What a personal loan really costs
Personal loans are unsecured, so rates are higher than home or car loans. A ₹3 lakh loan at 12% for 3 years has an EMI of about ₹9,964 and costs about ₹58,700 in interest. At 18%, the same loan costs about ₹90,400 in interest.
Check these before you borrow
- Processing fee: 0.5–3% of the loan plus 18% GST, deducted upfront.
- Foreclosure charges: many lenders charge 2–5% if you close the loan early.
- Insurance add-ons: often bundled; ask for the cost and whether it is optional.
- Lender: borrow only from banks and RBI-registered NBFCs. Check an app’s lending partner before sharing documents.
Cheaper alternatives
A loan against your fixed deposit, PPF (years 3–6) or gold usually costs much less than a personal loan. A top-up on an existing home loan is another low-cost option if you have one.
Frequently asked questions
How much EMI for a ₹3 lakh personal loan?
At 12% for 3 years, the EMI on ₹3 lakh is about ₹9,964 and you pay about ₹58,700 in interest.
What interest rate do personal loans charge?
Rates usually range from about 10% to 24% a year depending on your credit score, income and employer. Fintech and instant loan apps can charge more.
Are there other charges?
Expect a processing fee of 0.5–3% of the loan plus GST, and possible foreclosure charges. Compare the total cost, not just the rate.
How can I get a lower rate?
Keep your credit score above 750, borrow from your salary-account bank, and compare pre-approved offers before accepting one.
Last reviewed: 13-10-2026. Rates and rules are checked against official sources; tell us if something has changed. Contact