Looking for a personal loan? A complete guide to securing the best interest rates in April 2025

Personal loans have become a popular tool for individuals in India to manage financial challenges such as medical issues, home renovation, travelling expenses, etc. However, securing the best interest rates is crucial to maximise savings.

Let us discuss some basic fundamentals to help you secure the best possible personal loan interest rates in 2025.

Overview of personal loan interest rates

As of April 2025, personal loan interest rates in India hover in the range of approximately 9.75% to 20.35%. This is largely influenced by the borrower's credit profile, credit score and repayment history.

For example, India Bank offers rates beginning at 9.75%, whereas IndusInd Bank provides interest rates beginning at 10.49%. Major private sector banks such as HDFC Bank, ICICI Bank, and Kotak Bank, among others, offer interest rates beginning from the range of 10.85% and 10.90%, reflecting the competitive nature of the loan market in the country.

Note: Interest rates discussed here are illustrative only. Please contact your respective financial institution for the most recent and updated figures. Interest rates are bound to change as per the terms and policies of the bank.

What are factors influencing personal loan interest rates for borrowers?

There are many factors that determine the interest rate on personal loans:

• Your credit score and credit profile: The higher the credit score, the better it is for you. A credit score of 750+ and above can immensely boost your overall credit profile. This will lower your interest rates for future loans or easier terms and conditions for credit cards. Lenders carefully check your credit score, repayment capacity and integrity as an individual before offering you personal loans.
• Stability in income and employment history: It is important to remember that regular income, clean and consistent employment history, and longer tenures at various companies play a vital role in assessing the creditworthiness of borrowers. That is why consistency in life, employment and income are very important signs of reliability for any individual.
• Tenure of the loan: The tenure of the loan, i.e., whether it is for 6 months, 6 years, or 15 years, matters in deciding the personal loan interest rates applicable to an individual. Longer tenure of the loan generally carries higher interest rates.
• Amount of the loan: The amount borrowed can also impact the interest rates on personal loans. A higher loan amount generally results in higher interest rates and stricter repayment terms.

Expert views on selecting the best personal loan

According to Akshay Mehrotra, Co-Founder & CEO, Fibe, it is important to first clearly understand as to how much loan do you actually need?

On the same he suggested that: “Before taking a personal loan, it’s important to understand how much you really need. Start by looking at your spending habits, income, and existing expenses. Once you know what you can afford, choose a loan amount that fits your budget."

"From there, focus on improving your financial profile—things like keeping a good credit score and a steady income can help you get better interest rates. It’s also smart to compare offers from different digital lenders, because rates and terms can differ a lot.”

He further added that, “Don’t just go for the lowest rate—check for hidden fees, loan duration, and flexibility in repayment. With a bit of planning and research, you can find a loan that’s affordable and works best for your needs.”

What are strategies to secure lower interest rates on personal loans?

To find the most competitive personal loan interest rates, follow these steps:

1. Carefully check and compare multiple lenders: Use online comparison tools or visit the official websites to check and evaluate interest rates across various leading banks, such as HDFC Bank, ICICI Bank, and Kotak Bank, as well as leading NBFCs, such as Bajaj Finance and Shriram Finance.
2. Discuss and negotiate terms: If you have a strong credit profile and a high credit score, leverage it to discuss and negotiate lower interest rates on your personal loans and better terms of repayment.
3. Understand prepayment options and choose carefully: Choose loans with flexible prepayment terms, EMI options and repayment structures that allow early repayment without hefty penalties or hidden processing charges.
4. Make use of online calculators: Many leading banks provide online calculators to help estimate monthly EMIs based on different interest rates and tenures.
5. Reach out to the customer service team: Speaking to your lender's customer support team can provide clarity on applicable terms, repayment options and interest rates, helping you make informed decisions.

Conclusion

Hence, to conclude, to secure the best possible personal loan interest rates, first understand loan terms and conditions. By researching and negotiating terms effectively, you can unlock significant savings on your personal loans in 2025.

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