Author
LoansJagat Team
Read Time
5 Min
30 May 2025
Are you stuck paying high EMIs every month? Most people jump into personal loans without checking the maths. They go by brand names, or just trust the bank they already have an account with.
That’s a mistake. Because not all banks treat personal loans the same, some charge higher rates, some have hidden fees, and some make you pay more interest over time, even if the EMI looks smaller at first glance.
So you need to compare if you want the lowest EMI possible on your personal loan in India. But not just the surface, you need to break it down. Let’s make it easier for you.
Most salaried professionals today want to borrow smartly. People want loans fast, whether it's for medical needs, a wedding, or even a last-minute renovation. But fast doesn’t mean cheap. Every rupee matters, especially when you're repaying over 3 to 5 years.
Here's something recent: As of May 2025, some top Indian banks have slashed interest rates for personal loans due to easing repo rates. But still, EMIs can vary for the same amount depending on tenure, interest type, and even your credit score.
Now, let’s break it down with real examples and show how numbers can surprise you.
People often think that the lowest interest rate means the lowest EMI. Not true. Let’s say two banks offer a ₹5,00,000 loan. One gives you a 10.50% interest rate but for 3 years, and another offers 11.25% for 5 years. Which has lower EMI?
Let’s calculate it.
Bank | Rate (p.a.) | Tenure | EMI (Approx) | Total Interest |
HDFC Bank | 10.50% | 36 months | ₹16,265 | ₹85,540 |
ICICI Bank | 11.25% | 60 months | ₹10,978 | ₹1,58,680 |
You see? The EMI looks small in ICICI Bank’s case. But over time, you pay more interest. So if your monthly budget allows, shorter tenure saves money. But if you want to ease monthly stress, longer tenure helps.
Read More – Top 5 Banks Offering Lowest Personal Loan Interest Rates in 2025
Technique to follow: Always use the reducing balance EMI formula.
Formula:
EMI = [P × r × (1 + r)^n] / [(1 + r)^n – 1]
Where:
Example:
Loan = ₹3,00,000
Interest = 11.75% annually → 0.979% monthly
Tenure = 48 months
EMI = ₹7,864 (approx.)
Don’t trust bank ads. Use this method to check what you’re actually paying every month.
Let’s look at a few top names. Not every bank offers the same deal, and some even waive off processing fees during limited periods. You should know what’s happening now, not 6 months back.
Bank | Interest Range | Max Tenure | Processing Fee |
SBI | 10.30% – 15.30% | 84 months | NIL (till Mar 2025) |
ICICI Bank | 10.85% – 16.65% | 72 months | 2% + taxes |
HDFC Bank | 10.90% – 24.00% | 72 months | ₹6,500 + GST |
Kotak Mahindra Bank | 10.99% – 16.99% | 72 months | Up to 5% |
SBI is waiving off processing fees, which alone can save you ₹10,000+ for bigger loans. HDFC’s upper limit on interest rates is too high. Kotak is good for short-term, but watch their processing cost.
You looked at interest rate and EMI. Good. But there’s more, and this is where most people go wrong.
Type of Charge | Range | Impact on EMI |
Processing Fee | ₹999 – ₹10,000 | Adds to loan cost |
Pre-closure Penalty | 2% – 5% of balance | Hurts if you repay early |
Late Payment Charges | ₹500 – ₹1,200 | Triggers if you miss date |
GST on Charges | 18% extra | Always adds silently |
Technique name: Read the “Loan Agreement Schedule of Charges”.
Most banks won’t highlight this during application. But that 2% fee on ₹10,00,000 loan? That’s ₹20,000 gone on day one.
Yes, your CIBIL score matters. But do you know by how much?
If you have a score above 750, you may get the loan at 10.50%. If your score is 680, the same bank may offer 13.25%. Over 5 years, this makes a huge cost difference.
CIBIL Score | Interest Rate | EMI (60 months) | Total Repayment |
780 | 10.50% | ₹15,049 | ₹9,02,940 |
700 | 12.75% | ₹15,895 | ₹9,53,700 |
650 | 14.25% | ₹16,377 | ₹9,82,620 |
You save ₹79,680 just by having a better credit score.
Keep old accounts open
These small steps can save ₹50,000+ in interest over 5 years.
Also Read - DIY Loan Comparison Spreadsheet – Make One in Just 5 Minutes
Finding the lowest EMI isn’t about picking the lowest interest rate. It’s about checking the numbers, processing charges, tenure, credit score, hidden fees, and budget. Make the bank work for you, not the other way around.
Always compare 3–4 options, check numbers using EMI calculators, and don’t skip reading terms. It’s your money. Keep more of it.
1. Can I reduce EMI after taking the loan?
Yes, by extending the tenure or switching banks. But balance transfer has its own charges. Do the math first.
2. Is loan insurance mandatory for personal loans?
No. Banks may push it, but it's optional. Say no unless you really need it.
3. Which bank gives instant approval for low EMI loans?
Mostly private banks like HDFC, ICICI. But interest may be higher. Instant isn’t always cheaper.
4. Should I go for NBFC if the EMI is lower?
Maybe. But check if they’re RBI registered. NBFCs sometimes charge more in processing and pre-closure.
5. Does choosing auto-debit reduce EMI or interest?
Not directly. But it avoids late payment fees. Also, banks prefer it and may approve faster.
About the Author
LoansJagat Team
We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?
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