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Collateral Free Loan

Loan without Collateral

Last Updated 26th Sep 2021

  • Collateral free loans are offered without any security.
  • A collateral is any asset like property, car or gold which can be pledged to take a loan.
  • These loans are offered at a competitive interest rate if you have a good credit score.
  • The documents required for collateral free loans are identity proof, income proof and business proof.
  • Loans without collateral in India can be used for personal purposes as well as business use.
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Collateral Free Personal Loans

Collateral free personal loans are offered by a lender without pledging off any asset as collateral. It is an unsecured loan that can be used for business purposes as well as personal use. Loans without collateral are offered at a higher interest rate compared to secured loans, however you might get a lower rate if you have a good credit score.

Features of Collateral Free Loan

Following are the features of collateral free personal loan:

  • Avail loans for up to ₹ 1 Cr for Micro and Small Enterprises as per the terms of the MSMED Act, 2006.
  • You can take a higher loan amount depending upon your income and credit score.
  • Both existing and new enterprises can take a loan without guarantee.
  • Loans without security have a margin of 75%, 80% or 85%.

Benefits of Collateral Free Loan

Benefits of loans without security are:

  • No need to pledge a security
  • Subsidised and competitive interest rate
  • Flexible repayment tenure
  • No credit score required
  • Funding for development of product
  • Get moratorium on repayment
  • Quick processing
  • Letter of credit/bill discounting up to 180 days

Eligibility Criteria for Loan without Collateral

To avail collateral free loan you need to fulfill the following eligibility criteria:-

  • Must be an Indian Citizen
  • You should be aged between 18 years and maximum 65 years
  • If self employed, your business should not be 5 years older
  • You should have a clear credit history with a good credit score above 650
  • Need an approval from the Department of Industrial Policy and Promotion (DIPP)
  • Get a patron guarantee from the Indian patent and trademark office

Documents Required for Loans Without Security

  • A duly signed application form
  • A business plan drafted in a document for self employed professionals
  • Identity proof- PAN card , aadhar card, driving license, passport, voter ID card
  • Business registration certificate

Key Points to Remember for Personal Loan Without Security

If you want to apply for personal loan without security remember the following given points:-

  • Compare the lenders on the basis of interest rate, tenure, loan amount and other fees and charges.
  • Do not just select a lender who is offering a low interest rate. Evaluate the amount carefully so that you do not end up paying extra money.
  • Check the eligibility criteria to avoid rejection of collateral free loans.
  • You must have a credit score above 650 to get a loan approved and for a lower interest rate you must have a score above 750.

FAQs

What is a collateral free loan?

A collateral free loan is an unsecured loan which is availed without pledging any asset as security. The loan amount can be used for personal as well as business purposes as the loan is featured with end use of the loan amount.

Which bank gives loans without collateral?

Loan without Collateral in India is offered by lenders like Bajaj Finserv, Axis Bank, Fullerton India, SBI, ICICI Bank and many more.

What is the interest rate on collateral free personal loans?

The interest rate on collateral free personal loan starts from 8.70% to 36.00% pa. The interest rate for every lender and a borrower is different because it is dependent on factors like credit score, loan amount etc.

Does interest remain high on collateral free loans?

Yes, the interest rate remains high on loan without guarantee because it is an unsecured loan. However, it is possible to get a lower interest rate if you have a high credit score above 750.

What is the tenure for a personal loan without collateral?

You must pay personal loan without guarantee in minimum 1 months and maximum 84 months. The tenure for every lender is different so you must check the eligibility criteria before applying for a loan.

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*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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