Personal Loan Interest Rates 2025: There is some welcome news for borrowers planning to take a personal loan in 2025. Thanks to a cumulative 1.25% cut in the RBI repo rate this year and a decline in banks’ funding and operating costs, personal loan interest rates have come down significantly. Several banks are now offering personal loans at starting interest rates between 9.75% and 9.99%, which is much lower compared to previous years.

Interestingly, two banks are currently offering personal loans at rates even lower than the State Bank of India (SBI), making them the cheapest options for eligible borrowers. Here’s a detailed look at where personal loans are available at the lowest rates, how banks compare, and what factors determine the interest you pay.

Since the beginning of 2025, the Reserve Bank of India has reduced the repo rate by a total of 1.25%. This has directly lowered borrowing costs for banks. At the same time, improved liquidity conditions and lower operating expenses have helped banks reduce their overall cost of funds.

As a result, lenders have passed on some of this benefit to consumers by cutting personal loan interest rates. Earlier, most personal loans started at 10.5% or higher, but today many banks are offering loans at sub-10% starting rates, especially to customers with strong credit profiles.

Here is how interest rates at major public and private sector banks have changed over the year:

• HDFC Bank: Reduced from 10.85% to 9.99%

• ICICI Bank: Reduced from 10.85% to 10.45%

• Kotak Mahindra Bank: Remained unchanged at 10.99%

• State Bank of India (SBI): Cut sharply from 12.60% to 10.05%

• Axis Bank: Reduced from 10.55% to 9.99%

• Punjab National Bank (PNB): Reduced from 12.50% to 10.60%

This comparison shows that most banks have lowered rates by 1.5% to nearly 2% in 2025, making personal loans far more affordable.

Based on the latest data, Bank of Maharashtra and IDFC First Bank are among the lenders offering some of the lowest starting rates—lower than even SBI in certain cases.

Here’s a snapshot of current personal loan rates in 2025:

• Bank of Maharashtra: Starting from 9.00%

• HDFC Bank: 9.99% to 24.00%

• Axis Bank: 9.99% to 22.00%

• IDFC First Bank: Starting from 9.99%

• State Bank of India (SBI): 10.05% to 15.05%

• ICICI Bank: 10.45% to 16.50%

• Bank of Baroda: Starting from 10.40%

• IndusInd Bank: Starting from 10.49%

• Punjab National Bank: Floating from 10.60%, Fixed from 11.60%

Processing fees typically range from 0.35% to 5% of the loan amount, depending on the bank and borrower profile.

SBI has significantly reduced its personal loan rates in 2025, bringing them down to around 10.05% at the lower end. However, private banks and some public sector banks are now undercutting SBI to attract salaried customers with strong credit scores.

For borrowers with high income stability and a credit score above 750, private banks often offer more competitive rates, quicker approvals, and flexible repayment options.

Personal loan interest rates are risk-based, meaning they depend heavily on the borrower’s profile. Banks consider several factors, including:

• Credit score and repayment history

• Existing loans and EMIs

• Income level and job stability

• Employer category (government, PSU, private, self-employed)

• Loan tenure, usually between 1 to 5 years

Unlike home or car loans, personal loans are unsecured, which makes them riskier for banks. That’s why lenders prefer fixed interest rates and do not strictly link personal loans to benchmarks like MCLR or RLLR.

Although RBI mandates external benchmarks such as the repo rate for many retail loans, unsecured loans and credit cards enjoy certain exemptions. As a result, personal loan rates can vary widely even among borrowers applying to the same bank.

While floating-rate personal loans do exist, they are far less popular. Most borrowers prefer fixed-rate personal loans because they offer certainty in EMIs. Since personal loan rates are already higher than secured loans, both lenders and borrowers usually avoid fluctuations.

If you are planning to take a personal loan in 2025, this is one of the best rate environments seen in recent years. However, the cheapest rate advertised by a bank is not guaranteed for everyone. To secure the lowest possible interest rate:

• Maintain a high credit score

• Keep existing debt under control

• Compare offers across multiple banks

• Look beyond SBI and explore private and smaller public sector banks

With careful comparison and timing, borrowers can now access personal loans at rates that were considered impossible just a few years ago.