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Personal Loan Interest Rates Falling – Why it may Be the Best Time to Take Loans

Submitted by admin on November 5th, 2025

The following good news to lighten your year–interests on personal loans have been reduced in the large Indian banks in 2025. This may be the correct time to borrow in case you have been planning it. It has just become a bit cheaper to borrow money whether it be a home makeover, consolidation of debt or even handling an emergency.

We should begin with what has changed. The central bank of India (RBI) has recently lowered the repo rate -the rate at which the central bank lends to the banks. A low repo rate results in a reduction in the cost of borrowing by the banks hence the banks can transfer the savings to their customers. This has led to banks begin to reduce their personal loan rates and therefore borrowing has become less expensive to the consumers.

Some of the major banks are presently charging very competitive rates. Canara Bank has fallen to rates down to 9.95 and Bank of Maharashtra is also giving rates of about 9.50 to the eligible borrowers. Personal loans of SBI have reached 10.05% starting and HDFC bank and ICICI Bank are providing personal loans starting around 9.99-10.45 percent, according to your credit worth.

These may be little differences, now, but in time they do become a difference. Suppose you take a five-year borrowing of 5 lakh. With the interest rate of 10.5, your EMI will be approximately 10,748 per month. At 9.5%, that drops to 10,521. That is a savings of almost 13,600 in five years- without varying anything but the rate.

So, what’s behind the fall? Banks are competing intensely among themselves over quality borrowers besides making a repo cut as done by RBI. Personal loans are already in the retail lending market and with the discounts during the festival season and already approved digital deals, lenders are more competitive than ever.

There is however a hitch- the best rates are those offered to the best borrowers. You will generally have to have a credit score of more than 750, have a stable income, and a good repayment record to be eligible to these low-interest offers. In the case of others, between 12% and 16 may still be on the cards.

Always check the processing fee (most times 1-2 percent of the amount) and prepayment charges in case you intend to close it prematurely before plunging into a new loan. Indeed, it is sometimes smarter to have a slightly higher interest rate with non-existent prepayment penalties than a low rate with large penalties.

In case you have a personal loan with a higher rate, then you may want to refinance. Banks are now ready to accept balance transfers at lower rates, simple ensure that savings exceed the transfer cost.

Overall, 2025 is becoming the market of the borrowers. There are low interest, quicker online approvals and banks are more accommodating than ever. Nevertheless, there should be a responsible use of personal loans- you should only borrow what you need, pay it at the right time, and maintain a good credit score.

In a world where rates keep fluctuating the only thing that is always paid off is financial discipline.