Personal Loans for Bad Credit: Compare the Real Cost

In short: With a low or bad credit score you can still get a personal loan, but the offers you receive will vary a lot in real cost. Compare them on the annual percentage rate (APR) and the total amount you repay, both shown in the Key Fact Statement (KFS), not on the headline rate or the EMI alone. A “flat” monthly rate and a large processing fee can make an offer that sounds cheap the most expensive one on the table.

By the Omozing Credit Team, which includes IIT and IIM alumni · Updated October 2026 · 8-minute read

This guide is about one decision: once you have bad-credit loan offers in hand, how do you tell which one is actually cheapest and safest? If you are still working out which kinds of lenders say yes to a low score, start with personal loans for a low or bad CIBIL score: which lenders to try. For ways to improve your chances before applying, see 10 ways to get a personal loan with a low CIBIL score.

Why bad-credit offers differ so much

When your score is low, each lender prices the extra risk in its own way. One raises the interest rate. Another keeps the rate modest but charges a bigger processing fee. A third quotes a small-sounding monthly “flat” rate. Some add insurance or “platform” charges. The EMI on each may look similar, yet the total you hand over can differ by tens of thousands of rupees.

The good news: the RBI’s digital lending rules require regulated lenders to give you a Key Fact Statement before you sign. It shows the APR, which folds interest and fees into one annual figure, plus every charge and the repayment schedule. A fee that is not in the KFS cannot be charged. That one document is your comparison tool.

Three offers for the same loan: a worked example

Here is an illustrative borrower with a CIBIL score in the low 600s who needs ₹2,00,000 for 24 months and receives three offers.

₹2,00,000 for 24 months	Offer A	Offer B	Offer C
How the rate is quoted	16% a year, reducing	24% a year, reducing	1.5% a month, flat
Processing fee	2% + GST	5% + GST	3% + GST
Fee deducted (with 18% GST)	₹4,720	₹11,800	₹7,080
Monthly EMI	₹9,793	₹10,574	₹11,333
Total interest	₹35,023	₹53,781	₹72,000
Total cost (interest + fee)	₹39,743	₹65,581	₹79,080
Approximate APR	~18.5%	~30.5%	~35.4%

Illustrative offers, not quotes from any lender. APR here is the annualised rate on the amount actually received after the fee, calculated from the EMIs. Your KFS shows the exact APR for your loan.

Total cost of each offer on ₹2,00,000 over 24 months

Bars drawn to scale (₹80,000 = 400 units). Total cost = interest plus processing fee with GST. Illustrative.

Offer C sounds cheapest and costs about twice as much as Offer A.

The flat-rate trap

“1.5% a month” sounds like 18% a year, which sounds cheaper than Offer B’s 24%. But a flat rate charges interest on the full original amount for the whole tenure, even as you repay it. With a reducing rate, interest is charged only on what you still owe. That is why Offer C ends up with the highest APR. As a rough rule, a flat rate costs close to twice its headline number once converted to a reducing-balance rate. Always convert flat quotes using the APR in the KFS before you compare.

A 7-point checklist for comparing offers

APR, not the headline rate. It is the only figure that includes fees.
Total amount payable. EMI multiplied by months, plus any fee deducted upfront.
Money you actually receive. A 5% fee on ₹2 lakh means ₹11,800 less in your account with GST.
Prepayment and foreclosure terms. If you expect a bonus or plan to refinance once your score improves, low foreclosure charges matter.
Add-ons. Insurance or other products should be optional and shown separately in the KFS.
Late-payment charges. With a tight budget, know exactly what one late EMI would cost.
Who the lender is. The KFS must name the regulated bank or NBFC. Check any app against the RBI’s list using our guide to checking RBI-registered loan apps.

Can you afford the EMI?

A cheaper loan is still a bad loan if the EMI squeezes your budget into a late payment, which would push your score lower still. Add the new EMI to your existing EMIs and card minimums. Many lenders want total obligations to stay within roughly half of your take-home pay, and you will sleep better well below that.

₹50,000illustrative take-home pay

₹8,000existing EMIs

₹9,793new EMI (Offer A)

~36%of take-home going to EMIs

Illustrative profile, not a real customer.

Red flags that should end the comparison

Walk away if…

Anyone asks for a fee before approval. Omozing never does.
There is no KFS, or it does not name the lender.
Money would come from a third party’s account.
The app wants your contacts or photo gallery.
You are promised “guaranteed approval” regardless of score.

Good signs

A named RBI-registered bank or NBFC.
APR and total cost shown before you sign.
A cooling-off period you can use to exit.
A grievance officer you can contact.
A real look at your income, not just your score.

Fake apps target people with poor scores precisely because they expect rejection elsewhere. Our guide to spotting fake loan apps covers the warning signs.

Where Omozing fits

Omozing lends to salaried people with a credit score from 600 and a take-home of ₹40,000 a month or more: up to ₹25 lakh, unsecured, for 3 to 36 months, with two documents (six months of salary-account statements and your latest salary slip). Rates start from 11% a year, the processing fee is 3% to 7% plus GST, and your exact rate, fees and APR are in the KFS before you sign, so you can compare us exactly as described above. A credit officer reads your full report, and a co-applicant can strengthen the application.

Get an offer you can compare

Check what Omozing can offer with a credit score from 600. You will see the APR and total cost before you commit.

Personal loan from a score of 600 Apply with a co-applicant

Frequently asked questions

What interest rate will I get with a bad credit score?

It depends on the lender and on your income, existing debt and repayment history, not just the score. Compare offers on APR and total cost in each Key Fact Statement rather than on headline rates.

What is the difference between a flat and a reducing interest rate?

A flat rate charges interest on the original loan amount for the whole tenure. A reducing rate charges interest only on the balance still owed. The same number quoted flat costs far more.

What is APR and where do I find it?

APR is the annual percentage rate: the yearly cost of the loan including interest and fees. Regulated lenders must show it in the Key Fact Statement before you sign.

Is a lower EMI always the better offer?

No. A lower EMI over a longer tenure, or with a big upfront fee, can cost more in total. Compare total amount payable and APR for the same amount and tenure.

Should I accept the first offer I get with a low score?

Not without reading the KFS. But avoid applying to many lenders at once, since each application adds a hard enquiry. Shortlist two or three suitable regulated lenders instead.

Can I refinance later if my score improves?

Often yes. Check the foreclosure and prepayment charges in the KFS before you sign so that moving to a cheaper loan later is not expensive.

Omozing is the digital lending brand of Aparampaar Finance Private Limited, an RBI-registered non-deposit-taking NBFC. Loans are subject to credit assessment; the exact rate, fees and APR are in your Key Fact Statement. See our regulatory disclosures and grievance redressal process.