluctuations. And usually vary anywhere between 12% to 24% based on how one meets the personal loan eligibility requirements of the lender.

However, as COVID-19 outbreak sent the economy into a downward spiral, the rates have dropped to a record low of 8%.

How COVID-19 impacted personal finance interest rates?

The COVID-19 induced economic slowdown is one of the primary reasons for the low personal loan interest rate recently. As many faced unexpected salary cuts, reliance on unsecured debts like personal finance also increased considerably.

And in consequence, many NBFCs followed suit with the RBI’s policy rate cuts and came forth with various personal finance products, available at reasonable loan terms.

RBI Repo rate cuts

In response to the country’s acute financial crisis, RBI had cut down the repo rate by 40 basis points, so that it now stands at 4%.

Repo rate is essentially the rate at which RBI “lends” money to various financial institutions. Any cut in the rate, therefore, reduces the costs at which these financial institutes borrow the money from RBI. And inevitably, lower the interest rates for individual borrowers on term loans like personal loans.

However, the benefits of such rate cuts are only applicable to new loans and those borrowed at a floating interest rate. For personal finance borrowed at a fixed interest rate, the impact of the Repo cuts remains neutral.

But since the interest rates are lowered, credit becomes more easily accessible.

Additional Read: How does the repo rate impact personal loan EMI?

Revival in demand

Cuts in the interest rates are a way to revive the demand for various loan products, including personal finance.

A reduction in the Repo rate also means a reduction in the interest rates of various loans. As a result, the Cash Reserve Ratio or CRR – a portion of the amount, financial institutes deposit with RBI – reduces, so lenders can supply the credit more readily and increase the liquidity in the system.

To take the example of personal finance; a low PL interest rate will increase the demand for personal finance products among interested borrowers. When more individuals avail the personal finance products, there will be a healthy flow of cash in the system, which can alleviate the cash crunch to a favourable extent.

However, do note that while a lower personal loan interest rate will be favourable in terms of lowered EMI payments, the overall cost of credit will also depend on factors such as borrower’s CIBIL score, credit history, monthly income, employer reputation, among others.

Additional Read: Top Factors Affecting Your Personal Loan Interest Rates

Therefore, to negotiate the best personal finance terms, you must rely on a reputed company like Tata Capital. Renowned for competitive interest rates and a smooth documentation process, we provide a personal loan for self-employed and salaried individuals, to help them meet a variety of needs comfortably.

Not sure how much amount you should borrow? Our personal loan EMI calculator can help you to determine a suitable loan amount and repayment terms free of cost.

Avail of a custom loan from Tata Capital today!

Apply Now

Get an Instant Personal Loan for all your needs !

Apply now
Popular Searches
loan without cibil personal loan for 15000 salary Loan for ring small cash loan on aadhar card pre approved personal loan What To Buy On Dhanteras Personal loan when self employed how to increase cibil score form 15g for pf withdrawal how to download aadhar card
Disclaimer

Most Viewed Blogs

Trending Blogs

Calculator

Personal Loan EMI Calculator

Personal Loan EMI Calculator
Home Loan EMI Calculator

Home Loan EMI Calculator
Business Loan EMI Calculator

Business Loan EMI Calculator
Used Car Loan EMI Calculator

Used Car Loan EMI Calculator
Two Wheeler Loan EMI Calculator

Two Wheeler Loan EMI Calculator
Loan Against Securities Calculator

Loan Against Securities Calculator
Loan Against Property Calculator

Loan Against Property Calculator
More Tools
Our Subsidiaries
Our Other Websites

Important Information

Investor Information

Visit us on:,Visit us on: www.tatacapitalmoneyfy.com,www.tatacapitalmoneyfy.com

Our Private Equity Funds

Amalgamated Companies

Top Branches
Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Policies, Codes & Other Documents

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Tata Capital Solutions & Services

Uh oh, something went wrong

Please try again later.