How personal loans work
A personal loan is an unsecured loan — no collateral is pledged — so lenders price in the extra risk with higher interest rates than home or gold loans. Rates typically range from about 10% to 24% a year and depend heavily on your credit score, income stability and employer.
Watch the total cost, not just the rate
Two loans with the same interest rate can cost very differently once you include the processing fee (usually 1–3% plus GST) and any insurance bundled in. A loan may also quote a lower rate but a longer tenure, raising total interest. Always compare the total amount repaid plus fees.
Tips
- Borrow only what you need — a longer tenure feels cheaper monthly but costs far more overall.
- Check foreclosure terms; many lenders allow prepayment after a few EMIs, sometimes with a small charge.
- A higher credit score is the single biggest lever for a lower rate.