Personal loan interest rates vary widely across lenders. Below is a clear, easy-to-read guide that lays out typical rates by lender type, explains what drives the differences, and gives practical tips to help you find a better deal.
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Indicative interest rates by lender type
- Large public banks: Typically lower, more conservative ranges — ~9%–14% p.a. (indicative)
- Private banks: Competitive, with wider spreads depending on credit — ~10.5%–18% p.a. (indicative)
- Small finance banks: Often target niche borrowers — ~12%–22% p.a. (indicative)
- NBFCs and fintech lenders: Faster approvals but higher rates for some profiles — ~13%–28% p.a. (indicative)
- Credit unions / cooperatives: Can be cost-effective if eligible — ~8.5%–15% p.a. (indicative)
What these numbers mean
The ranges above are indicative and reflect typical market spreads. Your actual rate depends on your credit score, income, loan amount, tenure, relationship with the lender, and prevailing policy rates. Lenders also add different fees (processing, prepayment, insurance) that affect the effective cost.
How to compare offers
- Look at APR — annual percentage rate includes interest plus most fees and gives a truer cost comparison.
- Compare EMI and total payout — same interest rate can mean different monthly payments depending on tenure.
- Check eligibility and documentation — pre-approved offers can reduce processing time and sometimes lower rates.
- Ask about penalties — prepayment and foreclosure charges raise the long-term cost.
Quick tips to lower your rate
- Improve your credit score before applying — better scores usually secure better rates.
- Choose a shorter tenure where possible — shorter loans often carry lower interest overall.
- Use an existing bank relationship or salary account to negotiate a discount.
- Consider secured options (e.g., loan against fixed deposit) if you want a lower rate.
Final note: These figures are for guidance only. Rates change frequently, so contact lenders directly for the latest offers and personalised quotes before deciding.