If you are looking to take a personal loan with a low interest rate, your biggest concern is getting the lowest Loan interest rate in India. Many banks in India offer high rates. But what you actually pay depends on many factors.
In March 2025, banks are giving different repayment terms and a loan summary. It is very important to look at other ways first before applying so that one can land and apply to find a budget-friendly deal. Many banks in India offer personal loans to their customers and you can easily apply for them online and offline. When seeking a personal loan in India, one of the most important questions borrowers ask is:
Which bank gives the lowest interest rate for a personal loan? The loan interest rate in India varies considerably across banks, and actual rates depend on your credit profile, income, and bank relationships. In this article, we’ll explore loan rates in India, review banks offering competitive personal loan rates, discuss the money leader interest rate (i.e., leading banks or lenders), and also highlight personal loans with no foreclosure charges, loan charges, and how to choose the best offer.
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How To Obtain The Lowest Personal Loan Interest Rate?
Getting a personal loan with the lowest possible interest rate it’s a difficult ta,sk but not impossible. If you are looking for a personal loan, here are a few steps that will help you get the loan cheapest rate of interest:
Good credit score: If you have a good credit score, then you are creditworthy. Banks and financial company provides lowest personal loan interest rate to applicants who have a good credit score. Check your credit score before applying for a personal loan. If your credit score is less than 750, then you should look for a way to improve it. You get more chances for a personal loan with the lowest interest rate if your credit score is above 750.
Understanding Loan Rates In India
Loan rates in India refer to the prevailing interest rates banks or NBFCs charge borrowers for personal loans. These rates are influenced by factors such as the Reserve Bank of India (RBI) policies, the bank’s cost of funds, competition, and borrower risk.
- As of 2025, many banks advertise personal loan interest rates in India starting around 9.99% p.a. or slightly above for select borrowers.
- However, the lowest rate a borrower receives depends heavily on their credit history, income, existing debt, and eligibility.
Their advertised starting rate is normally on a basis of only the customers with excellent credit and low risk.
Top Banks Offering Competitive Personal Loan Rates
Some of the lowest-interest rates are offered by banks at present in India, and special features include:
IDFC FIRST Bank
- Offers personal loan interest rate in India starting at 9.99% p.a.
- A notable advantage: zero foreclosure charges (you can prepay without penalty) for these personal loans.
- Their “FIRSTmoney” personal loan is digital and offers flexibility in tenure.
Thus, IDFC FIRST is often cited when people search for r personal loan with no foreclosure charges.
HDFC Bank
- HDFC offers rates starting from 9.99% p.a. during festive or promotional periods.
- They sometimes waive foreclosure or prepayment charges as part of special offers (especially short tenures), though normally, typical foreclosure charges apply.
Axis Bank
- Axis Bank’s personal loan interest rate in India starts at 9.99% under certain conditions.
- The rate is typically linked to 1-year MCLR plus a margin.
ICICI Bank
- ICICI currently quotes personal loan interest rates starting from 10.60% p.a.
- Their personal loans often come with no foreclosure charges after you make 12 EMIs.
State Bank of India (SBI)
- SBI’s personal loan scheme (as of Aug 2025) is based on a 2-year MCLR of 8.80% plus a spread, resulting in effective rates between ~ 10.05% – 15.05% depending on borrower and spread.
- So, for some eligible candidates, SBI can offer relatively low rates with a wide reach.
Bank of Maharashtra
- Bank of Maharashtra advertises a personal loan rate of 9.00% p.a. for certain salaried customers under special schemes.
- This is one of the lowest advertised rates in India, though the eligibility criteria will be stringent.
Bank of India (BOI)
- BOI’s Star Personal Loan offers interest rates starting from 10.85% p.a. with no prepayment penalty (i.e., no foreclosure charges) and no hidden charges.
What Is “Money Leader Interest Rate”?
The phrase money leader interest rate may refer to the interest rate offered by a leading or top lender in the market (a “money leader” in terms of prominence or competitive rates). In the ontext of personal loans, a “money leader” bank might be one that consistently offers among the lowest interest rates, innovative features (like zero foreclosure), and attractive terms.
In India, banks such as IDFC FIRST, HDFC, Axis, and ICICI are often among the money leaders in the personal loan space as they advertise some of the lowest starting interest rates and value features like zero prepayment/foreclosure (for floating loans) or digital disbursal.
Personal Loan With No Foreclosure Charges
Many borrowers look for a personal loan with no foreclosure charges, because it gives them flexibility to pay off the loan early without penalty.
- IDFC FIRST Bank: Their “FIRSTmoney smart personal loan” has zero foreclosure charges for eligible borrowers.
- ICICI Bank: They offer no foreclosure charges after 12 EMIs (for certain loans). HSBC India: Offers no foreclosure charges for tenors up to 2 years.
- BOI’s Star Personal Loan: Offers no prepayment or foreclosure penalty under its scheme.
Furthermore, recent regulatory developments suggest that the RBI may prohibit banks from charging prepayment penalties on floating-rate term loans (other than business loans).
Thus, when comparing, always check whether the loan is fixed vs floating and whether the bank allows no foreclosure charges under certain conditions.
Loan Charges & Hidden Costs (Loan Charge)
While the interest rate is primary, loan charge components (processing fees, documentation costs, stamp duty, prepayment fees) also affect the true cost of borrowing.
- HDFC charges processing fees up to ₹6,500 + GST and imposes premature closure charges depending on the number of EMIs repaid.
- ICICI charges processing/ origination charges (non-refundable) up to 2%.
- Axis Bank includes processing fees and other service charges in its personal loan offering.
- Bank of Maharashtra’s scheme may include “loan charges” under application/processing, which borrowers must confirm.
Note: Even if a bank offers a low nominal rate, high processing fees, prepayment penalties, or hidden charges can erode your advantage.
What Exactly Determines the Rate You Get?
Even though some banks advertise ultra-low rates, not every applicant gets them. What matters is your personal financial profile. Key determinants:
- Credit Score / CIBIL / Credit History — Higher score = lower rate
- Income & Job Stability — Salaried with a steady salary from a reputable company helps
- Debt-to-Income Ratio — Lower existing liabilities improve your chances
- Loan Amount & Tenure — A Larger amount, longer tenure may attract a higher spread
- Existing Relationship With Bank — Existing customers or salary account holders often get preferential rates
- Type of Rate (Fixed vs Floating) — Floating rate loans often allow no foreclosure charges; fixed may be rigid
- Promotional Offers / Seasonal Discounts — Banks often run offers with lower rates or waived charges
How to Find the “Lowest Bank” for Your Case
To identify which bank gives the lowest interest rate for your personal loan, follow this step-by-step approach:
- Check your credit score and clean any errors.
- Use aggregator sites or bank rate comparison tools to filter by the lowest rate + minimal charges.
- Look for banks offering zero foreclosure or no prepayment penalty for your preferred tenure.
- Compare processing fees, documentation costs, and other charges (loan charge).
- See if any banks offer pre-approved offers for you based on your existing relationship.
- Request quotes from multiple banks with identical loan amount and tenure, then compare the effective interest cost (including charges).
- Negotiate — show competitor offers; banks sometimes match or beat rates for good customers.
- Finally, read the fine print regarding foreclosure, floating vs fixed, and hidden fees.
Sample Comparison Of Leading Banks (2025)
This table illustrates that while a few lenders advertise very low rates, your eligibility and the fine print (foreclosure, charges) will determine what you actually get.
Precautions & Things To Watch Out For
- “Lowest rate” is often for exceptional profiles — don’t expect it unless your credit is excellent.
- Always compute the effective annual rate, including loan charges.
- If the loan is a fixed rate, foreclosure may attract a penalty; if a floating rate, the RBI is pushing to ban foreclosure charges.
- Beware of teaser rates — sometimes banks offer a temporarily low rate which later reverts.
- Check the tenure — extremely long tenures might attract a higher margin.
- Don’t forget processing fees, legal fees, documentation, stamp duty, etc.
Conclusion
If your goal is to find which bank gives the lowest interest rate for a personal loan, here are the takeaways:
- IDFC FIRST Bank is currently among the most competitive for many borrowers with 9.99% p.a. and zero foreclosure charges.
Other “money leader” banks like HDFC, Axis, ICICI, and BOI also offer competitive rates, especially during promotional periods. - Always compare the actual cost, not just the advertised rate — include loan charge, prepayment rules, and hidden fees.
- The ideal bank for you depends on your credit profile, income, and which offers you the lowest effective rate.
By combining diligent research, checking your credit, and negotiating carefully, you can secure one of the lowest interest rates available under your circumstances — getting a loan that’s truly affordable for loan rates in India.