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Personal Loan

Personal Loan Highlights

Last Updated 18th Oct 2021

  • A personal loan is an unsecured loan offered by banks without any collateral or security, based on an assessment of your income, employer and credit score.
  • Personal loan in India does not have any end-use restrictions and can be used for any purpose be it a medical emergency, wedding, education.
Personal Loan Rate starts at 10.25% Check Best Offers
Processing Fee Upto 3% of loan amount
Loan Tenure Upto 5 years
Lowest EMI Per Lakh ₹ 2,275 for 5 years
Prepayment Charges Nil to upto 5% of the outstanding balance

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Compare Best Personal Loan in India

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Bank Interest Rates Lowest EMI Per Lakh
SBI Personal Loan
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9.60% ₹ 1,832
HDFC Bank Personal Loan
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10.25% ₹ 2,137
ICICI Bank Personal Loan
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10.25% ₹ 2,137
Bajaj Finserv Personal Loan
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12.99% ₹ 2,275
IDFC First Bank Personal Loan
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10.49% ₹ 2,149
Axis Bank Personal Loan
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10.49% ₹ 2,149
Tata Capital Personal Loan
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10.49% ₹ 1,877
Fullerton India Personal Loan
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11.99% ₹ 2,633
IndusInd Bank Personal Loan
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10.49% ₹ 2,149
Kotak Bank Personal Loan
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10.25% ₹ 2,548

What is a Personal Loan?

A personal loan is an unsecured loan taken from a bank or NBFC for any personal use including medical emergency, paying off old debts, travel, home improvement, education fees or wedding. Being an unsecured loan means you are not required to pledge any collateral or security with the bank. The loan repayment is done in the form of EMIs over a fixed tenure. One can avail personal loan online through the bank's website, app-based lenders, by applying on MyLoanCare or by visiting the nearest branch of the bank.

Features and Benefits of Personal Loan

Given are the features and benefits of a personal loan:-

Unsecured Loan

Personal loan does not require any collateral or security such as a house, car or jewellery. Loan approval is based on your creditworthiness and employment profile which is reflected by your credit score.

Flexible End-use

The personal loan amount can be used for various purposes like meeting expenses of a medical emergency, travel, house renovation, debt consolidation, etc. There is no end-use monitoring by banks.

Flexible Tenure

You can choose the tenure as per your requirement. The tenure ranges between 1 months to 60 months.

Minimal Documentation

Personal loans can be availed with minimal documentation. You are only required to submit identity proof, address proof and income proof.

Quick Disbursal

You can have a personal loan amount credited to your account within 48 hours to 72 hours. If it’s a pre-approved offer then the loan can get sanctioned within a few hours.

Types of Personal Loan

Personal loans can be used in various situations based on no end-use and the way lenders market these loans. Types of personal loans are:-

  • Wedding Loan : Many lenders offer personal loans for weddings which helps you make your or your child’s wedding a memorable event. The funds can be used for organising destination weddings as well as buying jewellery.
  • Travel Loan : Travel loan is also known as a holiday loan that you can take to meet all the expenses related to vacation and pay the amount later. The added benefit of this loan is that it comes with travel insurance.
  • Home Renovation Loan : A home renovation loan, also called a home improvement loan, helps you take care of costs like repairing costs, buying new material, labourer’s charges, etc. Unlike a home loan, you do not need to mortgage your house to get a personal loan for home renovation.
  • Pension Loan : These are the loans for retired people to help them meet medical or daily expenses. The eligibility criteria such as age, work experience, salary credits etc do not apply for a pension loan. However, a pensioner has to submit pension proof to avail of this loan.
  • Personal Loan for Education : Education Loan has existed for decades and has helped many people fulfill their dream. However, this loan only covers tuition fees, hostel fees and all the other expenses related to education. If you study abroad or do not take the hostel facility, then the living cost will not be covered under an education loan. A personal loan for education can be a better option to cover all these expenses as it can be availed for any purpose and interest rates are also lower than an education loan.
  • Consumer Durable Loan : Banks offer consumer durable loans to people who want to buy white goods or any electric device. Also, sometimes such loans are covered by insurance.

How to Apply for a Personal Loan Online?

To apply for an online personal loan, either you can visit the official website of the lender or perform the following steps:-

  • Step 1 : If you need a thorough personal loan comparison before deciding on the bank, visit MyLoanCare.in.
  • Step 2 : Click on the Personal Loan tab.
  • Step 3 : Fill in the required information like name, age, loan amount required etc on the form given on the right side.
  • Step 4 : Click on ‘Get Quote'.
  • Step 5 : Fill the OTP and click ‘Submit’.
  • Step 6 : At this step, you will be requested to provide a few more details to get customised offers. Fill in the details and click ‘Submit’.
  • Step 7 : Compare your eligible offers and select the one that meets your requirements.
  • Step 8 : Get assistance from our loan advisors or choose to complete the online personal loan journey to get instant loan approval and disbursal.

Top Personal Loan Schemes

These are the schemes offered by all banks personal loan:-

  • Personal Loan for Government Employees : This loan helps cater the financial needs of government employees. The loan is offered only to the people who work in the centre or state government and PSU’s. The rates for central govt, state government, PSUs and defense employees may vary in banks. HDFC Bank, ICICI Bank, Kotak Bank offer the lowest rate on personal loan for govt employees.
  • Personal Loan for Self Employed : This scheme is exclusively designed for self employed professionals like CA, CS, Architects, Doctors, Engineers and others. The loan amount can be used for personal use or to expand their profession etc. The lowest rate on personal loan for the self employed is 13.00% and is offered by Axis Finance.
  • Personal Loan for Bank Employees : Personal loan bank list is huge and few banks offer special rates on personal loans for bank employees. They get loans at a lower interest rate than general people. The discount in rate may vary from 0.05% to 0.25% which is an added benefit for bank employees.
  • Personal Loan for Pensioners : If you are a pensioner and you need funds to meet a medical emergency, wedding of your children, renovate your house then this loan is for you. Here is a list of banks which provide this scheme:-
    Bank of Baroda 9.75% - 15.35%
    PNB 8.70% - 14.25%
  • Personal Loan for Doctors : Also, called Physician personal loan comes with no end usage restriction. You can avail Doctor Loan of up to ₹ 50 Lakh for 5 years tenure if you are a medical practitioner. The lowest interest rate on a doctor loan is 10.50% .
  • Personal Loan for Home Improvement : This loan is availed if you want finance for renovation or expansion of home. Remember the loan amount can only be used for home improvement and the rate charged on this loan is similar to regular personal loan.
  • Personal Loan for Education : To fulfill your education dreams or your child’s dream, financial institutes offer personal loans for education. The loan amount can be used to pay tuition fees, hostel fees, air tickets and all other expenses related to education.
  • Personal Loan Balance Transfer : A Personal Loan balance transfer is a process where you can transfer your total outstanding loan from one bank to another. You can opt for a lender who offers the loan at a lower interest rate, this way the overall burden can be decreased. Personal loan transfer rates start at 10.25%. Bank that offers the lowest rate on balance transfer is HDFC Bank.
  • Top Up Personal Loan : A Top up loan is a financing option in which you get extra loan amount over and above your existing personal loan. You can avail top up loans only if you have a good repayment history. The interest charged on top up loan is similar to the rate at which you avail a personal loan.

Documents Required for Personal Loan

You need to be ready with the following list of documents to be submitted at the time of personal loan application:-

  • Identity proof- PAN Card, Aadhaar Card, Voter ID, Passport
  • Address proof- Passport, Driving License, Election ID card, Utility bills
  • Income proof- Salary Slip, Bank Account Statement, Form 16
  • Self-employed professionals are also required to submit last year's ITR and Bank Account Statement.

Personal Loan EMI Calculator

Personal Loan EMI Calculator is an online tool that helps you to calculate the EMI by entering three details of loan amount, interest rate and tenure. Advanced EMI calculators also build an amortization schedule which gives you a break up of every EMI into interest as well as loan repayment. EMI calculators are preferable over manual calculation due to their instant and accurate results and an ability to do multiple calculations in one go.

Personal Loan Eligibility Criteria

While the essential eligibility criteria to avail of a personal loan vary for every financial institution, below listed are standard eligibility parameters required by banks and NBFCs to avail a personal loan.

  • Age : The minimum and maximum age to avail Personal Loan are 18 to 65 years. However, many banks require a minimum age of 21 years.
  • Loan Amount : You can get a Personal Loan of upto ₹ 75 Lakh, subject to your eligibility calculated based on your net take-home salary. Some banks usually limit the maximum eligibility to 10 – 27 times of net monthly income.
  • Employment : Salaried persons working in government, private, or MNC companies can avail of a personal loan by submitting relevant proofs such as ITR and salary slips.
  • Work Experience : The minimum work experience may vary in banks. However, banks prefer individuals with job stability with at least 3 years of total experience and 6-12 months of current work experience.
  • Credit Score : Lenders may only approve your loan at low-interest rates if you have a 650 or more credit score.

How to Get Instant Approval on Personal Loan?

To get instant approval on a personal loan, you need to fulfil the following conditions:-

  • A good relationship with your existing bank is maintained by paying off dues and instalment on time. If you are a savings account holder, ensure that you maintain the minimum required balance per month. This way, the lender develops trust in you and grants you an instant loan based on your financial credibility.
  • Make credit card payments on time and maintain a good balance between no use and excessive usage of your credit card.
  • A good credit score is key to getting a loan quickly. Maintain a good credit score above 650 and get the loan amount sanctioned in the account within no time.
  • If you are working with top corporations and getting timely salary credits, you stand a better chance of getting a loan.

5 Most Important Things to Consider before taking a Personal Loan

Keep these points in mind before taking a personal loan:

  • Interest Rate : Personal Loan Rates are one of the crucial factors to consider. Typically the best personal loan offer has the lowest interest rates. As per the current rates, HDFC Bank, ICICI Bank, Kotak Bank provide the lowest personal loan rates of 10.25%.
  • Processing Fees : The financial institutions also charge processing fees on the disbursed loan amount along with the interest rates. Thus, personal loan at Nil or nominal processing fees on your loan is a feasible option.
  • Part-payment & Foreclosure Charges : Having a loan is indeed a burden on your pockets, and you want to repay as soon as possible. If you have ample funds and want to close your loan tenure before the due date, you must be able to do it at nil or nominal charges.The lower the foreclosure and prepayment charges, the better it is.
  • Flexible Repayment Tenure : Banks provide flexible tenure on personal loans ranging from 12 to 60 months. In some cases, you may also get additional flexibility on your loan, such as repaying the loan through a bullet repayment scheme.
  • Quick Disbursal : Borrower prefers a personal loan due to simple documentation and quick disbursal. In case of emergency, you can avail instant personal loan with minimum documentation.

What to do after Closing a Personal Loan?

When you decide to close a personal loan look at these crucial things:-

  • Pre-closure charges : When you decide to close the personal loan account, check the pre-closure charges which the bank or NBFC levies. The prepayment charges range upto 5% of the outstanding balance. However, some banks offer Nil charges on prepayment under special schemes.
  • Obtaining NOC : No Objection Certificate is proof that shows that you have cleared all the dues and there is no outstanding balance which you need to pay.
  • Obtain all your original documents : When you avail of a loan, you submit your important documents, so make sure that you take all your documents while closing the account.
  • Ensure updation of your CIBIL Score : Once the loan is repaid in full, the bank must update your loan repayment action in the CIBIL database. However, when banks take time to do so, you need to keep a check on your report, and if it is not done, you should ask your lender.
Illustration on Personal Loan
Maximum Annual Percentage Rate (APR) 10.75% to 36.5%
Representative example of the total cost of the loan, including all applicable fees
Here is an illustration of the total cost of the loan:
  • Total amount borrowed: ₹ 1,00,000
  • Time period: 6 Months to 84 Months
  • Personal Loan Interest Rate: 10.25% to 36.00%
  • Processing Fee payable to: Upto ₹ 3,500
  • Fee payable to MyLoanCare: NIL
  • Total Monthly Cost – From ₹ 1,673 for 84 Months ₹ 1,00,000 loan at 10.25% (lowest rate, longest time period) to ₹ 18,460 for 6 Months ₹ 1,00,000 loan at 36.00% (highest rate, shortest time period). This is inclusive of principal repayment.
  • Annual Percentage Rate (APR) of charge including all applicable fees: 10.75% to 36.5%
  • Total cost payable over loan tenure: ₹ 1,06,511 for 6 Months loan to ₹ 1,44,037 for 84 Months loan

FAQs

How long does it take for personal loan approval?

Personal loan approval takes somewhere between 48 hours and 72 hours. However, if you have a pre-approved offer, you can get an instant personal loan within a few hours.

Which bank is best for personal loan?

HDFC Bank, ICICI Bank, Kotak Bank offer the lowest interest rate starting at 10.25% and can be considered the best bank for a personal loan. In addition, based on customer service, HDFC Bank offers the highest-rated customer service in the market with 4.5/5 and is the best bank for a personal loan. Check the complete personal loan bank list at MyLoanCare.

What is the best way to get a quick personal loan approval?

The best way to get a quick personal loan approval is to maintain a good relationship with a lender, and if you already have a savings account with that bank, it is a plus. Also, having a good credit score helps in quick loan approval.

What is the minimum income required to get a personal loan?

The minimum monthly income required to get a personal loan for salaried employees is ₹ 20,000. However, the income criteria may vary for metro and tier locations. You can avail Personal loan without income proof from your existing bank where you maintain your salary account.

How does the personal loan work?

A personal loan is an unsecured loan under which you are not required to submit any collateral or security. Due to the absence of collateral, the documentation verification process is short and hassle free. As soon as the documents are verified the loan is disbursed into your bank. The loan is then to be repaid in fixed installments over a fixed tenure. If you need a personal loan, for any purpose like paying debts, medical bills, buying consumer durables or planning a wedding or going for a vacation, you can check the best personal loan offers.

Which bank gives the cheapest personal loan?

The following banks offer the lowest personal loan rate of 10.25%,10.49%, HDFC Bank, ICICI Bank, Kotak Bank, IDFC First Bank, Axis Bank, Tata Capital, IndusInd Bank, Federal Bank respectively.

What is the maximum amount of personal loan I can get?

You can get a personal loan for a maximum of ₹ 75,00,000 from HDFC Bank. However, the maximum loan amount varies for lenders and customers because it depends on your eligibility.

What is the CIBIL score for a personal loan?

CIBIL score ranges from 300 to 900. A score of 650 and above is considered a good score to get a personal loan. Higher the credit score, the higher the chances to get the loan application approved.Personal loan for low cibil score can be availed at a higher interest rate.

Do I need to open a bank account to service my personal loan?

Yes, you need to have at least one active bank account in your name. It is even better if you have an account with the same bank from which you would like to get a loan. Opting for a loan from the same bank as your savings or current account, can help you get a good deal at affordable terms and conditions.

Can I apply for a personal loan jointly with my spouse?

Yes, you can apply jointly with a co-applicant (either be your spouse or your parents). Joint personal loans helps you to increase your eligibility, and you can also avail of a higher amount of loan as your co-applicants income also gets added to your income, and that total is taken into consideration for calculating the loan amount you will be eligible for.

Does it affect my co-applicant if I default on a personal loan?

Usually, personal loans are given at a fixed interest rate, and hence banks do not change these rates after sanction. However, suppose you have opted for a floating interest rate. In that case, you can get the cheapest personal loan depending upon market trends because the interest rate will be reset at regular intervals by the bank in response to fluctuations in market interest rates.

How much personal loan can I get if my salary is ₹ 40,000 ?

Usually, banks and financial institutions offer 10-27 times of the loan amount of your monthly take home salary. While making the final offer, they consider your debt to income ratio as well. Personal loan for salaried is available at low rates.

How MyLoanCare helps government employees to get personal loans easily?

MyLoanCare helps government employees get personal loans without any hassle. As it is easy to verify the credentials of government employees. If the borrower fits the criteria of a certain bank, then MyLoanCare offers the most suitable rates and offers available in the market suiting borrowers’ requirements.

Can I get a personal loan without a salary slip?

Yes, you can get a personal loan without a salary slip, if you hold a bank account or salary account in the same bank as it contains all your ITR records.

What is the maximum tenure for a personal loan?

Most of the banks offer Upto 5 years as personal loan maximum tenure. Although some banks offer 7 years to the customers.

Can we transfer personal loans from NBFC to bank?

Yes, you can transfer your NBFC personal loans from NBFC to a bank, if you fit into the criteria of the bank. Usually banks are the primary lenders in the finance chain, hence, can offer favourable balance transfer deals.

How to get a personal loan from a bank?

You can get a personal loan from the bank by applying through their website or visiting the nearest bank branch. To get an instant personal loan, apply online and save time. Visit the website of the lender, fill personal and occupational details, check eligibility, get a call and submit documents. Based on your eligibility and documents verification, the loan will be approved and disbursed to your account.

How to avoid a personal loan rejection?

To avoid the rejection of your personal loan application, ensure that you: (i) Keep monthly outgo to income ratio below 50%. (ii) pay your credit card dues and loan EMIs on time and (iii) Maintain the credit utilisation ratio below 30%.

Along with following above steps, avoid (i)Making mistakes in the application form or documents. (ii) Paying multiple loans EMI at one time. (iii) making frequent job switches and (iv) multiple loan enquiries directly from the lender.

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Personal Loan News - Oct 2021
  • 2021-10-14 : Zavron Finserv Launches Instant Personal Loan Application
    Zavron Finserv- a non-banking financial institution- has introduced an instant personal loan application. This App will help customers to take loans instantly within few minutes that too from their mobile phone. A loan for a minimum of Rs 10,000 and a maximum of Rs 2 lakh is available.
  • 2021-10-13 : Early Salary Introduces Dussehra Offers
    Early Salary has announced the Dussehra offer on personal loans by 50% off on processing fees. The interest rate charged by the instant mobile application is Rs. 9 per day.
  • 2021-10-12 : Axis Bank Has Launched Open API For Customers
    Axis Bank unveils open APIs (Application Programming Interface), these APIs will help retail and corporate customers/ partners to use banking services integrated across partner platforms. This banking portal has retail as well as corporate products like loans, accounts, deposits, payments, trade, collections and bills.
  • 2021-10-11 : Punjab National Bank Introduces 6S Campaign
    Punjab National Bank (PNB) has launched the 6S Campaign. The campaign consists of schemes like Swabhiman, Samruddhi, Sampark and Shikhar, Sankalp and Swagat. The objective of the campaign is to spread awareness about the development of financial services and accelerate credit growth, improve penetration of social security schemes and drive digital banking push.
  • 2021-10-07 : Bank of Baroda Decreases Personal Loan Rates
    Bank of Baroda has decreased personal loan rates by 25 points to 9.75%. Earlier the personal loan started at 10.00%.
*Terms and conditions apply. Credit at sole discretion of lender, which is subject to credit appraisal, eligibility check, rates, charges and terms. Information displayed is indicative and collected from public sources. Read More
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