Loan Rates: Understanding What Impacts Your Borrowing Cost
When you start looking at loan rates, the percentage charged by lenders for borrowing money. Also known as borrower interest, they shape how much you’ll repay over the life of a loan.
Key factors that drive loan rates
One of the biggest players is interest rates, the base rate set by the RBI or market forces that banks add a spread to. In 2024 the RBI repo rate hovered around 6.5%, which pushed personal loan rates into the 9%‑14% APR range. Loan rates rise when interest rates climb and fall when the central bank eases policy. Another critical piece is the EMI, the fixed monthly payment used to repay a loan. EMI is calculated from the loan amount, tenure, and the prevailing loan rate; a higher rate means a larger EMI and tighter cash flow.
How lenders see you also matters. Your credit score, a numeric representation of your repayment history, typically ranging from 300 to 900 in India can shave points off the interest spread. Scores above 750 often secure rates two to three percent lower than the market average. For niche products like gold loan rates, the interest charged on loans secured by gold ornaments, the same principles apply but RBI caps keep them between 7% and 9%.
Because loan rates move opposite to fixed deposit rates, the interest banks pay on deposits, watching FD trends can hint where borrowing costs are headed. When FD rates rise, banks have cheaper funds and may lower loan rates to attract borrowers.
Below you’ll discover a curated set of articles that break down these concepts, compare offers, and give step‑by‑step tips to lock in the best loan rate for your situation.
What APR Will I Get With a 700 Credit Score Personal Loan?
Curious about what kind of APR you can expect if you have a 700 credit score? This article breaks down the real numbers lenders offer, why rates vary so much, and what influences your final offer. Learn how to spot a fair deal and how even small differences in APR add up. You'll find some rarely mentioned tips that could help you lock in an even better rate. Get the facts before you sign anything.
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