Best Personal Loans in India

What is a good interest rate?

For salaried borrowers with strong credit, personal loan rates often start around 10%–12%. Applicants with thinner files or lower scores may see rates above 16% due to higher risk. Rates vary by employer category, city, loan amount, and tenure. Improve eligibility by reducing outstanding credit card balances, maintaining FOIR within lender limits and avoiding multiple hard inquiries before applying. Always compare the APR which includes processing fees and not just the headline rate.

Can I prepay a personal loan and save interest?

Most lenders allow part-prepayment or foreclosure after a minimum number of EMIs. Charges can be a fixed fee or a percentage of outstanding principal. Prepaying early reduces future interest significantly because interest accrues on the reducing balance. Check whether your loan is fixed or floating, confirm the exact fees, and ask for an amortization statement post-prepayment. If you anticipate bonuses or variable income, choosing a tenure that keeps EMI comfortable while planning early part-prepayments is a practical approach.

How is EMI decided and can it change?

EMI depends on principal, monthly interest rate and tenure. Fixed-rate loans have constant EMIs. Floating-rate loans may adjust the EMI or tenure when the benchmark changes. Use our EMI Calculator to estimate monthly payments and total interest. Choosing a slightly longer tenure lowers EMI but increases interest cost; a moderate EMI aligned with your budget plus the option to prepay future windfalls tends to balance affordability and total cost well.

What documents are usually required?

Typically KYC (PAN and Aadhaar), address proof, income proofs (salary slips and bank statements), and employment details are required. Self-employed applicants may provide ITRs and GST returns. Digital journeys now simplify uploads through secure portals. Keep soft copies organized to speed approvals. Discrepancies between salary credits and declared income often cause delays—ensure statements clearly show employer credits and that personal loan EMI estimates fit your FOIR limit.

What is FOIR and how does it affect eligibility?

FOIR (Fixed Obligations to Income Ratio) measures how much of your income goes to existing EMIs and mandatory expenses. Lenders cap FOIR, commonly around 40%–50% for salaried applicants. A higher FOIR reduces eligible EMI and hence the loan amount. Lower FOIR by reducing credit card revolvers, closing small loans, or extending tenure to spread payments. Use our Loan Eligibility Calculator to estimate maximum principal based on your income, obligations and expected rate.

How do processing fees and insurance impact cost?

Processing fees are often 1%–3% of the sanctioned amount, plus taxes. Some lenders bundle credit life insurance for protection; useful for dependents but it adds cost. Compare offers using APR so fees are accounted for. If insurance is optional, assess whether existing coverage (term plan) already provides adequate protection. Avoid upfront add-ons unless they genuinely provide value; prioritize lower APR and transparent terms.

How fast is disbursal and what delays happen?

Digital personal loans can disburse within hours, while traditional journeys may take 2–3 days. Common delays include verification calls not answered, bank statements not readable, or KYC mismatch. Keep your phone available, documents legible, and employer details accurate. If your address has changed, update KYC first. Respond promptly to queries; speed often depends on how quickly you complete e-mandates and consent steps.

Should I choose a co-applicant?

Co-applicants can enhance eligibility via combined income but both become responsible for repayments. Co-apps are more common in home loans; for personal loans, lenders may require individual eligibility. If your income is variable or FOIR is high, consider lowering loan amount or extending tenure rather than adding a co-applicant. Maintain clean credit behavior—late payments affect both profiles.

What mistakes should I avoid?

Applying to many lenders in parallel triggers multiple hard inquiries and can lower your score temporarily. Avoid taking a loan to close revolving credit unless you’ve budgeted repayment strictly. Don’t ignore fees like mandate registration, bounce charges or foreclosure terms. Read sanction letters carefully and keep a copy of all communications. Set auto-debit to pay the total amount due on time every month—late fees and penal interest quickly add up.

Any tips to get a better offer?

Keep utilization low on existing cards, pay EMIs before the due date, and avoid new borrowings for a few months before applying. Provide accurate income proofs and highlight stable employment. Consider pre-approved offers in your banking app—they often have lower friction and competitive rates. If approved, compare multiple offers on APR, processing fees, prepayment terms, and disbursal speed, then choose the one that balances cost and flexibility.