Personal loans in India have become a popular financial tool for individuals seeking quick access to funds for various needs, such as medical emergencies, home renovations, or weddings. As of 2025, several key factors influence the landscape of personal loans in India, including interest rates, eligibility criteria, and Equated Monthly Installments (EMIs).
Interest Rates: Competitive Yet Varied
Interest rates for personal loans in India vary across banks and financial institutions. As of September 2025:
Axis Bank offers personal loans with interest rates starting at 9.99% per annum, with minimal paperwork and quick approval processes.
IDFC FIRST Bank provides loans with interest rates beginning at 9.99% per annum, along with zero foreclosure charges and instant disbursal within 30 minutes.
State Bank of India (SBI) offers personal loans with interest rates ranging from 10.05% to 15.05% per annum, depending on the loan amount and tenure.
HDFC Bank provides loans with interest rates starting at 9.99% per annum for salaried individuals, with processing charges applicable.
It's important to note that interest rates can vary based on factors such as the applicant's credit score, loan amount, tenure, and the lender's policies.
Eligibility Criteria: Who Qualifies?
To qualify for a personal loan in India, applicants typically need to meet certain eligibility criteria:
Age: Applicants should be between 21 and 60 years of age.
Income: A minimum monthly income of ₹25,000 is generally required, though this can vary by lender.
Employment: Applicants should be employed with a public, private, or multinational company. Self-employed individuals may also be eligible, depending on the lender's policies.
Credit Score: A good credit score (typically 750 or above) is essential for loan approval and to secure favorable interest rates.
Documentation: Standard documentation includes proof of identity, address, income, and employment.
Some lenders may have additional requirements, such as a minimum number of years in employment or a specific educational qualification.
EMI Calculations: Planning Your Repayments
Equated Monthly Installments (EMIs) are fixed monthly payments made by the borrower to the lender until the loan's term ends. The EMI amount depends on three main factors:
Loan Amount: The total sum borrowed.
Interest Rate: The rate at which interest is charged on the loan.
Tenure: The duration over which the loan is to be repaid.
For instance, using an EMI calculator, one can determine that a ₹10 lakh loan at an interest rate of 10% per annum for a tenure of 5 years would result in an EMI of approximately ₹21,742.
It's advisable to use online EMI calculators provided by banks to estimate monthly payments and plan finances accordingly.
Recent Trends: Impact of RBI Policies
In recent months, the Reserve Bank of India (RBI) has maintained the repo rate at 5.5%. Despite this, several banks have independently reduced their Marginal Cost of Funds-Based Lending Rates (MCLR), leading to lower interest rates for borrowers. For example, Punjab National Bank (PNB) and Bank of India (BoI) have reduced their MCLR by up to 15 basis points, effective from September 1, 2025. These reductions aim to ease borrowing costs for consumers.
However, it's important to note that the transmission of RBI's policy rate cuts to the lending rates of banks has been gradual, and borrowers may not immediately see a decrease in their EMIs.
Tips for Prospective Borrowers
Check Your Credit Score: A higher credit score can help secure better interest rates.
Compare Offers: Different lenders offer varying interest rates and terms; it's beneficial to compare before making a decision.
Understand the Terms: Be clear about the loan tenure, processing fees, prepayment charges, and other terms before signing the agreement.
Plan Your Repayments: Ensure that the EMI fits within your monthly budget to avoid financial strain.
FAQs
Q1: What is a personal loan?
A: A personal loan is an unsecured loan provided by banks or NBFCs to individuals for personal needs such as medical emergencies, travel, weddings, or home renovations.
Q2: What are the typical interest rates for personal loans in India 2025?
A: Interest rates generally range from 9.99% to 15% per annum, depending on the lender, loan amount, tenure, and borrower’s credit score.
Q3: Who is eligible for a personal loan?
A: Applicants usually need to be 21–60 years old, have a stable income (salaried or self-employed), a good credit score, and valid documentation such as ID, address proof, and income proof.
Q4: How are EMIs calculated?
A: EMIs depend on the loan amount, interest rate, and tenure. Online EMI calculators can help estimate monthly payments.
Q5: Can RBI repo rate cuts reduce my EMI immediately?
A: Not necessarily. Banks adjust their lending rates gradually, and EMIs may not decrease immediately even after an RBI repo rate cut.
Published on : 6th September
Published by : SMITA
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