Author
LoansJagat Team
Read Time
5 Min
15 May 2025
Personal loans in 2025 are more within reach as banks in India are charging lower interest rates and taking less time for approval. As the cost of living remains stable and the interest rates from the Reserve Bank of India remain steady, this is the right time for borrowers to look for improved loan deals. This article is sourced from well-researched pieces published by The Economic Times and Mint.
Whether it is a wedding, a medical need, or home repairs, opting for the right loan with the minimum rate of interest can save a considerable amount of money in the long term.
Amit is a 30-year-old marketing executive from Pune. In April, he needed ₹10,00,000 to pay for his sister's wedding expenses. Two banks offered him loans:
Option A: 9.50% interest from Bank of Maharashtra
Option B: 14.00% interest from a private bank
He almost opted for Option B as the approval was faster, but he made a quick comparison afterwards:
Bank | Interest Rate | Monthly EMI (5 years) | Total Interest Paid | Total Amount Repaid |
Option A | 9.50% | ₹20,973 | ₹2,58,440 | ₹12,58,440 |
Option B | 14.00% | ₹23,268 | ₹3,96,080 | ₹13,96,080 |
By opting for the lower rate of interest, Amit saved ₹1,37,640 in five years.
This guide will help you discover similar savings by showing which banks are providing the lowest personal loan rates in 2025 and what to consider before applying.
As personal loan interest rates have been revised in 2025, borrowers must be aware of their EMI and the total amount to be repaid.
The comparison below of the best Indian banks includes interest rates, processing charges, EMIs, and the total amount to be repaid on a ₹10 lakh loan taken for 5 years, making it easier to see which bank is providing a better deal.
Bank Name | Interest Rate (p.a.) | Processing Fee | Loan Tenure | EMI | Total Repayment |
Bank of Maharashtra | 9.50% | Up to 1% | Up to 60 months | ₹21,002 | ₹12,60,120 |
Indian Bank | 9.75% | 0.50% to 1% | 12 to 84 months | ₹21,124 | ₹12,67,440 |
State Bank of India | 10.30% | Up to 1.5% | Up to 72 months | ₹21,395 | ₹12,83,700 |
IndusInd Bank | 10.49% | Up to 2% | Up to 60 months | ₹21,489 | ₹12,89,340 |
ICICI Bank | 10.85% | Up to 2% | Up to 60 months | ₹21,668 | ₹13,00,080 |
HDFC Bank | 10.90% | Up to ₹6,500 | Up to 60 months | ₹21,693 | ₹13,01,580 |
Kotak Mahindra Bank | 10.99% | Up to 5% | Up to 60 months | ₹21,737 | ₹13,04,220 |
Axis Bank | 11.25% | Up to 2% | Up to 60 months | ₹21,867 | ₹13,12,020 |
Note: All rates are indicative and vary based on credit profile, employer, and location.
While one applicant may get a rate as low as 10%, another may be offered 16% for the same loan. The following are the key factors influencing your interest rate:
Quick Tip
Check your credit report. Fixing even minor mistakes can make a major impact, sometimes reducing your interest rate by as much as 0.5%.
A low interest rate may seem attractive, but it's only part of the story. Several other fees can quietly add up to make the true cost of a personal loan higher. Here's a brief rundown of typical hidden fees to be aware of:
Charge Type | Typical Range | Watch Out For |
Processing Fees | 0.5% to 2.5% of the loan amount | Usually deducted upfront from the loan amount |
Prepayment Charges | 2% to 4% of the outstanding principal | Some lenders don’t allow free early closure |
Late Payment Fees | ₹500 to ₹1,000 per missed EMI | It can add up if you miss more than one EMI |
GST | 18% on all service charges | Increases the effective cost of borrowing |
Warning: Always read the terms and conditions thoroughly—even for pre-approved deals. Fine print usually has larger implications.
The personal loan rate of interest in 2025 may vary by as much as 6% based on your profile. On a 5-year, ₹10 lakh loan, that difference could cost you over ₹1.8 lakh in additional repayment. Here are five simple steps to ensure you get the lowest available rate:
Keep your repayments up to date for at least 12 months
A stable history can assist you in being eligible for interest rates below 11%, provided that there are no late EMIs in your credit history.
Verify Pre-Approved Offers Through Reliable Sources
Going over pre-approved offers made to your profile can keep you away from high-interest loans. Pre-approved rates occasionally range between 0.5% to 0.75% less.
Apply For Loans One At A Time
Several applications can lower your credit score by 10 to 15 points and may raise your interest rate by 0.5% or more.
Borrow Only What You Need
Cutting your loan size from ₹10 lakh to ₹9.5 lakh can save you more than ₹1,000 in EMI and ₹60,000+ in interest over five years.
Use Your Job Stability as Leverage
If you've worked with the same company for more than 2 years, you could be eligible for a 0.25% to 0.50% rate cut — lenders usually reward job stability.
Quick Tip: Even a 0.5% cut in interest rate can save you almost ₹15,000–₹16,000 for a 5-year loan of ₹10 lakh. Negotiate it.
In 2025, it's simpler to get a personal loan, but finding the right loan still takes some homework. As interest rates fall and more banks give you better deals, it's worth comparing before you sign on the dotted line. Similar to Amit, opting for a lower rate can save you big money in the long run. Always see beyond the EMI — compare the total repayment, charges, and conditions.
A few minutes of research at the moment will help you save lakhs later on. Refer to this guide to make wiser decisions and acquire a loan that works for your requirements, not only for now but also for years to come.
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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