Getting a loan in Sri Lanka has become extremely commonplace as hardly anyone has enough cash in hand to make large purchases outright. While there are separate loan schemes for purchasing vehicles and homes, sometimes you would need to take out loans for reasons other than that, such as to pay off existing debt, for your wedding day, to show money when applying for visas, for school or university fees etc. If it’s for this purpose, personal loans were created where you can borrow a sum of money for various reasons.
A personal loan is a loan given out to individual borrowers usually for smaller values. Personal loan interest rates tend to be lower than that of credit cards and are a preferred source of credit for most people. However, the process of taking out a personal loan is very complicated, requiring extensive documentation and proof of assets. This fact alone encourages people to opt for other loan facilities that charge higher interests but have much easier procedures.
Let’s take a look at personal loan interest rates in Sri Lanka.
How Loan Interest Rates Work
When you take out a personal loan from any financial institution (including OnCredit), you will be charged a fee - this is known as “interest”. This fee is usually a monthly or annual percentage of the amount you wish to receive, and there is no way you can avoid paying loan interest rates. Personal loan interest rates in Sri Lanka tend to be lower than other forms of credit.
The loan interest rates in Sri Lanka are highly dependent on overall economic conditions. These days, due to the ongoing pandemic, loans are highly encouraged to improve the cash flow of banks. Therefore, loan interest rates in Sri Lanka are extremely low (in stark contrast to the very poor interest rates of Fixed Deposits and Savings Accounts).
Floating and Fixed Interest Rates in Sri Lanka
When you take a personal loan, you will be asked to decide what kind of loan interest rate you want to go with: a floating rate or a fixed rate. A fixed interest means that for the entire duration of the loan term, you will be paying interest at the interest rates that you took the loan at. A floating interest rate means that the interest rate for your loan will change according to the market condition. If you took the loan at a high rate, a floating interest rate would be beneficial for you as when the market picks up, your loan interest rate will reduce. The risk is if the market gets worse, your interest rate will go up once more.
Secured and Unsecured Loan Interest Rates in Sri Lanka
Generally, the loan interest rates differ vastly between secured and unsecured loans. Unsecured loans, while extremely convenient when pressed for time, tend to have higher loan interest rates than secured loans (like a personal loan from a bank).
For this reason, at OnCredit, our loan interest rates tend to be a little higher since most of our loans are unsecured loans. However, first-time customers can get a loan with zero interest rates (albeit for a slightly lower loan amount)! However, since our loans are very short-term and we only lend relatively smaller amounts of money, the trade-off between the interest rate and the extreme levels of speed and convenience is well worth it.
Interest rates in Sri Lanka tend to be very confusing and complex. When dealing with OnCredit, we have simplified things for you by offering our very own loan calculator available in your personal account. Everytime you want to take a loan, use our loan calculator to check how much loan interest will be charged for your loan. This way, you know exactly what you are signing up for before taking the loan. We believe in complete transparency and fairness, with absolutely no “hidden fees” or unexpected costs arising when you take a loan with us (make sure to read all the terms and conditions!).
To find out more about interest rates in Sri Lanka, stay tuned to the OnCredit website for regular updates.