Personal loan and alternative borrowing options compared
Bank, NBFC and app personal loans compared with secured and card-based alternatives on how they are priced, who they suit and what to watch.
This table compares types of borrowing an Indian household might use for a personal need, not individual lenders. Pricing descriptions are structural: how the rate is set and which charges usually apply. They are not rate quotes. Your own rate depends on your credit report, income, employer, existing EMIs and the lender's policy, and the only reliable figure is the APR in the Key Fact Statement you receive.
Read across a row to see how an option works and what it is good for, then check the last column for the trade-offs. Secured options such as a loan against a fixed deposit or gold are often cheaper than an unsecured personal loan, but put an asset at risk.
Select a column header to sort.
| Option | How it is priced | Good for | Watch out for |
|---|---|---|---|
| Bank personal loan, fixed rate | Fixed rate for the whole tenure set by the bank's risk-based pricing; processing fee + 18% GST | Salaried borrowers with a good credit report who want a predictable EMI | Foreclosure and part-prepayment charges may apply to fixed-rate loans; check the KFS |
| Bank personal loan, floating rate | External benchmark such as the RBI repo rate plus a spread, reset at least once every three months | Borrowers who expect to prepay, since floating-rate loans to individuals carry no foreclosure charges | EMI or tenure rises if the benchmark goes up; few banks offer floating personal loans |
| NBFC personal loan | Usually fixed, set on the NBFC's own pricing policy; often higher rates for wider eligibility | Self-employed or newer-to-credit borrowers, faster processing | Higher fees, bundled insurance and stricter penal charges; confirm RBI registration |
| Loan through an app (digital lending) | Priced by the regulated bank or NBFC behind the app; KFS and APR required; cooling-off period | Small, short loans for borrowers who check the regulated lender and APR | Fake apps, upfront-fee frauds, data misuse; very high APRs on small short loans |
| Pre-approved or instant loan from your own bank | Offer based on your account and repayment history with that bank | Existing customers who need money quickly with little paperwork | Pre-approved does not mean cheapest; still compare APR and fees |
| Loan or EMI conversion on a credit card | Fixed rate and processing fee set by the card issuer; not covered by the KFS circular | Short, small needs if you already hold a card | Can block the card limit; revolving card dues are far more expensive than a loan |
| Loan or overdraft against a fixed deposit | Usually a margin over the FD rate; secured by the deposit | Short needs when you hold an FD you do not want to break | The FD stays liened until the loan is repaid |
| Gold loan | Secured by gold; lower rate than unsecured loans; LTV limits apply | Short-term needs where you accept the risk of auction on default | Gold can be auctioned after default; bullet repayment schemes need discipline |
| Top-up on an existing home loan | Often priced near the home loan rate, secured by the property | Larger needs for borrowers with a good home loan record | Longer tenure raises total interest; the house secures the extra borrowing |
Rates and charges change often and differ by borrower; nothing here is an offer, a ranking or advice. Verify a lender's registration and rules on the Reserve Bank of India website, report unauthorised lenders on Sachet, and complain about a regulated lender through the RBI Complaint Management System. Gold, FD and home loan top-ups are secured, so default can cost you the asset. For tax treatment of interest on a loan used for a house or business, ask a chartered accountant.