How to Get a Personal Loan with Low Interest Rates in India
Personal loans have become one of the most popular financial products in India, thanks to their quick approval, minimal documentation, and flexible usage. Whether you need funds for a medical emergency, a wedding, higher education, or consolidating debt, personal loans are often the go-to choice.
However, one major concern for borrowers is the interest rate. A small difference in the personal loan interest rate can have a significant impact on your monthly EMIs and overall repayment amount. That’s why understanding how to secure a personal loan with low interest rates in India is crucial.
In this article, we will explore factors that affect personal loan interest rates, practical tips to lower them, and the best practices to ensure you get the most affordable deal.
Why Interest Rates Matter in Personal Loans
Unlike secured loans (such as home or car loans), personal loans are unsecured, meaning you don’t need to pledge any collateral. Since lenders bear a higher risk, they often charge higher interest rates.
For instance:
- A loan of ₹5 lakh at 10% interest for 5 years will cost you around ₹1.37 lakh in total interest.
- The same loan at 15% will cost you around ₹2.14 lakh in interest.
That’s nearly ₹77,000 more! Clearly, securing a low-interest personal loan can save you a substantial amount.
Current Personal Loan Interest Rate Trends in India (2025)
Most banks and NBFCs in India offer personal loans with interest rates ranging from 9% to 24% per annum. The exact rate depends on several factors such as your credit score, income stability, employer reputation, and loan amount.
Here are some popular banks/NBFCs and their approximate personal loan interest rates (as of 2025):
- SBI Personal Loan – Starting from 9.60% p.a.
- HDFC Bank Personal Loan – 10.25% to 21% p.a.
- ICICI Bank Personal Loan – 10.50% onwards
- Axis Bank Personal Loan – 10.49% to 24% p.a.
- Bajaj Finserv Personal Loan – 11% onwards
Note: Rates vary based on borrower profile and RBI repo rate changes.
Factors That Affect Personal Loan Interest Rates
Before applying, it’s important to understand what lenders look at when deciding your personal loan interest rate.
- Credit Score (CIBIL Score)
- The higher your credit score, the lower your interest rate.
- A score above 750 is generally considered excellent.
- Income and Job Stability
- Higher income and a stable job increase your creditworthiness.
- Salaried employees in reputed companies often get better rates than self-employed applicants.
- Existing Relationship with the Lender
- If you already have a salary account, fixed deposit, or loan with a bank, you may qualify for preferential rates.
- Debt-to-Income Ratio
- If you already have high EMIs, lenders may charge you more or reject your loan application.
- Loan Amount and Tenure
- Larger loan amounts or longer tenures can sometimes lead to higher rates, as lenders assume higher risk.
How to Get a Personal Loan with Low Interest Rates in India
Here are proven strategies to secure a low-interest personal loan in India:
1. Maintain a Good Credit Score
- Pay your credit card bills and EMIs on time.
- Keep your credit utilization ratio below 30%.
- Avoid applying for multiple loans at once.
2. Compare Lenders Before Applying
Don’t settle for the first offer. Use online loan comparison websites to check interest rates from multiple banks and NBFCs.
3. Apply with Your Existing Bank
If you have a long-standing relationship with your bank, apply there first. Many banks offer special discounts to existing customers.
4. Choose Shorter Loan Tenures
While shorter tenures mean higher EMIs, they also help you get lower interest rates. Plus, you save on total interest outgo.
5. Negotiate with the Lender
If you have a strong credit profile or if you’re a loyal customer, don’t hesitate to negotiate for a lower rate.
6. Opt for Balance Transfer
If you already have a personal loan at a higher rate, consider a personal loan balance transfer to another lender offering lower interest rates.
7. Keep Your Debt-to-Income Ratio Low
Try to keep your monthly EMIs below 40% of your monthly income. This improves your eligibility for lower rates.
Documents Required for Personal Loan in India
Having the right documents ready ensures faster approval and may even improve your chances of negotiating better rates.
- Identity Proof – Aadhaar, PAN, Passport, or Driving License
- Address Proof – Utility bills, Passport, or Rental agreement
- Income Proof – Salary slips (last 3 months), Form 16, or ITR
- Bank Statements – Last 6 months
- Employment Proof – Company ID card or offer letter
Benefits of Getting a Low-Interest Personal Loan
- Lower EMIs – Reduced monthly burden
- Less Total Interest Paid – Save thousands (or lakhs) in repayment
- Better Debt Management – Easier to close loan earlier
- Improved Financial Stability – More disposable income for investments
Common Mistakes to Avoid While Applying
- Ignoring your credit report before applying.
- Applying for too many loans at the same time.
- Choosing a very long tenure just for lower EMIs (leads to higher overall interest).
- Falling for instant loan apps without verifying RBI approval.
FAQs on Personal Loan with Low Interest Rates in India
Q1: What is the lowest personal loan interest rate in India right now?
👉 Some banks like SBI and Bank of Baroda offer personal loans starting at 9%–9.60% p.a., but eligibility is key.
Q2: Can I get a personal loan with a credit score of 650?
👉 Possible, but interest rates will likely be higher. Aim for 750+ for the best rates.
Q3: Do government employees get lower interest rates?
👉 Yes, many lenders offer special discounted personal loan rates for government and PSU employees.
Q4: Should I go for a fixed or floating interest rate personal loan?
👉 Fixed rates are more common for personal loans and provide repayment stability. Floating rates are rare.
Q5: How much personal loan can I get on a salary of ₹50,000 per month?
👉 Depending on your credit profile, you may qualify for ₹10–15 lakh with low interest rates.
Final Thoughts
Getting a personal loan with low interest rates in India is not about luck—it’s about preparation. By maintaining a strong credit score, comparing offers, leveraging existing relationships with banks, and managing debt smartly, you can significantly reduce your borrowing cost.
Remember, even a small difference in interest rate can save you a large sum over the loan tenure. So, invest time in research and negotiation before signing the dotted line.
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