Personal Loan Interest Rates
Personal loan interest rates offered by top private sector lenders usually start from 10.50% p.a.
However, some public sector banks may offer even lower interest rates on their personal loan schemes.
The interest rates offered to applicants would depend on the lender’s cost of funds, net interest margins, etc., along with the credit risk assessment of their loan applicants.
Updated On - 25 April 2025
Latest Personal Loan Interest Rates - April 2025
The risk-based pricing models followed by banks and NBFCs may vary widely across lenders, leading to widely varying interest rates for the same applicant. Thus, prospective applicants should compare the personal loan interest rates of as many lenders as possible before making the final loan application.
| Banks/NBFCs | Interest Rates |
|---|---|
| HDFC Bank | 10.90%-24.00% p.a. |
| Axis Bank | 11.25% p.a. onwards |
| ICICI Bank | 10.85%-16.65% p.a. |
| Kotak Mahindra Bank | 10.99%-16.99% p.a. |
| IndusInd Bank | 10.49% p.a. onwards |
| IDFC FIRST Bank | 10.99% p.a. onwards |
| Federal Bank | 12.00%-22.50% p.a. |
| DBS Bank | 10.99%-30% p.a. |
| YES Bank | 11.25%-21% p.a. |
| Tata Capital | 11.99%-29.99% p.a. |
| Aditya Birla Finance | 10.99% p.a. onwards |
| L&T Finance | 11.00% p.a. onwards |
| Hero Fincorp | 19.75%-37.75% p.a. |
| Piramal Finance | 12.90% p.a. onwards |
| HDB Financial Services | 10%-35% p.a. |
| Poonawalla Fincorp | 18%-36% p.a. |
| SMFG India Credit | 13% p.a. onwards |
| Moneyview | 14%-36% p.a. |
| PaySense | 1.4%-2.3% p.m. |
| InCred Financial Services | 13.99% p.a. onwards |
Note: Interest rates as of 25 April 2025
Fees and Charges
Personal loans come with various fees and charges that can affect the total cost of borrowing. Below are the range of some fees and charges levied by most lenders:
| Particulars | Charges |
|---|---|
| Processing Fees | 0.5% to 4% of the loan amount |
| Stamp Duty Charges | As per actuals |
| EMI/Cheque Bounce | Around Rs 400 per bounce |
| Legal Fees | As per actuals |
| Prepayment and Foreclosure Charges | 1%-5% of the outstanding loan amount |
| Late Payment Penalty | Usually @ 2% per month; 24% p.a. |
Other fees and charges levied by the lenders include verification charges, NOC certificate charges, documentation charges, and duplicate statement charges.
Prepayment and Foreclosure Charges
Pre-payment or foreclosure charges are levied on the loan amount if you choose to pay off the loan before the end of the loan tenure. These charges usually range between 1% and 5% of the outstanding loan amount. Some lenders may also charge a higher fee for foreclosing a personal loan.
Late Payment Penalties
Late penalties usually range from 1%-2% p.m. on the EMI overdue amount. These charges are also known as overdue interest charges and are levied on the overdue EMIs till the date of their repayment.
Personal Loan Annual Percentage Rate (APR)
The Annual Percentage Rate is its annualised cost of borrowing, which includes the interest rate and charges associated with the loan.
The charges may include processing fees, documentation fees, verification charges and other fees levied during the loan origination process. The APR is expressed in the form of a percentage and thus, allows applicants to identify schemes offered at lower interest rates but with higher processing fees and/or other charges.
For instance, let’s say you availed a personal loan of Rs 4 lakhs @ 12% p.a. with a 3-year repayment tenure. The processing fee charged is 1.5% of the loan amount, which amounts to Rs 6,000. Therefore, the total borrowing cost of your personal loan will be Rs 85,540 and its APR will be 13.05%.
Factors Affecting Personal Loan Interest Rates
Banks and NBFCs primarily set personal loan interest rates based on the cost of funds and the credit risk evaluation of their loan applicants. Here are the factors affecting personal loan interest rates:
- Credit Score: Lenders usually assess the credit scores of their applicants as an initial check of their creditworthiness. Applicants with credit scores of 750 or above are often viewed as financially disciplined and, thereby, have lower chances of loan defaults. Many lenders offer personal loans at lower interest rates to such loan applicants.
- Income: Some lenders may also offer preferential interest rates to personal loan applicants having higher monthly income as loan applicants with higher incomes may reduce credit risk for the lenders.
- Occupation Profile: Lenders usually offer preferential interest rates to salaried individuals as compared to self-employed applicants due to the former’s higher income security. Within salaried applicants, government and PSU employees are offered lower interest rates than private sector employees due to the former’s higher job security.
- Existing lending or banking relationship with the lender: Many lenders offer interest rate concessions or pre-approved instant personal loans at lower interest rates to applicants with whom they have existing lending, deposit, or credit card relationships.
- Employment History: Lenders assess the employment stability of an applicant when setting interest rates. Applicants who frequently change jobs are often considered to carry higher credit risks, which can lower their chances of approval or result in higher interest rates.
How to Get a Personal Loan with Low Interest Rate?
The interest rates of personal loans can significantly impact a borrower’s overall borrowing costs. However, the interest rates set by the lenders can vary widely for the same applicant due to factors like the lender’s net interest margins, cost of funds, and the applicant’s credit risk assessment. Here are five tips to improve your chances of availing a personal loan at a lower interest rate:
Aim for credit scores of 750 & above
Maintain a good credit score of 750 or above – by timely repayment of credit card bills and/or EMIs, avoid frequent multiple credit card applications or loans, etc. Check your credit report at periodic intervals to ensure that it reflects accurate information. Address any discrepancies by contacting both the respective lender and the credit bureau to correct the errors.
Leverage existing relationships with banks/NBFCs for lower interest rates
Before applying for a personal loan elsewhere, consider checking with the lender(s) where you maintain a deposit, loan account or credit card. Offers from your current lender can serve as a benchmark to compare interest rates and terms from other lenders, helping you evaluate whether they provide more competitive personal loan interest rates. Additionally, existing relationships with the lender can make you eligible for pre-approved offers or more favorable loan terms.
Avoid Multiple Loan Applications within a Short Duration
When you apply for personal loans with multiple lenders within a short period, each lender performs a hard inquiry on your credit report to ascertain your creditworthiness. Each hard inquiry initiated by a lender can reduce your credit score by a few points, thus making it harder to get your personal loan approved at lower interest rates.
Check online comparison tools
Visit online financial marketplaces to compare offers from multiple lenders based on their interest rates, loan tenure, amounts, disbursal times, fees and other charges. The requests made through these platforms are generally considered soft inquiries by the credit bureaus, which do not impact your credit score.
Types of Personal Loan Interest Rates
When applying for a personal loan, one of the key decisions you’ll need to make is whether to choose a fixed or floating interest rate. Understanding each type of interest rate can help you make an informed decision based on your financial goals. Here is an overview of both options:
Fixed Interest Rates
In case of fixed interest rate personal loans, as the term implies, the interest rate remains the same for the entire loan tenure. As a result, your EMIs remain constant and therefore easier for borrowers to plan their budget. However, fixed rate loans usually come with a higher spread than floating rates.
Floating Interest Rates
In case of personal loans availed at floating interest rates, the interest rate fluctuates over time based on changes in the linked benchmark rate (repo rate). Note that the EMIs would increase only in the case of floating rate personal loans availed with the ‘EMI change’ option. In this case, the tenure would remain the same irrespective of the changes in the interest rates. In case of floating rate personal loans availed with ‘tenure change’ option, the EMI would remain the same while the tenure would change as per the changes in the interest rates.
Floating Interest Rates
In case of personal loans availed at floating interest rates, the interest rate fluctuates over time based on changes in the linked benchmark rate (repo rate). Note that the EMIs would increase only in the case of floating rate personal loans availed with the ‘EMI change’ option. In this case, the tenure would remain the same irrespective of the changes in the interest rates. In case of floating rate personal loans availed with ‘tenure change’ option, the EMI would remain the same while the tenure would change as per the changes in the interest rates.
How Interest Rates Affect Your Loan Tenure and EMIs?
Personal loan tenures usually range from 1 to 5 years with some banks and NBFCs offering longer tenures of 6, 7 or 8 years. The choice of loan tenure directly affects the borrower’s EMIs and total interest cost. Opting for a longer tenure lowers loan EMIs, making repayment easier for borrowers having limited repayment capacity. However, this convenience comes at the cost of incurring higher interest costs. Borrowers who choose longer tenures can reduce their total interest cost by making prepayments, whenever they have surplus funds. Personal loan applicants should opt for shorter tenures only when they have adequate repayment capacity for the EMIs.
Personal Loan Balance Transfer to Reduce Interest Rates
Personal Loan Balance Transfer (PLBT) allows existing borrowers to transfer their outstanding loan balance from one lender to another at a lower interest rate, for a longer tenure and/or for better terms and conditions. The interest rate offered by the new lender would depend on the borrower’s credit score, income, existing outstanding loan amount, tenure and other aspects of their credit profile.
Borrowers should note that there are certain nominal charges, such as foreclosure charges and loan transfer fees payable to their existing lender. Additionally, the new lender may charge a processing fee, stamp duty and other fees that are associated with a fresh loan application. Therefore, it’s important to carefully evaluate whether the savings on interest from the balance transfer will outweigh these associated costs.
Impact of RBI Regulations on Personal Loan Interest Rates
RBI monetary policy and its liquidity maneuvers can directly impact the cost of funding for the banks/NBFCs, which in turn will impact the interest rates for fresh borrowers. These will also impact existing borrowers who have availed loans at floating interest rates, subject to their interest rate reset date set by their lenders. However, these policy changes will not impact the interest rate of fixed rate personal loan borrowers as their interest rate will remain unchanged for their entire loan tenure.
EMI on a 10 Lakh Loan
Rahul Mehta, a 30 year old, needed funds to cover expenses for his wedding. After comparing various personal loan offers, he applied for a personal loan of Rs 10 lakh from HDFC Bank. Based on his credit profile, the bank offered him an interest rate of 11% p.a. with a repayment tenure of 4 years. His EMI would be Rs 25,846, the total interest payable would be Rs 2.40 lakh, and the total amount payable over 4 years would be Rs 12.40 lakh.
Compare Personal Loan Interest Rates Offered by Top Banks
Interest rates vary across lenders depending on factors like the applicant’s credit score, income, repayment capacity, and the lender’s cost of funds, credit risk pricing model and other internal policies. Here’s an overview of the personal loan interest rates offered by major banks:
SBI Personal Loan
| Key Highlights | |
|---|---|
| Interest Rate: | 10.30%-15.30% p.a. |
| Loan Amount: | Up to Rs 35 lakh |
| Tenure: | Up to 7 years |
| Minimum Monthly Salary: | For Government/Defence Sector employees: Rs 20,000; For Corporate Sector employees: Rs 25,000 |
| Processing Fee: | Up to 1.50% (Minimum Rs 1,000 to Maximum Rs 15,000) |
Axis Bank Personal Loan
| Key Highlights | |
|---|---|
| Interest Rate: | 11.25% p.a. onwards |
| Loan Amount: | Up to Rs 40 lakh |
| Tenure: | Up to 7 years |
| Minimum Monthly Salary: | Rs 15,000 for Axis Bank customers; Rs 25,000 for non-Axis Bank customers |
| Processing Fee: | Up to 2% of the loan amount |
HDFC Personal Loan
| Key Highlights | |
|---|---|
| Interest Rate: | 10.90%-24.00% p.a. |
| Loan Amount: | Up to Rs 40 lakhs |
| Tenure: | Up to 6 years |
| Minimum Monthly Salary: | Rs 25,000 |
| Processing Fee: | Up to Rs 6,500 |
ICICI Personal Loan
| Key Highlights | |
|---|---|
| Interest Rate: | 10.85%-16.65% p.a. |
| Loan Amount: | Up to Rs 50 lakh |
| Tenure: | Up to 6 years |
| Minimum Monthly Salary: | Rs 30,000 |
| Processing Fee: | Up to 2% of the loan amount |
Bank of Baroda Personal Loan
| Key Highlights | |
|---|---|
| Interest Rate: | 10.80%-18.30% p.a. |
| Loan Amount: | Up to Rs 20 lakh |
| Tenure: | Up to 7 years |
| Minimum Monthly Salary: | Not specified |
| Processing Fee: | Up to 2% of the loan amount (Maximum Rs 10,000) |
FAQs on Personal Loan Interest Rate
What is the Personal Loan Interest Rate?
Personal loan interest rates refer to the cost (expressed in terms of percentage) incurred by the borrowers for borrowing money in the form of a personal loan.
Which Bank has the Lowest Interest Rate on Personal Loan?
Among the leading private sector banks, IndusInd Bank offers the lowest interest rates on personal loans starting at 10.49% p.a., closely followed by ICICI Bank offering personal loans at 10.85% p.a. onwards. Some public sector banks may offer lower interest rates. However, the final interest rate offered will depend on factors such as credit score, monthly income, occupation profile, etc.
What is the current interest rate for personal loans?
Personal loan interest rates vary between banks and NBFCs, depending on factors such as your credit score, employment history, income and the lender’s credit risk policies. Currently, the personal loan interest rates offered by private sector banks start from 10.49% p.a. onwards. However, some public sector banks may offer personal loans at lower interest rates.
Is GST applicable on personal loan interest?
GST is not applicable on the interest component of personal loans. However, a GST of 18% is levied on the various personal loan fees and charges levied by the lenders.
What is a good interest rate on a personal loan?
There is no such thing as good personal loan interest rates. Lenders consider their cost of funds, net interest margins and the credit risk assessment of their loan applicants while setting their interest rates. Those with higher credit scores are likely to fetch lower interest rates on personal loan schemes. Therefore, loan applicants with higher credit scores should check and compare interest rates offered by multiple lenders to know the best offers available on their credit profiles.
What are the minimum and maximum interest rates for a personal loan?
The interest rate for personal loans offered by private sector lenders usually starts from 10.50% p.a. Note that the lenders may offer lower personal loan interest rates than their published card rates, based on the borrower’s credit profile, subject to their floor rate for retail loans as per RBI’s guidelines.
Is there any difference between salaried and self-employed personal loan rates?
Most lenders usually offer lower personal loan interest rates to their salaried applicants than self-employed applicants due to the higher income certainty of the former. Note that apart from the applicant’s occupation profile, lenders would also consider other factors of the loan applicant’s credit profile like his/her credit score, income profile, etc while setting his/her interest rates.
What is the average interest rate charged on personal loans?
The interest rates offered on personal loans by most lenders usually range from 10.50% to 26% p.a., with some public sector banks offering lower rates. However, the average personal loan interest rates depend on the applicant’s credit score, income, etc.
How does my credit score affect the interest rate of my personal loan?
Lenders use the credit score of their personal loan applicants as an initial check of their creditworthiness. Applicants with a credit score of 750 or above are usually considered as financially disciplined and thus, are believed to carry lower risk of loan defaults. This reduces the credit risk for the lenders, thereby allowing them to offer personal loans at lower interest rates to such applicants.
Do NBFCs offer lower interest rates on personal loans compared to banks?
NBFCs usually offer higher interest rates on personal loans than those offered by banks because of their higher cost of funds. However, some larger NBFCs with access to low cost funds may offer personal loans at competitive interest rates.
Can I negotiate the personal loan interest rate with my lender?
Both existing as well as fresh personal loan applicants are free to negotiate the interest rates with the lenders. Additionally, they should also visit online financial marketplaces like Paisabazaar to explore personal loan offers from other lenders based on their credit profile.
How to reduce personal loan interest burden?
Existing personal loan borrowers can reduce their interest burden by transferring their outstanding loan amount to another lender by offering them lower interest rates and/or better personal loan terms. Reduced interest rates will lead to a reduction in both EMIs and overall interest costs. Personal loan borrowers can also reduce their interest burden by making part prepayments whenever feasible. Those opting for part prepayment on their personal loans can either reduce their loan tenure or EMI. Personal loan borrowers seeking to reduce their interest burden further should opt for tenure reduction as it results in interest cost savings.
Can personal loan borrowers claim tax benefits on the interest amount?
The interest amount payable on personal loans for home renovation/repair is eligible for tax deduction under Section 24(b) of the Income Tax Act. You can claim deductions of up to Rs 30,000 per year on the interest amount paid on your personal loan.
How can I check the total interest cost for my personal loan?
You can check your monthly EMI and total interest cost using the personal loan EMI calculator. All you need to provide are the loan principal, the interest rate and the loan tenure to get instant results.
What is meant by reducing rate of interest in personal loans?
Reducing interest rate is a method in which interest rate is calculated on the outstanding loan amount every month. The EMI includes the interest payable on the outstanding loan amount.
What is the difference between floating and fixed interest rates?
In the case of fixed-interest rate loans, the rate remains unchanged over the entire tenure of the personal loan. In the case of floating-rate loans, the rate can change periodically due to changes in market interest rates. Currently, most personal loans are offered at fixed rates as most loans have a relatively short tenure of up to 5 years.
Can I avail a personal loan at a lower interest rate despite having a low CIBIL score?
Personal loan applicants having a credit score of 750 and above reflect good credit behavior and financial discipline. Therefore, such applicants have a higher probability of getting their personal loan applications approved. Conversely, applicants with credit scores below 750 have lower chances of getting a personal loan. However, some NBFCs and fintech lenders offer loans to individuals with low credit scores. The personal loan interest rates offered by such lenders are usually higher than those offered by large banks and NBFCs.
Can a government employee qualify for special interest rates on personal loans?
Many leading banks in India offer special personal loan interest rates to government employees due to the higher job stability typically associated with those in government service as compared to private sector employees. Such employees should first approach the banks with which they maintain their salary accounts or other deposits, as many personal loan lenders offer lower interest rates to their existing customers.
Written By: Shamik Ghosh