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How Is Your Personal Loan Interest Rate Decided?


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A personal loan could be the primary choice for anybody in life when they experience some financial
crunch in life. Unsecured nature of the loan and instant approval features of the loan drags the attention
of the customer during the times of need ignoring high personal loan interest rates. The facility to use
the personal loans for multiple purposes that need not be disclosed to the lender is a second big reason
for their high demand over other types of loans. If you are reading this article, you might be either
suspecting the need for the personal loan in near future or you want to know about the factors that
affect the interest rate on personal loans.

As many do, you might start your research for the good personal loan by comparing the interest rates
offered by the different lender which is a bad start of hunting a good personal loan. Hidden fact is that
personal loan interest rates calculation varies depending on the customer profile considering various

Work profile

Many lenders don’t mention this to you. The place you work and the designation you hold plays a key
role in the interest rate deviation. Major Banks in India have categorized almost 33,000 companies
under different categories like Super A, A, B, C and D. If you are fortunate enough to work in the
companies like Infosys and TCS which fall in the super A category of most of the leading banks, you will
enjoy good deviation in the interest rates. If the banks are charging interest rate in the slab of 11% -16%,
has employed in the top companies will win you a chance of lowest interest rates. People working in the
other companies also enjoy a good reduction on the interest rate depending on their designation in the

Credit profile

Apart from the company your work with and designation in the company, credit score is another
an important factor that the lenders looks at while deciding the personal loan interest rates. Before you
start comparing the interest rates offered by the lenders through loan comparison sites, have your
credit report handy to gain a power to negotiate the interest rate further. Your good credit history will
give the lender assurance about your responsibility in repaying the loan so, there are good chances of
quoting the lowest personal loan interest rates in order to not to lose the relation with good and loyal


Your income is the third important factor that decides personal loan interest rates. You can
alternatively call it as repayment capacity. A person with the good repayment capacity wins a chance to
get low interest on the personal loan when compared borrower with low income. For instance, if a
person with the income of 35,000 gets personal loans at interest rate of 16%, a person with 50,000 will
get the loan at 11% s, it is important to keep your personal loan as low as small as possible depending
on your repayment capacity to gain better interest rate on the personal loan.

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