Latest Personal Loan Interest Rates in India – 2022

Personal Loan Interest Rates in 2021

Personal Loan Interest Rates in 2021

A personal loan is an unsecured credit that individuals can borrow from banks and other financial institutions for various purposes including short-term financial needs – be it holidays, marriage, car purchases, home renovations or even personal and medical emergencies. It does not require any collateral or security and requires the least amount of documentation. Personal loan interest rates vary across banks and other financial institutions depending on the credit score of the lender and borrower, besides the financial history of the applicant. It is advisable to apply for personal loans after calculating interest rates, processing fees and EMI. In fact, the interest rate is the most critical aspect to be considered while applying for personal loans.

A low interest personal loan would mean low EMIs. Banks and financial institutions consider various factors including the type and profile of the borrower while deciding on personal loan interest rates.

What factors affect the interest rates on personal loans?

To avail of personal loans with a low rate of interest, the lenders take into consideration multiple factors including the background, profile, and the type of loan applicant. Here are some of the critical deciding factors –Factors Affecting Personal Loan Interest Rates

Income and Organisation:

The income/salary of the borrower is a crucial factor for lenders while deciding to give a personal loan. The bigger the income, the lower the rate of interest. Personal loans with low rates of interest are disbursed once the bank is convinced that the individual earns a good income – salaried individuals have better chances of getting low-interest rates, more than self-employed as the latter’s income is not fixed. Besides, an individual working for a big corporation or a reputed institution is more likely to get a personal loan with low interest rates because of the stability that a bigger workplace provides which leads to regular repayment of loans by the borrower.

Credit Score:

Lenders will always look at the credit score of the borrower to understand the individual’s creditworthiness. It is a measure of an individual’s ability to pay back the borrowed amount. It is a 3-digit numeric rank given by the Credit Rating Agency to individuals based on their repayment history and the higher the credit scores are, the better their chances of securing a personal loan with a low rate of interest. A credit score (also known as CIBIL score) between 750 and 900 is considered ideal and safe by most lenders and this becomes a deciding factor for banks and financial institutions to determine personal loan interest rates. Irresponsible repayment records apart, applying for multiple credits from various lenders over a short period will also adversely affect the borrower’s credit report.

History of the Loan Payment and FOIR (Fixed Obligation to Income Ratio):

An individual’s record of loans and their repayment will be carefully assessed before sanctioning the personal loans or personal loan interest rates are decided.  If the borrower was diligent and disciplined with repayment in the past, the lenders will be more confident and trusting and will be able to provide low interest personal loans.

Banks assess whether the individual has defaulted on payments in the last 12 months and if there has been a delay or default, either the personal loan application is rejected, or a high-interest rate is charged. Apart from this, the ratio of the borrower’s pre-existing EMIs and credit card dues to the borrower’s monthly income, also known as FOIR or debt-to-income ratio, is also evaluated by the lenders while deciding on personal loan interest rates. If FOIR is on an average between the range of 40% to 50%, the situation is ideal, and the borrower is considered as having the capacity to pay back the loan on time. Above 50% is not good news to lenders and sanctioning and personal loan interest rates will be impacted as a result.

Banking Relationship:

The borrower’s history of bank deposits, savings account, salary account, credit card, etc is also a determining factor to avail loans with low-interest rates. If the individual had been a loyal customer of the lender, it would be beneficial for the borrower to get the best personal loan interest rates. An interpersonal relationship with the bank staff over the years, along with consistency in availing the services of the bank can help the customer get loans with low interest rates.

Type of Applicants:

Types of Loan Applicants

While background, employment history and income are deciding factors in securing low-interest loans, what is also considered is the type of personal loan applicant.

  • Salaried/Self Employed

    Self-employed people may not be considered safe bets as the income is not fixed whereas salaried individuals are perceived as people with stable jobs and stable income. So, a salaried individual with a reputed organisation has better chances of getting personal loans with a low rate of interest than a self-employed individual.

  • Women

    Certain financial institutions, to encourage women entrepreneurship or promote salaried women to become financially stable, give out personal loans with low interest rates. HDFC, Bajaj Finserv and Fullerton India offer attractive interest rates for women.

  • Retired Pensioners

    Banks like State Bank of India (SBI), Bank of India (BOI) and UCO Bank provide low interest personal loans to pensioners, especially if they have been active customers of these banks.

Here is a look at the different bank loan interest rates on personal loans in India

Current Bank Loan Interest Rates on Personal Loans in India – 2022

Banks/NBFCs Interest Rate (p.a.) Loan Amount (Rs.) EMI/1 lakh for 1 year (Rs.)
State Bank of India 9.60% onwards Up to 20 lakhs 8,773
Central Bank of India 8.45% onwards Up to 20 lakh 8,720
Union Bank of India 8.90% onwards Up to 15 lakh 8,741
Punjab National Bank 8.95% onwards 25,000 to 15 lakh 8,743
Indian Bank 9.05% onwards As per the applicant profile 8,747
Bank of India 9.35% onwards Up to 10 lakh 8,761
IDBI Bank 9.50% onwards 25,000 to 5 lakh 8,768
Bank of Maharashtra 9.55% onwards Up to 20 lakh 8,771
UCO Bank 8.45% onwards Up to 10 lakh 8,720
HSBC 9.75% onwards Up to 30 lakh 8,780
Citibank 9.99% onwards Up to 30 lakh 8,791
Bank of Baroda 10.00% onwards 50,000 to 10 lakh 8,792
Kotak Mahindra Bank 10.50% onwards Up to 30 lakh 8,803
Indian Overseas Bank 10.30% onwards Up to 15 lakh 8,,806
Federal Bank 10.49% onwards Up to 25 lakh 8,814
ICICI Bank 10.50% onwards 50,000 to 25 lakh 8,815
IndusInd Bank 11.00% onwards 50,000 to 15 lakh 8,838
IDFC First Bank 11.00% onwards Up to 40 lakh 8,838
Axis Bank 11.00% onwards Up to 15 lakh 8,838
Standard Chartered Bank 11.00% onwards 1 lakh to 50 lakh 8,850
Bajaj Finserv 11.49% onwards Up to 15 lakh 8,861
Tata Capital 11.75% onwards Up to 20 lakh 8,873
StashFin 11.99% onwards 1000 to 5 lakh 8,884
Faircent 12.00% onwards Up to 10 lakh 8,885
Kreditbee 12.24% onwards 1000 to 2 lakhs 8,896
Yes Bank 12.49% onwards Up to 50 lakh 8,908
HDFC Bank 12.50% onwards Up to 25 lakh 8,908
MoneyTap 12.96% onwards 3000 to 5 lakh 8,930
Fullerton India 13.00% onwards Up to 25 lakh 8,932
Indiabulls 13.99% onwards 1000 to 15 lakh 8,978
RBL Bank 14.00% onwards 1 lakh to 20 lakh 8,979
Muthoot Finance 14.50% onwards 50,000 onwards 9,002
Money View 15.96% onwards 5000 to 5 lakh 9,071
PaySense 16.80% onwards 5000 to 5 lakh 9,111
Early Salary 18.00% onwards Up to Rs. 5 lakh 9,168
Home Credit 24.00% onwards Up to 2.4 lakh 9,456
CASHe 33.00% onwards 6000 to 4 lakhs 9,897
HDB Up to 36% Up to 20 lakhs 10,046

Steps To Avail Personal Loan with Low Rate Of Interest

Steps to avail low interest personal loans


The minimum personal loan eligibility is:
– The applicant should be at least 21 years of age at the time of loan application
-The applicant’s minimum net monthly income should be Rs. 25,000.
– The applicant should have completed a minimum of two years of employment and should have completed one year in the current organization

  • Employees working in private companies, public companies and central, state, and local bodies are eligible to apply
  • Should have completed a minimum of one year of stay at the current residence, if rented

Once the eligibility criterion is taken care of, the next step is to ensure all the parameters to avail low interest personal loans are met. This includes

Compare All Offers

When looking for a personal loan with low interest rates, it is important that the applicant has details of interest rates of every bank or institution in front of him or her. It is important to visit the websites of every bank to understand the interest rates and processing fees and make an informed comparison and then choose the best option as per the requirement. It is when a comparative analysis is done when an individual can stumble upon attractive offers and select the best personal loan interest rates.

Apply With a Known Lender

A known bank or financial institution through which the individual has been continuously doing transactions and making deposits is more likely to give preferential interest rates than an unknown financial entity. The relationship the individual has with the bank can lead to the bank giving discounts and offers and loans with low interest rates. Because of the familiarity, trust is built and that will lead to better offers on bank loan interest rates.

Maintain a Good Credit Score

The credit score determines the individual’s creditworthiness and the lesser the debts and loan defaults, the better the credit score of the individual will be. If the credit score is high (750 and above), the chances of getting a personal loan with low interest rates are high. So, it is always advisable to ensure that a healthy credit score is maintained and that is possible by keeping a track of all the financial transactions and being a responsible lender.

Leverage Work Credentials

For a lender, stable employment status is important as it indicates the individual has the means to pay back the amount on time. If the borrower has a stable job in a reputed organisation, then the chances of him/her getting personal loans with low rates of interest are high. Hence the borrower should leverage his/her position and reputation of the company to secure good interest rates.

How to Calculate Personal Loan Interest Rates?

The rate of interest charged by banks and other financial institutions is calculated by considering various important factors –


This score indicates your creditworthiness. The better the CIBIL score is, the better the interest rate will be. As per the policies of the lender, the minimum CIBIL score to avail of a personal loan varies.

Principal Amount

A good repayment history will give the borrower a better chance of obtaining larger amount of personal loans with minimum interest rates.

Loan Tenure

If the repayment tenure is shorter, then the interest rate will be lower.

Personal Loan Interest can be calculated using

  • Flat Rate Method of Interest Calculation

    In this method, the personal loan interest rate is calculated on the initial principal amount without accounting for the principal repaid. Here the lending rate remains unchanged throughout the loan tenure. This method of interest calculation results in a higher EMI.

  • Reducing Balance Method of Interest Calculation

    In this case, after every EMI payment, the outstanding loan amount gets reduced. Therefore, the interest for the next month is calculated only on the outstanding loan amount. Here interest is calculated on this decreasing loan amount and not the total amount initially borrowed. So, the personal loan interest rate is calculated on the principal amount outstanding at the end of a specific period.

How to Calculate EMI on a Personal Loan

Calculate EMI on Personal Loan

The interest on a personal loan is calculated in the following manner:

EMI = [P x (R/100) x {1+(R/100)} ^N]/[{1+(R/100)} ^(N-1)]


EMI = equated monthly instalments
P = the principal amount borrowed
R = loan interest rate (monthly basis) = annual interest rate/12
N = loan tenure (in months)

Let us assume that a borrower borrows a sum of Rs. 7 lakhs at a rate of 12% for a tenure of 5 years, the interest for the 1st month will be calculated as follows:

(7, 00,000*0.12/12) =7,000

Check the bank loan interest rates of the top 10 banks in India that are offering the lowest interest rates on personal loans:

Top 10 Bank Loans with Lowest Interest Rates -2022

Bank Loan Interest Rates

Bank Name* Interest Rate Processing Fees
State Bank of India 9.60% onwards Up to 1.5%
Central Bank of India 8.45% onwards Up to Rs. 500
Union Bank of India 8.90% onwards 0.50%
Punjab National Bank 8.95% onwards Up to 1%
Indian Bank 9.05% onwards Up to 1%
Bank of India 9.35% onwards Up to 2%
IDBI Bank 9.50% onwards Up to 1%
Bank of Maharashtra 9.55% onwards Up to 1%
UCO Bank 8.45% onwards Up to 1%
HSBC Bank 9.75% onwards Up to 1%

Always Remember

Make Repayment a Priority:

Paying your credit card bill on time and another EMIs without delay is important to get a better deal on interests. You can negotiate better when you have a responsible credit history.

Look for Deals and Offers:

Keep looking for seasonal offers and schemes that banks introduce, especially in the festive season which will promise lower interest rates on personal loans,

Calculate Interest Carefully

Even if the interest offered is low, you may end up paying more, especially if you are taking on a flat interest rate. Take into consideration the processing fee of each bank too, which varies amongst banks.

Customer Service of Banks

Go for banks and institutions that offer impressive customer service and regular assistance in loan sanctioning and repayment etc.


To summarise, personal loan is among the most hassle-free loans disbursed by banks and other financial entities. If the lender is convinced of the applicant’s repayment capacity after evaluating the credit scores, income level and employment history, the borrower is likely to get good deals on interest rates. While the interest rate on personal loans stands to vary among lenders, if the borrower keeps an eye on offers, does a comparative analysis on all the interest rates, leverages the employment status, and maintains a great credit score, he/she will attract the best interest rates possible to fulfil the financial goals.