GUIDESPERSONAL LOANS
What are the Personal Loan Interest Rates? How to Calculate it?
3 MIN • 
LAST EDITED BY ULFATH JOAD ON JUNE 3, 2025.
LAST EDITED BY ULFATH JOAD ON JUNE 3, 2025.
GUIDES LAST EDITED BY ULFATH JOAD ON JUNE 3, 2025.
The decision to take a personal loan is challenging. But getting an attractive interest rate to can help smoothen the decision making process. The current market interest rates range between 8.75% to 13% in banks and reputed financial institutions in India.
You can calculate the interest rate for a personal loan using a simple formula:
Total accrued amount = Principal Amount * (1 + rate of interest x number of years)
For example, if you’ve borrowed a principal of ₹15,000 at a 9.1% interest rate for 2.5 years, then your total accrued amount is:
₹15,000 x (1+0.091x2.5) = ₹18,412.50
Alternatively, you can use a personal loan calculator to work out your EMI per month. Interested to learn the factors that decide a bank’s interest rate on a personal loan? Keep reading!
Loan providers prefer to lend money at low-interest rates to trusted customers who have a history of making regular payments.
So, don’t be surprised when you notice loan providers going as low as 8.75% and as high as 49.5% on the interest rate for personal loans depending on the borrower’s creditworthiness.
While these estimated figures might seem higher than that of secured loans, the risks associated with personal loans largely justify the interest rates. For instance, personal loans are mainly used to address an emergency and are provided without collateral. So, loan providers look to make the most of this flexibility by charging relatively higher interest rates.
Every time a bank offers a personal loan to you or accepts your loan request, they will offer you two interest rate models - fixed and fluctuating.
When you opt for fluctuating interest rates, the market movement decides the percentage of your interest. Granted, you could be paying high rates in several instances. But the low rates in other instances more than makeup for this discrepancy.
Regardless of the model you choose, you will notice that banks will analyse the following documents before deciding your rate of interest.
If you fulfil all these criteria, you might be convinced to ask what is the current interest rate on a personal loan to get a better idea of the market rates at the moment. The current interest rates are more in the vicinity of 10%, but you can negotiate if you have a strong credit score and a high income.
Personal loans are great when you need immediate liquid funds. However, given the high interest rates and stipulated deadlines every month, the repayment of these loans can easily cause undue financial stress. To avoid such problems, it is vital to create a monthly budget to maintain financial discipline and complete the payments before the monthly deadline.
Eager to get a personal loan without much hassle? You can get an instant loan directly to your Savings Account through the Fi Money app. The best part? This process is 100% paperless and boasts competitive interest rates. Stay in charge of your loans with a transparent borrowing process!
Most financial institutions offer loans at interest rates between 10% to 24% per annum.
If you have a high credit score, high income and a low debt-to-income ratio, you might be able to secure personal loans at an interest rate of around 8% per annum.
A rate of 10.20% is completely possible to get in India. Loan providers like Bank of Baroda offer a similar interest rate. Be sure to do your research and find the providers that work for you!
The loan percentage that is safe for you is entirely subjective. This depends on various factors, including the borrower's income, credit history, and debt-to-income ratio.
