Imagine you are planning a wedding, buying a car, or starting a new business. Now think of the first thing you would need, money. Most of us don’t have lakhs sitting idle in our accounts. That’s when loans or debt financing come into the picture. But here’s the catch, the interest rate you choose today will decide how heavy your EMIs feel tomorrow.

In India, where every rupee counts, finding a loan with a low interest rate is not just smart, it’s essential. The lower the rate, the less you pay over time. Whether you are a salaried employee planning a dream vacation or an entrepreneur launching your first startup, a low-interest loan gives you breathing space.

That’s where BigMudra comes in. It’s a one-stop platform where you can compare loans from top banks and NBFCs, check your eligibility, and apply, all from your mobile.

Let’s now explore how debt financing works, how it can fuel your startup, and how you can secure the lowest interest loans using BigMudra.

What is Debt Financing?

In simple words, debt financing means borrowing money that you’ll pay back with interest. Unlike equity, where you give away a piece of your company, debt lets you keep full control.

For example:

• You take a business loan for startups from a bank.
• You get the funds.
• You pay monthly EMIs that include principal + interest.
  

That’s it. No investor interference, no dilution.

Debt vs. Equity

Feature	Debt Financing	Equity Financing
Ownership Dilution	No	Yes
Repayment Required	Yes (with interest)	No (profits are shared)
Control Over Company	Full	Shared with investors
Credit Score Impact	Yes	No

Startups often mix both. But for early traction, venture debt funds or loans are good because you stay in control while scaling.

Types of Loans & Their Interest Rates (As of 2025)

Let’s break down popular loan types in India along with their interest rates:

1. Personal Loans

• Purpose: Weddings, travel, education, emergencies
• Interest Rate: 10.5% to 18% p.a.
• Pros: No collateral, quick disbursal
• Cons: Higher interest than secured loans

2. Home Loans

• Purpose: Buying/constructing a house
• Interest Rate: 8.35% to 9.5% p.a.
• Pros: Tax benefits, long tenure
• Cons: Requires property documents, lengthy processing

3. Auto Loans

• Purpose: Buying a vehicle
• Interest Rate: 8% to 11% p.a.
• Pros: Secured by the vehicle
• Cons: Only for specific use

4. Business Loans (Ideal for Startups)

• Purpose: Expanding or launching business
• Interest Rate: 9% to 17% p.a.
• Pros: No equity dilution, scalable
• Cons: Requires credit score, financials
  

(Data Source: RBI, SBI, HDFC, ICICI, 2025 lending reports)

Real-Life Example: Startup Founder Using Debt Wisely

Let’s say Ravi, a 28-year-old software engineer from Pune, has a brilliant idea for a food delivery app. He needs Rs. 10 lakhs to launch it.

Now, if he raises funds via equity, he may lose control. Instead, he compares business loans for startups using BigMudra. He finds a 10% interest loan from an NBFC. He gets the funds within 5 days, starts his venture, and begins repaying monthly.

Result? His startup grows and he still owns 100% equity. That’s the power of debt funding.

Factors That Affect Loan Interest Rates in India

Understanding what influences your loan rate can help you negotiate better.

1. Credit Score

• A good credit score (750+) means lower interest.
• Check it for free using BigMudra tools.

2. Loan Tenure

• Shorter tenure = lower overall interest.
• Longer tenure = smaller EMIs but more total interest.

3. Type of Lender

• NBFCs may offer flexible terms but higher rates.
• Banks usually have strict norms but better rates.
  

4. Repo Rate (Set by RBI)

• Lower repo rate = cheaper loans.
• As of 2025, repo rate stands at 6.5%. This affects all floating-rate loans.

5. Borrower’s Profile

• Income, job type, location, and even age matter.

Read More: Which Loan Offers the Lowest Interest Rate?

How BigMudra Helps You Find the Lowest Interest Loans

Here’s what makes BigMudra special for Indian borrowers:

Loan Comparison Tool

• Compare loans from top banks and NBFCs instantly.
• Filter by amount, tenure, interest rate, and more.

Eligibility Checker

• Enter a few details and know which loans you qualify for.
• Saves time and reduces rejection chances.

Quick Online Applications

• No need to visit branches. Apply from your phone.

Covers Multiple Loan Types

• From personal to business loans for startups to home loans.

Trusted by Thousands

• Transparent, secure, and growing fast across India.

Tips to Get Low Interest Loans in India

Want to pay less EMI? Follow these tips:

1. Maintain a Good Credit Score
   
   • Pay your credit card bills on time.
   • Avoid loan defaults.
     
2. Compare Before You Commit
   
   • Use BigMudra to compare and find the best offer.
     
3. Choose a Shorter Tenure (If You Can)
   
   • Your EMIs may be higher, but total interest paid will be less.
     
4. Negotiate with Lenders
   
   • Especially if you have a good profile or existing relationship.
     
5. Avoid Multiple Loan Applications
   
   • Too many queries can hurt your credit score.

When Should Startups Choose Debt Over Equity?

Startups should pick debt funding when:

• You need quick capital without giving up control.
• You have steady revenue to repay.
• Your startup is in early growth but not ready for big VC rounds.

Venture debt funds are another option, these are loans given to startups that already have VC backing. They help you extend the runway without diluting equity.

For example, fintech companies in India like Razorpay and BharatPe have used both debt and equity at different stages. A smart mix works best.

Final Thoughts: Make Smart Financial Moves

Whether you are planning a wedding, buying your first home, or launching a startup, choosing the right loan matters. In India, even a 1% difference in interest can save you thousands.

Debt financing gives startups wings without selling their soul (or equity). And platforms like BigMudra make this journey easy, safe, and smart.

So, don’t jump into just any loan. Compare, plan, and borrow wisely.

Ready to Find Your Perfect Loan?

Explore low-interest loan options on BigMudra now. Whether it’s a business loan for startups, a home loan, or personal funding, BigMudra is your financial buddy.

Visit BigMudra.com today and unlock better financial opportunities.