Avail the Best
Interest Rates for your Personal Loan in 2025.

Your CIBIL score is the representation of your creditworthiness. A CIBIL score above 730 points reassures the lender that you have the required credit management skills. A higher CIBIL score translates into a lower risk factor for the lender, and applicants with a higher CIBIL score are offered the best interest rates. Check your CIBIL score eligibility as below.

The tenure for repayment of a Personal loan is fixed according to your eligibility. The following factors are considered when finalising a tenure:

• The loan amount approved.
• The net income of the applicant.
• The existing EMI being paid.
• The interest rate applicable.

The interest will be applicable as per the APR (Annual Percentage Rate) charged. A personal loan with a 2-year repayment tenure will cost less than if the tenure is extended for 4 years. Illustration:

Significant features of a floating interest include:

• It is governed by the PLR (Prime Lending Rate) of the Reserve Bank of India.
• The PLR is subject to fluctuations based on changes in the Repo rate of the RBI.
• Banks offer mortgages at a variable interest rate based on the PLR and MCLR.
• Your EMI will increase or decrease with the market fluctuations.
• Floating rates of interest are typically lower than fixed rates.

Whereas fixed interest rates work as follows:

• Applicable for loans with a limited tenure, such as Personal and Auto loans.
• The interest and EMI remain fixed for the entire tenure.
• A fixed rate of interest is not affected by market fluctuations.
• Interest for a fixed rate is higher than for a floating rate.
• There may be foreclosure charges applicable with a fixed rate of interest.

There is no direct influence on the Personal Loan interest rate that is fixed for the tenure. Your existing personal loan interest rates and EMIS will remain unchanged despite the fluctuations in the Repo Rate.

The economic conditions that may cause the Repo Rate to increase or decrease will influence the cost of funds for the Banks and NBFCs. Therefore, the interest rate slabs for future personal loans will be different.

• Private sector banks' interest rates range from 9.99% to 24%.
• The interest rates of public sector banks are from 9.25% to 18.5%.
• Public Sector Banks issue higher personal loan amounts up to ₹ 40 lakhs.
• Whereas private sector Banks offer a maximum of ₹30 lakhs.

Private Banks have become preferred Personal loan lenders due to the following:

• Discounts are offered to government employees due to their stable employment.
• Online Personal loans are disbursed with speed and efficiency.
• Minimum documentation is required for processing a personal loan.

The APR, or the annual percentage rate, are the annual charges of a personal loan expressed as a percentage. These include the interest, processing fees and any other charges applicable, such as the charges for personal loan insurance.

Leading Banks issuing personal loans are:

• HDFC Bank
• ICICI Bank
• AXIS Bank
• YES Bank
• KOTAK

Leading NBFCs offering personal loans include:

• TATA Capital
• SMFG Finance
• Bajaj Finserv
• Muthoot Finance
• Aditya Birla Finance

Key differences for the rate of interest include:

• Interest rate: The cost of funds for banks is lower; therefore, the interest rates offered by Banks for a personal loan range from 9.99% to 16% whereas NBFCs' personal loan lending slabs range from 11.50% to 30%.
• Processing fees: The processing fees charged by banks range from ₹5000 to 2.5% of the personal loan amount; fees for NBFCs are considerably higher, with applicants being charged 3% to 5% of the personal loan amount.
• Eligibility Criteria: NBFCs consider issuing personal loans to applicants with a lower CIBIL score, charging a higher interest rate compared to banks like ICICI Bank, which has a CIBIL score cutoff of 750 points for personal loan approval.
• Processing time: ICICI Bank instant online personal loans are processed within 48 hours. Most banks have a streamlined system for quick personal loan disbursals; the processing for a personal loan from an NBFC can take more time.

When finalising the terms for your personal loan, you should also consider the charges if you are expecting funds and want to pay part or all of the loan amount before the decided tenure is over. Key points include:

• The lock-in period for a personal loan is usually 12 months; some banks make an exception.
• Banks usually allow customers to repay up to 25% of the principal amount borrowed in a calendar year without any charges.
• The charges for foreclosure decrease with the EMI paid; the charges are nil for most lenders after the payment of 48 EMI.
• Banks charge interest according to policy for part payment and foreclosure of a personal loan. Check the illustration below for details:

To get the best rate of interest for your personal loan, check out the following:

• Compare interest rates: Before applying for an instant personal loan online, check the details of the personal loan rates of all Banks, which are displayed on their websites. Your usual lender may be offering a higher rate of interest currently.
• Confirm the loan amount you require: The interest rate for a personal loan varies with the loan amount. Finalise the loan amount you need to check for applicable interest and the EMI for repayment.
• Check all costs: The rate of interest for a personal loan is the primary charge, but there are other costs which are relevant, such as the processing fees, insurance and foreclosure charges that can make a difference to the APR.
• Avoid added costs: Extra services such as loan insurance and a Pre-EMI can add to total costs. Before signing the agreement, verify the amount that will be deducted from the loan amount disbursed to determine the amount you will receive.
• Look for special offers and discounts: Your salary account may reflect a preapproval offer with a special interest rate, or there can be limited-period discounts offered by lenders that can be availed.

• The interest rate for a personal loan is fixed at the time of disbursal and cannot be changed; however, an applicant has the option to apply for a balance transfer of the personal loan to another bank.
• Most banks offer the lowest interest rates to applicants who have a consistent on-time repayment history for their existing personal loan. The condition is that the loan must be eligible for foreclosure.
• Applicants can also choose a shorter tenure, with the principal loan amount decreasing after the transfer. Customers can lower costs further by selecting a shorter tenure and can also access an extra amount as a top-up if needed.
• Checking for foreclosure charges is essential; the cost of foreclosure on your loan should not exceed the benefits from the personal loan balance transfer, to lower your interest rate.

The rates given above are the lowest current interest rates, according to the loan amount required. Other conditions are that the CIBIL score must be above the required benchmark and the employer of the applicant must be included in the Banks Approved Company category list for personal loans.