Personal loans have become one of the most popular financial products in India. In 2026, both banks and NBFCs are offering competitive personal loan interest rates with faster approval and flexible repayment options. However, interest rates can vary significantly depending on the lender, credit score, income profile, and employment type.
This detailed guide explains personal loan interest rates in India (2026), compares banks vs NBFCs, and helps you choose the best option to save money on interest.
What Is a Personal Loan Interest Rate?
A personal loan interest rate is the percentage charged by a lender on the borrowed amount. It directly affects your monthly EMI and total repayment amount. Since personal loans are unsecured, interest rates are generally higher than home or car loans.
Interest rates depend on:
- Credit score (CIBIL)
- Income stability
- Employment type
- Lender type (Bank or NBFC)
Personal Loan Interest Rates in India (2026)
Below is an updated comparison of interest rates offered by different lenders in India.
| Lender Type | Interest Rate Range | Loan Amount | Approval Time |
|---|---|---|---|
| Public Sector Banks | 10.25% – 15.50% | Up to ₹20 Lakhs | 5–7 days |
| Private Banks | 11% – 22% | Up to ₹40 Lakhs | 2–5 days |
| NBFCs | 14% – 30% | Up to ₹50 Lakhs | 24–72 hours |
| Digital Loan Apps | 18% – 36% | Up to ₹10 Lakhs | Same day |
👉 Banks = lower interest rates
👉 NBFCs = faster approval
Bank vs NBFC – Which Offers Better Personal Loan Rates?
Personal Loans from Banks
Banks usually offer the lowest personal loan interest rates, especially to salaried individuals with high credit scores.
Advantages of Banks:
- Lower interest rates
- Longer repayment tenure
- Higher trust and security
Disadvantages of Banks:
- Strict eligibility
- Slower approval
- More documentation
Personal Loans from NBFCs
NBFCs focus on faster processing and flexible eligibility criteria.
Advantages of NBFCs:
- Fast approval (24–72 hours)
- Flexible credit score requirements
- Suitable for self-employed individuals
Disadvantages of NBFCs:
- Higher interest rates
- Shorter tenures in some cases
EMI Comparison – Bank vs NBFC (Example)
Loan Amount: ₹5,00,000
Tenure: 3 years
| Lender | Interest Rate | EMI (Approx.) | Total Interest |
|---|---|---|---|
| Bank | 11% | ₹16,350 | ₹88,600 |
| NBFC | 18% | ₹18,100 | ₹1,51,600 |
👉 Choosing a bank can save ₹60,000+ in interest over 3 years.
How Credit Score Affects Personal Loan Interest Rates
Your credit score plays a major role in deciding your interest rate.
| Credit Score | Interest Rate Impact |
|---|---|
| 750+ | Lowest rates |
| 700–749 | Moderate rates |
| 650–699 | Higher rates |
| Below 650 | Very high rates / limited approval |
👉 Maintaining a good credit score can reduce your EMI significantly.
Personal Loan Interest Rates for Salaried Individuals
Salaried applicants usually receive lower interest rates because of stable income.
Typical Interest Rate Range:
10.25% – 16%
Eligibility factors:
- Stable employment
- Salary account with bank
- Government or reputed private company job
Personal Loan Interest Rates for Self-Employed Individuals
Self-employed borrowers may face slightly higher rates due to income variability.
Typical Interest Rate Range:
13% – 28%
Requirements:
- Stable employment
- Salary account with bank
- Government or reputed private company job
👉 Many self-employed individuals also consider personal loans without collateral or business loans depending on funding needs.
Documents Required for Best Interest Rates
To secure lower personal loan interest rates, keep these documents ready:
- PAN Card & Aadhaar Card
- Bank statements (last 6 months)
- Salary slips / ITR
- Address proof
Tips to Get the Lowest Personal Loan Interest Rate
- Maintain a high CIBIL score
- Apply with a realistic loan amount
- Avoid multiple loan enquiries
- Choose longer tenure if EMI is a concern
Fixed vs Floating Interest Rates
Most personal loans in India come with fixed interest rates, meaning EMI remains constant throughout the tenure.
Fixed Rate Benefits:
- Predictable EMI
- Better financial planning
Floating rates are rare in personal loans and mostly offered by select lenders.
FAQs – Personal Loan Interest Rates in India
Q1. Which bank offers the lowest personal loan interest rate in India?
Public sector banks generally offer the lowest rates for eligible borrowers.
Q2. Are NBFC personal loan interest rates higher than banks?
Yes, but NBFCs provide faster approval and flexible eligibility.
Q3. Can interest rates be negotiated?
Yes, borrowers with high credit scores can negotiate lower rates.
Q4. Does tenure affect interest rates?
Longer tenure increases total interest but lowers EMI.
Final Conclusion
Understanding personal loan interest rates in India (2026) is crucial before applying for a loan. Banks are ideal for low interest rates, while NBFCs suit borrowers who need fast approval. Comparing lenders carefully can save you thousands of rupees in interest.