Personal Loan Refinancing Tips After RBI's Repo Rate Cut in 2025

The Reserve Bank of India's latest 25 bps repo rate cut in December 2025 is the fourth rate cut of the year, and it can turn out to be a game-changer for your finances. The new 5.25% repo rate can translate into lower Personal Loan interest rates offered by banks and NBFCs, making this a good time for Personal Loan refinancing before the year-end. If you have an existing Personal Loan, then you can benefit from lower EMIs by refinancing your existing loan at lower rates and longer EMI tenure. Read on to find out how to refinance your existing Personal Loan and benefit from RBI repo rate cut in 2025.

What is Personal Loan Refinancing?

Personal Loan refinancing, also known as Personal Loan balance transfer, refers to opting for a new loan at better terms such as lower interest rates, flexible tenure, etc. The new loan pays off your existing loan while you benefit from lower EMIs due to lower interest rates and an extension of the loan tenure.

For example, Anjali has an active Personal Loan of ₹5 Lakh at an interest rate of 12% p.a. After a few months of EMI repayment, she comes across a lender offering Personal Loan refinancing/balance transfer at a much lower rate of 9.99% p.a. By opting for the balance transfer, she can avail a new loan of ₹5 Lakhs (or more) at lower interest rate and pay off the existing loan entirely.

Additionally, Anjali can further reduce her EMIs by opting for a longer tenure or choosing a shorter tenure to pay off the new loan faster. Both options can help Anjali save big on the total interest outgo.

So, a lower interest rate resulting from the RBI repo rate cut can result in significant Personal Loan EMI reduction with lower interest rate and flexibility to choose a longer tenure.

Also Read: How RBI Repo Rate Cut Affects Personal Loan Interest Rates

Personal Loan Refinancing Tips for December 2025

The RBI repo rate cut to 5.25% means that the central bank will lend capital to banks at a lower rate. Thanks to this reduction, banks can pass on the benefits to their customers by lowering Personal Loan interest rates. This makes it an ideal time to refinance your existing Personal Loan.

Here are some important tips to consider:

1. Estimate Potential Savings With Refinancing

A Personal Loan refinancing after RBI’s latest repo rate cut must allow you to save on the total cost of borrowing. Utilise a Personal Loan EMI calculator to estimate savings on overall interests. Consider any associated cost of refinancing. The total savings must significantly outweigh associated costs for the refinancing to be worth it.

2. Check Your Active Personal Loan Type

If your existing loan is based on floating interest rates, chances are the lender will automatically pass on the benefit of lower interest rates. If your lender hasn't already reduced the interest rate, consider proactively requesting lower EMIs. This new calculation should be done based on the new repo rate.

3. Compare Refinancing Offers From Multiple Lenders

Compare the rates that are being offered by different lending institutions. Take into consideration discounted processing fees or any other associated charges apart from lower interest rates. Also explore flexible repayment tenure. Play around with an EMI calculator to find out the best combination of interest rate and tenure that suits your monthly EMI budget.

4. Apply With a High CIBIL Score

Before you apply for the Personal Loan refinancing offer from your preferred lender, check your latest CIBIL score and see if it matches the lender’s eligibility criteria. A high CIBIL score of 750 or more makes you eligible for lower interest rates and more favourable loan terms and conditions.

5. Optimise Loan Tenure

A shorter tenure leads to a higher monthly EMI, but more savings in overall interest paid. A longer tenure, on the other hand, might translate to a lower monthly EMI, but more outgo in terms of total interest paid over the entire tenure. You can use an EMI calculator to lock in on a tenure that creates the perfect balance between interest amount and monthly outgo, and then apply with a lender offering flexible EMI tenure on Personal Loan refinancing.

Also Read: Difference Between Fixed and Floating Interest Rates

How to Plan a Personal Loan Refinancing?

The main objective of a Personal Loan refinancing following RBIs repo rate cut in 2025 must be to benefit from lower interest rates and better lending terms. Here is a roadmap to guide your plan for Personal Loan refinancing.

Step 1: Assess your active Personal Loan details in terms of outstanding balance, interest rate, remaining tenure, monthly EMI amount, etc. Evaluate if refinancing can help you

• Pay of the existing outstanding amount
• Offer lower interest rates
• Provide option to extend or shorten the tenure

Step 2: Check your credit score to see if you're eligible for a Personal Loan refinancing. It is only with a high credit score that you can actually benefit from refinancing with lower interest rates and better terms.

Step 3: Lock in on a lender whose loan offer satisfies your refinancing requirements. For faster processing, always choose a lender that offers a 100% digital loan process.

Step 4: Apply for Personal Loan refinancing with your preferred lender. Some lenders might offer a higher amount that not only covers your existing loan but also leaves you with additional funds once approved.

To Conclude

After RBI’s repo rate cut this year, refinancing your existing Personal Loan can actually lead to extensive saving with lower interest rates and favourable loan terms. If your lender has not already lowered the interest rate or offered beneficial revisions in loan terms, now is the time to consider a Personal Loan balance transfer. Poonawalla Fincorp offers hassle-free Personal Loan up to ₹50 Lakhs at affordable rates starting at just 9.99%* p.a. Apply now and enjoy benefits like a 100% digital process and flexible tenure up to 84 months.

FAQs

Is Personal Loan refinancing a good idea?

Personal Loan refinancing can be a good choice when RBI cuts repo rates as lenders can pass on the benefit to existing borrowers in terms of lower interest rates. This can mean lower EMI amount and the flexibility to shorten or extend your loan tenure.

What is the impact of RBI repo rate cut on a Personal Loan?

The RBI's recent repo rate cut to 5.25% can help reduce the EMI amount of a Personal Loan.  Banks are expected to pass on the benefits to users, reducing EMIs for auto, home and personal loans.

What are the benefits of Personal Loan refinancing?

The fundamental benefit of a Personal Loan refinancing is lower interest rates and more favourable loan terms and conditions. This ultimately translates to lower EMIs or interest burden for the borrower.

What is the minimum CIBIL score required for a Personal Loan refinancing?

You should apply for a Personal Loan refinancing with a high CIBIL score of 750 or more and with a record of timely repayments. This is important to avail the benefit of lower interest rates and better loan terms.