Note (September 2026): This guide earlier gave Bajaj Finance’s maximum personal loan tenure as 96 months; it is now 108 months. It also presented a CIBIL score of 650 as enough for competitive rates, when 650 is typically a minimum for approval; both points have been corrected.
The best personal loan interest rate is the lowest annual percentage rate (APR) you qualify for, not the lowest advertised rate. As of September 2026, major Indian banks advertise personal loans from about 9.99% to 10% a year, while NBFCs such as Bajaj Finance charge 10% to 30.5%. A CIBIL score above 750, stable income and low existing EMIs usually earn the lowest rates.
Key Takeaways
- As of September 2026, SBI, HDFC Bank, ICICI Bank and Axis Bank advertise personal loan rates starting at about 9.99% to 10% a year; only strong applicants get the starting rate.
- Compare the APR in each lender’s Key Fact Statement (KFS), which includes the processing fee, rather than the headline interest rate.
- A CIBIL score of 650 is a common minimum, but scores above 750 usually unlock lower rates.
- Check prepayment, bounce and penal charges: fixed-rate personal loans can carry foreclosure fees, such as 3% at ICICI Bank and up to 4.72% at Bajaj Finance.
- The RBI repo rate is 5.25% as of September 2026; a change mainly affects new and floating-rate loans, not existing fixed-rate EMIs.
Choosing the right personal loan can feel overwhelming, especially with so many banks and non-banking financial companies (NBFCs) in India offering different features, benefits, and charges. Whether you want to plan a holiday, handle medical expenses, or upgrade your home, a personal loan is often one of the quickest ways to get funds. The real question is how to pick the best personal loan interest rate for your profile, and the answer depends on the full cost of the loan, not just the headline rate.
Understanding personal loans
A personal loan is an unsecured loan that you can use for almost any personal purpose, such as travel, weddings, home renovation, emergencies, or consolidating debt. With no collateral involved, lenders evaluate your income, repayment history, and credit score to decide the loan terms.
Personal loans in India are offered by banks such as SBI, HDFC Bank and ICICI Bank and by RBI-regulated NBFCs such as Bajaj Finance, and each lender prices its loans differently. As of September 2026, Bajaj Finance advertises personal loans of Rs. 40,000 to Rs. 55 lakh, while several large banks list maximums of Rs. 40 lakh to Rs. 50 lakh. The amount any borrower is actually offered depends on income, credit history and existing debts.
If you’re new to borrowing, start by understanding your requirements. Think about:
- How much money you need.
- How quickly you need it.
- How much EMI you can comfortably repay.
- Your long-term financial plans.
Once this is clear, comparing personal loan interest rates becomes easier.
Why the interest rate matters
The personal loan interest rate has a direct impact on your monthly instalment. Even a small difference in rate, such as 0.5 percentage points, can raise or lower your total repayment by thousands of rupees.
For example, on a Rs. 3 lakh loan repaid over 3 years, the EMI is about Rs. 9,964 at 12% a year and about Rs. 10,108 at 13%. Total interest rises from about Rs. 58,715 to about Rs. 63,895, a difference of roughly Rs. 5,180 for one percentage point. That’s why comparing rates, and the fees that come with them, is essential.
Factors that influence personal loan interest rates
Interest rates vary because lenders evaluate each borrower differently. These factors matter most:
1. Your credit score (CIBIL Score)
A higher score shows that you have managed your debts responsibly. Most lenders prefer a CIBIL score of 650 or above to approve a personal loan, but the most competitive rates usually go to applicants with scores above 750. If your score is lower, you may still get a loan, but the interest rate will likely be higher.
2. Your monthly income
Higher and stable income gives lenders confidence that you can repay your EMIs on time.
3. Your employment profile
Working with a reputed organisation or in a stable industry often leads to lower rates because it reduces the lender’s risk.
4. Loan amount and tenure
Choosing a longer tenure reduces your EMI, but it may increase the total interest you pay. Similarly, a very high loan amount may lead to slightly higher interest rates.
5. Existing financial obligations
If you already have several EMIs, lenders may consider you a higher risk. Keeping your debt-to-income ratio low helps secure better rates.
How to choose the best personal loan interest rate
Here’s a straightforward process to follow before applying:
1. Compare lenders online
Check interest rates on lenders’ official websites, and compare processing fees, prepayment or foreclosure charges, and late-payment charges. The annual percentage rate (APR) shown in each lender’s Key Fact Statement is the fairest single number to compare, because it includes fees as well as interest.
2. Improve your CIBIL Score before applying
If your score is below 650, consider improving it by paying bills on time, clearing overdue amounts, or reducing credit card utilisation. Even a small improvement can lower your interest rate.
3. Choose a lender with transparent policies
Look for lenders who offer clear terms, predictable EMIs, and no hidden charges. Since 1 October 2024, the RBI has required banks and NBFCs, including Bajaj Finance, to give retail borrowers a Key Fact Statement (KFS) that sets out the APR and all fees before the loan agreement is signed.
4. Use online tools to calculate EMIs
Always check the EMI before applying. A simple tool like the personal loan EMI calculator helps you estimate your monthly instalment within seconds. You only need to enter the loan amount, interest rate, and tenure. This helps you decide whether the loan is affordable.
5. Maintain a low debt-to-income ratio
This shows lenders that you can manage your finances well. Aim to keep your EMIs below 40% of your total income.
6. Choose the right tenure
Shorter tenures usually mean higher EMIs but lower overall interest. Longer tenures reduce your monthly EMI but increase the total payable amount. Choose a balance that suits your income and lifestyle.
Bajaj Finance personal loan: key features and charges
Bajaj Finance is an RBI-regulated NBFC and one of many personal loan lenders in India. As of September 2026, it lists these features for its personal loan:
- Online application, with approval subject to eligibility, credit and document checks.
- Loan amounts from Rs. 40,000 to Rs. 55 lakh.
- Repayment tenures from 12 months to 108 months.
- Online tools to check eligibility and EMIs.
- Disbursal directly into the borrower’s bank account, which the lender says can happen within 24 hours of approval*.
The published charges matter as much as the features. As of September 2026, Bajaj Finance lists interest rates of 10% to 30.5% a year, a processing fee of up to 4.13% of the loan amount (including taxes), bounce charges of Rs. 700 to Rs. 1,200, and full or part-prepayment charges of up to 4.72% (including taxes) on term loans. Borrowers should compare these figures with bank offers before applying.
Tips to reduce your personal loan interest rate
Even small steps can make a big difference:
- Apply with a strong CIBIL score (650 is a common minimum; scores above 750 usually get better rates).
- Opt for a shorter tenure if your income allows.
- Avoid multiple loan applications within a short period.
- Keep your credit card balances low.
- Choose a regulated lender with competitive rates, such as a bank or an RBI-registered NBFC, and compare offers from at least three lenders.
Final thoughts
A personal loan can be a convenient financial tool when chosen wisely. Understanding interest rates, improving your credit score, and comparing lenders can help you secure the best deal. Whichever lender you consider, whether a bank or an NBFC such as Bajaj Finance, compare the Key Fact Statements side by side, because they show the APR and every fee in one place.
Whether you’re planning a trip, renovating your home, or handling an emergency, make sure to borrow responsibly and pick a personal loan that supports your financial goals comfortably.
*Terms and conditions apply.
What is a good personal loan interest rate in India?
A good personal loan interest rate in India is one close to the starting rates that major banks advertise, which as of September 2026 is roughly 10% a year. Only applicants with strong credit scores and stable incomes usually qualify for the lowest rate, and many borrowers are offered more. NBFC rates can run much higher: Bajaj Finance’s published range goes up to 30.5% a year.
| Lender | Type | Interest rate (per year) | Processing fee |
|---|---|---|---|
| SBI | Public sector bank | From 10.00% | Up to 1.50% of the loan |
| HDFC Bank | Private bank | From 9.99% | Up to Rs. 6,500 |
| ICICI Bank | Private bank | 9.99% to 16.50% | Up to 2% plus taxes |
| Axis Bank | Private bank | From 9.99% | Up to 2% |
| Bajaj Finance | NBFC | 10% to 30.5% | Up to 4.13% (including taxes) |
These are advertised rates and fees as of September 2026, taken from the lenders’ own websites and the Paisabazaar personal loan rate comparison. They change often, so check current terms before applying. The rate a borrower actually receives depends on credit score, income, employer and existing debts; this guide to the factors that affect your personal loan interest rate covers each one in more detail.
How does the RBI repo rate affect personal loan rates?
The RBI repo rate is the rate at which the Reserve Bank of India lends to banks, and it influences what banks and NBFCs charge borrowers. As of September 2026, the repo rate is 5.25%. The RBI’s Monetary Policy Committee left it unchanged at its August 2026 review, the fourth pause in a row, after cutting it by a total of 125 basis points in 2025.
A repo rate change affects personal loans less directly than home loans. Many personal loans carry a fixed rate, so the EMI on an existing fixed-rate loan does not change when the repo rate moves; new loans and floating-rate loans are the ones that reprice. Knowing the difference between fixed and floating interest rates helps before signing.
How much does loan tenure change the total interest?
A longer tenure lowers the EMI but raises the total interest paid. The table below shows a Rs. 3 lakh personal loan at 12% a year, calculated with the standard reducing-balance EMI formula and rounded to the nearest rupee.
| Tenure | Monthly EMI | Total interest |
|---|---|---|
| 24 months | Rs. 14,122 | Rs. 38,929 |
| 36 months | Rs. 9,964 | Rs. 58,715 |
| 60 months | Rs. 6,673 | Rs. 1,00,400 |
Stretching the same loan from 2 years to 5 years cuts the EMI by more than half but raises the total interest by more than Rs. 60,000. This explainer on the interest component in a personal loan EMI calculator shows how each EMI splits between interest and principal.
What charges should you check besides the interest rate?
The interest rate is only part of the cost of a personal loan. These charges also affect how much a borrower pays:
- Processing fee: usually a percentage of the loan amount, deducted from the amount disbursed. On a Rs. 3 lakh loan, a 2% fee is Rs. 6,000 before taxes.
- Prepayment and foreclosure charges: fees for repaying early. As of September 2026, ICICI Bank lists a foreclosure charge of 3% of the outstanding principal, nil after 24 EMIs, and Bajaj Finance lists up to 4.72% (including taxes) on term loans.
- Penal charges: charged when an EMI is paid late. Under RBI rules in force since April 2024, lenders must levy these as a separate penal charge rather than as extra penal interest added to the loan rate, and no further interest can be charged on them.
- Bounce charges: fixed fees when an auto-debit or cheque fails. Bajaj Finance, for example, lists Rs. 700 to Rs. 1,200 per bounce.
- Stamp duty and taxes: stamp duty varies by state, and GST applies to most fees.
The APR combines the interest rate with these upfront costs, which makes it the most useful single figure for comparing offers from different lenders.
What RBI rules protect personal loan borrowers?
The Reserve Bank of India regulates banks and NBFCs that lend in India, and several of its rules directly protect personal loan borrowers:
- Key Fact Statement: since 1 October 2024, banks and NBFCs must give a KFS for all retail and MSME loans, showing the APR, total cost and all fees in a standard format. Fees not listed in the KFS cannot be charged without the borrower’s explicit consent.
- Digital loans: under the RBI’s Digital Lending Directions, 2025, loan offers made through apps must show the APR and a link to the KFS, and borrowers get a cooling-off period of at least one day to exit the loan by repaying the principal and proportionate APR, without a penalty.
- Directory of lending apps: since July 2025, the RBI has published a directory of digital lending apps linked to regulated lenders in the Citizen’s Corner section of its website, so borrowers can check whether an app is genuine.
- Prepayment on floating-rate loans: under the RBI’s Pre-payment Charges on Loans Directions, 2025, lenders cannot charge prepayment fees on floating-rate loans taken by individuals for non-business purposes, for loans sanctioned or renewed on or after 1 January 2026. Fixed-rate loans can still carry charges, which must be disclosed upfront.
- Faster credit report updates: since 1 January 2025, lenders must report credit information to credit bureaus every fortnight, so repayments show up in credit reports sooner.
- Complaints: a borrower should first complain to the lender. If the complaint is not resolved satisfactorily within 30 days, the borrower can approach the RBI Ombudsman.
Common mistakes when choosing a personal loan
- Comparing only the “starting from” rate, which relatively few applicants receive.
- Ignoring the processing fee, which reduces the amount actually credited to the bank account.
- Picking the longest tenure only for the lowest EMI, without checking the total interest.
- Applying to many lenders at once: each application usually triggers a hard enquiry on the credit report, which can lower the score.
- Borrowing through an app that is not linked to an RBI-regulated bank or NBFC.
- Signing the loan agreement without reading the KFS, especially the prepayment and penal charges.
Next steps before applying for a personal loan
- Check your credit report for errors and, if needed, use these easy ways to improve your credit score before applying.
- Estimate how much you can borrow using this guide on how personal loan eligibility is calculated.
- Calculate the EMI and total interest for two or three tenures.
- Collect KFS documents from at least three regulated lenders and compare the APR, not only the interest rate.
- Confirm the prepayment terms if you expect to repay early.
This guide is general information about how personal loans work in India. It is not personal financial advice, and loan terms should always be confirmed with the lender.
Frequently Asked Questions
What is the current personal loan interest rate in India?
As of September 2026, HDFC Bank, ICICI Bank and Axis Bank advertise personal loan rates from 9.99% a year and SBI from 10%, while Bajaj Finance lists 10% to 30.5%. The rate a borrower is offered depends on credit score, income, employer and existing debts.
What CIBIL score is needed for a personal loan?
Many lenders, including Bajaj Finance, set a minimum CIBIL score of about 650 for a personal loan. Scores above 750 generally bring faster approval and lower rates, while scores below 650 may lead to rejection or a higher rate.
Can a personal loan be prepaid without charges?
A personal loan can be prepaid without charges only if the loan terms allow it. RBI rules bar prepayment charges on floating-rate loans to individuals for non-business purposes sanctioned or renewed from 1 January 2026, but many personal loans are fixed-rate and carry foreclosure fees, such as ICICI Bank’s 3% of outstanding principal, which falls to nil after 24 EMIs.
What is the difference between the interest rate and the APR?
The interest rate is the cost of borrowing the principal, while the annual percentage rate (APR) adds upfront costs such as the processing fee. RBI rules require lenders to show the APR in the Key Fact Statement, so two loans with the same interest rate can have different APRs.
Does an RBI repo rate cut reduce an existing personal loan EMI?
An RBI repo rate cut reduces an existing personal loan EMI only if the loan has a floating rate linked to a benchmark. A fixed-rate personal loan keeps the same EMI for the full tenure, although new loans may be priced lower after a cut.
How can you tell if a loan app is genuine?
A genuine loan app is linked to an RBI-regulated bank or NBFC, and the RBI’s public directory of digital lending apps lets borrowers check this. Warning signs include demands for an upfront fee before disbursal, no Key Fact Statement, and pressure to accept an offer immediately.
