Inflation, defined as the rise in prices of goods and services, directly impacts personal loan interest rates in India by influencing the Reserve Bank of India's (RBI) repo rate. When inflation increases, the RBI may raise the repo rate to control spending, leading to higher borrowing costs. Conversely, a decrease in inflation may prompt the RBI to lower the repo rate, making loans more affordable for consumers. As of February 2026, the repo rate is unchanged at 5.25%. Personal loans, being unsecured, typically reflect changes in the repo rate more rapidly compared to secured loans. Factors such as whether the loan has a fixed or floating interest rate also affect how quickly these changes are felt. Lenders assess borrowers based on various criteria, including income, credit score, and debt-to-income ratio, which means that understanding these factors can help applicants secure better loan terms. To navigate the impact of repo rate changes effectively, potential borrowers should evaluate their affordability, improve their credit scores, and stay informed about RBI announcements. By preparing adequately, borrowers can position themselves to secure personal loans at more favorable interest rates.