June 28, 2025by Today Finserv0 comments

What is the typical interest rate on a personal loan?

Personal loan interest rates in India typically range between 10.5% to 24% per annum, depending on your credit profile, income, and lender type. While public sector banks offer the lowest rates (from 10.5%), NBFCs and fintech lenders may charge higher interest (up to 24%) for quick, collateral-free loans.

At Today Finserv Consulting India, we help borrowers understand personal loan interest rate structures and secure the most competitive offers. Here’s a detailed breakdown.

Current Personal Loan Interest Rates (2024)

Lender TypeInterest Rate Range (p.a.)Best For
Public Sector Banks (SBI, PNB)10.5% – 15%Lowest rates, long-tenure loans
Private Banks (HDFC, ICICI)11% – 18%Balance transfers, existing customers
NBFCs (Bajaj Finserv, Tata Capital)12% – 22%Flexible eligibility, fast approval
Fintech Lenders (MoneyTap, KreditBee)15% – 24%Instant loans, low documentation

6 Key Factors Affecting Your Personal Loan Interest Rate

1. Credit Score (CIBIL/Analysis)

  • 750+ = Best rates (10.5-14%)
  • 650-749 = Moderate rates (15-18%)
  • Below 650 = High rates (18-24%) or rejection

2. Income & Employment Stability

  • Salaried (MNC/govt. employees get 0.5-2% lower rates)
  • Self-employed with 3+ years ITR history qualify for better deals

3. Loan Amount & Tenure

  • Larger loans (>₹10L) often get preferential rates
  • Shorter tenures (1-3 years) have lower total interest

4. Existing Relationship with Lender

  • Salary account holders get 0.25-1% discounts

5. Debt-to-Income Ratio

  • Maintain <40% for optimal pricing

6. Market Conditions

  • RBI repo rate changes impact floating rate loans

How to Get the Lowest Interest Rate?

✔ Improve CIBIL score to 750+ (clear old debts, limit credit utilization)
✔ Compare 3-4 lenders before applying
✔ Negotiate with your existing bank (leverage long-term relationship)
✔ Opt for shorter tenure if EMI affordability allows
✔ Consider secured loans (FD/insurance-backed) for 2-5% lower rates

FAQs: Personal Loan Interest Rates

1. What is the current lowest personal loan interest rate?

📉 10.5% p.a. (SBI, Bank of Baroda for govt. employees)

2. Why is my offered rate higher than advertised?

📊 Lenders show “starting from” rates – your final rate depends on credit risk assessment

3. Can I reduce interest after loan disbursal?

🔄 Yes, via balance transfer to a cheaper lender (1-2% savings possible)

4. Are there hidden charges beyond interest?

⚠️ Watch for processing fees (0.5-6%), prepayment penalties (2-5%), and GST

5. Do women borrowers get lower rates?

♀️ Sometimes (0.25-0.5% discount in banks like SBI, HDFC)

Today Finserv Pro Tips

🔸 Apply mid-month (lenders have more rate flexibility)
🔸 Bundle loans with insurance for possible discounts
🔸 Autopay enrollment can fetch 0.1-0.25% reduction

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