Personal loans have become one of the most preferred ways to manage immediate financial
—be it for medical emergencies, home renovation, education, weddings, or even debt consolidation. However, the biggest concern for most borrowers is the interest rate. A small difference in rates can lead to significant changes in the total repayment amount.
If you’re wondering how to get a personal loan at a low interest rate, this detailed guide will help you understand the best practices, eligibility factors, and expert tips to secure the most affordable deal.
✅ What Is a Personal Loan?
A personal loan is an unsecured loan provided by banks, NBFCs (Non-Banking Financial Companies), and digital lenders. Since it’s unsecured, there’s no need for collateral. However, due to the higher risk to lenders, interest rates can be high, especially if the borrower’s profile is weak.
Getting a loan at low interest rates can help you save a lot over time, especially if you plan to borrow a large amount.
✅ Key Factors That Affect Your Personal Loan Interest Rate
To qualify for the lowest possible rate, you must understand what factors influence it:
1. Credit Score (CIBIL Score)
Your credit score is one of the most important factors. A score above 750 is generally considered excellent.
- 750–900: Low interest rate
- 600–749: Moderate rate
- Below 600: High rate or application rejection
Tip: Check your credit score for free on platforms like CIBIL, Experian, or CRIF.
2. Income Level
Higher income means lower risk for the lender, resulting in better interest rates. Salaried individuals with stable income are usually offered better terms than freelancers or self-employed individuals.
3. Employer Reputation
Working in a reputed private or government organization can increase your chances of getting a better rate.
4. Debt-to-Income Ratio
If you already have multiple EMIs, it shows higher credit exposure. Keeping your debt-to-income ratio under 40% is a good practice.
5. Loan Amount & Tenure
Smaller amounts and shorter durations often come with lower interest rates. But it varies across lenders.
✅ Tips to Get Personal Loan at a Low Interest Rate
1. Improve Your Credit Score
- Pay EMIs and credit card bills on time.
- Avoid using more than 30% of your credit limit.
- Do not apply for too many loans at once.
2. Compare Lenders
Never apply without comparing multiple lenders. Use comparison websites like:
- Paisabazaar
- BankBazaar
- Policybazaar
- KreditBee
- Lendingkart
These platforms show interest rates, tenure, processing fee, etc.
3. Opt for Pre-Approved Offers
Banks often send pre-approved loan offers to their existing customers based on account history. These loans usually come with:
- Lower interest rates
- Zero documentation
- Instant disbursal
4. Check Digital Loan Apps
Many NBFCs and fintech platforms provide low-interest personal loans via mobile apps:
- Navi
- CASHe
- MoneyTap
- KreditBee
- Slice
Always ensure the app is RBI-registered and has transparent policies.
5. Maintain Job Stability
If you’ve been working in the same company for 2+ years, lenders see you as a stable borrower. This can help you negotiate better interest rates.
6. Negotiate with Banks
If you’re a long-time customer of a bank, ask for a discount on the interest rate. Loyalty sometimes helps reduce rates by 0.5% or more.
7. Avoid Multiple Applications at Once
Each loan application triggers a hard inquiry on your credit report. Too many applications can reduce your score and interest rate offers.
8. Look for Government Schemes
Some government-backed loans for specific needs (like Mudra loans for businesses) offer lower interest rates. You can explore them if you qualify.
9. Use Collateral if Available
Some banks convert your unsecured loan to a secured one if you offer fixed deposit, property, or gold as collateral. This significantly reduces interest.
10. Apply During Festive Offers
Many lenders offer discounted interest rates during festivals like Diwali, New Year, and Independence Day.
✅ Documents Required for Personal Loan
Having your documents ready helps in faster processing and may qualify you for better offers:
- Aadhaar Card/PAN Card
- Bank Statements (last 6 months)
- Salary Slips or ITR (Income Tax Returns)
- Proof of Residence
- Employment Certificate (optional)
✅ Top Banks and Their Interest Rates (As of 2025)
| Bank Name | Interest Rate (per annum) | Processing Fee | Tenure |
|---|---|---|---|
| SBI | 10.65% – 13.85% | Up to 1.5% | Up to 72 months |
| HDFC Bank | 10.5% – 18% | Up to 2.5% | Up to 60 months |
| ICICI Bank | 10.75% – 17% | 2.25% | Up to 60 months |
| Axis Bank | 10.99% – 21% | 1.5% – 2% | Up to 60 months |
| Bajaj Finserv | 11% – 26% | Up to 2% | Up to 84 months |
✅ Common Mistakes That Increase Your Interest Rate
- Applying without comparing offers
- Poor credit score maintenance
- Not reading the terms and conditions
- Ignoring hidden charges (like processing fees, prepayment charges)
- Taking a loan for unplanned expenses
✅ FAQs: How to Get Low Interest Personal Loan
Q1. What is the minimum interest rate for a personal loan?
Some banks offer rates as low as 9.9% per annum, especially for salaried individuals with excellent credit history.
Q2. Can I negotiate my loan interest rate?
Yes, especially if you are a loyal customer, have a good credit score, or have other financial products like FDs or savings accounts with the lender.
Q3. Will applying with multiple banks affect my CIBIL score?
Yes. Each application results in a hard inquiry, which can temporarily reduce your credit score.
Q4. Is it safe to take a personal loan from an app?
Only take loans from apps registered with the RBI. Check reviews, privacy policy, and contact information.
Q5. Can I transfer my high-interest loan to a lower-interest lender?
Yes, through personal loan balance transfer. It helps reduce interest burden and EMIs.
✅ Final Thoughts
Getting a personal loan at a low interest rate is not just about finding the right lender; it’s about preparing yourself financially to be an ideal borrower. Maintain a healthy credit score, research your options, avoid financial mistakes, and always read the fine print before signing.
With proper planning, you can save thousands in interest and manage your financial goals more effectively.
🔍 Suggested Reads to Increase CPC:
- “Best Personal Loan Apps in India 2025”
- “Difference Between Secured and Unsecured Loans”
- “How to Improve Your CIBIL Score in 30 Days”
- “Hidden Charges in Personal Loans You Should Know”
- “Loan EMI Calculator Tool (Embed or Link for Tools Website)”