Personal loans are one of the most convenient financial products for individuals looking to meet short-term or emergency financial needs. Whether it’s for medical expenses, education, home renovation, or debt consolidation, personal loans offer flexibility and quick access to funds. However, the interest rate plays a crucial role in determining affordability.
In 2025, Indian banks and NBFCs (Non-Banking Financial Companies) are offering competitive personal loan interest rates, making it easier for borrowers to access low-cost credit. This article provides a detailed guide to the best low-interest personal loans in India for 2025, along with eligibility, benefits, comparison tables, and expert tips to help you choose the right lender.
Why Choose a Low-Interest Personal Loan?
A personal loan is an unsecured loan, which means you don’t need to pledge collateral. However, the interest rate directly impacts your EMI (Equated Monthly Installment). Even a 1–2% difference in the interest rate can save you thousands of rupees over the loan tenure.
Key Benefits of Low-Interest Personal Loans:
- Lower EMIs → Reduces monthly financial burden.
- Higher Loan Eligibility → With lower interest, you can borrow a higher amount.
- Improved Affordability → Helps in better debt management.
- Financial Freedom → Enables you to use savings for other investments.
Factors That Affect Personal Loan Interest Rates
Before exploring the best options in 2025, it’s important to understand the factors that influence your loan’s interest rate:
- Credit Score – A CIBIL score above 750 ensures lower interest rates.
- Income Level – Higher and stable income leads to better loan offers.
- Employer Reputation – Salaried employees in reputed companies get preferential rates.
- Loan Amount & Tenure – Higher amounts and longer tenure may attract different rates.
- Existing Relationship with Bank – Long-term customers often enjoy special interest rates.
Best Low-Interest Personal Loans in India 2025
Here’s a comparison of leading banks and NBFCs offering low-interest personal loans in 2025:
| Bank / NBFC | Interest Rate (per annum) | Loan Amount | Tenure | Processing Fee |
|---|---|---|---|---|
| State Bank of India (SBI) | 10.20% – 14.50% | ₹50,000 – ₹20 lakh | Up to 6 years | 1% of loan amount |
| HDFC Bank | 10.50% – 18.00% | ₹50,000 – ₹40 lakh | Up to 6 years | Up to ₹4,999 |
| ICICI Bank | 10.65% – 16.50% | ₹50,000 – ₹25 lakh | Up to 6 years | 2.5% of loan amount |
| Axis Bank | 10.49% – 18.00% | ₹50,000 – ₹25 lakh | Up to 5 years | 1.5% – 2% |
| Kotak Mahindra Bank | 10.25% – 17.00% | ₹50,000 – ₹25 lakh | Up to 6 years | Up to 2.5% |
| Bajaj Finserv | 11.00% onwards | ₹1 lakh – ₹25 lakh | Up to 7 years | 2% – 3% |
| Tata Capital | 10.99% onwards | ₹75,000 – ₹25 lakh | Up to 6 years | 2% |
| Punjab National Bank (PNB) | 9.90% – 14.50% | ₹50,000 – ₹15 lakh | Up to 5 years | 1% |
| Bank of Baroda | 10.20% – 16.00% | ₹50,000 – ₹20 lakh | Up to 7 years | 2% |
| IDFC FIRST Bank | 10.49% onwards | ₹1 lakh – ₹40 lakh | Up to 6 years | 1% – 2% |
✅ Lowest advertised rate in 2025: Punjab National Bank at 9.90%
Government and PSU Banks vs. Private Banks
When applying for a personal loan, borrowers often compare government banks and private banks.
| Aspect | Government Banks (e.g., SBI, PNB, BOB) | Private Banks (e.g., HDFC, ICICI, Axis) |
|---|---|---|
| Interest Rate | Generally lower | Slightly higher |
| Processing Time | Slower | Faster (instant approvals) |
| Loan Amount | Limited | Higher amounts available |
| Eligibility | Strict documentation | Flexible eligibility |
| Customer Service | Moderate | More customer-friendly |
If you’re looking for the lowest interest rate, PSU banks are better. But if you need faster disbursal, private banks and NBFCs offer quicker processing.
Eligibility Criteria for Low-Interest Personal Loans in 2025
Most banks follow similar eligibility conditions:
- Age: 21 to 60 years.
- Income: Minimum ₹20,000 – ₹30,000 per month (varies by bank).
- Credit Score: 700+ (750+ for the lowest rates).
- Employment: Salaried with at least 1 year of experience; self-employed with 2+ years in business.
Documents Required
- KYC Documents: Aadhaar, PAN, Passport, or Voter ID.
- Income Proof: Salary slips (last 3 months), IT returns, Form 16.
- Bank Statements: Last 6 months.
- Employment Proof: Offer letter, company ID, or business proof (for self-employed).
How to Get the Best Low-Interest Rate in 2025?
- Maintain a High Credit Score → Keep it above 750.
- Compare Different Banks → Don’t settle for the first offer.
- Choose a Shorter Tenure → Interest burden is lower.
- Leverage Pre-approved Offers → Banks often give special rates to existing customers.
- Apply Online → Many banks offer lower rates on digital applications.
EMI Calculation for Low-Interest Personal Loans
Let’s see how different interest rates affect your EMI on a ₹5 lakh loan for 5 years:
| Interest Rate | Monthly EMI | Total Payable Amount | Total Interest |
|---|---|---|---|
| 10% | ₹10,624 | ₹6,37,440 | ₹1,37,440 |
| 12% | ₹11,122 | ₹6,67,320 | ₹1,67,320 |
| 15% | ₹11,895 | ₹7,13,700 | ₹2,13,700 |
| 18% | ₹12,697 | ₹7,61,820 | ₹2,61,820 |
👉 Clearly, choosing a 10% loan vs. an 18% loan can save you over ₹1.2 lakh across the tenure.
Advantages of Taking a Low-Interest Loan in 2025
- Affordable Borrowing – Lower EMIs reduce stress on your budget.
- Debt Consolidation – Pay off high-interest credit card debts at a lower rate.
- Better Credit Score – Easier to repay without defaults.
- Financial Flexibility – More money available for savings and investments.
Things to Watch Out For
Even if the interest rate is low, borrowers must pay attention to hidden charges:
- Processing Fees – Can be 1–3% of the loan amount.
- Prepayment Charges – Some banks charge fees if you close the loan early.
- Late Payment Penalties – 2–3% extra interest on missed EMIs.
- GST on Charges – Increases overall cost.
Always check the Annual Percentage Rate (APR), which includes both interest and fees.
Future of Personal Loans in India
The personal loan market in India is expected to grow rapidly in 2025, with digital-first lending becoming the norm. Trends include:
- AI-driven Loan Approvals – Faster risk assessment and approvals.
- Blockchain-based Lending Platforms – More secure and transparent loan processes.
- BNPL (Buy Now, Pay Later) vs. Personal Loans – Consumers shifting towards flexible borrowing options.
- Customized Loan Offers – Based on spending and income behavior.
Conclusion
The year 2025 offers borrowers plenty of options for low-interest personal loans in India. With PSU banks like PNB and SBI offering rates below 10.5% and private banks providing quick disbursal with digital features, customers have more flexibility than ever.
To get the best deal:
- Maintain a good credit score.
- Compare banks and NBFCs.
- Understand all charges beyond the interest rate.
A well-chosen personal loan can help you meet financial goals while minimizing costs.