By Thelowinterest 09 Dec, 2025
Personal loans are one of the most popular ways to meet urgent financial needs, whether it’s for medical expenses, weddings, travel, education, or debt consolidation. Since personal loans are usually unsecured, interest rates can be higher than home or business loans. However, with the right approach, you can still get a low interest personal loan in India.
This guide explains how personal loan interest rates work, what lenders look for, and smart tips to secure the best deal.
A personal loan is an unsecured loan, which means you don’t need to provide collateral such as property or gold. The loan amount, interest rate, and tenure depend on your income, credit score, and repayment capacity.
Key features of personal loans:
No collateral required
Quick approval and disbursal
Flexible loan tenure (12–60 months)
Fixed monthly EMIs
Understanding how lenders price personal loans helps you negotiate better.
Your CIBIL score is the biggest factor.
750+: Best interest rates
650–749: Moderate rates
Below 650: Higher interest or limited offers
Higher and stable income signals lower risk, leading to better rates. Salaried professionals with stable jobs usually get lower interest than self-employed borrowers.
If you already have multiple loans or high EMIs, lenders may charge a higher rate due to increased risk.
Smaller tenures often attract lower interest rates. Longer tenure reduces EMI but increases total interest paid.
To improve your credit score:
Pay EMIs and credit card bills on time
Keep credit utilisation below 30%
Avoid frequent loan applications
Don’t default on payments
Even a small improvement in your score can reduce interest rates significantly.
Never accept the first offer you receive. Compare:
Interest rates
Processing fees
Prepayment charges
Loan tenure options
Banks, NBFCs, and digital lenders all offer different terms. Online comparison platforms help identify the lowest-cost loans.
Shorter loan tenure means:
Lower interest rate
Less total interest outflow
If your income allows, opt for a shorter tenure to reduce overall cost.
Adding a co-applicant with a good credit score and stable income improves eligibility and lowers interest rates.
Lenders prefer borrowers with:
Regular monthly income
Long employment history
Reputed employer or stable business
Avoid changing jobs right before applying for a loan if possible.
Banks often provide special interest rates for:
Salaried professionals
Government employees
Women applicants
Existing bank customers
These offers can help you save significantly on interest.
The documentation process is simple:
Aadhaar & PAN card
Salary slips or income proof
Bank statements (last 3–6 months)
Employment proof/business proof
Address proof
Many lenders now offer 100% digital verification, speeding up approval.
Check your eligibility online
Compare lenders and select the best offer
Fill out the application form
Upload required documents
Receive approval within hours
Get funds credited directly to your bank account
The entire process can take less than 24 hours with digital lenders.
Common Mistakes to Avoid
Applying with a low credit score without preparation
Choosing a longer tenure without checking the total interest cost
Ignoring hidden charges
Applying to multiple lenders simultaneously
Missing EMI payments after loan approval
Avoiding these mistakes helps you get better loan terms.
Getting a low interest personal loan in India is possible when you prepare smartly. Maintaining a strong credit score, comparing lenders, choosing the right tenure, and keeping your finances healthy can help. thelowinterest.com
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