As the country has witnessed the Union Budget 2026, one of the major questions arising among the loan seekers is whether this budget will have any effect on the Personal loan or not. We always consider the budget to be solely focused on the tax slabs, policies, schemes, and infrastructure. However, it also has an indirect role in deciding the monthly or even daily expenses of us, including our personal loan EMIs. From the bird's eye point of view, the government ostensibly seems to maintain fiscal discipline for this financial year, which will result in stable interest rates for personal loans.
The borrowers from different segments are closely analysing the budget with the hope that new potential policy measures could ease their repayment burden.
In this article, we will know whether the Union Budget 2026 will affect the personal loan landscape in India, and if so, then how.
Unlike the other types of loans, such as home & education loans, in personal loans, you don’t get direct income tax deductions on interest for individual consumption purposes. However, calls for greater indirect relief and improved consumer protection have been fueled by the quick rise of unsecured retail loans as well as worries about household leverage. Personal loans usually feature variable interest rates depending on the borrower's profile and are unsecured. Borrowers expect indirect relief measures that increase repayment flexibility or lessen overall debt burden, even if direct tax benefits on personal loans are rare.
Since the personal loan interest rates are decided by the Reserve Bank of India, there is no direct impact of the Union Budget on the personal loan interest rates. Thus, if you are paying an interest rate of supposed 9% today, it is not going to increase or decrease with the budget.
The reason is that personal loan interest rates depend on the RBI’s monetary policy stance, inflation, credit costs, and banks' cost of funds. All these parameters are outside the scope of the Union budget.
Unlike home loans, in which there is an important role of interest deduction and tax benefits, there are no income-tax deductions in personal loans. Personal loan interest is not deductible under current income-tax regulations, but home loan interest is subject to special tax provisions under Sections 24 and 80C (for principal).
The current rates of interest for personal loans in India range from 9.9% to 22%, depending on the credit profile of the borrower. For the fiscal year 2026-27, the government is aiming to achieve a nominal GDP growth of 10%.
We are anticipating that in the upcoming meeting of the RBI monetary policy, there will be no change in the repo rates; however, for Quarter I and Quarter II, there is a possibility of a rate cut of 25 to 50 basis points. Thus, if you have already taken a personal loan on a floating interest rate, you can expect a lower EMI in the upcoming time.
Digital Shift:
There has been a constant momentum by the government towards digital financial infrastructure and fintech for the last decade. Thus, with the growth of digital financial infrastructure, borrowers will have to much less administrative and operating costs for personal loans.
Though there is no positive or negative effect of the budget on personal loans, we still need to wait for the Monetary Policy of the RBI for February 2026 and the upcoming quarters. Economists are hoping for a rate cut of 25 to 50 basis points in the repo rate, which will result in lower rates of interest in perrsonal loan. Nevertheless, we can assure you that you can get the best services and competitive interest rates through Rupee112. We not just provide the convenience, we believe in meeting your financial needs through the digital medium. It will hardly take you 10 minutes to apply for a personal loan on Rupee112 and submit the necessary documents in a digital format. With Rupee112, you can get funds in your account with a few taps on the screen.
FAQs:
If the Union Budget 2026 helps in boosting economic stability and reducing inflation, it will ultimately lead the RBI to reduce interest rates, which will make your personal loan cheaper.
No! Banks, credit unions, NBFCs, and other financial institutions decide the interest rates. However, the ultimate body decisions i.e,. RBI gets influenced by the budget policies.
No, unlike other kinds of loans, there are no income-tax deductions on personal loans, except for some particular cases.
Rupee112 Lending Partners:
( All lending partners are RBI-registered NBFCs.)
SOLOMON CAPITAL PRIVATE LIMITED is a Non Banking Finance Company (NBFC) registered with the Reserve Bank of India (RBI). RUPEE112 is the brand name under which the company conducts its lending operations and specialize in meeting customer's instant financial needs.
