Am I overpaying on my personal loan? Find your real rate first

If you borrowed within months of starting a job, from a lender you had no account with, with a card balance running and the money needed that week, each of those pushed the rate up. Two years on, the same person often has a longer credit history, a higher salary, a cleared card and 20 or more EMIs paid on time: a different borrower, still paying the old one's price.

A floating-rate loan is only a partial exception. Its rate follows the benchmark, but the spread over it was set on the old profile and stays there.

You need three numbers: the amount sanctioned, the tenure in months, and the EMI. All three are on any loan statement, and the EMI is on every bank statement. A's are ₹8 lakh, 60 months and ₹19,454. Start with 10 and 20 percent. The EMI on ₹8 lakh over 60 months at 10 percent is ₹16,998, below A's; at 20 percent it is ₹21,195, above. So the rate is between them. Try the middle, and each time keep the half whose ends still straddle ₹19,454.

Each try uses the standard reducing-balance EMI: with i as the annual rate divided by 1,200, EMI equals P times i times (1 plus i) to the power n, over ((1 plus i) to the power n minus 1). A spreadsheet's RATE function does the same search in one cell; multiply its answer by 12. A's rate is 16 percent.

There is a second rate hiding behind the first. A paid a 2.5 percent processing fee plus GST, ₹23,600, deducted before the money arrived, so A received ₹7,76,400 while repaying EMIs calculated on ₹8 lakh. Run the same search on the money actually received and the rate is 17.38 percent, 1.38 points higher. Use that one to compare new offers; for deciding whether to switch, the old fee is spent either way.

Two steps. First, see your credit report as a lender will: the score and every account behind it, including anything overdue or settled. Checking your own report is a soft enquiry and does not affect the score. Second, get one or two real quotes, starting with the bank that holds your salary account, and ask for the Key Facts Statement, which states the all-in annual rate including fees. An illustrative band for a salaried borrower with a clean record at a bank is 10.5 to 14 percent; where you sit inside it depends on your profile.

The gap between your rate and that quote is only half the answer. The other half is how long the gap has to work and how much it costs to capture. Here is ₹5 lakh outstanding on a 15 percent loan, with a 1.5 percent processing fee on the new loan and a 3 percent foreclosure charge on the old one, both plus GST: ₹26,550 in charges, 5.31 percent of the balance.

A has paid 12 of 60 EMIs. The outstanding balance is ₹6,86,459 and 48 EMIs of ₹19,454 remain: ₹9,33,792 still to pay, of which ₹2,47,333 is interest. A's score and salary have both improved, and a bank quotes an illustrative 11.5 percent, 4.5 points lower.

Moved to 11.5 percent over the same 48 months, the EMI is ₹17,909 and the remaining payments total ₹8,59,632, a gross saving of ₹74,160. Against that: a 1.5 percent fee plus GST on the new loan, ₹12,150, and a 3 percent foreclosure charge plus GST on the old, ₹24,301. What is left is ₹37,709, about half the headline saving.

B borrowed ₹3 lakh over 36 months and pays ₹10,253 a month. The same search gives 14 percent; with the 2 percent fee plus GST, ₹7,080, B's rate on the money received was 15.69 percent. After 22 EMIs the balance is ₹1,31,730 and 14 EMIs remain: ₹1,43,542 to pay, of which only ₹11,812 is interest.

The same bank quotes B 11.5 percent, a 2.5 point gap. Over the 14 months left the EMI falls to ₹10,100, just ₹153 lower, for a gross saving of ₹2,142. The new fee is ₹2,332 and the foreclosure charge ₹4,663, ₹6,995 in all, so switching loses ₹4,853. Even if the old loan had no foreclosure charge, the fee alone leaves B ₹190 worse off.

The offer that makes it look worthwhile is the reset. Spread over a fresh 36 months, the EMI drops by ₹5,909 to ₹4,344, and B pays ₹19,837 more than by staying. Is B overpaying? A little, and not enough to act on.

Asking costs no application, no enquiry on your report and no foreclosure charge. Suppose A's lender agrees to 13.5 percent for the remaining 48 months. The EMI becomes ₹18,587 and A saves ₹41,616, ₹3,907 more than the switch, for one conversation. With a 0.5 percent repricing fee plus GST, ₹4,050, the saving is ₹37,566, level with switching and without the paperwork.

Take one number into that conversation. For A, fee-free repricing to 13.74 percent saves exactly what switching saves. At or below it, accept; above it, switch. That threshold is 2.26 percentage points below A's current rate and 2.24 points above the outside offer. The lender does not have to match the new rate to keep you. It only has to beat the cost of leaving.

The arithmetic hinges on one line in your loan agreement: whether the old lender can charge for closing early. The RBI's Pre-payment Charges on Loans Directions, issued on 2 July 2025 and published at https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=12878&Mode=0, bar regulated lenders from levying prepayment charges on floating-rate loans to individuals for purposes other than business, for loans sanctioned or renewed on or after 1 January 2026. This holds whatever the source of the money used to prepay, a transfer to another lender included, and with no minimum lock-in. The directions also require the position on prepayment charges to be disclosed in the sanction letter, loan agreement and Key Facts Statement; a charge not disclosed there cannot be levied.

Two limits. The directions do not cover fixed-rate loans, and many personal loans are fixed-rate, so the charge on those depends on your contract. And a loan sanctioned before 1 January 2026 is not covered unless since renewed. Hence the table above shows both cases.

The hard part of this page is the first step: knowing each loan's EMI, what it costs, and what you would be offered today. Unyfy reads the EMI debits from your bank and card transaction emails and, on Android, transactional SMS, so the loans come from what actually leaves your account rather than from memory. It flags any loan priced above what the same borrower would be offered today and says whether switching is worth it after the fee, and it shows a blended rate across all your loans and cards.

When you want a real quote, the eligibility check pulls your Equifax credit report as a soft enquiry, with no effect on your score, and shows the score and the accounts behind it before you apply anywhere. It then compares offers from 15+ banks and NBFCs. Only the one lender you choose to apply with runs a hard enquiry.

Before acting on a verdict, confirm the foreclosure charge in your sanction letter. Unyfy is not a lender; the lender you apply with makes the decision. It never asks for your bank password or UPI PIN, and every payment is one you authorise. Install Unyfy on Android, or use the web app at app.unyfy.co.in on an iPhone.