Lending Desk · Methodology v1.0 · last updated 2026-04-26
How we rate loans.
Six segments — personal, home, car, education, gold, business — each with its own scoring formula. Anchored to RBI's external benchmark rates (MCLR / RLLR), NHB data, and our own monthly TAT sampling against advertised disbursal times.
· RBI-benchmarked· Real TAT sampling· No paid placements· Lending Desk owns it
Why segment-specific
A 0.25% rate difference matters very differently across segments.
On a ₹50 L home loan over 20 years, 0.25% = ₹1.5 L+ over the tenure. On a ₹2 L personal loan over 3 years, the same 0.25% is ₹800. Same delta, different magnitudes — so the weight we assign to "effective rate" varies by segment.
India-specific factors that drive segment differences: government interest subsidies (PMVLK, CGTMSE, CSIS), the RBI's 2014 ban on prepayment penalties for floating-rate retail housing loans, MCLR vs RLLR linkage transparency, and CGTMSE coverage that effectively turns a "secured" MSME loan into a near-collateral-free product.
Per-segment rubrics
Six formulas. One scoring scale (1–5 stars).
Personal loans
Formula — Effective rate 40% · Fees + foreclosure 25% · Eligibility 15% · TAT + service 20%
Unsecured, short-tenure, fast-disbursal. Rate matters most because tenure is short (1–5 years) so the second-order costs (foreclosure, processing) compound fast. Disbursal TAT is a decision factor for emergency users.
Factor
What we measure
Weight
Effective interest rate (RLLR-linked)
Headline rate + bundling discounts (insurance push, salary-account discount). Floor is the RBI repo benchmark. Lenders quoting fixed rates without RLLR linkage scored down.
40%
Processing fee + foreclosure penalty
One-time fee % + GST + prepayment penalty as % of outstanding. Some lenders charge 4-5% to foreclose; RBI banned this for floating retail loans in 2014 but personal loans still allow it.
25%
Eligibility friction
Min income (often ₹15K-₹40K depending on lender), CIBIL floor (typically 700+), employer category restrictions. Self-employed face higher scrutiny.
15%
Disbursal TAT + service
Promised vs actual TAT (we sample monthly). Doc digitization, branch dependency, mobile-app workflow quality, RBI complaint volume.
20%
Total
100%
Effective interest rate (RLLR-linked): Headline rate + bundling discounts (insurance push, salary-account discount). Floor is the RBI repo benchmark. Lenders quoting fixed rates without RLLR linkage scored down.
Processing fee + foreclosure penalty: One-time fee % + GST + prepayment penalty as % of outstanding. Some lenders charge 4-5% to foreclose; RBI banned this for floating retail loans in 2014 but personal loans still allow it.
Eligibility friction: Min income (often ₹15K-₹40K depending on lender), CIBIL floor (typically 700+), employer category restrictions. Self-employed face higher scrutiny.
Disbursal TAT + service: Promised vs actual TAT (we sample monthly). Doc digitization, branch dependency, mobile-app workflow quality, RBI complaint volume.
Home loans
Formula — Effective tenure cost 50% · Flexibility 20% · Eligibility 15% · Service 15%
Long tenure (15–30 yrs) means small rate differences compound to lakhs. Total-tenure-cost is the dominant metric — including processing, MOD/franking, valuation, top-up flexibility, and the RBI-mandated zero-foreclosure-penalty advantage.
Factor
What we measure
Weight
Effective rate over tenure
Year-1 rate often discounted (teaser); we score the effective average over the FULL tenure assuming RBI repo-rate-linked resets every quarter.
35%
Processing + statutory fees
Processing fee + MOD/franking (varies by state) + valuation + technical/legal. Total often 0.5-1% of loan amount.
15%
Prepayment + balance transfer
RBI banned foreclosure penalty on floating-rate retail home loans (2014) — most lenders compliant. We confirm + check for hidden 'admin fees' that substitute.
10%
Top-up + tenure flexibility
Top-up eligibility post-12-months at attractive rate, tenure extension during distress, EMI vacation options.
10%
Eligibility (LTV + employer + CIBIL)
LTV cap (usually 75-90% per RBI by ticket size), income multiplier, salaried-vs-self-employed parity, employer category bands.
15%
Disbursal + servicing
End-to-end TAT (sanction-to-disbursal), part-disbursement for under-construction, statement clarity, RBI ombudsman record.
15%
Total
100%
Effective rate over tenure: Year-1 rate often discounted (teaser); we score the effective average over the FULL tenure assuming RBI repo-rate-linked resets every quarter.
Processing + statutory fees: Processing fee + MOD/franking (varies by state) + valuation + technical/legal. Total often 0.5-1% of loan amount.
Prepayment + balance transfer: RBI banned foreclosure penalty on floating-rate retail home loans (2014) — most lenders compliant. We confirm + check for hidden 'admin fees' that substitute.
Top-up + tenure flexibility: Top-up eligibility post-12-months at attractive rate, tenure extension during distress, EMI vacation options.
Eligibility (LTV + employer + CIBIL): LTV cap (usually 75-90% per RBI by ticket size), income multiplier, salaried-vs-self-employed parity, employer category bands.
Disbursal + servicing: End-to-end TAT (sanction-to-disbursal), part-disbursement for under-construction, statement clarity, RBI ombudsman record.
Car loans
Formula — Effective rate 35% · Total cost of ownership 25% · Eligibility 15% · Disbursal speed 25%
Medium tenure (3-7 yrs), often bundled with dealer-financing relationships. Rate is competitive but processing + insurance push can erode the advertised rate. Used-car loans are a distinct niche with different physics.
Factor
What we measure
Weight
Effective rate (new vs used)
Used cars often 1.5-3% higher than new. We score each separately.
35%
Processing + bundled insurance
Lender push for tied insurance product erodes effective rate. Penalised when bundling is required.
15%
Foreclosure terms
Most lenders allow part-prepayment; foreclosure penalty 2-5% common in vehicle finance.
10%
LTV cap
Standard 80-90% on-road price. Higher LTV = bigger loan, but more interest paid.
10%
Eligibility friction
Income + employer + age. Standardised across lenders; minor differentiator.
5%
Disbursal + dealer integration
Same-day disbursal at dealer point is common with major lenders. Integration quality is the practical differentiator at the showroom.
25%
Total
100%
Effective rate (new vs used): Used cars often 1.5-3% higher than new. We score each separately.
Processing + bundled insurance: Lender push for tied insurance product erodes effective rate. Penalised when bundling is required.
Foreclosure terms: Most lenders allow part-prepayment; foreclosure penalty 2-5% common in vehicle finance.
LTV cap: Standard 80-90% on-road price. Higher LTV = bigger loan, but more interest paid.
Eligibility friction: Income + employer + age. Standardised across lenders; minor differentiator.
Disbursal + dealer integration: Same-day disbursal at dealer point is common with major lenders. Integration quality is the practical differentiator at the showroom.
Education loans
Formula — Effective rate 30% · Subsidy + moratorium 20% · Eligibility breadth 25% · Service 25%
Different physics: government interest subsidy under PMVLK / Vidya Lakshmi changes the math, moratorium during course is standard, and collateral-vs-non-collateral split is the key segmentation. We score domestic and overseas separately.
Factor
What we measure
Weight
Effective rate post-subsidy
PMVLK / CSIS interest subsidy during moratorium effectively reduces the rate. We score net-of-subsidy for eligible borrowers; gross for non-eligible.
30%
Moratorium terms
Course duration + 6-12 month grace period. Some lenders offer 2-year post-course moratorium for premier institutes.
10%
Margin / collateral terms
Non-collateral up to ₹7.5L per IBA scheme; collateral required above. Margin: 5% domestic, 15% overseas typical.
10%
Premier-institute fast-track
Lenders maintain a 'list A' of institutes (IIT/IIM/AIIMS/IISc + global top-100) with relaxed collateral, lower rates, faster sanction. Coverage matters.
15%
Documentation + overseas-loan competence
I-20/CAS handling, foreign currency disbursement, FEMA compliance for overseas study.
10%
Disbursement reliability + servicing
Multi-tranche disbursal aligned with semester fees. Many lenders fail at this — student suffers semester delays.
25%
Total
100%
Effective rate post-subsidy: PMVLK / CSIS interest subsidy during moratorium effectively reduces the rate. We score net-of-subsidy for eligible borrowers; gross for non-eligible.
Moratorium terms: Course duration + 6-12 month grace period. Some lenders offer 2-year post-course moratorium for premier institutes.
Margin / collateral terms: Non-collateral up to ₹7.5L per IBA scheme; collateral required above. Margin: 5% domestic, 15% overseas typical.
Premier-institute fast-track: Lenders maintain a 'list A' of institutes (IIT/IIM/AIIMS/IISc + global top-100) with relaxed collateral, lower rates, faster sanction. Coverage matters.
Documentation + overseas-loan competence: I-20/CAS handling, foreign currency disbursement, FEMA compliance for overseas study.
Disbursement reliability + servicing: Multi-tranche disbursal aligned with semester fees. Many lenders fail at this — student suffers semester delays.
Gold loans
Formula — Rate 30% · LTV + valuation 25% · Storage + audit 20% · Renewal/auction process 25%
Secured by gold ornaments. Speed-of-disbursal is the killer feature (often 30 minutes). The differentiation lives in LTV cap, storage transparency, valuation method, and the renewal-vs-auction process.
Factor
What we measure
Weight
Effective interest rate (annualised)
Many gold-loan ads quote monthly rate. We always score annualised. Range typically 8-18% depending on tenure + ticket size.
30%
LTV cap + valuation
RBI caps LTV at 75% for banks (90% for NBFC short-term). Valuation method: 22K vs 24K basis, melt charge deduction, transparent calculation.
25%
Storage + insurance
Vault security audited? Insured? Customer can access their gold for periodic check?
10%
Renewal vs auction process
Pre-auction notice period, renewal fee, partial-repayment allowed during tenure. Auction process transparent and time-bound?
15%
Branch + service
Branch density (matters because gold needs physical handover), customer service, dispute mechanism.
10%
RBI compliance + audit history
RBI inspection findings, NBFC vs scheduled bank, complaints volume.
10%
Total
100%
Effective interest rate (annualised): Many gold-loan ads quote monthly rate. We always score annualised. Range typically 8-18% depending on tenure + ticket size.
LTV cap + valuation: RBI caps LTV at 75% for banks (90% for NBFC short-term). Valuation method: 22K vs 24K basis, melt charge deduction, transparent calculation.
Storage + insurance: Vault security audited? Insured? Customer can access their gold for periodic check?
Renewal vs auction process: Pre-auction notice period, renewal fee, partial-repayment allowed during tenure. Auction process transparent and time-bound?
Branch + service: Branch density (matters because gold needs physical handover), customer service, dispute mechanism.
RBI compliance + audit history: RBI inspection findings, NBFC vs scheduled bank, complaints volume.
Business loans (MSME / Mudra)
Formula — Effective rate 30% · Collateral terms 20% · Documentation simplicity 15% · Disbursal speed 15% · Service 20%
MSME segment with large heterogeneity — manufacturing vs services, working-capital vs term-loan, secured vs unsecured. We score collateral-free Mudra loans (PMMY) separately from secured term loans.
Factor
What we measure
Weight
Effective rate post-CGTMSE coverage
CGTMSE (Credit Guarantee Trust for MSE) guarantee enables collateral-free up to ₹2 cr. Net-of-guarantee-fee rate is what matters to borrower.
30%
Collateral / margin
Range: 0% (Mudra Shishu / Tarun) to 50%+ for secured term loans. Lower = more accessible but higher rate.
20%
Documentation simplicity
MSME UDYAM number sufficient? GST-only docs accepted? KYC + financial doc bar.
15%
Disbursal TAT
Working-capital limits: same-day to 30 days. Big spread; differentiates lenders.
15%
Renewal + relationship banking
MSME often need annual renewal. Lender's ability to grow with the business matters more than the first sanction.
10%
RBI compliance + grievance
RBI ombudsman record, RBI penalty history (some lenders have been penalised for MSME mis-selling).
10%
Total
100%
Effective rate post-CGTMSE coverage: CGTMSE (Credit Guarantee Trust for MSE) guarantee enables collateral-free up to ₹2 cr. Net-of-guarantee-fee rate is what matters to borrower.
Collateral / margin: Range: 0% (Mudra Shishu / Tarun) to 50%+ for secured term loans. Lower = more accessible but higher rate.
Documentation simplicity: MSME UDYAM number sufficient? GST-only docs accepted? KYC + financial doc bar.
Disbursal TAT: Working-capital limits: same-day to 30 days. Big spread; differentiates lenders.
Renewal + relationship banking: MSME often need annual renewal. Lender's ability to grow with the business matters more than the first sanction.
RBI compliance + grievance: RBI ombudsman record, RBI penalty history (some lenders have been penalised for MSME mis-selling).
Standardised adjustments
Cross-segment modifiers.
- ·Pre-approved offer to existing salary-account holder (skips fresh CIBIL pull) +0.0 to +0.2 stars
- ·Strong digital workflow (e-sign, video KYC, fully online) +0.0 to +0.2 stars
- ·Insurance bundling required (effective rate erosion) −0.1 to −0.3 stars
- ·Top-up offered post-12-months at attractive rate +0.1 to +0.2 stars
- ·Hidden 'admin fee' substituting for prohibited foreclosure penalty −0.3 to −0.5 stars
- ·RBI ombudsman complaint volume > 90th percentile −0.2 to −0.5 stars
- ·Recent RBI penalty for mis-selling −0.3 to −0.7 stars
Data sources
Where the values come from.
RBI MCLR/RLLR data (monthly)
Mandatory disclosure under RBI's external benchmark linking circular. We pull each lender's published rate and benchmark spread.
RBI ombudsman quarterly reports
Per-lender complaint volume, dispute resolution time, RBI penalty events.
NHB + IBA quarterly data
Home loan disbursement trends, rate distribution, NHB refi cost.
Lender T&Cs + most-important-terms
Public schedule of charges, foreclosure terms, fee tables. Audited monthly.
In-house TAT sampling
Editorial team submits dummy applications quarterly across major lenders to measure actual disbursal TAT vs advertised.
Update cadence
When scores get refreshed.
- Weekly: RBI repo / MCLR / RLLR rate changes propagated within 7 days.
- Monthly: Lender fee + foreclosure schedule audit.
- Quarterly: Disbursal-TAT sampling round across top 20 lenders.
- Event-triggered: RBI ombudsman quarterly report, lender penalty event, RBI policy circular — re-score within 48 hours.
Related methodologies
Other product types we rate.
Loans methodology v1.0 · last updated 2026-04-26