Lenders tend to follow a risk-based pricing concept for setting personal loan interest rates. They typically charge a higher rate if the credit risk involved is higher. This is because personal loans do not involve any collateral and hence lenders do not have the option to recover funds from assets pledged in case of default like in the case of other types of loans.  

Based on the assessment of your credit risk, lenders may set your personal loan rate ranging anywhere between 10.99% and 24% or higher per annum. Discussed here are some smart tips through which you can secure a lower personal loan rate.

  • Maintain a credit score of 750 and above

Lenders factor in your credit score to evaluate your creditworthiness. If your score is 750 and above, then you are considered credible and may hold a higher approval chance at a lower interest rate. However, if your score is low, then your loan application may be rejected or will be approved at a higher interest rate.

Forming a strong score of 750 and above takes time. So, you must constantly review your credit report to keep a thorough check on your credit behaviour and take the required measures to improve it. Doing so allows you to maintain a good score and remain eligible for a personal loan at a lower rate anytime to meet unannounced monetary crunches.

  • Qualify depending on your professional credentials

Employees working with well-known companies are usually considered stable in the context of their income and ability to pay personal loan EMIs and are offered a lower rate of interest than those employed with less reputable organisations.

Apart from this, your employment nature may even impact your personal loan interest rates. Among the salaried individuals, those working in PSU and government sectors are highly favoured followed by those working in major private companies. 

  • Approach the lender with whom you hold an account

Many tend to open a savings or current account and then recurring or fixed deposits with the same bank, thus becoming loyal bank customers. Owing to this loyalty, you may manage to maintain a good informal relationship with the lender, which may fetch you a lower personal loan rate when the need for a loan comes up.


Availing a low-interest-rate personal loan is one of the best ways to meet your immediate monetary requirements. From funding your child’s wedding expenses to renovating your home, you can easily bankroll all your non-speculative needs with a personal loan.

But availing a personal loan at the lowest possible interest rate is essential. Doing so allows you to make your loan repayments with ease. Thus, ensure to factor in the above-mentioned tips to avail a personal loan at a lower rate.

Also, before you hit on the personal loan apply option, make sure to use an online personal loan EMI calculator. This will help you get an idea about the personal loan EMI and tenure and budget the same with your other expenses accordingly.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.