In India, personal loans have increased tremendously over the past few years because of their ease of acquisition, less paperwork, and the unlimited use of funds. The interest rate, however, is the actual game changer as far as price is concerned. High-interest loans may consume whatever you have in savings; therefore, a low-interest personal loan is a clever financial instrument that will allow you to fulfill your requirements without strain.
Currently, the Indian personal loan market is expected to cross 10 lakh crores by the year 2025, and since most borrowers want to have a loan at the most reasonable rate, finding a loan at the cheapest rate possible becomes a major concern. How the interest rate charged on a personal loan is calculated? And more to the point, how to make sure that you qualify for the lowest rate possible?
In this blog, we will guide your understanding of what influences low-interest personal loans and how you can become a low-risk borrower to receive the best rate the lenders have to offer.
What is Considered a Low Interest Rate for Personal Loans in India?
Personal loan interest rates in India typically range from 10% to 24% per annum, depending on your lender and credit profile. A low interest rate is generally anything below 12%, though this can vary based on economic conditions and your financial standing.
Government data and reports from credit agencies like TransUnion CIBIL show that individuals with a CIBIL score above 750 are more likely to secure loans at interest rates below 12%, especially from digital lending platforms.
Key Factors That Affect Your Interest Rate
To rush to gain a low-interest personal loan, first, we need to know what drives your price of a loan:
1. Experian or CIBIL Credit Score
The score is attached to your credit score, which indicates the way you have made repayments and financial discipline. Any score above 750 is perfect to get a low-interest loan. A score of less than 650 means rejection or astronomically high charges.
2. Income Level
The increase in stable incomes represents a higher capacity to repay, which decreases the risk to the lender. Most lenders love dealing with people who have monthly salaries.
3. Type and Stability of Employment
Bank workers or office men in dignified companies or government jobs also availed a high rate as compared to self-employed or contract workers.
4. Debt-to-Income Ratio (DTI)
This is the percentage of your monthly EMI as compared to your income. A DTI of less than 40 per cent is considered healthy.
5. Tenure and Loan Amount
An increment in the amount of loans or tenure could be equated with a slight increment in interest rates owing to the higher lender exposure.
6. Current Family Venture Connection with Lender
The ready customers tend to receive pre-approved offers at lower rates and under better terms.
How to Qualify for a Low-Interest Personal Loan
Here are actionable steps you can take to boost your eligibility for better interest rates:
1. Maintain a Healthy Credit Score
Your credit score is the most critical factor.
Tips to Improve It:
- Pay all EMIs and credit card bills on time
- Keep credit card utilization under 30%
- Don’t apply for multiple loans at once
- Check your CIBIL report regularly for errors
A 2023 CIBIL report showed that borrowers with a score of 750+ had a 50% higher approval rate and got loans at rates 2-5% lower than average.
2. Apply with a Reputed Digital Lending Platform
Traditional banks may have rigid policies, but NBFCs and digital lenders like Stashfin offer more flexible terms. Stashfin evaluates your profile holistically and often provides competitive rates even to new-to-credit or gig workers.
Their digital processes make it easier to apply and receive quick disbursals—often within 24–48 hours.
3. Choose the Right Loan Tenure
While longer tenures reduce EMI amounts, they often increase the total interest paid. Shorter tenures usually attract better interest rates.
Pro Tip: Use online EMI calculators to compare options and find a tenure that balances affordability and savings.
4. Show Proof of Stable Income
Submitting income documents like:
- Latest 3 salary slips
- Last 6 months’ bank statements
- ITR (if self-employed)
This boosts your credibility and reassures the lender about your repayment ability.
5. Consider a Co-Applicant
If your credit score or income is low, applying with a co-applicant who has a strong profile can improve your chances and lower the interest rate.
For instance, salaried parents or a spouse with stable income can strengthen the application and unlock better offers.
6. Avoid Frequent Loan Applications
Multiple loan inquiries within a short span hurt your credit score and signal desperation. This can increase your risk profile, leading to higher interest rates.
Stick to one or two trusted platforms—like Stashfin—that offer real-time eligibility checks without affecting your credit score.
India’s Digital Lending Boom: Why Timing Matters
According to a 2024 report by Inc42, digital lending in India is growing at a CAGR of 36%, with NBFCs like Stashfin driving inclusive credit across metros and small towns.
With the RBI tightening regulations for transparency, this is the best time for borrowers to explore competitive rates through online platforms rather than sticking to traditional banks.
Additional Tips to Reduce Your Loan Burden
Even after securing a personal loan at the lowest rate, here are some strategies to reduce your outgo:
Prepay when possible: Reduce your principal faster to save on interest
Negotiate terms: If your credit score improves, ask for a rate revision
Opt for a balance transfer: Shift your loan to another lender with a lower rate
Choose credit lines over lump-sum loans: Pay interest only on the utilized amount
Take the Smart Step with Stashfin
Securing a low-interest personal loan isn’t just about luck—it’s about planning, discipline, and choosing the right lending partner. Platforms like Stashfin help you qualify faster by looking beyond traditional parameters and offering flexible, digital-first solutions.
Whether you need a personal loan for education, medical bills, travel, or debt consolidation, Stashfin’s affordable interest rates, minimal paperwork, and real-time processing make it the smarter choice.
Explore your options now at www.stashfin.com and see how easily you can qualify for a personal loan that doesn’t burden your wallet but empowers your goals.