In today’s fast-paced world, personal loans have become a go-to financial solution for managing emergencies, weddings, education, or travel. But with dozens of banks and lenders in India, one key question remains on everyone’s mind: Which bank offers the lowest interest rate on a personal loan in 2026?
This article breaks down the information for you in simple terms, comparing top lenders and providing you with insights to make an informed decision.
Whether you are a salaried professional or self-employed, understanding loan interest rates is essential to avoid paying more than necessary.
Let’s First Understand What A Personal Loan Is
A personal loan is an unsecured loan offered by banks and NBFCs that doesn’t require collateral. It is typically used for various individual needs and comes with fixed or floating interest rates.
There are 2 types of personal loan interest rates, fixed and floating/variable.
- Fixed Rate: Remains constant throughout the loan term.
- Floating Rate: Changes based on market fluctuations and repo rates.
Personal loan interest rates are based on several factors such as the applicant’s credit score, income level, loan tenure, employment type, and relationship with the bank.
Suggested Read: Fixed vs Reducing Balance Personal Loans
Top Banks In India With Lowest Personal Loan Interest Rates
There is no one-size-fits-all answer for which bank has the lowest interest rate for a personal loan in India. There are several banks and NBFCs that offer personal loans at affordable rates. Moreover, these interest rates can vary based on your credit score. Here are a few:
Public Sector Banks
| Bank | Interest Rate (% p.a.) | Processing Fee |
|---|---|---|
| Bank of Maharashtra | 8.75 – 13.55 | Up to 1% (max ₹10,000) |
| Union Bank of India | 8.75 – 12.55 | Up to 1% (max ₹7,500) |
| Punjab & Sind Bank | 9.60 – 13.85 | 0.50% – 1% |
| Canara Bank | 9.70 – 15.15 | Up to 0.5% (max ₹5,000) |
| Central Bank of India | 9.85 – 11.65 | Up to 1% |
| UCO Bank | 9.95 – 13.20 | Up to 1% (min ₹750) |
| State Bank of India (SBI) | 10.00 – 15.05 | ~1–1.5% (₹1,000–₹15,000) |
| Indian Overseas Bank | 10.25 onwards | Up to 0.75% |
| Punjab National Bank | 10.25 – 16.80 | Up to 1% |
| Bank of Baroda | 10.15 – 18.00 | Up to 2% (max ₹10,000) |
| Bank of India | 10.85 – 16.15 | Up to 1% (max ₹15,000) |
Private Sector Banks
| Bank | Interest Rate (% p.a.) | Processing Fee |
|---|---|---|
| Kotak Mahindra Bank | 9.98 onwards | Up to 5% |
| HSBC Bank | 9.75 onwards | Up to 2% |
| HDFC Bank | 9.99 onwards | Up to ₹6,500 |
| ICICI Bank | 9.99 onwards | Up to 2% |
| Axis Bank | 9.99 onwards | Up to 2% |
| IDFC FIRST Bank | 9.99 onwards | Up to 2% |
| IndusInd Bank | 10.35 onwards | Up to 3.5% |
| Federal Bank | 12.00 – 22.50 | Up to 2% |
| Karnataka Bank | ~13.43 onwards | Up to 2% (max ₹8,500) |
| South Indian Bank | 12.85 – 20.60 | Up to 2% |
Small Finance Banks
| Bank | Interest Rate (% p.a.) | Notes |
|---|---|---|
| Equitas Small Finance Bank | 10.49 – ~15.00 | Loan amount typically ₹2L–₹20L; among the more competitive SFB rates |
| Ujjivan Small Finance Bank | 11.49 – 20.00 | Reported ranges vary by source; smaller ticket sizes (₹50K–₹1.5L) |
| AU Small Finance Bank | Up to 30.00 | Floor rate undisclosed by bank; rate is profile-dependent |
| Jana / Suryoday / Utkarsh / ESAF / North East / Unity / Capital SFB | Not widely published for personal loans | These SFBs focus more on FD, microfinance, MSME, and gold loan products; where personal loans exist, pricing tends to run higher (~16%+) |
Get Personal Loan Online Up to ₹35 Lakhs
By entering your number, you're agreeing to Terms & Conditions & Privacy Policy.
Factors to Consider in Personal Loan Interest Rates
Now that you know several lenders offer personal loans at low interest rates, there are various factors as well that influence these rates:
- Credit Score: A score above 750 is generally considered favorable and can lead to lower interest rates. A lower score indicates higher credit risk and may result in higher interest rates or application rejection.
- Income and Employment Stability: Stable income and employment in a reputable organization increase repayment credibility. Salaried individuals, especially those working in government or large private sector firms, often receive better interest rate offers than those in less stable employment.
- Existing Relationship with the Bank: Long-term relationships with a bank, including maintaining a salary or savings account, can positively influence loan pricing.
- Loan Tenure: Longer tenures may come with slightly higher interest rates due to the potential risk of repayment. Choosing the right tenure can help balance EMI affordability and interest costs.
- Loan Amount: Applicants seeking higher loan amounts and possessing a strong repayment profile may be eligible for lower rates, especially if the requested amount aligns with their repayment capacity and credit history.
- If you are unsure where to start to apply for a personal loan with a low interest rate, loan aggregator platforms like Buddy Loan compare loan offers from multiple banks and NBFCs to help you find the lowest interest rate on personal loans based on your profile.
The platform also includes a personal loan EMI calculator so that you can be aware of your monthly installments in advance.
Conclusion
As of 2026, SBI offers the lowest starting interest rate on personal loans at 10% p.a, followed closely by HDFC Bank and Axis Bank. However, personal eligibility and requirements may vary.
Digital platforms like Buddy Loan to compare and apply effortlessly, ensuring you get the deal suited to your financial profile.
Download the Buddy Loan App Now!
One solution to each of your financial needs at your fingertip.
Scan to download now
