In 2026, personal loan interest rates in India typically range from around 10.5% to 24% — with banks generally offering lower rates (10.5–18%) while NBFCs may charge slightly higher (12–24%) based on risk profiles and customer credit profiles.
Introduction
If you’re planning to take a personal loan in India, the interest rate difference between banks and NBFCs can significantly impact your EMIs and total repayment.
Personal loans are widely used for:
✔ Emergencies
✔ Travel & weddings
✔ Medical needs
✔ Home renovation
✔ Education
✔ Debt consolidation
Let’s break down how rates compare in 2026 and what drives the differences.
Bank vs NBFC Personal Loan Interest Rates (2026)
Average Interest Rate Range
| Lender Type | Typical Interest Range |
|---|---|
| Banks (Public & Private) | 10.5% – 18% p.a. |
| NBFCs (Fintech + Traditional) | 12% – 24% p.a. |
Note: Actual rates vary by lender, credit score, income, and tenure.
Personal Loan Rates at Major Indian Banks
Banks may offer lower rates because they:
• Have access to low-cost deposits
• Follow strict credit guidelines
• Use borrower banking history for pricing
Typical Bank Rate Range:
💰 10.5% – 16.5% p.a. (Prime borrowers)
💰 16.5% – 18% p.a. (Moderate credit profiles)
Personal Loan Rates at NBFCs
NBFCs include traditional non-bank lenders and digital fintech platforms. They:
✔ Accept alternative data
✔ Serve lower credit profiles
✔ Disburse faster
NBFC Rate Range:
📊 12% – 20% p.a. (Good profiles)
📊 20% – 24% p.a. (Higher risk or instant loans)
Why NBFC Rates Are Higher
📌 1. Risk-Based Pricing
NBFCs may lend to customers with:
Thin credit history
Less formal income proof
Gig or informal work profiles
They charge higher rates to manage risk.
📌 2. Faster Processing
Instant or minimal-document loans come at a premium.
📌 3. Technology & Convenience Fees
Some digital platforms include convenience charges.
How Banks Price Personal Loans
✔ Banking relationship benefits
✔ Better historical data
✔ Lower cost of funds
✔ Risk-assessed pricing models
Banks may offer:
• Better rates to existing customers
• Experience bonuses (salary account + loan combo)
Examples of Rates in 2026
| Borrower Type | Bank Rate | NBFC Rate |
|---|---|---|
| High credit score | 11% – 13% | 13% – 16% |
| Average score | 14% – 16% | 17% – 20% |
| Thin credit history | 16% – 18% | 20% – 24% |
How to Get Lower Personal Loan Rates
💡 1. Improve Credit Score
High scores often bring rates toward the lower band.
💡 2. Use Salary Account With Bank
Banks often give discounts to salary customers.
💡 3. Choose Longer or Shorter Tenure Smartly
Shorter tenure → lower total cost (but higher EMI).
Longer tenure → smaller EMI (but higher total interest).
💡 4. Negotiate
Banks sometimes negotiate if you have strong docs.
💡 5. Consider Balance Transfers
If rates drop later, transfer to a cheaper lender.
When NBFCs Can Be Better
✔ You need quick approval
✔ You lack formal income proofs
✔ You have limited bank history
✔ You’re a gig/freelance worker
Expert Insight
Retail Lending Analyst – Mumbai
“Banks tend to remain cheaper in most cases, but NBFCs fill an essential gap for underserved profiles — and digital platforms are bridging friction in credit access.”
Consumer Finance Advisor – Delhi
“Always compare APR — including processing fees — not just headline interest.”
Key Takeaways
✔ Banks usually offer lower personal loan rates
✔ NBFCs provide speed and flexibility but at higher rates
✔ Credit score remains the biggest driver
✔ Compare APR, fees, and tenure before signing
❓ FAQs –
1. Which has lower rates — bank or NBFC loans?
Banks usually offer lower interest.
2. Why do NBFCs charge more?
They serve wider profiles and offer faster approvals.
3. Do personal loans affect credit score?
Yes — timely payments improve scores.
4. Can I get a loan without salary account?
Yes — but rates may be higher.
5. Is the rate fixed or floating?
Most personal loans have fixed rates.
6. Do processing fees count in cost?
Yes — always check APR.
7. Are prepayment charges applicable?
Depends on lender policy.
8. Should I negotiate rate?
Worth trying — especially with strong profile.
Final Word
In 2026, banks remain the first choice for lowest interest — but NBFCs fill critical gaps with fast, flexible credit. Smart comparison, good credit, and timing can save you tens of thousands in interest.
Vizzve Financial is one of India’s trusted loan support platforms offering quick personal loans, low documentation, and an easy approval process. Apply at www.vizzve.com
Published on : 20th February
Published by : SMITA
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