When looking to borrow, choosing the right lender can make a big difference in how much you repay. That’s why doing a personal loan interest rates comparison is crucial before signing on the dotted line.
Interest rates in India vary widely based on factors like credit score, income, and the lender’s internal policies. Whether you’re borrowing for a wedding, travel, or emergency, taking time to compare personal loan interest rates in India can help you find the most cost-effective option. In this guide, we break down the latest rates offered by leading banks and NBFCs to help you make an informed choice.
What is a Personal Loan Interest Rate?
The personal loan interest rate is the cost of borrowing money from a lender. It’s expressed as a percentage of the loan amount and can be fixed or floating, depending on the lender’s terms.
The personal loan interest rate determines your monthly EMI and the total repayment amount over the loan tenure. Ultimately, the rate you are offered will depend on factors like your credit score, income, employment stability, etc. Lower rates mean more affordable repayments, making it essential to compare offers before choosing a lender.
Personal Loan Interest Rates Offered by Other Banks & NBFCs
Personal loan interest rate comparison chart makes it easier to understand and carry out interest rate comparison of personal loan interest rates in different banks. Here’s a tabular comparison to help you compare personal loan interest rates in India across leading banks and NBFCs.
Bank/NBFC
Interest Rates (p.a.)
Kotak Mahindra Bank
10.99% – 16.99%
HDFC Bank
10.90% – 24.00%
Federal Bank
12.00% – 22.50%
ICICI Bank
10.85% – 16.65%
Axis Bank
11.25% onwards
IndusInd Bank
10.49% onwards
IDFC FIRST Bank
10.99% onwards
Aditya Birla Finance
10.99% onwards
DBS Bank
10.99% – 30.00%
Poonawalla Fincorp
18.00% – 36.00%
Tata Capital
11.99% – 29.99%
YES Bank
11.25% – 21.00%
L&T Finance
11.00% onwards
Piramal Finance
12.90% onwards
HDB Financial Services
10.00% – 35.00%
Hero Fincorp
19.75% – 37.75%
SMFG India Credit
13.00% onwards
Moneyview
14.00% – 36.00%
PaySense
1.4% – 2.3% per month
InCred Financial Services
13.99% onwards
Why do Banks and NBFCs offer Different Interest Rates on Personal Loans?
Banks and NBFCs offer different interest rates on personal loans mainly because each follows its own way of assessing risk and pricing. They don’t use a one-size-fits-all approach. Instead, they consider factors like your credit score, income, job type, and existing financial obligations to decide how risky it is to lend to you.
Banks typically prefer salaried applicants with steady incomes, especially those working in government or well-established companies. Since the risk is lower, they often offer better interest rates. On the other hand, NBFCs cater to a wider range of borrowers, such as those with limited credit history or irregular incomes so they may charge higher rates to balance the risk.
Other factors like how much it costs them to lend, their operating expenses, and even internal policies also impact the final interest rate you’re offered. That’s why it’s always a smart move to compare personal loan offers from multiple lenders before deciding. It helps you find the best deal for your specific financial situation.
Factors Affecting Personal Loan Interest Rates
Banks and NBFCs offer different personal loan interest rates based on several key factors, primarily influenced by their cost of funds and credit risk evaluation processes. These variations explain why interest rates can differ significantly from one lender to another for the same applicant.
Credit Score: Most lenders look at your credit score first. If it’s 750 or above, you’re seen as financially disciplined and less likely to default. That usually means better interest rates for you.
Income: If you earn a good monthly salary, lenders may offer you a lower rate. A higher income means less risk for them and more confidence in your repayment ability.
Job Profile: Salaried individuals often get better rates than self-employed ones. And if you work with the government or a PSU, you might get even better terms thanks to the job security.
Job Stability: Lenders prefer applicants with steady jobs. If you’ve been switching jobs frequently, they may consider you a higher risk and offer a higher interest rate or possibly even reject the loan.
How to Get the Lowest Interest Rate on a Personal Loan?
Personal loan interest rates can make a big difference in how much you end up repaying. Even a 1–2% difference can lead to substantial savings over the loan tenure. Here are some smart ways to increase your chances of getting a personal loan at a lower interest rate:
Keep Your Credit Score Healthy: A good credit score is one of the most important factors lenders consider. If your score is 750 or higher, you’re more likely to be offered attractive interest rates.
To maintain or improve your score:
Pay credit card bills and EMIs on time
Avoid applying for too many credit cards or loans in a short span
Check your credit report regularly for errors. If you spot any mistakes, raise a request with the lender or credit bureau to get them corrected.
Use Your Existing Relationship: Already have a savings account, loan, or credit card with a lender? Reach out to them before applying elsewhere. Lenders often extend special rates or pre-approved personal loans to existing customers because they already have your financial data and trust your credit behaviour. Use these offers as a benchmark when comparing with others.
Avoid Applying to Multiple Lenders at Once: Submitting multiple loan applications in a short period can harm your credit score. Every lender pulls your credit report (a “hard inquiry”), and too many of these can lower your score. Instead, research first, narrow down your top options, and then apply selectively.
Compare Offers Online: Take advantage of online financial marketplaces and loan comparison platforms. These websites let you:
Compare interest rates
Check loan tenures, fees, and disbursal times
View offers tailored to your credit profile
Most of these platforms only do a soft inquiry, which won’t impact your credit score.
Time Your Loan Right: Festive seasons, year-end offers, or special promotional campaigns often come with reduced interest rates. If your need isn’t urgent, waiting for such periods could get you a better deal.
Final Tip: Personal loans are unsecured, so lenders will always assess your risk profile before offering a rate. The better your financial habits and credit history, the more negotiating power you’ll have. Always compare, verify, and apply wisely.
Why Tata Capital is a Top Choice for Personal Loans
In the bustling marketplace of personal loans in India, TATA Capital doesn’t merely exist – it thrives. A consistent top performer in personal loan interest rates comparison, TATA Capital offers competitive rates that are difficult to overlook. But the allure of TATA Capital extends beyond attractive rates. It’s the transparency of their terms, the speed of their loan disbursal and the commitment to customer-centric solutions that make them a standout choice.
TATA Capital embodies the principles of fairness and clarity, ensuring that borrowers fully understand the terms of their loan. They set the standard for transparent lending, with no hidden charges or clauses. This transparency enables borrowers to make informed decisions, knowing the full extent of their commitment.
Moreover, TATA Capital understands that when it comes to financial needs, time is of the essence. Their quick loan approval and disbursal process ensure that funds reach borrowers when they need them the most. It’s the financial equivalent of a fast-acting remedy – providing timely relief for immediate financial needs.
With TATA Capital, borrowers aren’t just securing a loan; they’re embarking on a journey towards financial stability and prosperity. That’s why, in the personal loans arena, TATA Capital isn’t just a participant – it is a beacon of trust, reliability and excellence.
Conclusion
Exploring the realm of personal loan interest rates doesn’t need to be a challenging endeavour. With the right partner, like TATA Capital, it can be a smooth sail. Ready to embark on your financial voyage? Visit TATA Capital’s website today and explore their personal loan options tailored just for you. Remember, in the world of personal loans, knowledge is not just power; it is savings.
A good personal loan interest rate in India generally ranges between 10% to 15% per annum, depending on your credit profile, income, and lender policies.
How to reduce personal loan interest burden?
To reduce interest burden, opt for shorter tenures, prepay whenever possible, maintain a strong credit score, and negotiate with the lender. You can also consider a balance transfer if another lender offers a better rate.
Can personal loan borrowers claim tax benefits on the interest amount?
No, unlike home or education loans, personal loan interest is generally not eligible for tax deductions unless used for specific purposes like business, home renovation, or asset purchase—supported by proper documentation.
What is the difference between floating and fixed interest rates?
Fixed interest rates remain the same throughout the loan tenure, offering predictable EMIs. Floating rates fluctuate with market conditions, which can lower or increase EMIs depending on changes in the lender’s benchmark rates.
Can I avail a personal loan at a lower interest rate despite having a low CIBIL score?
It’s challenging but possible. You may need to show strong income, offer a guarantor, or pledge collateral. However, most lenders charge higher rates to compensate for the credit risk associated with a low score.
How does balance transfer help you get a lower interest rate?
A personal loan balance transfer lets you shift your existing loan to another lender offering a lower interest rate, helping reduce EMIs and overall interest cost. Some lenders also offer additional top-up loans.
How is my interest rate determined by my income?
Higher and stable incomes signal better repayment capacity, which reduces the lender's risk. As a result, applicants with higher income levels may be offered lower personal loan interest rates compared to lower-income applicants.
Can I receive a lower interest rate than what the lender advertises?
Yes, especially if you have an excellent credit score, strong income, or an existing relationship with the lender. These factors can make you eligible for preferential or negotiated rates below the standard advertised rate.
08 May 2025
7 mins read
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