Personal Loan 2026: Need a ₹5 Lakh Personal Loan? These Banks Are Offering the Cheapest Deals—Check Out the Full List..
If you are considering taking out a personal loan of up to ₹5 lakh for home renovation, a medical emergency, or any other personal requirement, it is absolutely essential for you to compare the interest rates offered by various banks. A personal loan is an unsecured loan; therefore, its interest rates depend on your credit score and the bank's specific policies.
Currently, there is fierce competition among banks in the market regarding personal loans of up to ₹5 lakh. While some banks are offering loans at single-digit interest rates (less than 9%) to attract customers, the rates at other banks are soaring past the 15% mark. If you, too, are planning to take out a loan of ₹5 lakh, you must check the latest interest rates offered by the country's leading public and private sector banks before applying, to ensure that the burden of your EMI remains as low as possible.
Which Bank Offers the Lowest Interest Rate?
Currently, the Bank of Maharashtra offers the lowest interest rate, providing personal loans of up to ₹5 lakh at a starting rate of 8.75%. However, this specific interest rate is not available to everyone; if an applicant's CIBIL score does not meet the bank's prescribed criteria, the interest rate could rise as high as 13.55%, which is a significantly high rate. Bank Name | Interest Rate
Union Bank of India | 8.90 - 12.65
Axis Bank | Starting from 9.60
Punjab & Sind Bank | 9.60 - 13.85
Canara Bank | 9.70 - 15.15
HSBC Bank | Starting from 9.75
Central Bank of India | 9.85 - 11.65
UCO Bank | 9.95 - 13.20
HDFC Bank | Starting from 9.99
ICICI Bank | Starting from 9.99
IDFC FIRST Bank | Starting from 9.99
State Bank of India (SBI) | 10.00 - 15.00
Apart from these banks, there are certain other banks and NBFCs whose interest rates are currently among the highest. While Bajaj Finserv's starting rate begins at 10.00%, its upper limit extends to 30.00%. Similarly, Federal Bank's starting rate is 11.75%—which is among the highest—while its upper limit reaches up to 18.99%.
**Understanding Through Calculation**
Based on the data provided above, the Bank of Maharashtra is currently charging the lowest interest, with a starting rate of 8.75%. If you were to borrow ₹5 lakh from this bank for a tenure of 5 years, you would need to pay ₹10,319 per month as an EMI. This means that you would pay a total of ₹1,19,117 to the bank as interest, and over the course of 5 years, you would have to repay a total of ₹6,19,117 to the bank, inclusive of interest.
Now, let's assume that your CIBIL score is not deemed satisfactory by the bank, and the bank grants you a loan at its upper limit (which is 13.55% for the Bank of Maharashtra); in that scenario, you would be required to pay ₹11,518 per month as an EMI. Consequently, the bank will charge you a total interest of ₹1,91,068. Over a period of 5 years, you will be required to repay a total of ₹6,91,068 to the bank.
What should you keep in mind before taking out a loan?
CIBIL Score: Banks invariably determine the applicable interest rate based on your CIBIL score. Therefore, check your CIBIL score before applying for a loan; if your score is not favorable, take steps to improve it before proceeding with the loan application.
Processing Fees and Other Charges: It is often the case that banks offering lower interest rates levy higher processing fees. Therefore, ensure that you compare file charges, processing fees, and any hidden charges.
Foreclosure Rules: If you come into a lump sum of money midway through the loan tenure and wish to prepay or close the loan ahead of schedule, be sure to verify whether the bank imposes any penalty (Prepayment Penalty) for doing so.
Disclaimer: This content has been sourced and edited from Dainik Jagran. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
