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Personal Loan in India

A Personal Loan is an unsecured loan that can be availed to fulfill any of your financial requirements. Since it is an unsecured loan, you do not have to pledge any collateral in order to avail it. A personal loan can be used for a variety of purposes. Be it planning your wedding the royal way, financing a trip to your dream destination, refurbishing your home, dealing with a medical emergency, expanding your business horizons or hiring staff for your clinic, Personal Loans will provide you the much-needed financial aid.

Types of Personal Loans in India

Today, financial institutions offer various kinds of Personal Loans, that can suit your requirements. These loans can be used for specific purposes. Here are the types of Personal Loans.

Travel Loan

Travel loan is a Personal Loan, which can be used to fund the financial requirements associated with travelling. Be it travelling to your dream destination or for business purposes, with a Travel Loan, you can have all your expenses covered such as that of tickets, food, accommodations, shopping etc.

Home Renovation Loan

With a Home Renovation Loan, you can revamp your abode like never before. From purchasing new furniture to repairing costs or refurbishing your home in general, you can add the much needed spark to your home with a Home Renovation Loan.

Education Loan

Education loans offer financial support to students, who want to pursue higher education. The loan can be availed with minimal documentation, paid over flexible repayment tenure.

Wedding Loan

Marriage holds a special place in one’s life. To make this day a memorable one, you can apply for a Marriage Loan and cover your expenses of arrangements, accommodation, etc. You can get the loans instantly at attractive interest rates.

Debt-Consolidation Loan

A debt consolidation loan is a Personal Loan which lets you combine all your outstanding dues or debts into one single payment, which can be done monthly, thus helping you manage your installments.

Features and Benefits of Personal Loan

  • Instant Loan Approval & Disbursal

    This feature is the specialty of Personal Loans. With required income, credit score and documents, your Personal loan can be approved instantly. Once your application is approved, you can choose your desired amount and repayment tenure. The lender, after completely assessing your profile which includes both application and credit profile, verifies the documents. And then, you get the loan amount credited to your account within 24 hours.

  • High Loan Amount Offerings

    Most of the lenders provide Personal Loans of up to Rs. 25 Lakhs. In some cases, it goes up to Rs. 40 Lakhs. Depending on your income, credit score and repayment capacity, you can avail greater loan amounts.

  • No Collateral/Security Needed

    Since Personal Loans are unsecured in nature, you do not have to pledge any collateral.

  • Flexible Repayment Tenures

    The repayment tenure is flexible and usually ranges from 1 to 5 years. Thus, you get the option to choose your tenure and repay the dues over that period.

  • Attractive Interest Rates

    Attractive Personal Loan Interest Rates starting from 9.85% per annum.

  • Applications

    Personal Loan can be used for variety for purposes like wedding, travel, home refurbishing, education and much more.

  • Prepayment Allowed in a Loan

    You have complete flexibility and control of your principal amount. With a prepayment facility, you can pay the outstanding loan balance much before the completion of the actual loan tenure. Nowadays, depending on the lender, you also have the option to make full prepayments and even part prepayments.

  • Exciting Offers

    You can get tailor-made fast personal loans online to meet all your financial requirements. Personalized pre-approved offers and value added services can make your experience of availing a Personal Loan amazing.

Personal Loan Eligibility

The Personal Loan Eligibility may vary from lender to lender. But here are some basic eligibility criteria that are valid across most of the lenders.

Age

You must be at least 21 years of age to apply for a Personal Loan. The maximum age of the salaried applicant must not be more than 58 years and 65 years for self-employed.

Earning Amount

Usually for a salaried applicant, the minimum net monthly income should be INR 15,000-20,000 to apply for a Personal Loan. For self-employed it is around Rs. 25,000.

Work Experience

You must have a work experience of around 2-3 years, to avail the Personal Loan. Self-employed applicants must have a vintage of at least 3 years.

Credit Score

A credit score describes the creditworthiness of borrowers. For instant personal loan approval and to avail a Personal Loan of higher amount, you must have a credit score of 750 and above. If your score is between 700 and 750, you will get a loan at slightly higher rate of interest. Also, you must have a good repayment track record, which will enhance your credit score and your chances of getting a Personal Loan.

Documents Required for Personal Loan

  • Identity Proof - PAN Card/Voter ID/Aadhaar Card/Passport/Driving License
  • Proof of Residence - Voter ID/Aadhaar Card/Passport/Driving License/Electricity Bill/Telephone Bill
  • Income Proof – Bank statement or salary slips of the last 3 months
  • Passport size photographs
  • Office Address Proof - Electricity Bill/Landline Bill/GST or VAT Registration (for Self-employed)

If you are an NRI (Non-Resident Indian), the following documents will be required:

  • Passport and Visa copy
  • Bank statements of the last 6 months
  • Identity Proof
  • Address Proof
  • Salary slips
  • Passport-size photographs

Personal Loan Fees & Charges

When you apply for a loan, apart from the interest rate which is the basic charge that comes with EMI payments, there are certain other fees and charges that come with it. Here are the following:

Processing Fee

It’s a one-time fee that you have to pay to the lender so as to process your loan amount. The processing fee payable is considered with respect to the applied amount. You can then pay the processing fee from your pocket, or have it deducted from the actual loan amount during disbursal. Though the fee may vary from lender to lender, it usually ranges between 0.5% and 2.50% of the loan amount.

Late Payment Charges

The financial institution/lender will charge you with late payment charges; at around 2% of the due amount, if you do not pay the EMIs before the due date.

Foreclosure Charges/ Prepayment Charges

It is the charge that you need to pay, if you close the loan before the actual tenure.

In addition, Goods and Services Tax(GST) is charged on processing fees, or loan prepayment charges i.e on the services required by the applicant for his loan to be processed and sanctioned.

Tips for Personal Loan Application

  1. Understand your need

This is the first point you need to take into consideration. Analyze the need for a loan and how it will help you fulfill your requirement. This will help you manage your other finances and chalk out a plan to pay the monthly EMI payments.

  1. Know the eligibility criteria set by the lender

Do thorough research about the lender, the kind of loans they offer, and their eligibility criteria. For example, a regular source of income is a must to apply for a loan. Other necessary factors include your age, work experience, credit score and loan repayment history.

  1. Check your Credit Score

Ensure that you have a good credit score since your loan amount and interest rates will depend on it.

  1. Avoid errors in your Credit report

Check for any discrepancies in your credit report after going through it in detail and have the errors eliminated. This will facilitate a smooth loan application process.

  1. Compare various banks and NBFCs

This will help you find the best deals and offers that you can avail of. Check interest rates and repayment tenures they provide. Also, check for their reputation in the marketplace, especially with respect to the application process and transparency.

  1. Read the terms and conditions

Go through the terms and conditions thoroughly. In case of any confusion or queries regarding the clauses or fees charged, seek the assistance on an immediate basis. This will help you a lot during the repayment period.

  1. Do not apply for multiple loans

Too many applications will surely bring down your credit score and can affect your application in the future.

Pre-Payment and Part Payment in Personal Loan

Pre-Payment

Pre-payment is the EMI payment made before the due date of the loan closure. Making the repayment early, before the due date helps in reduction in the EMI that you will have to pay for the remaining loan tenure. You can also save on interest rates by prepaying your loan. Since, with pre-payments, you close the loan before the repayment tenure ends, it can have a positive impact on your credit score as well. However, pre-payment also invites with certain associated charges called pre-payment charges. Though it can vary from lender to lender, on an average about 2%-3% of the outstanding loan amount is charged as prepayment fee.

Part Payment

In case, you have some amount of money in hand, but it is not sufficient to make the whole payment before the due date, you can choose to make part-prepayment. With part payments, you can reduce the unpaid principal amount, thereby also reducing your EMIs and rate of interest. Even part-payment can have a positive impact on your credit score.

Another advantage of part-payments is that you need do it only once. You can make multiple part payments which can further help you bring down your EMI substantially.

Modes of Loan Payment or Re-Payment

ECS (Electronic Clearance System)

ECS is the electronic means, through which one can transfer the funds from one bank to another. Through the ECS mode, transfer of loan EMIs and SIP investments can be done. Payments related to utilities like water, electricity bills can also be made through ECS.

NACH (National Automated Clearing House)

NACH is a service provided by the National Payment Corporation of India (NPCI) to banks, Financial Institutions and Corporate & Government Services. It aims at facilitating repetitive and periodic interbank high or low volume debit/ credit transactions.

PDC (Post Dated Cheque)

PDC’s are cheques written and given by the payers for a future date. You can cash or deposit the PDC’s on the date mentioned on the cheque. It functions as a bill of exchange and cannot be payable or demanded before the date written on the cheque.

Standing Instruction / Debit Mandate

Standing order or standing instruction enables the account holder to pay mortgage, rent or any other fixed payments to another bank/account at a regular interval.

Check Personal Loan Status

You have two major ways of checking the status of your personal loan application. Online mode and offline mode. Most lenders provide both the modes to track the status.

  1. Online Mode

With the online mode of tracking, you can log in to the online portal of the lender and check the status of your application. Your application number or reference number or Customer ID serves as the input. Online mode provides a lot of convenience and you can check your status anytime, anywhere.

  1. Offline Mode

In case of offline mode, you can visit the branch office of the lender to track and check the status of your loan application. Also, you can reach out to them through telephone using the customer care number.

How to get a Personal Loan Statement?

A Personal Loan Statement includes necessary details regarding your loan account such as payment due date, EMIs, and loan balance. You can get the statement both online and offline. In case you need it online, just log in to the online portal of the lender using your credentials, and request for the statement. You can either have it downloaded in a pdf format or have it sent to your email id. In case of offline means, you can visit the branch office and request for the same.

Personal Loan Top Up

Sometimes, it may so happen that, after availing a Personal Loan, you are still unable to fulfill all your financial needs. In that case, you can opt for a Personal Loan top-up. A top-up loan can be availed over and above the Personal Loan. You can get top-up loans at lower interest rates as compared to your existing Personal Loan interest rate. The top-up facility is an extremely reliable and flexible option to meet your financial needs. In addition, you can also consolidate your debt and pay off all your dues.

Here are the benefits of Top-up Loan:

  • Reduced Loan Burden
  • Minimal Documentation
  • Quick Processing
  • Attractive Interest Rate
  • No Collateral needed
  • Balance Transfer Facility Available

Personal Loan Disbursal

Personal loan disbursal is release of funds or the loan amount by the lender in the customer’s bank account. The loan disbursal takes place after the lender approves and verifies the borrower’s loan application and submitted documents. The disbursal of Personal loan usually varies from 24 hours to a few days.

Things to do After Closing a Personal Loan

Once you pay off your personal loan, there are certain things to be followed:

The No Dues Certificate (NDC) :

The No Dues Certificate is issued by your lender after you pay off the debt. This document confirms that you have paid all your debts and there is no further repayment. It is important to have this document handy for all further application processes as it proves to your future lender that you have paid your previous loan and nothing is outstanding. So, you need to ask your lender to furnish the document to you once complete repayment is done.

Collection of Unused Cheques:

In case, there are some unused or post-dated cheques, it is better to collect it from your lender. This officially marks the completion of the loan process.

Check Your Credit Score after Closing the Loan:

It is advisable to check your credit score after the loan is closed. This is to ensure that there is no difference in the score. Also, since there is no further payment involved, the positive impact on loan can be a little less as compared to when repayments were to be done. Hence, you must keep a track of repayment history and credit score.

How to Avoid Rejection of Personal Loan Application?

To avail your Personal Loan, you must fulfill certain eligibility criteria that includes age, work experience, credit score and more. If you fulfill all these requirements along with providing required documents, the chances of getting the application rejected can be greatly avoided.

How to Improve Your Chances of Getting a Personal Loan?

Maintain a Good CIBIL Score

Your credit score reflects your ability to repay the loan and is a factor considered by every lender. CIBIL Score of 760 and above is a very good score to get a Personal Loan. You can improve your score by repaying your existing loans, bills, installments and credit card dues on time.

Limit Your Outstanding Debt

Borrow only when required, else avoid it. If you have an outstanding loan amount that is more than what you can pay, then your chances of getting personal loan decrease. Also, ensure to keep your debt to income ratio low.

Avoid Multiple Loan Application

Multiple Loan applications can indicate to the lender that you are not financially stable and are debt ridden. This will definitely lead to the rejection of your Personal Loan. This rejection will bring down your credit score further, making the process of application even more difficult.

Have a Steady Income

Afraid that your bad credit history will sabotage your chances of getting a loan? Reduce your odds of loan rejection by having a stable income. Any recent appraisals or additional income sources improve your chances.

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Personal Loan FAQs

  • ✔️What is a Personal Loan?

    A personal loan is a type of unsecured loan that is usually availed by people in case of financial emergencies. Banks and NBFC offer Personal Loans to the borrowers.

  • ✔️How does a Personal Loan work?

    First, you need to submit your application to the lender. It is then verified and approved by the lender. Once approved, the loan amount is disbursed into your bank account. Once you submit your loan application to a lender for a personal loan, the lender verifies and approves it. Post this, the loan amount is disbursed into your bank account. Post you receive the loan amount; you need to start paying the EMIs within the repayment tenure you choose.

  • ✔️When can I opt for a Personal Loan?

    You can opt for a Personal Loan when you need financial assistance for purposes like wedding, travel, education, home renovation, medical emergency or more.

  • ✔️Am I eligible for a Personal Loan?

    You can apply for a personal loan if:

    1. You are a salaried employee
    2. You are between 23-58 years of age
    3. You have a good credit score. 
  • ✔️Is there a minimum Personal Loan amount that I need to borrow?

    Usually, Rs. 50,000 is the minimum personal Loan amount, one can borrow.

  • ✔️What is the maximum Personal Loan amount?

    Most banks and NBFCs offer up to Rs. 25 Lakhs as the maximum Personal Loan amount.

  • ✔️What is the tenure of a Personal Loan?

    The tenure ranges from 1 year to 5 years.

Personal Loan Reviews

Personal Loan Reviews

4out of 5

3 reviews

Online Process is Fast and Easy

Online mode of application was very nice, process was fairly easy, associate provided complete information. The mobile application is very easy to use and has nicely defined processes for buying products & investing money. Overall, I'm satisfied with Finserv MARKETS.

Super fast process

Super fast process! It was seamless and comfortable, complete information was provided and same was acknowledged on mail, executive supported very well, portal is easy to process application, acknowledgement sheet was very nice, portal is good and easy to process, mobile application is nice and I am using it almost daily, also executive explained how to use application.

Loan Disbursal was done Instantly

Process was very good and quick. Disbursal was quick, all details were shared via mail and message, so I am totaly satisfied with the process. Quick and professional service, got every detail which I needed. I had an urgent requirement and I got the loan very quickly, hassle free.