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Personal Loan Interest Rates for Banks & NBFCs 2025

Explore the latest 2025 personal loan interest rates from top Banks & NBFCs. Find competitive rates to suit your financial goals and secure the best loan offer.

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The flexibility that Indian citizens access with personal loans makes them a top financial tool across the country. A personal loan serves multiple needs from handling urgent medical costs to funding weddings alongside improving house conditions and easing debt burdens. An interest rate for personal loans acts as the primary factor which determines their affordability levels. This guide presents a complete understanding of Indian personal loan interest rates along with guidance on low-rate acquisition and floating versus fixed rate distinctions, reducing interest rates, factors affecting the personal loan interest rates, and ways to secure personal loans at best interest rates

Current Personal Loan Bank Interest Rates in India 2025
Banks
Personal Loan Interest Rates 2025
Institution Interest Rates
HDFC Bank 10.85% – 24.00%
Axis Bank 11% – 24.00%
Bandhan Bank 11.90% Onwards
ICICI Bank 10.85% – 16.25%
DBS Bank 10.99% – 24.00%
Bank of Baroda 11.05% – 18.75%
SBI 11.45% – 14.85%
IndusInd Bank 10.49% – 24.00%
Yes Bank 11.25% – 21.00%
Standard Chartered 11.50% – 24.00%
IDFC First 10.99% – 23.99%
Kotak Mahindra Bank 10.99% – 24.00%
PNB 11.40% – 17.95%
Indian Bank 10.90% – 24.00%
Current Personal Loan NBFC Interest Rates in India 2025
NBFCs
NBFC Name Interest Rate
InCred Interest Rate 2025 16% – 42%
Finnable Interest Rate 2025 16% – 28%
L&T Finance Interest Rate 2025 11% – 24%
Aditya Birla Interest Rate 2025 10% – 32%
Shriram Finance Interest Rate 2025 11% – 42%
Bajaj Finserv Interest Rate 2025 10.75% – 31%
Piramal Interest Rate 2025 12.99% onwards
Tata Capital Interest Rate 2025 11.99% – 35%
Poonawalla Interest Rate 2025 11.49% – 19%
SMFG Interest Rate 2025 13% – 36%
Axis Finance Interest Rate 2025 13% onwards
Mahindra Finance Interest Rate 2025 12% – 36%
Paysense Interest Rate 2025 16.8% – 33%

How to Get the Lowest Interest Rate on a Personal Loan?

Getting your personal loan at the lowest possible interest rate will save you substantial financial costs across your loan tenure:

  1. Maintain a Good Credit Score: In India lenders base their evaluation of your credit worthiness on your current credit score. People who achieve credit scores greater than 750 usually qualify for excellent personal loans that enable them to request reduced interest rates.
  2. Compare Multiple Lenders: Different banks and NBFCs (Non-Banking Financial Companies) offer varying interest rates. Online Loan Aggregator Fincover allows users to evaluate rates between lenders so they can choose the lowest offer available.
  3. Opt for a Shorter Tenure: Fast loan durations accommodate better interest costs since lenders experience reduced risk.
  4. Negotiate with Your Lender: Those with an existing relationship with the bank can negotiate for better interest rates.
  5. Choose the Best Employer: Lenders often provide their best interest rates to employees who work for esteemed organizations or at government bodies because these organizations have lower default risk.
  6. Avoid Multiple Loans: When you apply for multiple loans at once your credit score suffers which leads to decreased chances of obtaining low-interest rates.

Factors that Affect Personal Loan Interest Rates

  • Income: The applicant’s income determines the interest rate the lender will apply to loans. The risk profile of the borrower plays a vital role in determining their loan prospects. Those earning less during a year typically have to face elevated lending costs.
  • Employer Details: Banks and financial institutions charge lower personal loan rates to workers of renowned organizations.
  • Nature of Employment: The interest rate that loan providers offer changes depending on whether applicants run their own businesses or work for someone else. Normally, people who are employed in an organization have better chances to avail loan compared to self-employed people
  • Age: Banks and NBFCs offer personal loan to individuals in the age group of 21-60. Loan providers use applicant age as a factor in determining what interest rate to offer. Lenders often set higher interest costs on customers who will soon reach retirement age.
  • Relationship with the Loan Provider: Bank/financial institution customers who already maintain a strong connection with the provider can secure better interest rates during personal loan applications. The bank retains total control over whether to provide lower interest rates to existing customers although exclusive rates are not mandatory for all past clients.

Fixed Interest Rates vs. Floating Interest Rates - Which is better?

Personal loan applicants typically face the decision to select between fixed interest rate options and floating interest rate options. Here’s a breakdown of both:

1. Fixed Interest Rates:

  • The overall interest rate keeps its value steady from beginning to end of your loan term. For example, if your loan document says 12% fixed interest for a tenure of 5 years, you will have to pay 12% interest throughout the tenure
  • Due to fixed rates customers ought to pay every month, they can plan their budget much effectively
  • Loans with fixed interest rates are best for borrowers who need budget stability and protection from interest rate appreciation.

2. Floating Interest Rates

  • The rate of interest will change when market conditions shift or when the lender makes changes to their benchmark rate.
  • Interest payment amounts for EMIs can rise or fall throughout the duration of a loan term.
  • People who accept risk as part of their financial plan can opt for this as they can benefit during interest fall

3. Which option is better?

  • Seeking certainty versus surprises should drive borrowers toward selecting a fixed interest rate. Future interest rate reduction expectations make floating rates a smart borrowing approach since they have potential for savings. However, in the end of the day, it goes down directly to the user preference as to what is more convenient for them.

Reducing Interest rate

A reducing interest rate refers to a diminishing balance rate as an approach to calculate interest on the remaining balance of a loan. During loan repayment the principal value decreases while the remaining balance faces interest charges only. Customers benefit more from reducing interest rates since these payments require calculation against the remaining principal rather than the total loan assets throughout an entire period.

Example:

During your first month of borrowing ₹2,00,000 from a lender who uses reducing interest rate calculations at 12% per annum for a tenure of 5 years they will charge you interest on the full loan amount, which will amount to about Rs. 4500 per month. If you opt for a reducing interest rate, Your repaying of the loan will cause the principal amount to decrease and there will be a considerable reduction in your EMIs

Things to Consider While Applying for a Personal Loan

Review the following factors before you apply for a personal loan

  • Interest Rate: Compare the Personal loan interest rates from multiple lenders to ensure you get the best interest rate. At Fincover, we made it easy for the users to compare various financial products in few steps
  • Loan Tenure: Select a tenure that balances between EMI affordability and manageable interest costs.
  • Processing Fees and Other Charges: Lenders may charge processing fees, prepayment penalties, or late payment fees4
  • Calculate your EMI: EMI calculators help you determine your monthly payment obligations. The monthly payments you choose to pay should stay under 30-40% of your total monthly earnings according to your budget requirements.
  • Evaluate Repayment Flexibility: Look for financing options which permit both repayment and foreclosure with minimal fee burden. Early repayments will reduce your interest cost substantially.
  • Understand Loan Terms Review all texts within the loan terms and conditions. Examine all provisions regarding payment default penalties and loan foreclosure and loan repayment fees and penalties.
  • Choose a Reputable Lender Work with lenders known for maintaining an open lending process alongside superior client relations and quick loan processing. Before deciding apply, research their history by reading customer reviews and checking testimonials.
  • Avoid Over-Borrowing Get a loan for only what you truly require. Lending more money than needed causes problems because unnecessary borrowing will put you through a debt trap

Formula for Calculating Personal Loan EMI

To calculate the Equated Monthly Installment (EMI) for a personal loan, you can use the following formula:

EMI = [PxRX(1+R)^N]/[(1+R)^N-1]

Where:

  • P is the principal loan amount.
  • r is the monthly personal loan interest rate (annual interest rate divided by 12 and then by 100).
  • n is the total number of monthly installments.

Illustration:

Assuming a person borrows ₹4,00,000 for a tenure of 4 years (48 months) at an annual interest rate of 12.5%:

  1. Principal (P): ₹4,00,000
  2. Monthly Interest Rate (r):5% per annum = 12.5 / 12 / 100 = 0.0104167
  3. Number of Installments (n): 4 years × 12 months/year = 48

Plugging these values into the formula:

  • Calculating this yields an EMI of approximately ₹10,634.
  • Over the 48-month tenure, the total repayment amount would be ₹10,634 × 48 = ₹5,10,432, which includes ₹1,10,432 as interest.

Other Fees and Charges Levied by Lenders:

Lenders may impose various additional fees and charges in addition to the personal loan interest rate, including:

  • Processing Fee: Lenders charge this initial payment to process loan requests which usually takes a percentage of the total amount borrowed.
  • Prepayment or Foreclosure Charges: Having your loan paid early means you’ll need to pay applicable fees to the lender.
  • Late Payment Penalties: You will face additional fees when you skip or delay paying your Equated Monthly Installs (EMU payments).
  • Goods and Services Tax (GST): All settlement fees are subject to applicable taxation rates.
  • Documentation Charges: The paperwork required for a loan entail a charge which is recorded as Documentation charges
  • Loan Cancellation Charges: Lender will impose a charge if you decide to cancel the loan
  • Cheque Bounce Charges: The lender applies fines when you fail to pay EMIs through dishonored cheques.

FAQ on Personal Loan Interest rates

1. What is an EMI?

Users must repay loans through a steady sequence of Equated Monthly Installment (EMI) payments that mix the principal and interest costs over the personal loan tenure.

 2. Which elements determine how lenders decide personal loan interest rates?

 Banks and NBFCs determine the personal loan interest rates based on the customer’s credit score, credit history, and their bank policies 

3. Can loan interest rates change while an active loan remains in effect?

Personal loans maintain fixed interest rates which produce steady EMI amounts throughout their repayment term.

4. What can happen if I miss an EMI?

Failing to make any EMI payment results in penalty fees from your lender and potentially hurting your credit score.

5. Does the loan policy permit prepayment of amounts borrowed?

Although many lenders permit prepayment they might charge penalties so borrowers should read the loan documents provided to them at the time of disbursal.

 6. How does loan tenure affect the interest payable?

The duration of your loan determines your EMI costs and monthly interest payments where longer periods leave you with reduced EMIs but increased total interest costs while brief terms impose higher EMIs and decreased total interest

 7. Do personal loan interest payments qualify for tax deductions?

You cannot claim tax benefits from personal loan interest payments unless you use that loan to make home renovations or funding your education

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