Personal Loan Overview

A personal loan could be a short to medium term unsecured loan (no collateral) that you just will use to fulfill current monetary desires. Typically to meet expenses associated with debt restructuring, vacations, surprising medical expenses and down payments, a personal loan is also used for any such form of expense. If one appearance at the advantages of non-public loans, one will begin with the very fact that the tenure of a personal loan is shorter as compared to a mortgage. Mortgage loan are most likely for 10, twenty, maybe thirty years, whereas a personal loan is often for between one and 5 years.

There's no limit to the quantity of how a personal loan could be placed to use.

Personal loans act as the best-suited choice to smoothen up income, sometimes caused due to stringency. The key reason for a few to like a personal loan is owing to tokenized documentation, quick process time and also the flexibility of the loan. Witnessing the large potential of the market, leading banks and NBFCs in Asian country square measure are giving personal loans to each salaried and freelance people.

It can be taken for any personal reason, such as:

 A financial aid for the renovation of your house

 To fulfill wedding expenses one in every of the necessary and expensive days

 To shop for a replacement or purchase iPhone

 To set up and pay holidays with the family

 To easily pay off MasterCard bills or alternative debts

 To fulfill business necessities like advertisements or new table game table for the team

Now you can compare interest, processing fee, tenure and max. Loan offers, of all the banks before choosing your desired loan.

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Features of Personal Loan

All loans are not created equal, personal loan has become a great option for people to use.

Flexibility to Use Funds

Unlike other loan options, the funds raised through a personal loan can be used freely as per the needs of the individual borrower.

No Security

Personal loans are approved based on the income details and financial history of the borrower and not over any fixed asset as security or collateral.

Flexible Quantum of Loan

Based on the borrower’s financial history and credit report, personal loans are available for requirements as low as Rs. 10,000 to as high as Rs. 15 Lakhs or 20 lakhs, depending on the bank or NBFC concerned.

Flexible Tenure

The tenure of a personal loan is also quite broad depending on the bank and the loan amount. Personal loans are available for a tenure period ranging from 12 months to 60 months.

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Comparision Of Personal Loan

compare personat loan interest rates by banks

# Providers Interest Rate Processing Fee
1 SBI Personal Loan 12.55%-17.65% 1%-3% of the loan amount + applicable Service Tax
2 Axis Bank Personal Loan 11.25%-24% 1.50%-2.00% of the loan amount + Service Tax, as applicable
3 ICICI Personal Loan 11.29%-22.00% Upto 2.50% of the loan amount + Service Tax, as applicable

Documentation needed to apply for a personal loan:

Different banks and NBFCs have different minimum documentation requirement for personal loans. The common documents required by most banks and NBFCs for individuals requesting a personal loan include :

Documents for Salaried Individuals:

 Proof of Identity: Passport, Driving License, Voters ID or PAN Card

 Proof of Residence:-Passport or utility bills

 Latest 3 months Bank Statement of Salary Account

 Salary slips for last 3 months.

Documents for Self-Employed:

 Proof of Identity: Passport, Driving License, Voters ID or PAN Card

 Proof of Residence:-Passport or utility bills

 Income proof: Audited financials for the last two years.

 Last 6 months Bank statement.

 Office address proof.

Frequently Ask Questions

If you have a question that deals with clients, customers or the public in general, there is bound to be a need for the FAQ page.

Personal loan is a 1-5 year unsecured loan given by banks, NBFC’s (Non-Banking Finance Companies) or P2P lending platforms without asking for any collateral, guarantor or hypothecation of any assets. The ultimate usage of a personal loan is left to the discretion of the borrower. In our experience, the borrowers generally use a personal loan for debt consolidation, repaying high cost debt, meeting any family or medical emergency, wedding, vacations, home renovation, rental deposits, business needs for an SME, buying certain assets etc.

1. The company where you work. Every bank has a list of companies running into thousands which they have categorised into segments like A, B, C etc depending on the credentials and financials of your employer. The higher the category the higher is the loan eligibility chances.

2. Quantum of loans and credit card outstanding that you already have. Typically, a bank will not give a loan if the total EMI obligation (including the current personal loan that you are trying to apply for) exceeds 50-75% of your total net take home salary.

3. Your gross/net salary

4. Your credit score as reflected in your CIBIL or Equifax report. Having a good credit score is a necessary but not a sufficient criteria

The following people are eligible to apply for a Personal Loan:

• Employees of private limited companies, employees from public sector undertakings, including central, state and local bodies

• Individuals between 21 and 60 years of age

• Individuals who have had a job for at least 2 years, with a minimum of 1 year with the current employer

• Those who earn a minimum of Rs. 15,000 net income per month (Rs. 20,000 in Mumbai, Delhi, Bengaluru, Chennai, Hyderabad, Pune, Kolkata, Ahmedabad, Cochin)

Pre-closure means that a customer wants to close the entire principal outstanding amount at one go. Whereas part payment means that a customer wants to repay only a certain portion of the outstanding amount. Please ask our advisor for more details on this when you loan is being processed.

Some banks have a lock-in of 6 months to a year while some banks allow you to pre-close even after the 1st EMI has been debited from your bank. There may also be restrictions that you can only use your own funds (and not the balance transfer cheque of another bank) to pre-close a loan. In addition, banks may allow pre-closure at no cost or may levy a pre-closure fee (2-5% of the amount being pre-closed). Please ask for clarifications to our or the banks’ loan advisor on all these factors before signing the loan document.

Some banks like Bajaj Finserv, Axis, Citibank etc allow part payment. However, there can be restriction on how many times in a year you can part pay and the minimum and maximum amount that you part pay. Again, please ask for clarifications to our or the banks’ loan advisor on all these factors before signing the loan document.

Generally, the minimum amount loan amount is Rs 50,000 and maximum amount is Rs 30,00,000. Higher loan amounts are dependent on a personal discussion that a bank may want to have with the borrower and then take a call on the loan amount

The dependent factors are:
• - Loan amount disbursed
• - Company categorization of your employer
• - Tenure of the loan
• - Salary of the customer
• - Which bank account is the salary getting credited to

Usually banks disburse your loan within seven working days. However, it is recommended that you keep all your documents ready and in order, especially the post dated cheque (PDC), to avoid any delays. The loan is disbursed only after the completion of submitting of all required documents

• One need to provide an identity proof (copy of passport/voter ID card/driving license/Aadhaar)
• residence proof, (copy of passport/voter ID card/driving license/Aadhaar)
• last 3-month's salary slip,
• last 6 months bank statement and
• a passport sized photograph.
• Banks may also ask for additional documents later like Form 16, appointment letter, company ID card, previous company relieving letter

All personal loans repayment happens in the form of an EMI (Equated Monthly Installment) through the customers bank account. The customer needs to give few PDC’s (Postdated cheques) and sign an ECS mandate in favor of the bank disbursing the loan.

The bank will levy certain ECS bounce charges/penalties. In addition, it will get reported in your credit report. Depending on the severity of the default it can have serious impact on your future credit possibilities like a home loan, car loan etc. In addition, the banks can also take legal action against the borrower.