8 Ways to Get Personal Loan with Lowest Interest Rate

Personal Loan With Lowest Interest Rate

I have a friend who works for a government-sector bank. He told me that, many people like You and Me think that personal loan interest rates are fixed, but thatโ€™s not true! Banks and financial institutions are often allowed to negotiate, especially if you meet eligible criteria. Here are the 8 ways to get a Personal Loan with Lowest Interest Rate.

Yet, borrowers in urgent need of funds often accept their first loan offerโ€”sometimes with high interest rates or unnecessary add-ons like insurance.

How Banks Decide Your Personal Loan Interest Rate

Major Factors that all Banks Consider to Decide Your Personal Loan Interest Rate:

๐Ÿ”น CIBIL Score: A score above 750 improves your chances of securing a lower interest rate.

๐Ÿ”น Income Stability: Higher and stable income signals lower risk to banks. If you are a government employee you are like a golden duck for Banks.

๐Ÿ”น Debt-to-Income Ratio: The lower your existing loan EMIs, the better your negotiation power.

๐Ÿ”น Employment Type: Salaried professionals, especially government employees, often get lower rates.

๐Ÿ”น Banking Relationship: Existing customers with salary accounts or previous loans have better leverage.

Proven Tips to Negotiate a Lower Interest Rate

โœ… 1. Improve Your CIBIL Score Before Applying

A high CIBIL score (750 or above) shows youโ€™re a responsible borrower, making banks more willing to offer lower rates. If your score is below 750, try to repay existing debts, avoid multiple loan inquiries, and ensure timely bill payments before applying. Remember, You can not increase your CIBIL score suddenly, even if you clear all existing loans still it takes a month or two months to update.

โœ… 2. Compare Offers from Multiple Banks

Never settle for the first offer! Use online platforms to compare rates from different banks. A simple search for personal loans will show how interest rates vary across banks. Even It is the NBFC offers a low interest rate it is good to go as long as you are confident enough to repay EMI in time. NBFCs and other small lenders charge a little high on Defaults and Late Payments otherwise these offer low interest rates.

๐Ÿ’ก Pro Tip: Use the Cashvanto Personal Loan EMI Calculator to compare loan offers and choose the best one ( No PAN Card Required).

โœ… 3. Leverage Your Existing Bank Relationship

If you have a salary account or an active loan with a bank, they might offer a preferred rate. Always mention this while negotiating.

โœ… 4. Ask for a Lower Rate If You Have a High Credit Score

Banks may not automatically offer the lowest rate even if you qualify. If you have a 750+ credit score, confidently ask: ” I Have a good CBIL Score, can you lower my personal loan interest rate?”.

โœ… 5. Avoid Unnecessary Insurance & Hidden Fees

Banks or Bank Representatives always force you to take insurance against personal loans, quoting its mandatory. In reality, There is no such rule exists to take insurance against personal loan.

โœ… 6. Negotiate Processing Fees & Prepayment Charges

Processing fees range between 1-3% of the loan amount, and banks often waive or reduce them for eligible borrowers. Similarly, ensure prepayment charges are minimal (Zero) so you can repay the loan early without heavy penalties.

โœ… 7. Use Loan Offers from Other Banks as Leverage

If another bank offers a lower interest rate, use it as a bargaining tool:

๐Ÿ’ฌ โ€œXYZ Bank is offering me 10.5% interest, can you match or beat that?โ€

โœ… 8. Apply at the Right Time (Festive & Special Offers)

Banks roll out special loan discounts during festivals like Diwali, New Year, and Independence Day. Applying during these periods can help you lock in lower rates.

What If the Bank Refuses to Negotiate? (Plan B)

If your bank refuses to negotiate:

๐Ÿ”น Look at NBFCs: Non-Banking Financial Companies (NBFCs) like Bajaj Finserv, Tata Capital, or HDFC Credila often have flexible terms.

๐Ÿ”น Consider Balance Transfer: Most Banks offer low interest rates on Balance transfer, you can transfer your existing loan to them at a lower interest rate.

๐Ÿ”น Negotiate Other Loan Terms: Even if the interest rate isnโ€™t flexible, try negotiating tenure, processing fees, or EMI options to make repayments easier.

๐Ÿ”น Always compare personal loan rates before applying. ๐Ÿ”น If you have a good credit score, use it as leverage. ๐Ÿ”น Never agree to unnecessary charges like high processing fees or insurance. ๐Ÿ”น Be persistentโ€”banks do negotiate!

๐Ÿ’ก Want to save even more on loan interest? Try the Best Loan Calculator with Extra Payments to see how prepayments can cut your total cost!

How to get personal loan with lowest interest rate?

How to Get a Personal Loan with the Lowest Interest Rate?
โœ… Boost Your Credit Score: A score of 750+ gets you the best rates. Pay EMIs on time and reduce existing debt.
โœ… Compare Multiple Lenders: Use online loan comparison tools to find the lowest interest rates.
โœ… Check for Pre-Approved Offers: Banks and NBFCs offer exclusive lower-rate loans to existing customers.
โœ… Opt for a Secured Loan: Pledging collateral (like FD, gold) lowers the interest rate.
โœ… Choose a Shorter Tenure: Shorter loan periods often have lower rates, saving you money.
โœ… Maintain a Stable Income: Higher income and a steady job increase your chances of getting low rates.
โœ… Negotiate with Banks: Existing relationships with banks can help you bargain for better interest rates.
โœ… Apply During Special Offers: Banks provide lower rates during festivals or special loan campaigns.
๐Ÿ’ก Pro Tip: Avoid applying for multiple loans at onceโ€”each inquiry affects your credit score! ๐Ÿš€ Use our Online tool without affecting your CIBIL score (No PAN Card Required)

Which bank gives personal loan with lowest interest rate in India?

Bank of Maharashtra Offers personal loans with interest rates starting at 10.00% per annum. This is among the lowest rates available, making it a compelling option for eligible borrowers.

Which Type of Loan Is the Cheapest?

The cheapest loan depends on interest rates, tenure, and collateral requirements. Here are the most affordable loan types:
โœ… Secured Loans (Lowest Interest Rates)
1๏ธโƒฃ Home Loans (8.25% – 9.5% p.a.) โ€“ Lowest rates, long tenure, and tax benefits.
2๏ธโƒฃ Loan Against Fixed Deposit (FD) (6% – 8% p.a.) โ€“ Interest is just 1-2% above your FD rate.
3๏ธโƒฃ Gold Loans (7% – 10% p.a.) โ€“ Quick processing and lower rates if pledged with banks.
4๏ธโƒฃ Loan Against Securities (8% – 11% p.a.) โ€“ Use shares, mutual funds, or LIC policies as collateral.
โœ… Unsecured Loans (Higher Interest, But No Collateral Needed)
5๏ธโƒฃ Personal Loans (10% – 24% p.a.) โ€“ Based on credit score; lower rates for salaried & government employees.
6๏ธโƒฃ Education Loans (8% – 12% p.a.) โ€“ Special rates for premier institutions and tax benefits under Section 80E.

๐Ÿš€ Need help calculating your EMI? Use the Cashvanto Personal Loan EMI Calculator to find the best repayment plan for you!

๐Ÿ“ฉ Join 10,000+ Smart Borrowers! Get expert insights on low-interest loans, cashback deals, and financial hacks to maximize your savings. ๐Ÿš€ Never miss a money-saving tipโ€”subscribe now!

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