Personal Loan Interest Rate

Borrowing a personal loan is about meeting quick financial goals. But what about the interest rate? Many people might not pay much attention to this aspect of the loan, which could later lead to hefty EMIs.

For low interest rate personal loans, you need suitable lenders and a foolproof loan application. To stand out from the crowd and avail of the best personal loan interest rate, keep three things in check: income, credit score, and loan offering.

Our partner lenders offer attractive personal loan interest rates online. Compare the lowest interest rate personal loan and find the suitable lender for your financial needs.

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Instant Loan
Personal Loan Interest Rate Calculator
Loan Amount
   50,000 25,00,000 
Duration of Loan
Years
1
 1  Years Years 5
Interest Rate*i
*Rate of interest can vary subject to credit profile. Loan approval is at the sole discretion of the finance partner.
(P.A.)
%
 10  % % 30
EMI PER MONTH
₹4,396
Principal Loan Amount₹50,000
Interest Amount₹2,752
Payable Amount₹52,752

Types of Interest Rates 2025

Interest Rate Type
Description
Example Interest Rate
Fixed Interest Rate
The interest rate remains constant throughout the loan tenure.
12% p.a.
Floating Interest Rate
The rate varies based on market conditions or benchmark rates.
10% – 14% p.a.
Reducing Balance Rate
Interest is calculated on the outstanding principal, which is reduced with each EMI payment.
11% – 13% p.a.
Flat Interest Rate
Interest is calculated based on the full loan amount without considering principal reduction.
14% – 16% p.a.
Annual Percentage Rate (APR)
This includes interest rate plus other fees and charges expressed annually.
13% – 18% p.a.
Simple Interest
Interest is paid as a percentage of the original borrowed amount.
10% p.a.
Compound Interest
Interest is added to the original amount, leading to interest on interest.
12% – 15% p.a.
Effective Interest Rate (EIR)
Actual cost of borrowing considering compounding frequency.
14% – 17% p.a.
Variable Interest Rate
Interest rate fluctuates based on economic conditions or lender benchmarks.
9% – 14% p.a.
Real Interest Rate
Adjusts for inflation to reflect the true cost of borrowing.
6% – 9% p.a. (after inflation)
Accrued Interest
Interest that has accumulated but not yet been paid.
Varies based on loan terms

Current Personal Loan Interest Rates 2025

Bank
Processing Fee
Interest Rate (p.a.)
SBI (State Bank of India)
Up to 1% of the loan amount
10.30% - 15.30%
HDFC Bank
Up to 2.5% of loan amount
10.90% - 24.00%
ICICI Bank
Up to 2.5% of loan amount
10.85% - 16.65%
Axis Bank
Up to 2.5% of loan amount
11.25% onwards
Bank of Baroda
Up to 2% of loan amount
11.05% - 18.50%
PNB (Punjab National Bank)
1% of loan amount.
11.15% - 17.70%

Factors Influencing the Interest Rates on Personal Loans

Credit Worthyness Icon

Creditworthiness

Your repayment capacity and credit score let lenders know your creditworthiness. A highly worthy applicant gets the lowest personal loan interest rates. This is because there is a lesser possibility of them defaulting.

Digital Lending Icon

Income Stability

Although there is a minimum income bracket for personal loans, the lender also checks your source of income and its frequency. This ensures you are likely to handle the EMI payments.

Employment Profile Icon

Work Status

Being employed for over a year works in your favour when borrowing a personal loan. This helps lenders ensure stability in the applicant’s source of income.

Debt To Income Ratio Icon

Debt-to-Income Ratio

Currently paying EMIs, ensure your income compensates for the new EMI. If your debt-to-income ratio is more than 40%, it can affect your personal loan interest rate.

Payment History Icon

Payment History

Old loan payments and credit card bills can affect your interest rate. So check your credit report to see whether you have such records. Improving your credit score before a personal loan application can help secure a loan at better interest rates.

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How to Get a Personal Loan Lowest Interest Rate?

Tips
Reasons
Improve Credit Score
Correcting your credit records before applying for a personal loan can help you in the long term.
Borrow Jointly
Applying for a loan with a co-borrower can help you get a lower interest rate because this second borrower acts as a guarantor. So, if you default, the loan will be paid by the co-borrower.
Choose Shorter Tenure
Longer tenure attracts more interest payout. Choose a shorter tenure if you can afford slightly high EMIs.
Consider Existing Lenders
Borrowing with the lender with whom you already have a relationship can help negotiate for a low rate of interest.

Frequently Asked Questions

What is the lowest interest rate on personal loans online?
How is my personal loan interest rate determined?
How does your CIBIL score impact the cost of the loan?
Can I get an interest rate lower than the minimum rate set by the lender?
Can I get a low rate of interest even if I have a poor credit score?
If I offer collateral, will it get me a decent interest rate?
Will I get a lower rate of interest if I take a loan from my existing lender?
Should I always choose the lowest available interest rate?
How is the total interest rate calculated?
Are personal loan interest rates fixed or floating?