Authors: Khushali Uttam Thorat, Prof. Abhijeet Bharati
Abstract: This study examines the impact of interest rate differences on customer preferences towards loans in the modern financial environment. With increasing financial awareness and easy access to information, customers have become more cautious and analytical while making borrowing decisions. The primary objective of the research is to understand how variations in interest rates influence loan demand and the selection of financial institutions. The study is based on primary data collected from 100 respondents using a structured questionnaire in Pune city. The analysis reveals that interest rate is the most significant factor affecting customer choice, followed by EMI affordability and repayment flexibility. It was observed that customers actively compare loan options and are willing to switch banks to avail lower interest rates. The findings also indicate that higher interest rates tend to reduce loan demand, while competitive pricing attracts more borrowers. Furthermore , the study highlights the growing importance of transparency, digital platforms, and customer-centric services in the lending industry. Although interest rate remains the dominant factor, other elements such as service quality, processing time, and institutional trust also contribute to decision-making. The research concludes that financial institutions must adopt competitive interest rate strategies and flexible loan products to meet evolving customer expectations. The study provides valuable insights for banks, policymakers, and researchers in understanding borrowing behavior and improving lending practices.
DOI: http://doi.org/10.5281/zenodo.20326050
