Personal Loans Interest Rate

One of the financial options at your disposal is a personal loan, which can be utilized to meet various financial needs. Numerous banks in India provide competitive personal loan options that you can conveniently apply for, whether through online or offline channels. However, before proceeding with a personal loan application, it's essential to compare the interest rates offered by different banks, which typically range from 8.75% p.a. to 49.5% p.a. 

Ensure you assess the latest personal loan interest rates and processing fees from various banks to make an informed decision when applying for a personal loan. Apply today to secure the best offer.

Current Interest Rate on Personal Loans

Bank Interest Rate (p.a.) Processing Fee

HDFC Bank

10.5% p.a. - 21.00% p.a.

Up to 2.50%

ICICI Bank

10.75% p.a. - 19.00% p.a.

Up to 2.50%

TurboLoan Powered by Chola

15% - 21% (fixed) p.a.

3.00%

Yes Bank

10.99% p.a. onwards - 20% p.a.

Up to 2%

Kotak Mahindra Bank

10.99% and above

Up to 3%

Axis Bank

10.49% p.a.- 22% p.a.

Upto 2% of the loan amount

IndusInd Bank

10.25% p.a. - 27% p.a.

3% onwards

HSBC Bank

9.99% p.a. - 16.00% p.a.

Up to 2%

IDFC First Bank

10.49% p.a. onwards

Up to 3.5%

Tata Capital

10.99% onwards

Up to 3%

Home Credit Cash Loan

24% p.a. - 49.5% p.a.

2.5%-5%

Ujjivan Small Finance Bank

At the discretion of the bank

At the discretion of the bank

Aditya Birla Capital

14% p.a. -26% p.a.

Up to 2%

State Bank of India

11% p.a. - 14% p.a.

Up to 1.50%

Karnataka Bank

14.23%

At the discretion of the bank

Bank of Baroda

10.90% p.a. - 18.25% p.a.

Up to 2%

Federal Bank

11.49% p.a. - 14.49% p.a.

At the discretion of the bank

IIFL

12.75% p.a. - 34% p.a

2% - 4%

Bank of India

10.25% onwards

Up to 2%

Fullerton India

11.99% p.a. onwards

Up to 6%

IDBI Bank

10.50% p.a. - 13.25% p.a.

Contact the bank

Karur Vysya Bank

10.50% p.a. - 13.50% p.a.

1.50% onwards

South Indian Bank

12.85% p.a. - 20.35% p.a.

Up to 2%

Indian Overseas Bank

At the discretion of the bank

At the discretion of the bank

RBL Bank

14% p.a. - 23% p.a.

Up to 3.5%

Punjab National Bank

11.40% p.a. onwards

Up to 1.00%

Bank of Maharashtra

9.75% p.a. onwards

Up to 1%

Central Bank of India

12.35% p.a. - 12.55% p.a.

Up to 1%

City Union Bank

At the discretion of the bank

1.00% subject to a minimum of Rs.250

J&K Bank

12.30% p.a. - 13.30% p.a.

Up to 1% of the loan amount subject to a maximum of Rs.10,000

Note: Kindly be aware that the applicable processing fee will incur an additional GST charge.

Ensuring Lowest Interest Rate on Personal Loans 

To secure the lowest interest rate on a personal loan, consider these strategies:

Among these strategies, your credit score is a crucial factor considered by lenders when determining your interest rate. Ensure you check and work on improving your credit score to maximize your chances of obtaining a favorable interest rate.

CIBIL Ratings

Credit Score

Chances of being approved for a Personal Loan

Poor

Less than 600

You may not qualify for a personal loan

Average

Between 600 and 750

Loan may be approved, but at a high interest rate

Good

Over 750

Loan is likely to be approved with a lower interest rate

Excellent

Between 800 and 900

Loan with a low interest rate, faster approval, larger loan amount

Factor Affecting Personal Loan Interest Rates

Several factors influence personal loan interest rates, including:

Choosing Between Fixed and Floating Interest Rates

Fixed interest rate

Floating interest rate

Interest rates remain constant

Interest rate can change depending on the fluctuation in the market

Your EMI payable will remain the same throughout the repayment tenure

Your EMI payable is likely to change during the repayment tenure.

You are likely to be charged a prepayment charge if you prepay your loan

You may not be charged a prepayment charge if you prepay your loan

Not linked to MCLR

Linked to MCLR

Opting for a fixed interest rate provides the advantage of knowing precisely how much you will pay over the loan's duration. This makes it a suitable choice for individuals who prefer to proactively manage their financial planning.

On the other hand, if you are comfortable with interest rate fluctuations, a variable interest rate may be your preference. The benefit of selecting a variable interest rate is that your repayment amount will decrease when interest rates are low.

What Does Reducing Interest Rate Mean in Relation to Personal Loans?

When you opt for a personal loan with a flat interest rate, the interest is calculated on the entire loan amount throughout the entire repayment period. In contrast, when you choose a loan with a reducing interest rate or reducing balance rate structure, the interest is calculated only on the outstanding loan balance. Consequently, as you make monthly repayments, the interest for the remaining loan tenure is computed based on the remaining outstanding balance.

Important Considerations:

*While some lenders may indeed offer loans with slightly higher interest rates, it's important to consider a few other factors before reaching a decision.

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How to Calculate EMI on Your Personal Loan?

To determine your monthly EMI amount, simply utilize the CredBharat Personal Loan EMI calculator. Input your loan amount, repayment duration, interest rate, and processing fee to receive an accurate EMI calculation.

Interest Rates for Personal Loans 

The interest rates for personal loans vary from 8.75% per annum to 49.5% per annum. The determination of your loan's interest rate depends on factors such as the loan amount you request, your credit score, and the chosen repayment period. If you possess a strong credit score and maintain a positive banking relationship, you may qualify for a reduced interest rate on your personal loan.

Personal Loan EMI Calculation Formula

The formula to calculate your Personal Loan Equated Monthly Installment (EMI) is as follows:

EMI = [P x R x (1+R)^N] / [(1+R)^N-1]

Here, P represents the loan amount, R is the monthly interest rate, and N signifies the total number of monthly installments.

Example

Let's take the example of Mr. Mehta, a 33-year-old IT engineer, who plans to apply for a personal loan to cover his wedding expenses. He intends to borrow Rs.10 lakh and repay it over 36 months with an annual interest rate of 14%.

To compute the EMI for his personal loan, Mr. Mehta can use an EMI calculator available on a bank/NBFC's website or a third-party financial tool. He will input the loan amount (Rs.10 lakh), the loan tenure (36 months), and the interest rate (14% p.a.).

Upon entering these details, the calculated EMI will be displayed, which in this case is Rs.34,178 per month. For Mr. Mehta, the total interest paid amounts to Rs.2,30,395, making the total repayment amount Rs.12,30,395.

The interest rate on your personal loan plays a crucial role in determining your EMI and the total repayment amount. On this page, we've addressed some common queries borrowers often have regarding their personal loan interest rates.

What Are Additional Fees and Costs Imposed by Lenders? 

In addition to your loan interest rate, several other fees and charges are associated with your overall borrowing cost. These comprise:

These additional charges contribute to the overall cost of your loan and should be considered when evaluating your borrowing options.

Calculation of Prepayment Fees

Prepayment fees are typically determined using one of the following methods:

Additionally, certain lenders may apply a fixed fee for this service.

Personal Loan Interest Rates FAQ's

PNB offers personal loans at competitive rates starting from 8.75% per annum. However, the actual interest rate can vary based on individual factors such as your credit profile and your relationship with the bank.
Your income is a key factor in assessing your loan eligibility. A higher income indicates better financial stability, which typically results in a lower risk profile. Lenders often offer lower interest rates to individuals with higher incomes due to their lower perceived risk.
Your employment history and experience are indicators of job stability. Working for reputable companies and having a consistent work history can enhance your loan eligibility and may lead to a lower interest rate.
A good credit score demonstrates responsible financial management and reduces your risk profile. If your credit score is 750 or above, you are more likely to qualify for preferential interest rates.
Lenders assess your existing debt obligations when evaluating your loan application. If a significant portion of your income is already allocated to servicing existing loans, lenders may either decline your loan application or charge a higher interest rate to mitigate their risk.
Maintaining a credit score above 750 and having a positive relationship with your lender can increase your chances of securing favorable interest rates. Additionally, working for a reputable company and maintaining a strong credit profile can lead to better loan terms.
Yes, negotiation can play a crucial role in securing a lower interest rate than the one initially advertised. Effective negotiation with the lender may lead to more favorable terms.
You may still be eligible for a personal loan with a lower credit score by applying with a co-applicant who has a good credit history or by having a guarantor with a strong credit profile support your application.
Providing collateral can reduce your risk profile, potentially leading to a lower interest rate. However, remember that failure to repay the loan could result in the lender seizing the collateral.
Maintaining a good relationship with your current lender can lead to better loan terms. It's possible that your existing lender may offer you a lower interest rate compared to other lenders.
While the interest rate is an important consideration, you should also factor in other costs such as processing fees, loan tenure, and the lender's reputation when selecting a personal loan.
Processing fees can vary among lenders and may be calculated as a percentage of the loan amount or as a fixed fee set by the lender.
You can avoid prepayment fees if your lender offers a loan product with no prepayment charges or chooses not to levy such fees.
The decision to prepay your loan should be based on whether the interest savings outweigh the prepayment charges. If the savings are substantial, prepayment can be financially beneficial.
Late payment fees, as well as penalties, may be charged if you miss an EMI. These fees are typically outlined in your loan agreement.
With a fixed interest rate personal loan, the interest rate remains constant throughout the loan tenure. In contrast, floating interest rate loans can change in response to fluctuations in the market, typically linked to the Repo-linked Lending Rate (RLLR) set by the RBI.
Lenders offer the choice of fixed or floating interest rates for personal loans, allowing borrowers to select the most suitable option.
While EMI is an important factor, consider other aspects such as processing fees, loan tenure, interest rate, and the reputation of the lender when choosing a personal loan.
Floating interest rates are subject to change whenever the underlying benchmark rate, such as the Repo-linked Lending Rate (RLLR), experiences adjustments as determined by the RBI.
The average interest rate on personal loans varies between 10.50% to 24% per annum. The specific rate you receive depends on factors like your credit score, income, employer, age, and more.
Interest calculated on a monthly or daily reducing balance can reduce your overall interest costs. This method ensures that interest is charged only on the outstanding balance, potentially saving you money over the loan term.
A good relationship with a lender, including previous timely repayments or being an existing customer, may make you eligible for preferential interest rates. However, not all existing customers receive discounts automatically.
Balance transfer allows you to move your outstanding loan balance to a new lender offering a lower interest rate. This can reduce your overall interest expenses during the loan tenure.

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