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Best Personal Loan 2021

5 Best Online Personal Loans in India May 2021

Last Updated 12th May 2021

Bank Interest Rate Processing Fee Loan Amount
Kotak Bank 10.25% Starting from Rs.1999 ₹ 50 Lakh
Axis Bank 10.49% Rs.4,999 ₹ 25 Lakh
IndusInd Bank 10.49% Min 0.75% to Max 1.75% ₹ 25 Lakh
IDFC First Bank 10.49% Upto 2.00% ₹ 40 Lakh
ICICI Bank 10.50% Upto 2.25% of Loan Amount ₹ 30 Lakh

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Overview

A personal loan is an unsecured loan that does not require you to provide any security or collateral and can be availed to meet urgent financial requirements such as a wedding, medical emergency, home renovation, educational expenses etc. Banks provide instant personal loans starting from 12 to 60 months. Along with that, you can get upto ₹ 15 Lakh depending on your eligibility.

Personal Loan Eligibility

While the essential eligibility criteria to avail a personal loan varies 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 21 to 58 years. However, many banks require a minimum age of 23 years.
  • Loan Amount: You can get Personal Loan of upto ₹ 15 Lakh, subject to your eligibility calculated based on your net take-home salary. Some banks usually limit the maximum eligibility at 10 – 27 times of net monthly income.
  • Employment: Salaried persons working in government, private or MNC companies can avail a personal loan. Personal loans to self-employed and business people are known as business loans.
  • Work Experience: The minimum work experience may vary in banks. However, banks prefer individuals who have job stability with at least 3 years of total experience and 6-12 months of current bank experience.
  • Credit Score: Lenders may only approve your loan at low-interest rates if you have a 650 or more credit score.

Documents Required for PL

Following is the list of documents you require to avail a personal loan from the top lending institution.

Documents Salaried Employees
Application Form Signed application form along with a photograph
Proof of Identity Aadhaar card, PAN card, Voter Id card, or passport
Proof of Address Passport, utility bills like electricity, gas, water, or telephone, and driving license
Age Proof School and college leaving certificates, birth certificates, and voter Id card
Proof of Income ITR forms, form 16, last six months salary slips, and banking statements
Business Existence Not required

Fee & Other Charges on Personal Loan

Interest rates on personal loans start at 10.25%. As per the current rates, Kotak Bank offer lowest personal loan rates. Along with the personal loan rates, banks & non-banking financial institutions also charge the following fees & charges on a personal loan:

  • Processing Fee: Personal loan processing fee is the fee levied to process the loan application. The processing charges vary from bank to bank and range upto 2.5% of loan amount.
  • Penalty on Late Payment: Banks charge a late payment fee on your personal loan when there is a delay in repaying EMI. The penalty charges range from 2% to 3% of monthly EMI.
  • Prepayment and Foreclosure Charges: When you have some part of your loan as surplus funds, you can make part payment of your personal loan before the end of the tenure and when you have full loan amount, you can foreclose your personal loan in advance before the end of loan tenure. Banks levy a fee on early payment which generally ranges upto 6% of the outstanding balance.

Types of Personal Loan

There are no end-restrictions on using a personal loan, and a personal loan can be available to fulfil various financial requirements such as marriage, travel, home renovation etc. Presently, multiple banks provide specialised personal loan schemes based on the usage of a personal loan. Below-mentioned are different types of personal loan schemes offered in India.

  • Wedding Loans: As the name suggests, a marriage or wedding loan is a personal loan taken to manage the wedding expenses, ranging from booking a venue for a wedding, catering, jewellery, foods and gifts for the relatives. Some of the customised personal schemes offered by banks for a wedding includes Axis Bank Wedding Loan, ICICI Bank personal loan for weddings and HDFC Personal Lifestyle Loan.
  • Personal Loan for Pensioners: Some banks offer personal loans to pensioners, and SBI is one of those banks that offer SBI pension loans. This loan is exclusively for fulfilling retired personnel's emergency financial needs, including Central and State government pensioners, defence and family pensioners with a pension account in SBI.
  • Personal Loan for students: A personal loan for a student or a student loan is a personal loan availed by the working parents for the education of their child for both large and small expenses including academic fees, purchase of books and academic equipment etc.
  • Travel Loan: A personal loan for financing a vacation or travel in India or abroad is a travel loan or a vacation loan. To avail a travel loan, you must have a minimum age of 21 years.
  • Consumer Durable Loan: A consumer Durable Loan is an easy financing option for purchasing durable items related to your home, lifestyle or any household and electronic item etc. Various banks & financial institutions also provide a customised personal loan product for mobile known as mobile loan.

How to get the best Personal Loan?

Availing a personal loan involves costs, including interest payments, charges such as processing fees, registration charges etc. To get the best personal loan, you must check personal loan offers from multiple financial institutions based on the parameters mentioned below:

Bank Interest Rate Processing Fee Loan Amount
Kotak Bank 10.25% Starting from Rs.1999 ₹ 50 Lakh
Axis Bank 10.49% Rs.4,999 ₹ 25 Lakh
IndusInd Bank 10.49% Min 0.75% to Max 1.75% ₹ 25 Lakh
IDFC First Bank 10.49% Upto 2.00% ₹ 40 Lakh
ICICI Bank 10.50% Upto 2.25% of Loan Amount ₹ 30 Lakh
Yes Bank 10.50% 1499 ₹ 20 Lakh
Bank of Baroda 10.50% 2%, Min Rs. 250 ₹ 5 Lakh
HDFC Bank 10.50% Upto 2.50% Min Rs. 1,999 ₹ 75 Lakh
Bank of Maharashtra 10.85% 1.00%, Min Rs. 1,000 ₹ 10 Lakh
Union Bank of India 11.00% 0.5%, Min Rs. 500 ₹ 5 Lakh

Factors Affecting Personal Loan Approval

A personal loan is an unsecured loan and allows you to avail money without any security or collateral. However, due to the same reason, the rate of interest on a personal loan is high. Below-mentioned is factors that affect your approval for a personal loan:

  • Credit Score: Your credit score is one of the essential prerequisites to avail a personal loan at best rates. Banks generally approve a personal loan if your credit score is 700 or above. In case your credit score is low you must take necessary steps such as paying off your dues on loans & credit cards on time, clearing all your dues etc.
  • Multiple Enquiries: Applying for a personal loan with multiple lenders simultaneously can also affect your credit score as you seem desperate to avail the finance. The better option would be to apply for a loan at an online marketplace like MyLoanCare and compare the eligibility for the best offers at a single place.
  • Debt-Income Ratio: If you regularly apply for a personal loan, it does not look good on your credit health. Ideally, you should not borrow more than 40% of your Income towards EMI. Having a gap of a minimum of 6 months between loan applications can be an excellent alternative to improve your chances of approval of a personal loan.
  • Personal Loan Eligibility: Applying for the right loan amount can also increase your loan chances. Thus, you must check your eligibility for a personal loan for the best offers from top lenders. Using an online personal loan eligibility calculator can help get faster approval on a personal loan.

Reasons for Loan Rejection

It is essential to know the reasons for rejection to improve your chances of obtaining a personal loan at the best rates in the future. Here is what you need to do if your application for a personal loan is rejected.

  • High Debt to Income Ratio: Banks may likely deny your Personal loan if you have multiple existing loan accounts. You must have a debt-income ratio of 40%, which means that as much as 40% of your income is spent on EMI.
  • Low Credit Score: Having a bad or no credit score also means that banks may disapprove your application for a personal loan. This means that you need to take essential steps to improve your credit score.
  • Inadequate Eligibility: Along with the credit score, banks also check other eligibility for a personal loan on factors such as income, age, occupation etc. In case you do not meet the eligibility criteria, you can avail a personal loan by adding a co-applicant. Adding a co-applicant with a high credit score increases your chances of approval.
  • Other Reasons: Your application for a personal loan may also get rejected due to errors while filling the application form. The errors may range from missing crucial information, incorrect details, etc. Similarly, it is essential to monitor your credit score and report for any reporting errors to get them corrected as it can result in your loan application rejection.

How to apply for a personal loan at MyLoanCare?

If you apply for a personal loan at MyLoanCare, you can easily compare leading lenders' Personal loan rates and get a loan at best rates based on your eligibility. Along with that, MyLoanCare also offers free-on call assistance regarding the process of applying for a personal loan. To apply for a personal loan at MyLoanCare, you need to follow the steps as mentioned below:

  • Visit MyLoanCare website or download MyLoanCare mobile application.
  • Fill in your personal and loan details like name, number, Income, residence, loan amount and other details.
  • After submitting the details, you will get multiple banks offers to compare rates and charges.
  • Post viewing all the offers you will be contacted by a MyLoanCare representative to confirm your details and discuss your loan requirements. Based on your eligibility, the representative will forward your application to the bank and explain to you the complete personal loan process and documents required.
  • You will now be contacted by a bank's representative who will initiate a verification process.
  • After verifying your documents and based on your credit history and eligibility, the bank will decide to sanction or reject your loan. If approved, you will receive a sanction letter from the bank mentioning the key loan terms, including interest rate, processing fees, tenure, prepayment charges.
  • Finally, a personal loan with the sanctioned loan amount will be disbursed to your bank account.

Personal Loan Verification Process

The process of Personal Loan verification involves the steps as mentioned below:

  • Application For The Loan: The first step to verifying your loan begins with your personal loan application. After receiving the application, your request is processed and document collection, followed by its verification and approval.
  • Collection of Documents: After successful verification of personal loan application, the next step is documents collection. The agent of the bank will contact you for document collection. The documents for a personal loan include proof of address, proof of identity and Income & Employment Proof etc.
  • Verification of documents: The personal loan verification process includes validating all the details about an applicant including eligibility criteria, documents provided, repayment capacity, CIBIL score and more. A bank representative may also visit your residence and your place of work to verify your details.
  • Disbursal of Loan: Finally, after completing the verification process for a personal loan, you receive the loan approval. The confirmation regarding loan approval is intimated through a loan agreement. Subsequently, you will also receive a personal loan sanction letter, and the loan is subsequently prepared for disbursal.

How to Choose Best Personal Loan in India?

A personal loan is one of the most accessible financing options to avail funds without any requirement of collateral or security. Borrowers can get instant personal loans from various financial and non-financial institutions based on the eligibility criteria. Further, there are no restrictions on the end-use of personal loans. Thus, a personal loan can be availed for any financial emergency such as medical expenses, house renovation, marriage etc. However, availing a personal loan involves costs, including interest payments, charges such as processing fees, registration charges etc. Therefore, it becomes essential to choose the best personal loan offers based on the parameters mentioned below:

  • Interest Rate: Personal Loan Rates are one of the crucial factors to determine the best personal loans. Typically a best personal loan offer has the lowest interest rates. As per the current rates PNB provides the lowest personal loan rates of 8.95%.
  • Processing Fees: Along with the interest rates, the financial institutions also charge processing fees on the disbursed loan amount. Thus, the best personal loan offers Nil or nominal processing fees on your loan.
  • Part-payment & Foreclosure Charges: Having a loan is indeed a burden on your pockets, and you want to repay as soon as possible. In case 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. Thus, the best personal loan reduces the prepayment or foreclosure charges.
  • 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. So, the best personal loan provides a loan in the shortest time, especially during an emergency with minimum documentation.

FAQs

Which bank is best for personal loans?

As per the current rates,Kotak Bank offers the lowest rates on a personal loan starting at 10.25% and can be considered the best bank for personal loans.

What is the minimum salary to get a personal loan?

To get a personal loan, your monthly income should be at least ₹ 25,000. However, some banks may also give loans to individuals with a salary of less than ₹ 25,000.

How much loan can I get on a 30000 salary?

The lower of FOIR and multiplier determines the personal loan amount. Consider the bank gives a loan at a FOIR of 40%, and the maximum multiplier is 20, and assuming that you do not have any ongoing EMI, the full amount you can pay as EMI for a personal loan is ₹ 30,000*40% = ₹ 12,000. If you take a personal loan for a maximum of 5 years, then your loan amount will be ₹ 12,000*12*5 = ₹ 7,20,000. However, the multiplier is 20; thus, the loan amount will be ₹ 30,000*20 = ₹ 6,00,000. Therefore, the amount you will get on a ₹ 30,000 salary is ₹ 6,00,000.


*Terms and conditions apply. Credit at sole discretion of lender subject to credit appraisal, eligibility check, rates, charges and terms. Information displayed is indicative and from collected from public sources. Read More
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