People are always searching for a financial lifeline that offers a flexible and easy solution during unexpected times. A home renovation, paying off credit card bills, a medical emergency, or marriage expenses – a fast approval personal loan can instantly give you financial relief. And its skyrocketing popularity highlights why more and more people are availing this help to meet their demands.
The irony? All personal loans are created differently. They come with interest rates that can truly make a big difference, turning a good offer into an expensive one. This makes finding the best personal loan with low interest a must to keep your finances in check. To spot the loan that won’t break your bank, read this blog.
What is a Personal Loan and Why its Interest Rate Matters
It is a type of loan that delivers the flexibility to borrow money from a financial institution and repay it through monthly instalments over a specified period of time. Unlike automobile, home, or business loans, personal loans cater to marriage expenses, medical emergencies, travelling, gold investments, debt consolidation, and other financial needs.
Now, let us talk about interest rates. Why do they matter? The simple answer is that it directly impacts the repayment amount. The higher the interest rate, the higher the amount of EMIs. What about lower interest rates? They help you save money, making repayment a breeze. That is why, before signing the loan agreement, ensure to check the facts for your wallet to thank you later.
Personal Loans Decoded: A Look at Its Types
Beyond providing help during emergencies, personal loans are also good for growth. Here are a few types that cater to different needs:
1. Secured Personal Loan
Imagine you are in urgent need of funds, and the bank asks you to put in property documents as a guarantee. Relief, right? Such credits are considered as secured loans. This loan requires you to pledge an asset to get approval for a loan. The good part? They are available with lower interest rates.
2. Unsecured Personal Loan
This is one of the most common and easy loans that does not demand any collateral. Here, lenders offer credit based on your CIBIL, financial behaviour, and income stability. However, these loans come with higher interest rates, perfect for small expenses, emergencies, and medical bills
3. Debt Consolidation Loan
Have credit cards, medical bills, and other loans to pay, but wondering how? A debt consolidation loan can help you. This loan allows you to combine all your outstanding debts into one, usually at lower interest rates. It also reduces your monthly payments and manages your finances, improving your credit score over time.
4. Personal Line of Credit
One of the most flexible options to avail credit, a personal line of credit allows you to borrow the amount you truly need. In this, you can borrow and repay to stay within your credit limit while retaining your CIBIL. Ideal for home renovations or managing seasonal cash flow; if used responsibly.
Key Influencers That Determine Personal Loan Interest Rates
Are you wondering why you and your best friend got a personal loan of the same amount from the same bank at different interest rates? The factors below might have influenced personal loan interest rate.
1. Credit Score
This factor tells banks about your financial reputation, highlighting your creditworthiness when it comes to repaying loans and credit card bills. If your credit score is 750 or above, it indicates that you are a responsible borrower which makes you eligible to avail lower interest rates. Alternatively, people with low credit scores are considered risky borrowers, increasing interest rates and even chances of rejection.
Pro Tip: Pay off your debts, reduce credit utilisation, and improve your credit score to get a low-interest personal loan.
2. Loan Amount
It may come as a surprise to many, but it is true that the amount you want to borrow also changes the interest rate. Lenders offer small loans with higher rates. The reason? Processing and administrative charges are the same, irrespective of the amount, making them less profitable. In a similar way, big loan amounts come with higher personal loan interest rate, particularly if your debt-to-income ratio is not aligned with the borrowing amount. Therefore, borrow only what you need and can pay without any stress.
3. Loan Term
Whether you are applying for a long-term loan or a short-term, both options affect your interest rate. Usually, 1-3 year loans come with lower interest rates but high EMIs, while 5 years or above loan terms make you pay more interest over time. What is the recommendation for the best personal loan with low interest? If you can manage higher monthly payments, choose a short-term, low-interest personal loan to save money in the long run.
4. Type of Loan
Wondering why your brother secured a personal loan at 7% and you at 12%? This could be due to different types of loans. Unlike unsecured loans, in secured loans, lenders are at less risk, making them offer personal loans with lower interest rates. Also, remember that if you fail to repay the loan amount, the lender can seize your asset to cover the money.
Your Ultimate List of Personal Loan Interest Rates: Banks vs. NBFCs Compared
Knowing the interest rates on different personal loans makes it simple. Here is the comparison of the best bank for personal loan with low interest :
Personal Loan Interest Rates – Banks
| Name of Lender | Interest Rates |
| HDFC Bank | 10.85% p.a. onwards |
| Axis Bank | 11.10% p.a. onwards |
| ICICI Bank | 10.85% to 16.65% p.a. |
| Kotak Mahindra Bank | 10.99% to 16.99% p.a. |
| IndusInd Bank | 10.49% p.a. onwards |
| IDFC FIRST Bank | 10.99% p.a. onwards |
| Federal Bank | 12.00% to 22.50% p.a. |
| DBS Bank | 10.99% to 30% p.a. |
| YES Bank | 11.25% to 21% p.a. |
| SBI | 11.45% to 14.85% p.a. |
| Punjab National Bank | 11.15% to 17.70% p.a. |
| Union Bank of India | 11.10% to 15.20% p.a. |
| Bank of India | 11.60% to 16.20% p.a. |
| Bank of Baroda | 11.05% to 18.50% p.a. |
| Indian Bank | 9.75% to 15.25% p.a. |
| UCO Bank | 10.95% to 13.95% p.a. |
| Bank of Maharashtra | 9.75% to 14.55% p.a. |
| Central Bank of India | 11.75% to 12.50% p.a. |
| Punjab & Sind Bank | 11.10% to 13.85% p.a. |
| Indian Overseas Bank | 10.75% to 14.15% p.a. |
| Canara Bank | 10.70% to 16.15% p.a. |
| IDBI Bank | 11.00% to 15.50% p.a. |
| RBL Bank | 18% p.a. |
| South Indian Bank | 12.85% p.a. onwards |
| HSBC India | 10.15% to 16.00% p.a. |
Personal Loan Interest Rates – NBFCs
| Name of Lender | Interest Rates |
| Tata Capital | 11.99% to 29.99% p.a. |
| Aditya Birla Finance | 10.99% p.a. onwards |
| L&T Finance | 11.00% p.a. onwards |
| Hero Fincorp | 19.75% to 37.75% p.a. |
| Piramal Finance | 12.90% p.a. onwards |
| HDB Financial Services | 10% to 35% p.a. |
| Poonawalla Fincorp | 18% to 36% p.a. |
| SMFG India Credit | 13% p.a. onwards |
| Money View | 14% to 36% p.a. |
| PaySense | 1.4% to 2.3% p.m. |
| InCred Financial Services | 13.99% p.a. onwards |
Conclusion
Selecting the best instant personal loan is a lot more than just low interest rates; it is also about securing the smartest offer. Always do window shopping from multiple lenders, leverage loan comparison websites, know about hidden charges, and most importantly check the annual percentage rate for a full and better picture. So, take some time, evaluate the numbers, and get the best personal loan with low interest that truly caters to your financial needs and goals. After all, smart borrowing needs informed decisions to save thousands in the long run.
