The Complete Guide to Personal Loan Interest Rates

You can obtain a personal loan from banks, fintech companies, and non-banking financial companies (NBFCs) to fund your requirements and expenses. You are approved for these unsecured loans depending on your credit history and repayment capacity.

Personal loans are quite beneficial because they may be used for many different things. They can be used for anything, including paying for a wedding, travel, unexpected medical expenses, or buying a pricey piece of equipment. The interest rates on personal loans are competitive, and since they are unsecured, you are not even required to put up any security.

Benefits of personal loans

personal loans come with a variety of benefits, such as:

  • No security or collateral  required
  • Minimum Documentation
  • Quick Loan Disbursement
  • Flexible Loan Tenure of around 12 to 48 months
  • Easy EMI facility
  • Online application with instant approval and quick disbursal. 

Factors Affecting personal loan Interest Rates

Interest rates are often determined by the loan amount and the applicant’s credit risk lenders. The following are a few of the key elements that can have an impact on your personal loan interest rates.

Credit score

One of the crucial factors used by NBFCs, banks, and fintech to calculate personal loan interest rates is applicants’ credit scores. As a result, folks with superior credit scores than others can access personal loans at a reduced interest rate. Try to maintain a 630 or higher Experian credit score.

By maintaining sound financial practices, such as paying off credit card payments and EMIs by the due dates and avoiding making a lot of simultaneous loan or credit card applications, you may keep your credit score high. Keep in mind that errors on your credit report could result in a lower credit score. Check your credit reports frequently to look for errors.


If your income is high, you will be better able to pay back the loan. As a result, there is reduced credit risk for the loan provider. As a result, several NBFCs provide personal loans with lower interest rates to borrowers with greater incomes.

Tips to Avail personal loan at Low-Interest Rate

To get a personal loan with a low-interest rate, you must consider the following elements.

  • Raise your credit score to 630 or above.
  • Check with the NBFCs with which you already have a loan.  
  • Monitor interest rate reductions provided by NBFCs during the festive season.

To decide the loan amount, consider your affordability and personal risk tolerance. To calculate your monthly payment for a loan with a variety of interest rates and terms, use a personal loan EMI calculator. You can use the online loan calculator to get your precise monthly payment with the personal loan’s lower interest rate.

Eligibility Criteria for Personal Loans

Age limit: Employees earning a salary must be between the ages of 21 and 58.

Monthly income: Every lending institution has a different minimum monthly income demand. Many financial institutions demand a minimum of Rs. 20,000 per month in income.

Nature of employment: Salaried employees

Credit score: A minimum Experian credit score of 630.

Types of personal loan interest rates

Fixed and floating interest rates are the two types of personal loans available. You can use borrowing effectively if you understand them.

Fixed-rate personal loan

If you want to keep your interest rate constant during the course of the loan, a fixed-rate personal loan is an alternative. Additionally, if the interest rate decreases as a result of market circumstances, the fixed-rate personal loan will not profit from lower rates. So, just like a borrower, you must make a specified monthly payment.

Floating rate personal loan

A floating interest rate is an option, and in this type, the interest rate changes depending on the state of the economy. For those who don’t mind taking some risks, this is ideal because the interest rate could go up or down. When the market is strong, the interest rate drops and you pay significantly less. It is always possible, though, for the market to change negatively and for the interest rate to go up from what you first committed to. When you can take advantage of market conditions, use floating interest rates.