A Personal Loan is a type of unsecured advance profited by people based on particular criteria, for example, level of wage, business history, financial assessment, and extension for reimbursement. The advance is typically taken for the satisfaction of individual needs from a managing an account establishment or a non-keeping money monetary organization (NBFC). Borrowers can utilize online devices accessible at impartial budgetary sites, for example, the Personal Loan EMI Calculator, to evaluate the intrigue payout all through the residency before applying for an individual advance.
Why choose a Personal Loan?
A brief money related emergency can transpire independent of his or her general monetary status. Individual advances are an incredible method to counterbalance any such transitory budgetary emergency as it enables the clients to profit a credit with no preconditions on the utilization of assets. Individual advances have a speedy endorsement component with advances getting cleared as ahead of schedule as inside 24-48 hours of the advance application accommodation.
- Easy Availability: Easy availability is one of the biggest advantages of a personal loan. Almost all banks and on banking financial companies offer personal loans for its customers. Personal loans are not very expensive and are available at reasonable interest rates making them a lucrative option to overcome any immediate financial need.
- Minimal Documentation: Getting a personal loan does not warrant any long process of asset verification and require minimal documentation. Personal loans are quickly disbursed due to the fact that they seek minimal documentation for loan approval.
- Quick Loan Approval: Personal loans today come with a quick loan approval mechanism. Loans are approved almost instantly for online personal loan requests. Users requesting for a personal loan can expect a loan disbursal within one or two working days making the whole loan process swift and hassle-free.
Compare Personal Loans from different banks
| Bank/NBFC | Rate of Interest | Loan Processing Charges | Prepayment/ Foreclosure Charges | Cheque Bounce Charges |
| Axis Bank | 15.50% to 24% | 1.50% to 2.00% + GST as applicable | Nil | Rs. 500 per cheque bounce + GST as applicable |
| SBI | Personal Loans Scheme (SBI Saral): 8. 50% above Base Rate floating | 2.02%-3.03% of the loan amount. | Nil | NA |
| HDFC Bank | 15.75% to 20% | Up to 2.50% of the loan amount subject to a minimum of Rs. 1,000/- & Maximum of Rs. 25000/- for Salaried Customers. | Salaried – 13-24 Months – 4% of Principal Outstanding, 25-36 Months – 2% of Principal Outstanding >36 Months – NIL | NA |
| Bajaj Finserv | 16% | 2% – 3% of the loan amount | Nil | Rs. 1,000 for every bounce |
| ICICI Bank | 13.99% to 18.00% | Up to 2.25% of loan amount plus GST | The lower of the two amounts given below: 1) 5% of principal outstanding or 2) Interest outstanding for the unexpired period of the loan. | NA |
Features and Benefits of Personal Loans
- 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. Personal loans can be used to overcome any financial hardships, marriage or medical related expenses, house renovation or any other financial need of the borrower without any preconditions.
- 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. Since personal loans do not require any collateral or security to be mortgaged with the bank for loan approval, they are easy to use for a vast majority of people.
- 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, making it an ideal financial instrument compared to other options like credit card loan or gold loan.
Personal Loan Eligibility:
Various banks and NBFC’s offer personal loans to all applicants fulfilling their basic eligibility criteria. While different banks have different minimum eligibility criteria, the criteria common for most banks and NBFCs for individuals requesting a personal loan include:
Personal Loan Eligibility Details
| Particulars | Salaried | Self-Employed |
| Age(Min-Max) | 23 years to 58 years | 28 years to 65 years (25 years for doctors) |
| Income | Rs.17,000 (Rs.25,000 for metro cities) |
|
| CIBIL Score | Above 750 | Above 750 |
| Minimum Loan Amount | Rs.75,000 | Rs.75,000 |
| Maximum Loan Amount | Rs.20,00,000 | Rs.15,00,000 |
Top Banks Providing Personal Loans in India
- HDFC Personal Loan: HDFC Bank is a market leader in personal loans offering a Personal Accidental Cover of up to 8 Lakhs along with a Critical Illness cover of 1 Lakhs with each personal loan. HDFC Personal Loan starts as low as 15.75% interest rate for salaried individuals. HDFC Bank offers a high quantum of a personal loan with a complete removal of any prepayment charges after a period of 36 months. HDFC Bank offers pre-approved personal loans up to Rs. 3 Lakhs for women personal loan applicants along with free access to lifestyle diva products and services.
- ICICI Personal Loan: ICICI Bank personal loans are available for both salaried as well as self-employed individuals and professionals. Salaried individuals can get a maximum personal loan up to Rs. 15 Lakhs while self-employed individuals can get a loan up to Rs. 30 Lakhs. ICICI Personal Loan starts with as low as 13.99% interest rate.
- Bajaj Finserv (Finance) Personal Loan: Bajaj Finance Limited is one of the most popular non-banking financial companies offering personal loans up to Rs. 25 Lakhs for salaried individuals. Bajaj Finserv (Finance) Personal Loan starts from as low as 16% interest rate for salaried individuals. Bajaj Finserv allows prepayment up to 6 times in a calendar year with a minimum amount per prepay exceeding 3 EMIs. Bajaj Finserv offers a 24/7 customer support helpline including toll free number, emails and SMS allowing users to get in touch with the company to resolve their grievances at the earliest.
- SBI Personal Loan: State Bank of India, the largest public sector bank of the country is one of the most preferred banks when it comes to personal loans. SBI offers personal loans for both salaried and self-employed individuals. State Bank of India offers a personal loan up to 12 times the net monthly income for salaried individuals and pensioners subject to a ceiling of Rs.10 Lakhs. State Bank of India has streamlined it’s personal loan division allowing for quick loan approval and disbursal. SBI Personal Loan schemes are offered at lucrative interest rates for various working professionals and salaried individuals from time to time.
- Axis Bank Personal Loan: Axis Bank is a popular choice for personal loans as the bank aims to give personal attention to each loan applicant. The quantum of the personal loan amount for Axis Bank Personal Loan is highest in its class fixed at an upper limit of Rs 15 Lakhs. Axis Bank offers personal loans at a competitive interest rate ranging from 15.5 to 24% with zero prepayment charges. Axis Bank offers eDGE loyalty points on Personal Loans which can be redeemed for cash surplus and discounts along with multiple repayment options. For any loan-related query, Axis Bank has set up a dedicated helpline for loan services available round the clock at the bank’s toll-free numbers.
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:
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- 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.
Personal Loan Application Checklist
- One or Two Passport size color photographs
- Photo Identity Proof
- Residence Address Proof
- Residence Ownership Proof
- Income Proof for Self-employed Individuals
- Job Continuity Proof for Salaried Individual
- Last Six Months Bank Statement
Personal Loan Interest Rates
Different banks and non-banking financial companies offer different interest rates for personal loans. Most banks have their own unique different classification based on which interest rates are calculated. Personal loan interest rates of various banks vary from 10.85 to 18.50% depending on the eligibility criteria, the loan amount and the tenure period of the personal loan.
Personal Loan Interest Rates Table
| Bank Name | Interest rates |
| SBI | 12.5% to 16.5% p.a. |
| ICICI | 11.59% to 18.49% p.a. |
| Axis Bank | 15.50% to 24% p.a. |
| HDFC Bank | 15.75% to 20% p.a. |
| Citibank | 14.25% to 19.99% p.a. |
| Standard Chartered | 11.99% to 17% p.a. |
| TATA Capital | 13.99% to 17.5% p.a. |
| Oriental Bank | 11.20% to 12.95% p.a. |
| Capital First | 13% to 18.45% p.a. |
| IndusInd Bank | 11.25% to 26% p.a. |
| Fullerton India | 21% to 40% p.a. |
| Kotak Mahindra | 11.5% to 24% p.a. |
| Aditya Birla | 14% to 16% p.a. |
Some Simple Tips While Applying for a Personal Loan
- View the small print on your loan document carefully: Make sure you read even the tiniest print on your loan document to be aware of everything regarding your loan. You can read the small print to keep yourself aware of all the terms and conditions of your loan.
- Compare multiple personal loan options: You can compare the annual percentage rate (APR) of several personal loans available in the market. This will help you get a proper idea about the costs that you will incur with this personal loan.
- Choose your personal loan amount by assessing your repayment ability: A personal loan typically ranges from 1 to 5 years. You can fix the loan tenure according to your loan amount, your other monthly expenses, and the income that you earn on a monthly basis.
- Select your personal loan amount as per your convenience: You can choose your personal loan amount depending on your repayment capability, your income, and your expenditures.
- Choose an affordable interest rate: Make certain that you an economical interest rate for your personal loan. With a low-interest rate, your loan expenses will be low and you can repay it without any hassle. You will also avoid any defaults on loans.
- Check your EMIs properly: You will need to compute your EMIs before you fix your personal loan amount. This will help you plan your expenses efficiently. You can multiply this loan EMI with your loan tenure to find out your precise loan amount. You can then choose the lowest loan amount.
- Compare the processing fee: Most banks and NBFCs charge a processing fee for a personal loan. You can compare this fee and then decide which loan product you want.
- Be wary about automatic payments: If you choose standing instruction or ECS as your loan payment mode, you will need to be careful about the direct debiting of money. You should make sure that no additional amount is deducted from your account unnecessarily. You will need to monitor your loan payments on a regular basis to ensure that everything is being done properly.
- Select fixed or variable interest rate according to your preference: When you choose fixed interest rate, your loan payment will remain fixed throughout the loan tenure. When you select variable interest rate, your loan payment will depend on the rate. Hence, the loan payment will increase if the rate increases and the loan payment will reduce if the rate reduces.
Points to Consider Before Applying for Personal Loans
Before you apply for a personal loan, you need to make sure that you focus on certain elements carefully so that you make a sensible financial decision.
- Credit history: Before you proceed to apply for a personal loan from any bank or NBFC, you will need to assess your credit history thoroughly. This will give you an idea about the loan amount that you will receive. You need to make sure your credit history looks decent before you apply for a loan. You can go for a fixed rate or a variable rate according to your preferences.
- Interest rate: You need to check the interest rate for your personal loan before you actually apply for one. Since a personal loan is unsecured in nature, your lender may charge a very high interest rate. You will not be giving any asset as a collateral or security to your lender and hence, your interest rate will be a little high compared to rates charged for other loans.
- Assess the need for your personal loan: You will need to be clear about the need for your personal loan. You can take it for funding your wedding arrangements, for paying your hospital bills, for buying medicines, etc. Before you apply for the loan, you will need to assess if you really want the loan. If you are planning to take a personal loan for investing in shares or other financial instruments, then it may not be a great idea.
- Find out about the various fees and charges associated with your personal loan: When you prepay a personal loan or when you miss your payment deadlines for your personal loan, you will most likely be asked to pay a penalty fee. It will depend on your lender. You will need to assess these penalty fees properly before you apply for a loan.
- Do proper research to get the best rate for your personal loan: You can do online research by visiting third-party financial websites or by going to the banks’ official websites to compare different interest rates for personal loans. You can choose a low-interest rate for your personal loan as it will help you have a cost-efficient loan.