Getting a personal loan can be a smart financial decision when you need funds for emergencies, education, travel, or debt consolidation. However, one of the most important factors to consider is the interest rate. A high interest rate can significantly increase your repayment burden, while a low interest rate can make your loan affordable and easy to manage.
If you are searching for how to get a personal loan with low interest rate, this guide will explain everything in detail, including eligibility, tips, bank comparison, and application process.
What is a Personal Loan?
A personal loan is an unsecured loan offered by banks, NBFCs (Non-Banking Financial Companies), and digital lending platforms. Since it does not require collateral, the interest rate is usually higher compared to secured loans. But by choosing the right lender and improving your creditworthiness, you can still get a personal loan at a low interest rate.
Factors That Affect Personal Loan Interest Rates
Understanding these factors can help you negotiate better:
- Credit Score (CIBIL Score)
- A score of 750+ increases your chances of getting a low rate.
- Income Level
- Higher income means lower risk for banks, leading to lower interest.
- Employment Type
- Salaried employees with reputed organizations get better offers.
- Loan Amount & Tenure
- Shorter tenures usually attract lower interest rates.
- Existing Relationship with Bank
- Loyal customers or salary account holders often get special rates.
Best Banks and NBFCs Offering Low Interest Personal Loans in India (2025)
| Bank / NBFC | Interest Rate (p.a.) | Loan Amount | Tenure | Processing Fee |
|---|---|---|---|---|
| HDFC Bank | 10.50% – 17.50% | ₹50,000 – ₹40 Lakh | Up to 6 years | Up to 2.5% |
| ICICI Bank | 10.75% – 18.50% | ₹50,000 – ₹25 Lakh | Up to 5 years | Up to 2.5% |
| SBI (State Bank) | 9.60% – 15.65% | ₹25,000 – ₹20 Lakh | Up to 6 years | 1% – 1.5% |
| Axis Bank | 10.99% – 19.00% | ₹50,000 – ₹25 Lakh | Up to 5 years | 1.5% – 2% |
| Bajaj Finserv | 11.00% – 20.00% | ₹30,000 – ₹25 Lakh | Up to 5 years | Up to 3% |
| Kotak Mahindra Bank | 10.99% – 18.00% | ₹50,000 – ₹30 Lakh | Up to 5 years | 1.5% – 2.5% |
👉 Note: Interest rates may vary based on applicant profile and bank policies.
Tips to Get a Personal Loan with Low Interest Rate
- Maintain a High Credit Score
Always check your credit score before applying. A score above 750 helps you qualify for the best offers. - Compare Multiple Lenders
Never accept the first loan offer. Use online loan comparison tools to find the best rates. - Choose Shorter Tenure
Opting for shorter repayment periods reduces overall interest cost. - Apply with Your Existing Bank
Banks where you already have a salary or savings account may offer lower interest. - Negotiate with the Bank
If you are a long-time customer with good repayment history, negotiate for a reduced interest rate. - Look for Seasonal Offers
Many banks provide special rates during festive seasons or salary tie-ups.
Eligibility Criteria for Low Interest Personal Loans
While eligibility may differ across lenders, general requirements include:
- Age: 21 – 60 years
- Minimum monthly income: ₹20,000 – ₹30,000 (varies by city)
- Credit Score: 700+ preferred
- Employment: Salaried or self-employed with stable income
- Work Experience: Minimum 1 year (salaried) or 2 years (self-employed)
Step-by-Step Process to Apply for a Low Interest Personal Loan
- Check Your Eligibility
Use online loan eligibility calculators to estimate your chances. - Compare Offers
Check interest rates, tenure, fees, and repayment flexibility across lenders. - Prepare Documents
Commonly required documents:- PAN card, Aadhaar card, voter ID (KYC documents)
- Salary slips, bank statements, ITR for self-employed
- Address proof (utility bills, passport)
- Apply Online or Offline
Most banks allow you to apply through their website, app, or branch. - Loan Disbursement
Once approved, the loan amount is transferred to your account within 24–72 hours.
Benefits of Getting a Low Interest Personal Loan
- Lower EMIs: Affordable monthly repayment.
- Faster Repayment: Shorter tenure saves on total interest paid.
- Improved Credit Score: Timely repayments build your creditworthiness.
- More Savings: You can use extra money for investments instead of interest.
Common Mistakes to Avoid
- Ignoring hidden charges like processing fees and prepayment penalties
- Applying with multiple lenders at once (lowers your credit score)
- Choosing longer tenure just for lower EMI without checking total cost
- Not reading terms and conditions carefully
Frequently Asked Questions (FAQs)
SBI currently offers personal loans starting from 9.60% p.a., one of the lowest among major banks.
Most banks require a minimum monthly income of ₹20,000, though it varies by city.
Yes, some NBFCs offer loans without a credit score, but the interest rate will be higher.
Banks generally offer lower interest rates, while NBFCs provide faster disbursement with relaxed eligibility.
You can opt for loan balance transfer to another bank offering lower interest.
Conclusion
Getting a personal loan with low interest rate is possible if you maintain a good credit score, compare lenders, and apply strategically. Always read the fine print, check fees, and plan your repayment before applying. With the right approach, you can secure affordable financing that fits your budget.
