Personal loans are a popular financial tool for meeting urgent expenses, education, travel, or medical costs. However, interest rates vary widely across banks depending on loan amount, tenure, applicant profile, and credit score. Understanding these differences can help borrowers choose the most suitable lender and save on EMIs.
1. Overview of Interest Rates Across Major Banks (2025)
| Bank | Approx. Interest Rate (p.a.) | Tenure | Notes |
|---|---|---|---|
| State Bank of India (SBI) | 10.25% – 15.75% | 1–5 years | Lower rates for salaried & high-credit-score applicants |
| HDFC Bank | 10.50% – 21% | 1–5 years | Offers quick approval for salaried and self-employed |
| ICICI Bank | 11% – 21% | 1–5 years | Flexible repayment options; rates vary by credit score |
| Axis Bank | 11% – 18% | 1–5 years | Personalised interest based on income & profile |
| Kotak Mahindra Bank | 11% – 19% | 1–5 years | Quick disbursal for salaried professionals |
| Punjab National Bank (PNB) | 11% – 15% | 1–5 years | Focus on salaried borrowers; lower rates for higher scores |
| Bank of Baroda | 11% – 16% | 1–5 years | Competitive rates with flexible EMIs |
Note: Rates are indicative and may vary based on applicant profile, income, tenure, and RBI guidelines.
2. Factors Influencing Personal Loan Interest Rates
a. Credit Score
Higher credit scores (750+) often attract lower interest rates.
Low scores can result in higher rates or rejection.
b. Loan Amount and Tenure
Larger loan amounts sometimes offer slightly lower rates for credible borrowers.
Longer tenure can increase the overall interest burden.
c. Bank’s Policies & Market Rates
Banks adjust rates based on repo rate, inflation, and liquidity conditions.
Public sector banks may offer slightly lower rates than private banks.
d. Income & Employment Type
Salaried applicants with stable income enjoy better rates and faster approvals.
Self-employed borrowers may face higher rates or stricter documentation.
e. Existing Relationship with the Bank
Existing customers may receive preferential rates or waived processing fees.
3. Tips to Get the Best Personal Loan Rate
Maintain a high credit score (700+).
Compare rates across multiple banks and NBFCs.
Opt for shorter tenures if EMIs are affordable.
Negotiate with your bank or use pre-approved offers.
Consider salary account or existing banking relationship benefits.
FAQs
Q1: Are personal loan interest rates fixed or floating?
Most banks offer fixed rates, though some NBFCs may have floating rates tied to MCLR or repo rate.
Q2: Which bank offers the lowest personal loan rate?
Public sector banks like SBI and PNB generally have lower starting rates (10–11%), but eligibility criteria apply.
Q3: Can self-employed applicants get competitive rates?
Yes, but income documentation and credit history play a crucial role.
Q4: Does tenure affect the interest rate?
Yes, longer tenures may attract higher total interest, even if monthly EMIs are lower.
Q5: How often do banks revise personal loan rates?
Banks revise rates quarterly or in response to RBI repo rate changes.
Published on : 4th October
Published by : SMITA
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