Personal Loan Interest Rates
A personal loan, a popular type of unsecured loan, is granted to the borrower after reviewing the borrower’s income, credit history, and repayment options. Because this loan is flexible and can be used for various purposes, it’s typically borrowed to meet personal needs such as a wedding, home renovation, higher education, or vacation planning. Banks and other financial credit companies typically approve the loans (NBFCs).
The bank offers attractive interest rates for personal loans, education loans, home loans, car loans, etc., to their reputable customers. You can apply for a personal loan by internet banking or by visiting banks nearby your location.
Most banks offer personal loans for a maximum of 60 months, which means your EMI could be high compared to other loans. So, before applying for a loan, we suggest you use our personal loan EMI calculator before applying for a loan. You can check the lowest interest rates for personal loans in India and the equated monthly installments (EMI) to be paid. Then, you compare the personal loan interest rates offered by public and private sector banks.
You can compare ICICI, SBI, HDFC, and other financial institutions’ personal loan interest rates. After comparing the bank’s personal loan interest rates, you can make an informed decision about which financial institution offers the best deal.
Compare all banks’ latest personal loan interest rates and processing fees.
Latest Personal Loans Interest Rates in India
| Banks | Interest Rate (Annually) | Processing Charges |
|---|---|---|
| ICICI Bank | 11.25% p.a. – 21% p.a. | Up to 2.25% |
| State Bank of India | 9.60% p.a. – 15.65% p.a. | Up to 1.50% |
| HDFC Bank | 10.75% p.a. – 21.30% p.a. | Up to 2.50% |
| Yes Bank | 13.99% p.a. – 16.99% p.a. | Up to 2.50% |
| HSBC Bank | 10.50% p.a. – 17.84% p.a. | Up to 1% |
| Citibank | 10.50% p.a. – 17.99% p.a. | Up to 3% |
| Kotak Mahindra Bank | 10.50% and above | Up to 2.5% |
| Axis Bank | 12% p.a. – 24% p.a. | 1.5% – 2% |
| Bank of Baroda | 10.50% p.a. onwards | Up to 2% |
| IDFC First Bank | 15% and above | Up to 3.5% |
| Tata Capital | 11.25% onwards | Up to 2.75% |
| Karnataka Bank | 12% p.a. – 17% p.a. | 0.5% |
| Home Credit Cash Loan | 13% p.a. – 30% p.a. | 0%-5% |
| Canara Bank | 12.05% onwards | 1% |
| Ujjivan Small Finance Bank | 16.50% p.a. – 20% p.a. | At the discretion of the bank |
| Federal Bank | 10.49% p.a. – 17.99% p.a. | Up to 3% |
| IndusInd Bank | 11.00% p.a. – 31.50% p.a. | 2.5% onwards |
| IIFL | 13.49% p.a. onwards | Up to 3% |
| Bank of India | 10.85% p.a. – 12.85% p.a. | Up to 2% |
| Aditya Birla Capital | 11% onwards | 0.5% and 1% |
| Fullerton India | 11.99% p.a. – 36% p.a | Up to 6% |
| IDBI Bank | 8.55% p.a. – 11.30% p.a. | Contact the bank |
| Corporation Bank | 10.75% and above | 1.50% |
| Karur Vysya Bank | 12% onwards | 0.30% onwards |
| South Indian Bank | 11.55% p.a. – 14.4% p.a. | Up to 2% |
| Indian Overseas Bank | 10.80% and above | Up to 0.50% |
| RBL Bank | 14% p.a. – 23% p.a. | Up to 4% |
| Dhanalaxmi Bank | 12% p.a. – 15.7% p.a. | Up to 2.5% |
| Punjab National Bank | 8.95% p.a. – 14.50% p.a. | Up to 1.80% |
| Bank of Maharashtra | 9.70% p.a. – 10.70% p.a. | 1% |
| Central Bank of India | 9.85% and above | Rs.500 |
| City Union Bank | 16% p.a. | 1.25% |
| J&K Bank | 11% p.a. and above | Up to Rs.500 |
| Nainital Bank | 10.0% p.a. – 10.50% p.a. | Up to 1% |
| Oriental Bank of Commerce | 9.55% p.a. – 11.05% p.a. | Up to 1% |
Please keep in mind that the processing fee will be subject to additional GST. From July 1, 2017, an 18% GST rate will be applied to banking services and products.
How to Get Lowest Personal Loan Interest Rate?
If you’re looking to apply for a personal loan, here are a few pointers to help you get a lower interest rate:
Improve Your Credit Score: Having a high credit score shows that you are creditworthy. Banks and financial institutions provide the lowest personal loan interest rates to applicants with excellent credit. Before apply, for a personal loan, you should check your credit score. If your credit score is less than 750, you should work on improving it. If your credit score is above 750, you have a better chance of obtaining a low-interest personal loan.
Keep an Eye Out for Offers: During the holidays, banks and financial institutions often offer special interest rates for a limited time. You may be allowed a lower interest rate if you apply for a loan while such an offer is in effect.
Avoid Missed Repayments: Your credit score may suffer if you fail to make a loan or credit card payment. Before determining personal loan interest rates, loan providers typically consider your repayment history. If you paid your EMIs and credit card bills on time in the past, you are more likely to be charged a lower interest rate.
Negotiate with the Lender: If you are a bank’s current customer or have a good relationship with the loan provider, you can bargain for the lowest interest rate. It is best to submit a formal written request to the loan provider when doing so.
Compare Interest Rates: Before applying to a specific bank for a personal loan, compare the personal loan interest rates charged by various NBFCs and banks. They will enable you to obtain a personal loan with a low interest rate.
Among the various factors mentioned above, an applicant’s credit score is one of the primary factors banks and financial institutions consider when determining the interest rate. Check your credit score as soon as possible to ensure that you are offered a favorable interest rate.
Factors Influencing Personal Loan Interest Rates
Income: When determining the interest rate, loan providers consider the applicant’s income. Individuals with a high income pose less risk to the bank and, as a result, may be offered a lower interest rate. Those with lower annual revenues, on the other hand, may have to pay a higher interest rate.
Age: The applicant’s age can also influence the interest rate quoted by the loan provider. Individuals approaching retirement age may face a higher interest rate.
Employment Type: Whether an applicant is self-employed or salaried, loan providers may offer different interest rates.
Employer Information: If you work for a reputable company, the bank/financial institution will likely offer you a lower interest rate.
Relationship with the Loan Provider: Existing bank/financial institution customers who have a good relationship with the loan provider may be offered a lower interest rate when applying for a personal loan. It is at the bank’s discretion, and not all existing customers will be provided a special interest rate.
Which is better fixed interest rates or floating interest rates?
If you choose a personal loan with a fixed interest rate, you would be charged the same interest rate all across the loan repayment period.
The floating or variable interest rate is linked to the Marginal Cost of Lending Rate, or MCLR, causing the interest rate to fluctuate as the MCLR changes.
The advantage of choosing a fixed interest rate is that you will know exactly how much you will be charged throughout the loan term. Those who want to plan their finances ahead of time can choose a fixed interest rate.
However, if you don’t mind a fluctuating interest rate, you can choose a floating/variable interest rate. The advantage of choosing a variable interest rate is that your repayment amount will be reduced when the interest rate is low.
What does it mean to lower the interest rate on a personal loan?
When you take out a personal loan with a fixed interest rate, the interest is computed on the whole loan amount over the life of the loan. In contrast, the interest is calculated only on the outstanding loan amount if you take out a loan with a reducing interest rate/dropping balance rate structure. As a result, when you make a monthly repayment in this situation, the interest for the remainder of the loan term is computed on the outstanding loan balance.
Keep in Mind!
There are a few other factors to consider when choosing a personal loan with a low-interest rate:
Processing Fee: Loan providers levy a one-time fee known as the processing fee, which can raise the loan’s interest rate. Even if you are given a low-interest rate, you should check and evaluate the processing fees charged by various lenders.
Pre-Closure Fees: Some banks may charge you a pre-closure charge if you repay the remaining loan balance before the loan repayment term is completed. Check to see if the bank or financial institution to which you are applying charges a pre-closure fee.
Customer Service: To achieve a good lending experience, you must apply to a lender that provides excellent customer service. Before completing your loan application, you should look into the accessible customer service channels and how quickly the lender responds when you need help.
Eligibility Criteria: While the banker may issue personal loans at cheap interest rates, you should check to see if you match the lender’s eligibility criteria. For that purpose, you should check to see if your income is under the stipulated limit and if you fit the age criteria.
Loan Disbursal Time: If you need a personal loan for an emergency, it is critical to consider the loan disbursal time. Several major banks and financial organizations distribute loan funds in a matter of seconds.
Special Offers: During the holidays, several lenders may charge you a cheaper interest rate. Some loan providers charge a higher interest rate; nevertheless, you should consider several other considerations before selecting.
Discounts: Even though the bank/financial institution may have stated a high-interest rate, you might try to negotiate a lower interest rate with the bank. Existing customers and those who have maintained a positive relationship with the lender are frequently given a discount.
Other Fees: While the lender may charge you a slightly higher interest rate, you may be able to save money on the overall cost of the loan if the processing fee, default charges, prepayment fee, Loan Cancellation Fees, Check/EMI bounce charges, Instrument return fees, Stamp Duty Charges, Duplicate statement issuance charges, swap charges, Redundant Amortization schedule issuance charges, and so on are waived. Before applying for a personal loan, do assure you compare the various fees incurred by the lender.
How Do You Calculate Your Personal Loan EMI?
The formula for Calculating Personal Loan EMI
You may use our Personal Loan EMI calculator to calculate how much you’ll have to pay in EMIs. To determine the monthly EMI, you will need to input the loan amount, payback term, interest rate, and processing fee.
Personal Loan EMI Calculation Formula
EMI = [PxRX(1+R)N]/[(1+R)N-1], where P is the loan amount, R is the monthly interest rate, and N represents the number of monthly instalments.
As an example,
Mr.Chaddha, a 34-year-old software engineer, is considering applying for a personal loan to cover his wedding expenditures. He plans to seek Rs.10 lakh loan and repay it over 36 months. He expects to pay an annual interest rate of 14% on loan.
To calculate the EMI for the personal loan, he must go to our personal loan EMI calculator page. He must next enter the loan amount of Rs.10 lakh, the loan term of 36 months, and the interest rate of 14% per annum.
After inputting these details, the EMI payable will be revealed, which is Rs.34,177.63 per month. The entire payable interest in his case is Rs.2,30,394.67, while the total payment sum is Rs.12,30,394.67.
Personal Loan Interest Rates: Frequently Asked Questions
The interest rate on your personal loan is an important consideration. We’ve included a list of frequently asked questions about personal loan interest rates on this page.
What is the lowest personal loan interest rate available?
Personal loans are available from PNB at reasonable rates beginning at 6.90 percent per annum. However, interest rates may differ from one customer to the next depending on various circumstances, including the consumer’s credit history and relationship with the bank, to mention a few.
What factors influence my interest rate?
Your salary represents your ability to repay a loan, and a higher salary indicates that you have more financial ability to repay the loan on time. This shows that your risk is low. Lenders prefer low-risk customers and may thus offer you a cheaper interest rate.
What impact do my employment history and experience play in establishing the interest rate?
Working for a reputable company increases your chances of having a stable career and income. Your work experience also demonstrates job stability. This affects your loan rate.
What can I do to receive a reasonable interest rate?
If you have a credit score of at least 750 and are on good terms with the lender, you may be eligible for special rates. Working in a reputable company and having a solid credit profile may also help you get better rates.
Can I get a lower interest rate than what the lender advertises?
Yes, you may be able to receive a cheaper interest rate than what the lender advertises. This is where negotiating comes into play. You may be able to receive a good rate if you can haggle properly with the lender.
Can I get a cheap interest rate even if my credit is bad?
Yes, you may be able to obtain a personal loan despite your low credit score. You might try to get a better rate by bringing in a co-applicant with good credit. Another option is to find a suitable credit guarantor to back you up.
What effect does my credit score have on the cost of my loan?
A high credit score demonstrates that you are fiscally prudent. As a result, your risk rating remains low. If your credit score is 750 or higher, you will almost certainly be granted preferred rates.
How is my current debt amount used to calculate my interest rate?
Lenders will consider how much debt you presently have when processing your loan application. If you spend most of your current income repaying existing loans, they may refuse to give you a personal loan. Even if they do, you will be charged a high-interest rate.
Will offering collateral help me get a reasonable interest rate?
Another option to achieve a low-interest rate is to offer collateral. Your level of risk decides your rate. Offering collateral considerably minimizes your risk level because it serves as security against non-payment. However, keep in mind that the lender may repossess your collateral if you do not repay the loan on time.
Will I obtain a lower interest rate if I take out a loan from my current lender?
It is always advantageous to have an existing relationship with a bank or lender. You are more likely to acquire better loan conditions if you have a solid relationship with your current banker. For example, you may be able to obtain a lower interest rate than most others.
Should I always go with the lowest interest rate available?
The loan interest rate represents the cost of borrowing. As a result, choosing the lowest interest rate accessible on the market while applying for a loan is always best. However, keep an eye out for any additional fees imposed by your lender.
What are some of the various charges that lenders levy?
Aside from your loan interest rate, they will add a few extra costs to your bill. These are some examples:
- Processing fees – for the processing of your application
- Verification fees – these are fees for validating your background and other characteristics.
- Government levies, such as GST,
- Late payment penalties apply if you do not pay your EMIs on time.
- Prepayment penalties – if you want to pay off a portion of your loan early.
- Foreclosure fees – if you wish to close your loan early.
How is the processing fee determined?
Processing fees vary depending on the lender. This is either a percentage of the loan amount you apply for or a flat cost established by the lender.
How do I calculate my prepaid fee?
Prepayment fees are typically determined in two ways:
- As a percentage of the amount you want to prepay or as a fixed amount
- A percentage of the outstanding principal at the time of prepayment
Some lenders may charge a flat fee for this service.
Can I avoid prepayment penalties?
Only if your lender waives or does not charge you for making prepayments will you be able to avoid paying this cost.
Should I pay off my loan even if there is a prepayment penalty?
It’s dependent on whether you can make up for the price. Prepaying your loan will help you save money on interest. Prepayments minimize your outstanding principal, lowering your interest expense. Check to determine if the prepayment penalties are less than the interest savings. If so, it makes sense to prepay and get your loan paid off sooner.
How much will I have to pay if I fail to make an EMI payment?
If you do not pay your EMI on time, your lender will charge you a late payment fee. They will specify this cost in your loan agreement. Aside from that, you may have to incur a late payment penalty.
Can banks adjust the interest rate on loans during their term?
If you choose a personal loan with a fixed interest rate, the interest rate will not fluctuate over the loan term. If you choose a floating interest rate, the bank may modify the interest rate based on changes in the MCLR.
Are our personal loan interest rates fixed or variable?
Based on the alternatives supplied by the lender, you can choose between a fixed interest rate and a fluctuating interest rate.
Should I take out a loan from the loan with the lowest EMI?
While the EMI is a significant consideration, you should also examine other variables when applying for a personal loan, such as the processing fee, loan tenure, interest rate charged, repayment choices, loan provider reliability, and so on.
How frequently does the variable or floating interest rate fluctuate?
Banks will adjust the variable/floating interest rate whenever the Repo-linked Lending Rate (RLLR) changes, as determined by the RBI.
What is the typical personal loan interest rate?
Most banks charge personal loan interest rates ranging from 10.50 percent to 24 percent per annum. The interest rate you are charged will vary depending on various criteria, including your credit score, income, the firm you work for, your age when you apply for the loan, and so on. As a result, before applying for a personal loan, examine the interest rates of various loan providers.
How does a balance transfer assist you in obtaining a reduced interest rate?
A personal loan balance transfer is the procedure by which a borrower transfers their outstanding loan balance from their current loan provider to a new loan provider. The principal advantage of doing so is that you can move the due loan amount to a bank/financial institution with a cheaper interest rate, lowering the total interest you will have to pay during the loan term.
How does it help me if the interest is based on a daily/monthly decreasing balance?
In the case of monthly lowering loans, the principal amount is decreased each time an EMI is paid, and interest is computed only on the outstanding balance. The principal is reduced daily in daily lowering loans, and interest is levied on the outstanding sum. You, as the borrower, will gain from a monthly/daily lowering personal loan because the overall interest you will have to pay will be lower.
Is there a relationship between interest rates and discounts?
Suppose you currently have a good relationship with a loan provider, such as being an existing client of the bank/NBFC or having previously obtained a loan for which all repayments were made on time. In that case, you may be given a preferred interest rate. However, this does not imply that all existing clients who apply for a personal loan would be awarded a lower interest rate.