Personal Loan

PERSONAL LOANS:  Personal Loan is amount taken for fulfilling personal financial needs such as paying credit card bills, renovation of house, financing wedding function, meeting medical emergencies, for vacation and many more. Personal loan is an unsecured loan provided by financial institutions which is based on criteria such as customer’s source of income, customer’s income, employment history, customer’s repayment capacity, his credit history.

The best part of personal loan is you can make use of the amount to meet your personal needs without giving collateral or security.


Personal Loans is given by most banks/ NBFCs having different eligibility criteria.

Here are the eligibility criteria that are common to most banks and NBFCs.

AGE21 years to 65 years
OCCUPATION TYPESalaried/ Self Employed Non-Professionals/Self Employed Professionals.
LOAN AMOUNTRs. 50,000 up to Rs. 75 lakhs depending upon credit history.
LOAN TENORRanges from 12 months to 60 months.
INTEREST RATERanges from 10.50% – 24.00%
PROCESSING FEEDiffers from bank to bank, generally ranges from 0.5% to 3% of the loan amount + GST
WORK EXPERIENCEFor Salaried: employed in current company/institution/organization.
For Self- Employed: Business tenure of at least 1 years (continuous).
CIBIL SCOREMinimum 700 (* subject to different banks policies).


One of the interesting factor of Personal Loan is the requirement of minimum documentation.Here is a list of documents common to most banks and NBFCs.

For Salaried EmployeesFor Self Employed Borrowers
Identity ProofIdentity Proof
Aadhar Card
Driving License
Voters ID
PAN Card
Aadhar Card
Driving License
Voters ID
PAN Card
Address Proof:Address Proof:
Any utility bills
Aadhar Card
Rental Agreement
Ration Card
Any utility bills
Aadhar Card
Income & Bank Statement:Income & Bank Statement:
Form 16 & Salary slips since past 3-6 months.
Minimum 3-6 months bank statement (of salary account).
Last 3 years Income Tax Return with Balance Sheet
Profit and Loss for last 3 years certification by a Chartered Accountant
Minimum 6 months- 1 year bank statement (current account).
Additional documents you can give:Additional documents you can give:
For Doctor Loan: Education Qualification Certificate Medical Registration Certificate. For Private Limited Companies: Copy of Memorandum of Association.
For Partnership Firms: Copy of Partnership Deed.


If you are applying for a Personal Loan then you should be aware of the multiple features and benefits you can avail from it.

Here we are bringing to you some interesting features and benefits of Personal Loan that makes it more than a debt.

A Multipurpose Loan:Multiple purpose –one Solution and that is Personal Loan.

Quicker Approval:The best part of Personal loans is, they get approved quickly and can get disbursed within 1-2 working days.

Minimum Documentation Required:The documents required to get a personal loan is the least in comparison to any other loans. This feature is what makes Personal loans desirable.

No Collateral or Security Required: Another interesting feature of Personal Loan is absence of collateral or any security for availing personal loan. Lenders will simply look at your past financial history and your income details for assessing your credibility(to evaluate your potentiality).


If you are applying for personal loan it is clear that you are undergoing a financial crunch.But here are some aspects you should keep in mind if you are applying for a personal loan just to ensure that you not only avail the loan but also (avail) the benefits that lenders offer to their customers.

Here’s a list of some DO’s and DON’T’s you should consider while making the final decision to take a loan:


  • Know your Credit Score before applying for Loan: This is the first and foremost step which customers are usually unaware of or simply ignore. Know your credit score before you apply for loan as lenders determine your creditworthiness on the basis of your credit score.

A good credit score (750 and above) help lenders buildtrust on you and makes it easy for lenders to decide upon the loan amount to be approved and the interest rate on it.

  • Check various Loan offers available in the market: Since there’s a plethora of options of lenders offering loans in the market today, therefore it would be wiser on your part if you check and compare various loan offers to have the best deal.

What we would suggest our customers, you should first visit your own existing bankers and lenders and know the offer, its features and the availability of loan you are looking for.

If you are not satisfied then we can offer you a host of options to meet your financial needs.

  • Check the interest rates: Always remember that the calculation of EMIs include both principal and interest. Thereforealways check the interest rates offered by the lenders before applying.
  • Look for a Loan tenure suitable to your repayment capacity: If we talk about loan tenure then it is the time duration within which you have to repay the amount taken (then it is the specified period for which you take loan and within which you have to repay the loan amount to your lender). Shorter the loan tenure, higher will be the EMIs but lower the interest cost.

Thereforeplan for loan tenure as per your repaying capacity.

  • Check your Eligibility for the loan and the required documents:Another important step before finalizing any lender for the loan is to finding out your eligibility and the documents required for it. Checking your eligibility will help you save time as it will make it clearto you which option should you choose without much wandering.


  • Don’t apply without calculating the required credit amount: Before applying for a personal loan make sure that you have calculated well the impending expenditure and then apply accordingly.
  • Avoid applying to multiple lenders simultaneously at the same time:

When you submit your application to lenders, they will go ahead to fetch your credit score from the credit bureaus to know your credit worthiness.

When you submit your application to lenders, they put up an enquiry request to the credit bureaus to fetch your credit report. Such enquiries initiated by the lenders are considered as hard enquiries and it severely affects your credit score. Why? Because each time when such enquiries are initiated by the lenders to the credit bureaus, it gives an impression that you are a credit hungry person and your credit score will get affected. This will reduce your loan eligibility thereby making it difficult for you to avail a loan.

  • Don’t Take Loan to fund non-essential expenses:

Since there is no restriction on the end use of the amount you get in a personal loan, hence you have to be very careful about how you use it. Avoid taking a loan unless you really need to meet a financial emergency. Because remember taking loan is not just about having the funds in your account but involves a monetary commitment and the discipline to do timely repayments.

  • Don’t forget to read the Terms and Conditions:

       Once you have decided to go for a loan don’t forget to read all the terms and conditions before finalizing the loan. Be clear about the interest rates, the repayment schedule, The EMIs, the insurance and other charges. Ask your lender if you are not sure or unclear about any term or condition. You can also take help of a financial advisor to guide you.

Frequently Asked Questions

  1. What factors affect your personal loan eligibility?

The important factors that affect your personal eligibilityare:

  • Your Income.
  • Your Credit Score.
  • Your Age
  • Your Work Experience
  • Your Current Liabilities.
  • What factors affect your personal loan Interest Rates?
  • Loan Type
  • Loan amount/Loan Size.
  • Loan Tenure’
  • Your Credit Score: Higher the credit score, lower the interest rates.
  • Your Credit History
  • Employment Type
  • Your Income: Higher the Income, Lower the Interest Rates.
  • What factors affect the amount of a personal loan for which you may be approved?
  • Your Credit Score
  • Your Credit History
  • Your Income
  • Debt-to-income ratio: This help the lenders to determine how much a borrower would be able to repay and therefore decide upon the loan amount accordingly. Lenders generally seek borrowers with debt-to-income ratios of 36% or less.
  • Collateral/Security: Whether the loan is backed by some collateral or security.
  • Purpose of Loan
  • How much CIBIL Score is required to get a personal loan?

CIBIL score has a range between 300 and 900. An ideal CIBIL score should be closer to 900. The closer it is, the better chances are for you to get better deals from lenders. For personal loan, the minimum CIBILScore required is 600 and above. There are some lenders who may approve on CIBIL Score less than 600 but at higher interest rates, lesser loan amount, fees and charges.

  • What is the maximum loan amount that I can get?

The maximum loan amount that lenders offer is usually up to Rs. 30 lakhs. But some lenders offer loan amount up to Rs. 50 Lakhs subject to various terms and conditions.

  • How long does it take to get a personal loan approved?

While online lenders may provide loan amount within 24-48 hours subject to their terms and conditions, usually the approval time after submission of loan application is three to seven working days and disbursement after approval is done within seven working days.

  • What happens if a personal loan is not paid?

Defaulting on a personal loan can severely impact your credit score. If you miss one or two EMI payments it will not make you a defaulter. However, if you fail to pay several EMIs on time your lender shall report you as a defaulter. If it so happens, it will become very difficult (nearly impossible) for you to take another loan in future. With that, the concerned lender may also take action against you.

  • Is the interest rate on personal loan flat or reducing?

Interest rates on personal loan can be both flat or reducing. In flat rate method, the interest rate is calculated on the principal amount of the loan. On the other hand, in the reducing interest rate, the interest rate is calculated only on the outstanding loan amount on monthly basis in the reducing balance rate method.

  • Do I need to provide any security or collateral to obtain a personal loan?

Since Personal loan are unsecured loan therefore you are not required to provide any security or collateral to avail your personal loan.

  1. Can I get a top up on my existing personal loan?

Yes if you are already running a personal loan, you can go for a top up on it. You can obtain it either from your existing bank or lender at existing loan rate or transfer your loan to another bank.

  1. How is the personal loan disbursed?

Once you get approved for a personal loan, the amount would get electronically transferred into the salary account that is mentioned on the salary slip at the time of documentation. 

  1. What is the minimum and maximum tenure available to repay my personal loan?

Most lenders offer loans for a minimum tenure of 1 year to maximum of 5 year duration.