If you are planning to take a personal loan of up to ₹5 lakh in 2026 for home renovation, medical emergencies, education expenses, travel, or any other urgent financial need, comparing interest rates across banks has become more important than ever.
Since personal loans are unsecured loans, banks decide the applicable interest rate primarily based on:
Your CIBIL score
Monthly income
Employment profile
Existing liabilities
Repayment history
Currently, several public and private sector banks are aggressively competing in the personal loan segment. While some banks are offering loans at single-digit interest rates, others are charging rates above 15%, significantly increasing the EMI burden for borrowers.
Here’s a detailed look at the cheapest personal loan offers available for ₹5 lakh loans in 2026.
Bank of Maharashtra Offers the Lowest Personal Loan Interest Rate
Among major lenders, Bank of Maharashtra is currently offering one of the lowest starting personal loan interest rates in the market.
Bank of Maharashtra Personal Loan Details:
Starting Interest Rate: 8.75%
Maximum Interest Rate: 13.55%
Loan Amount Considered: ₹5 lakh
Loan Tenure: 5 years
However, the lowest rate is available only to borrowers with excellent credit profiles and high CIBIL scores.
If the applicant’s credit score is weaker, the bank may charge significantly higher interest.
EMI Calculation for ₹5 Lakh Personal Loan
Let’s understand the impact of interest rates through a simple example.
Scenario 1: Loan at 8.75% Interest
If you borrow ₹5 lakh for 5 years at 8.75% interest:
Monthly EMI: Approximately ₹10,319
Total Interest Payable: Around ₹1,19,117
Total Repayment Amount: Approximately ₹6,19,117
Scenario 2: Loan at 13.55% Interest
If your CIBIL score is lower and the bank charges 13.55% interest:
Monthly EMI: Approximately ₹11,518
Total Interest Payable: Around ₹1,91,068
Total Repayment Amount: Approximately ₹6,91,068
This shows how a poor credit score can dramatically increase your repayment burden.
Banks and NBFCs With Higher Interest Rates
While some lenders offer attractive starting rates, many banks and NBFCs charge much higher maximum rates depending on the borrower’s risk profile.
Examples:
Bajaj Finserv
Starting Rate: 10.00%
Maximum Rate: Up to 30.00%
Federal Bank
Starting Rate: 11.75%
Maximum Rate: Up to 18.99%
Borrowers should therefore compare both:
Starting interest rates
Maximum applicable rates
before applying for a loan.
Why Comparing Personal Loan Interest Rates Is Important
Even a small difference in interest rates can significantly affect:
Monthly EMI
Total interest outgo
Long-term repayment burden
For example, a difference of just 3%–4% in interest rates can increase repayment costs by tens of thousands of rupees over a 5-year tenure.
Therefore, experts strongly advise borrowers to compare offers from:
Public sector banks
Private banks
NBFCs
Digital lenders
before finalizing a personal loan.
Key Things to Check Before Taking a Personal Loan
1. Check Your CIBIL Score First
Your TransUnion CIBIL score plays the biggest role in determining loan eligibility and interest rates.
Generally:
750+ score: Better approval chances and lower rates
Below 700: Higher interest rates possible
Improving your credit score before applying can save a substantial amount of money.
2. Compare Processing Fees and Hidden Charges
Many banks offering low interest rates compensate by charging:
High processing fees
Documentation charges
Insurance costs
Hidden administrative fees
Always compare the complete borrowing cost instead of focusing only on the interest rate.
3. Understand Foreclosure and Prepayment Rules
If you plan to repay the loan early in the future, check whether the bank imposes:
Prepayment penalties
Foreclosure charges
Lock-in periods
Some lenders charge penalties for closing loans before the tenure ends.
4. Select the Right Loan Tenure
A longer tenure:
Reduces monthly EMI
But increases total interest payable
A shorter tenure:
Increases EMI
But lowers overall interest cost
Select a repayment period based on your monthly income and financial stability.
Why Personal Loan Demand Is Rising in 2026
Banks and NBFCs are witnessing increasing demand for personal loans due to:
Rising medical expenses
Home renovation needs
Wedding expenses
Travel and lifestyle spending
Emergency financial requirements
The digital loan approval process has also made borrowing faster and more convenient than before.
Tips to Get a Personal Loan at Lower Interest Rates
To secure the best personal loan offer:
Maintain a high CIBIL score
Avoid multiple loan applications simultaneously
Keep credit card utilization low
Pay existing EMIs on time
Compare multiple lenders before applying
Opt for salary-linked loan offers if available
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