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Personal Loan Interest Rate 2021

Current Personal Loan Interest Rates

Last Updated 17th Oct 2021

Bank Name Personal Loan Rates Lowest EMI Per Lakh
ICICI Bank 10.25% ₹ 2,137 for 60 months
HDFC Bank 10.25% ₹ 2,137 for 60 months
Kotak Bank 10.25% ₹ 2,548 for 48 months
Axis Bank 10.49% ₹ 2,149 for 60 months
IndusInd Bank 10.49% ₹ 2,149 for 60 months
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Personal Loan Interest Rate Comparison of All Banks 2021

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Bank Name Interest Rates Processing Fee Lowest EMI Per Lakh
SBI Interest Rates
Compare
9.60% 1.00% ₹ 1,832
HDFC Bank Interest Rates
Compare
10.25% Upto 2.50% Min ₹ 999 ₹ 2,137
ICICI Bank Interest Rates
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10.25% Upto 2.25% of Loan Amount ₹ 2,137
Bajaj Finserv Interest Rates
Compare
12.99% Starting from 1.50%, Up to 3% ₹ 2,275
IDFC First Bank Interest Rates
Compare
10.49% Upto 2.00% ₹ 2,149
Axis Bank Interest Rates
Compare
10.49% Rs.4,999 ₹ 2,149
Tata Capital Interest Rates
Compare
10.49% Upto 2.50% of Loan Amount ₹ 1,877
Fullerton India Interest Rates
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11.99% 2% ₹ 2,633
IndusInd Bank Interest Rates
Compare
10.49% Min 0.75% to Max 1.75% ₹ 2,149
Kotak Bank Interest Rates
Compare
10.25% Starting from Rs.999 ₹ 2,548
RBL Bank Interest Rates
Compare
14.00% Upto 3.5% ₹ 2,327
IIFL Interest Rates
Compare
24.00% 2% ₹ 2,877
HDB Financial Interest Rates
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30.00% Upto 3% of Loan Amount ₹ 3,235
IDBI Bank Interest Rates
Compare
12.00% 1.00% ₹ 2,224
Karur Vysya Bank Interest Rates
Compare
9.40% 0.40% ₹ 3,199
Muthoot Interest Rates
Compare
14.00% 2.5-3.5% ₹ 2,327

Personal Loan Interest Rate : Highlight

As per the current rates, HDFC Bank, ICICI Bank, Kotak Bank offers the lowest interest rate of 10.25%.The lowest personal loan rate have fallen by 0.15% from the previous rates and are applicable from 20 April, 2021. You can be eligible to get low-rate personal loan if you are a salaried, working in a reputed company with no payment defaults and are having an existing relationship with the bank. Typically, banks charge lower rate for a higher loan amount and for employees working with large and reputed companies.

HDFC Bank, Tata Capital, ICICI Bank, IDFC First Bank, Axis Bank are the best banks for personal loan, if you are looking for an instant personal loan with a quick disbursal within a few hours to 1-2 days. Interest rate on instant personal loan of these top banks are in the range of 10.25% to 17.25%. Further, if you are an existing bank account holder or existing loan customer of HDFC Bank, Tata Capital, ICICI Bank, IDFC First Bank, Axis Bank, you may be eligible for an instant disbursement without the need to submit any documents for personal loans.

Types of Personal Loan Interests

Personal Loan Interest Rate for Salaried Employee

Both salaried and self-employed professionals like doctors, CAs etc can apply for a personal loan. However, the interest rates on personal loan for salaried employees are lower than that for self employed professionals. Top banks that provide competitive personal loan interest rates for salaried employees is given below:

Bank Interest Rate Processing Fee Maximum Loan Amount
ICICI Bank 10.25% - 22.00% Upto 2.25% of Loan Amount ₹ 30 Lakh
HDFC Bank 10.25% - 22.00% Upto 2.50% Min ₹ 999 ₹ 75 Lakh
Kotak Bank 10.25% - 17.99% Starting from Rs.999 ₹ 50 Lakh
Axis Bank 10.49% - 17.25% Rs.4,999 ₹ 25 Lakh
IndusInd Bank 10.49% - 20.00% Min 0.75% to Max 1.75% ₹ 25 Lakh
Tata Capital 10.49% - 17.99% Upto 2.50% of Loan Amount ₹ 25 Lakh
Federal Bank 10.49% - 17.99% 0.5%, Min Rs. 500 ₹ 10 Lakh
IDFC First Bank 10.49% - 22.00% Upto 2.00% ₹ 40 Lakh

Self Employed Personal Loan Rates

Apart from salaried individuals, self-employed professionals with a stable source of income can also apply for a personal loan. List of top lenders providing the best personal loan interest rates for self-employed are listed as follows:

Bank Interest Rate Processing Fee
ICICI Bank 10.50% -10.50% Rs. 1999
Yes Bank 10.50% -10.50% Rs. 1499
HDFC Bank 10.85% -10.85% Rs. 499
Bank of Baroda 11.05% -14.10% Upto 2%, Min Rs. 1,000 and Max Rs. 10,000
Corporation Bank 11.20% -15.00% Upto 0.75%, Min Rs. 5,000

Current Personal Loan Rates for Pensioners

Various government banks such as SBI and PNB provide concessional personal loan for pensioners with interest rates to Pensioners starting at 9.75% as compared to rates starting at 10.25% for salaried employees. The personal loan rates for pensioners can even be lower if they borrow from the same bank where they hold the pension account.

Personal Loan Rates for Women

To boost financial independence among the women in the country, many top lenders provide discounted personal loan rates to women borrowers. Leading lenders that offer special personal loan schemes for women at low rates are:

Bank Interest Rate Processing Fee
ICICI Bank 10.25% -22.00%Upto 2.25% of Loan Amount
HDFC Bank 10.25% -22.00%Upto 2.50% Min ₹ 999
Kotak Bank 10.25% -17.99%Starting from Rs.999
Axis Bank 10.49% -17.25%Rs.4,999
IndusInd Bank 10.49% -20.00%Min 0.75% to Max 1.75%

Instant Personal Loan Interest Rates

Today, almost all top banks in India now offer instant personal loans with a completely online process, quick disbursal and competitive interest rates starting 10.25%. The best part is that you do not need to visit a branch even once to get a loan. Top lenders with the instant personal loan interest rates are listed as follows:

Bank Name Interest Rate on Instant Loans Processing Fee
SBI9.60% to 15.65% 1.00%
HDFC Bank10.25% to 22.00% Upto 2.50% Min ₹ 999
ICICI Bank10.25% to 22.00% Upto 2.25% of Loan Amount
Citibank10.90% to 18.99% Upto 0.5%
Bajaj Finserv12.99% to 15.50% Starting from 1.50%, Up to 3%

Personal Loan Balance Transfer Rates

In case you are paying high interest to the lender, you may switch the lender without closing the loan through the personal loan balance transfer facility.

Illustration: Suppose you have an outstanding balance on a personal loan of ₹ 5,00,000 to be paid at an interest rate of 15% for a remaining tenure of 3 years. In that case, your monthly EMI would be ₹ 17,333 with a total interest payout of ₹ 1.24 Lakh. However, if you plan to switch to lender B who provides an interest rate of 12%, then your monthly EMI would be ₹ 16,607 on the outstanding balance of ₹ 5,00,000. This is further depicted in the table below:

Parameters Existing Loan Balance Transfer
Outstanding Loan Amount ₹ 5,00,000 ₹ 5,00,000
Interest Rates 15 % 12 %
Remaining Tenure 3 years 3 years
EMI ₹ 17,333 ₹ 16,607
Total Interest Payout ₹ 1,23,976 ₹ 97,858
Total Amount Payable ₹ 6,23,976 ₹ 5,97,858
Savings - ₹ 26,118

Thus, on transferring your personal loan from lender A to lender B, you can save upto ₹ 726 on your per month EMI, which amounts to saving ₹ 8,712 per year. Further, the saving on total interest payout on transferring the loan would be ₹ 26,118 . If you want additional funds, you can avail personal loan top up at the time of balance transfer.

Floating Rate Personal Loan vs. Fixed Rate Personal Loans

All Personal Loans in India are offered on fixed rate which means that the interest rate remains constant throughout the loan tenure and hence, the EMI does not change. Thereby, any change in Repo Rates or other benchmark rates will not result in any change in personal loan rates.

Personal Loans in India are generally not offered on floating rate as they are short tenure loans. Floating rate loans are loans in which rates are linked external benchmarks like repo rate and hence, change with any changes in Repo Rate. As a result, there can be a change in loan tenure or an increase/decrease in the EMI amount of personal loan.

Personal Loan Interest Calculation & Formula

Interest Calculation on Personal Loan can be done using flat rate or reducing balance method. All leading banks and NBFCs in India calculate interest rate on personal loan using reducing balance method which is a more transparent method of calculation and recommended by RBI. Flat rate of interest is always costlier than a loan taken on reducing balance at the same rate as explained in the table below where interest outgo on a loan taken on flat rate of 14% is 1.8 times that on a personal loan taken on a reducing rate of 14%.

The mathematical formula for personal loan interest calculation is as follows:

  • Flat Rate Method: Interest is calculated on the entire principal amount
    EMI = (Principal + total interest payable) / loan tenor in month
    Where Total Interest Payable = Principal x Interest Rate x Loan Tenure/100)
  • Reducing Balance Method: Interest is calculated on the outstanding principal amount
    EMI= [P x R x (1+R)^N]/[(1+R)^ (N-1)]
    Where P = Principal Amount
    R = Rate of Interest
    N = Loan Tenure in months

The functioning of the above-mentioned methods can be understood with the help of the following table:

Parameters Flat Rate Method Reducing Balance Method
Loan amount ₹ 6,00,000 ₹ 6,00,000
Tenure 60 months 60 months
Rate of Interest 14 % 14 %
Monthly EMI ₹ 17,000 ₹ 13,961
Total Interest Payout ₹ 4,20,000 ₹ 2,37,627
Savings - ₹ 1,82,373

How to Get Lowest Personal Loan Interest Rate?

As personal loans are unsecured loans, banks consider several factors before deciding to sanction the loan and offer low interest rates. Keep in mind the following factors that affect personal loan rate to be able to get a lowest interest rate:

  • Check special offers for your company:- Always check current offers and interest rates offered for the company you are working for, as banks run special schemes for employees of top companies. The reputation and rating of the organization you are currently working for plays an important role in helping you grab a decent personal loan interest rate.
  • Compare bank offers for various loan amounts:- Some banks offer low interest rates at higher loan amount.Thus you must compare bank offers for varying loan amounts. Always compare bank offers for varying loan amounts.
  • Check for rates at various loan tenure:- Banks may offer lower rates on personal loans for certain tenure and, if possible, opt for tenures with lower interest rates.
  • Apply for a loan amount within the limit you are eligible for:- Applying for an amount higher than your eligibility may lead to rejection of your loan application. Always calculate your eligibility before applying for a personal loan to reduce chances of rejection.
  • Avoid multiple bank application:- Multiple loan applications in a short duration get recorded in your CIBIL report and can hurt your credit score as well as chances of getting a loan.
  • Look beyond the offer from your salary bank:- Various banks keep offering attractive schemes to acquire premium customers. Hence, the offer from your salary bank may not be the best option. In case you are an old customer of the lender via a savings or investment account, then it is likely that will be eligible for a  pre-approved personal loans at concessional rates owing to your relationship with the bank.
  • Maintain a good credit score:- All personal loan lenders ensure lending loans to an individual with a good credit score of 700 and above. In case of a relatively low credit score, you may either get a personal loan at a high rate of interest or may not get it all.

Factors Affecting Personal Loan Interest Rates

The factors below affect personal loan interest rates in banks:

  • Income: If you have a stable source of income, then banks might offer you a lower interest rate as you can repay the dues on time. On the other hand, lower annual incomes leads to a higher interest rate on a personal loan.
  • Employer Details: Working for a reputed organisation means that banks and NBFCs are more likely to offer you a lower interest rate.
  • Nature of the Employment: The interest rates to applicants may be further based on whether you are self-employed or salaried.
  • Age: Your age also plays a determining factor in deciding the personal loan rates. Individuals who are nearing the retirement age may be charged a higher interest rate.
  • Relationship with the Loan Provider: If you have a good existing relationship with the bank, then you would be offered a lower rate of interest at the time of applying for a personal loan.
  • CIBIL: Your CIBIL score is also one of the crucial factors that helps the financial institution to decide the rate of interest. If you have a CIBIL of 650 or above, then you may get a low interest personal loan.

Personal Loan Fees and Charges

  • Processing Fees:- Along with Personal Loan Interest Rates, banks also charge processing fees on a personal loan. A processing fee on a personal loan is a one-time fee levied on the loan amount to process the application.
  • Foreclosure Charges:- If you want to prepay or close your personal loan account before the predetermined loan tenure, you need to bear fees for prepayment & foreclosure. These charges can range from nil to up to 6% of the outstanding balance.
  • Late Payment Charges:-  Banks also charge a penalty on late payment of EMIs if you delay on your Personal EMI.
  • Other Charges after loan disbursal: -  A few other charges that the bank levies on personal loan customers post disbursement can include cheque bounce charges, fees for duplicate statements or loan switch fees. These charges are not to be paid by all customers and are applicable only when that event happens.
Bank Name Processing Fee Foreclosure Charges Penalty Charges Post Loan Disbursement
ICICI Bank Upto 2.25% of Loan Amount 5% 24% per annum Cheque Bounce Charges - ₹ 400+GST
Loan Cancellation Charges - ₹ 3000 + GST
Other Charges - ₹ 500 + GST
HDFC Bank Upto 2.50% Min ₹ 999 2 - 4% 2% Cheque Bounce Charges - ₹ 550
Loan Cancellation Charges - Nil
Kotak Bank Starting from Rs.999 Starting from Rs.999 3% per month Cheque Bounce Charges - ₹. 750
Other Charges - ₹ 500+ GST
Axis Bank Rs.4,999 For Loan Amt Approved of 10 Lacs and above-- 0% FC charges after 12 EMIs if closure through OWN FUNDS,1-12 EMI-5%, 13-24 EMI-4%, 25-36 EMI-3% & Above 36 EMI-2% 24% per annum N.A
IndusInd Bank Min 0.75% to Max 1.75% 4% Rs 150/- , Per EMI delay beyond 5 days N.A
Tata Capital Upto 2.50% of Loan Amount Rs. 1,000 to Rs. 5,000 3% per month Cheque Bounce Charges - ₹ 450 + GST
Loan Cancellation Charges - Nil
Additional Repayment Charges - ₹ 550 + GST
Other Charges - ₹ 550 + GST
Federal Bank 0.5%, Min Rs. 500 Nil prepayment charges N.A N.A
IDFC First Bank Upto 2.00% 5% foreclosure charges. Can foreclose after 3 months in case of smart personal loan 2% of the unpaid EMI or Rs 300 whichever is higher Cheque Bounce Charges - ₹ 400
Loan Cancellation Charges - 1% of the loan amount
Additional Repayment Charges - ₹ 500
Other Charges - ₹ 500
Yes Bank Upto 2.50% Up to 4% 24% per annum Cheque Bounce Charges - ₹ 750
Loan Cancellation Charges - ₹ 1000
Additional Repayment Charges - ₹ 750 + GST
Other Charges - ₹ 750
Indian Overseas Bank upto 3% of the loan amount Nil prepayment charges N.A N.A

FAQs

What is the personal loan interest rate today?

As per the current rates, ICICI Bank, HDFC Bank, Kotak Bank offers the lowest interest rate of 10.25%.However, the current rate of interest for personal loan may vary based on your income and loan amount. Apply for a personal loan that you are eligible for to get the best rates. Other banks that offer low personal loan rates are Axis Bank, IndusInd Bank.

Did Interest Rates on Personal Loan drop?

Yes, the lowest rate on personal loans have reduced by 0.15% from 10.4% to 10.25%. The lowest personal loan rate of 10.25% is provided by HDFC Bank,ICICI Bank,Kotak Bank.

Should I always choose the lowest available interest rate?

No, along with lower interest rates, you must also consider other charges such as processing fees, prepayment & foreclosure charges, disbursal time etc. before choosing the lender for a personal loan. One should always visit a online marketplace like MyLoanCare to compare the loan on all terms and take the right decision.

Which one provides a personal loan at a lower rate of interest – Govt. Banks, Private Banks or NBFCs?

Typically, private banks like ICICI Bank and HDFC Bank offer lowest personal loan rates starting at 10.25%. Currently, most of the government banks do not offer unsecured personal loans except for loans provided under government schemes and hence are not a very popular choice. NBFCs typically have a higher interest rate compared to private banks for personal and are best suited for customers who are unable to meet the stricter eligibility criteria of private banks.

What are some of the other fees and charges levied by lenders on personal loan?

Along with personal loan rates, banks and NBFCs levy charges such as processing fees, legal & technical charges, prepayment & foreclosure charges on a personal loan. These charges may together add up to the total cost of personal loan and are an important factor to decide before shortlisting the bank.

Can banks change the interest rate during the loan tenure for a personal loan?

No, in India all personal loans are fixed rate loans given their short tenure of 1 year to 5 years and hence, the rate rates will not change during the loan tenure. Always check for the type of interest that your bank is levying while sanctioning your loan to avoid surprises at a later date.

How does Repo Rate affect the interest rate of personal loans?

No, in India all personal loans are fixed rate loans given their short tenure of 1 year to 5 years and hence, any change in repo rates will not impact the rate on your existing loan. However, if your loan is floating rate loans the rates will change with changes in repo rate. Please do check with your lender on the type of interest rate it is offering.

What is the average interest rate on personal loans?

All bank personal loan interest rates range between 10.25% to 36.00%. Most of the banks' personal loan interest rates will vary based on factors such as your credit score, your income, the company you are employed with, your age at the time of applying for the loan, etc.

Is there any relationship discount on personal loan interest?

If you have an existing relationship with the bank and have cleared all your dues on time, banks may give you a preferential interest rate. However, if you have a bad CIBIL and do not meet other eligibility criteria, you may not be able to avail of any relationship discount on personal loan interest.

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Personal Loan News - Oct 2021
  • 2021-10-14 : Zavron Finserv Launches Instant Personal Loan Application
    Zavron Finserv- a non-banking financial institution- has introduced an instant personal loan application. This App will help customers to take loans instantly within few minutes that too from their mobile phone. A loan for a minimum of Rs 10,000 and a maximum of Rs 2 lakh is available.
  • 2021-10-13 : Early Salary Introduces Dussehra Offers
    Early Salary has announced the Dussehra offer on personal loans by 50% off on processing fees. The interest rate charged by the instant mobile application is Rs. 9 per day.
  • 2021-10-12 : Axis Bank Has Launched Open API For Customers
    Axis Bank unveils open APIs (Application Programming Interface), these APIs will help retail and corporate customers/ partners to use banking services integrated across partner platforms. This banking portal has retail as well as corporate products like loans, accounts, deposits, payments, trade, collections and bills.
  • 2021-10-11 : Punjab National Bank Introduces 6S Campaign
    Punjab National Bank (PNB) has launched the 6S Campaign. The campaign consists of schemes like Swabhiman, Samruddhi, Sampark and Shikhar, Sankalp and Swagat. The objective of the campaign is to spread awareness about the development of financial services and accelerate credit growth, improve penetration of social security schemes and drive digital banking push.
  • 2021-10-07 : Bank of Baroda Decreases Personal Loan Rates
    Bank of Baroda has decreased personal loan rates by 25 points to 9.75%. Earlier the personal loan started at 10.00%.
*Terms and conditions apply. Credit at sole discretion of lender, which is subject to credit appraisal, eligibility check, rates, charges and terms. Information displayed is indicative and collected from public sources. Read More
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