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Personal Loan Interest Rate

List of Personal Loan Interest rates across all banks in India

Personal Loan issuers in India

Personal Loan Interest Rates

Interest rates for personal loans from leading private sector banks typically commence at an annual percentage rate of 10.49%. But, some public sector banks may offer lower rates of interest for their personal loan schemes. The interest rates offered to personal loan applicants vary with credit score, occupation, occupation, monthly income, profile, etc. The interest rates vary across lenders as well. Prospective loan applicants must compare the interest rates offered by as many lenders as possible before making the final personal loan application.

Personal Loan Interest Rates Across Various Banks

Bank	Interest Rates (p.a.)	Processing Fee
Kotak Mahindra Bank	10.99% and above	Up to 3% of the loan amount plus applicable taxes
Axis Bank	10.49% p.a. to 22% p.a.	Up to 2% of the loan amount
J&K Bank	12.30% p.a. - 13.30% p.a.	Up to 2% of the loan amount plus applicable GST
ICICI Bank	10.50% p.a. to 16.00% p.a.	Up to 2.50% of the loan amount plus applicable taxes
City Union Bank	At the discretion of the bank	1.00% subject to a minimum of Rs. 250
HDFC Bank	10.50% to 21%	Up to 2.50% of the loan amount plus GST as applicable
Yes Bank	10.99% p.a. Onwards to 20% p.a.	Up to 2%
Kotak Mahindra Bank	10.99% p.a. onwards	Up to 3% of the concluding loan amount plus applicable taxes
HSBC Bank	9.99 p.a. to 16.00% p.a.	Up to 2% of the disbursed loan amount.
IndusInd Bank	10.25% p.a. to 27% p.a.	3% onwards
IDFC First Bank	10.49% to 36%	Up to 3.5%
Tata Capital	10.99% p.a. onwards	1% to 3.5% of the loan amount + GST
State Bank of India	11.05% p.a. onwards	8.50%* p.a.
Bank of Baroda	10.90% p.a. to 18.25% p.a.	Up to 2% of the loan amount
Syndicate Bank	13.25% p.a. To 13.45% p.a.	0.50% of the loan amount (min. Rs.500)
Dhanlaxmi Bank	According to the rates fixed by the bank	Up to 2.5% per annum
Federal Bank	10.49% p.a to 17.99% p.a.	Up to 2% of the loan amount plus GST
Bank of India	10.25% p.a. onwards	Up to 2% of the loan amount plus GST
IDBI Bank	9.50% onwards	1% of the loan amount
Karur Vysya Bank	10.75% to 13.75%	1.50% onwards
Aditya Birla Capital	13% p.a. to 28% p.a.	2% plus GST
Punjab National Bank	11.40% p.a. onwards	Up to 1.00%
Bank of Maharashtra	10.00% p.a.	1.00% of the loan amount plus GST
RBL Bank	14% p.a. to 23% p.a.	Up to 3.5%
Indian Overseas Bank	At the discretion of the bank	At the discretion of the bank

Factors that Influence Interest Rate on Personal Loans

Personal loans incur the highest interest rates since they are 'unsecured', and the bank/NBFC has no safeguard against default. The interest rate on a personal loan is influenced by a few factors including the following:

The Percentage of Loan Amount:

If your loan amount is a small percentage of your annual income, then your interest rate will tend to be lower. On the other hand, if your loan amount is a high percentage of your annual income, lenders might not be confident about your ability to repay and might insist on a higher interest rate on the loan.

Credit Score:

Since this is an unsecured loan, lenders would want to know about your past repayment behaviour in order to evaluate your ability and willingness to pay. In general, the higher your credit score, the better the interest rate you will get. A good credit score means you are responsible with credit.

Debt-to-Income Ratio:

If you have too many current loan obligations, potential lenders might be nervous about your ability to take on more repayments with your existing income.

Guidelines To Get Low Interest Rates on Personal Loans

Improve Your Credit Score: Since this is an unsecured loan, lenders would want to know about your past repayment behaviour in order to evaluate your ability and willingness to pay. In general, the higher your credit score, the better the interest rate you will get. A good credit score means you are responsible with credit. This is a very important factor influencing personal loan interest rates.

Credit Score Range and Interpretation

Credit rating	Analysis	Interpretation
300-550	Poor	The credit score has to be improved. Indicates poor creditworthiness. No lenders. Even if you obtain loans, interest rates will be exorbitantly high.
550-650	Fair	The credit score has to be improved. There are very few lenders. Low creditworthiness. High interest rates.
650-750	Good	Better interest rates, most lenders will be willing to lend, fair creditworthiness, but can still work to improve
750-900	Excellent	Highly creditworthy, preferential interest rates, all lenders available, quick loan approval

Negotiate With The Existing Lender: If you have an existing relationship with a bank or loan provider, you can negotiate for a lower interest rate with them. When doing this, it is essential to submit a formal written request to the loan provider.
Keep looking for offers: Banks and financial institutions typically provide promotional interest rates during festive occasions. Applying for a loan during this time may result in a lower interest rate offer.
Compare Interest Rates: It is important to compare personal loan interest rates from different banks and NBFCs before applying to a specific one. This can help you secure a competitive interest rate on your loan.
Prevent Missing Repayments: Making timely payments on your EMIs and credit card bills is important. It helps maintain a good credit score and increases your chances of getting a lower interest rate on future loans. Defaulting on the other hand will lead to a dip in the credit score. This will affect your scope for future credit

The Role of Balance Transfer in Getting You A Lower Interest Rate

Moving the outstanding loan balance from the current provider to a new provider is called a personal loan balance transfer. This process helps you to move the loan amount due to a bank/financial institution that gives you a lower interest rate. This will reduce the overall interest that you will have to pay during the loan tenure.

What Are Fixed and Floating Interest Rates?

Fixed Interest Rates:

Fixed interest rates will remain the same throughout the repayment tenure.
Your EMI payable will remain constant.
If you choose to pay your loan early, you will be charged a fee for doing so when the interest rate is fixed.
The fixed interest rate is not linked to the MCLR.

Floating Interest Rates:

Interest rates can change based on how the market fluctuates.
The market is likely to change during the repayment tenure.
You may not be charged a prepayment fee if you repay your loan before the loan tenure ends.
Floating interest rates are associated with the MCLR

Which is Better? Floating Interest Rate or the Fixed Interest Rate?

Opting for a fixed interest rate allows borrowers to know exactly how much they will be charged during the loan tenure. Those who want to predetermine their finances can choose this option. If you are comfortable with an interest rate that changes, you can choose a floating/variable interest rate. The advantage of choosing a variable interest rate is that your repayment amount will decrease when the interest rate is low.

What Is Reducing Interest Rate For Personal Loans?

When you take a loan at a flat interest rate, the interest will be computed on the entire loan amount throughout the entire loan repayment period. But, when you opt for a reducing interest rate, the interest will be computed only on the outstanding loan amount. Thus, when you make a monthly repayment, the interest will be computed on the outstanding loan balance.

What Are The Things That You Should Consider Before Taking A Personal Loan With A Low Interest Rate?

Processing Fees: This is a one-time fee levied by lenders, and it can increase the cost of the loan. When you take a loan with a low-interest rate, it is important to compare lenders for the processing fee and then opt for the loan.
Discounts: Although the bank initially gives a high interest rate, negotiating can often result in a lower interest rate. Lenders frequently offer discounts to loyal customers. So, negotiate with the customer.
Pre-Closure Charges: Banks or NBFCs may charge a preclosure fee for paying off your loan early. So, before you take a low interest rate personal loan, check and compare the preclosure fees that various lenders offer.
Eligibility Criteria: Check if you meet the eligibility criteria specified by the lender, such as age, income, employment, credit score, etc.
Special Offers: Lenders come up with special offers for festivals, occasions, etc, and you should check out these offers before taking a personal loan with low interest rate.
Loan Disbursal Time: The loan disbursal time is something that should be considered. Many banks/NBFCs disburse the loan within a matter of seconds.
Other Charges: Even if the lender gives you a higher interest rate, you will be able to save on the overall cost of the loan if the other charges like instrument return charges, stamp duty charges, duplicate statement issuance charges, etc. are low. Thus, ensure that you compare the various other charges on the loan levied by the lender before applying for the personal loan.
Customer Service: You should check if the lender has dedicated customer service channels to resolve any issues brought by the consumer. The lender must be able to provide prompt assistance in case of any issues.

How to Compute Personal Loan Interest Rates?

You can compute the personal loan interest rate and the monthly EMI through the formula EMI = [PxRX(1+R)^N]/[(1+R)^N-1],

Here, P is the loan amount.

R is the interest rate charged monthly

N is the sum total number of monthly installments.

This method of computing the interest and EMI is extremely cumbersome and time-consuming. In this case, you can use the personal loan EMI calculator. The result will be displayed instantly. All you have to do is enter the loan amount, interest rate, and the loan tenure.

Let us take an example,

X is a chartered accountant, and he wants to apply for a loan of 20 lakhs for his home renovation expenses. He gets an interest rate of 14% from his lender and desires to repay the loan over a period of 24 months.

By entering the values into a personal loan EMI calculator

The monthly payment or the EMI is Rs. 96026.77, the total interest payable is 3,04,618.48, and the total payment is Rs. 23,04, 618.48.

FAQs about Personal Loan Interest Rates:

1. What is the minimum interest rate that the lenders charge on a personal loan?

The interest rate on a personal loan varies from bank to bank. Some lenders offer personal loans from 10.75% onwards. However, this is subject to your loan amount, income stability and credit profile. The minimum interest rate is offered by PNB and it is 8.75%.

2. What is the maximum interest rate that the banks provide to the borrowers?

Individuals with poor credit scores might become eligible for high-interest rate loans which could be as high as 49.5% p.a.

3. Does having a good credit score lower interest rates on personal loans?

Yes, having a good credit score gives you the bargaining power to negotiate with the lender.

4. What is the lowest income one should have to get a personal loan?

The salary requirement set by most lenders is Rs. 15,000 or above. Note that individuals with a minimum salary of Rs 25,000 are favoured by lenders. For self-employed individuals, lenders usually require a gross annual income of Rs. 2 lakhs or above.

5. When will the interest rate on the personal loan be informed to the borrower?

After you have submitted all the documents, the lender will process your loan. If the loan is approved, you will be informed about the interest rate upfront before the disbursal.