What is Personal Loan?

A personal loan is a lifesaver for various expenses. Unlike mortgages or car loans that require collateral like your house or car, personal loans are unsecured. This means you borrow a fixed amount from a bank, credit union, or online lender without putting up an asset as security. You can use the money for anything from debt consolidation and home renovations to unexpected bills or even a dream vacation.

Did You Know: Studies show a high reliance on personal loans in India, with nearly two-thirds (67%) of people using them for various financial needs. 167% of Indians take personal loans Website: Financial Express Category: News Article

How to get a Personal loan With Pricemint

Finding the best personal loan deal can be a hassle. Pricemint can help! Our website acts like a personal loan marketplace, connecting you with offers from up to 40 different banks and lenders (including NBFCs or non-banking financial companies). By comparing rates across so many options, Pricemint aims to find you the lowest interest rate possible. This can save you a significant amount of money over the life of your loan.

How to Calculate Personal Loan EMI By Online Calculator

How much do you want to borrow?
For how long?
Your credit rating:
Loan amount
Loan Term
APR
Credit rating
Interest to pay
Processing
Repayment amount
Total to pay

  1. Select your credit score range: you can choose a range from 600 to 750. Your credit score significantly impacts the interest rate you’ll be offered by lenders.
  2. Input your desired loan details: Select the amount of money you want to borrow (loan amount)
  3. Select Period: the repayment period (loan term) in the designated fields. This could be in months or years.
  4. Credit score consideration: The calculator takes into account your credit score range to estimate the interest rate you might qualify for.
  5. Real-time market rates: The calculator factors in current interest rates offered by lenders for different credit score ranges. This helps provide a more accurate picture of potential EMIs.

With this additional information, the personal loan EMI calculator provides a more precise estimate of your monthly EMI compared to a generic calculator. This way, you get a better idea of what you can expect to pay and avoid any surprises down the road.

Different Types of Personal Loans in India

Personal loans in India come in all shapes and sizes to fit your specific needs. Here’s a breakdown of the most common types:

  1. Unsecured Loans: These are the most popular option. You don’t need to put up any guarantee (like a car or house) to borrow the money.
  2. Secured Loans: Unlike unsecured loans, these require collateral like property or gold to get approved.
  3. Line of Credit: Think of this like a credit card for personal loans. You have a borrowing limit, and you can access funds up to that amount as needed.
  4. Salary Advance Loans: Need a quick cash advance until your next paycheck? These short-term loans can help bridge the gap.
  5. Targeted Loans: Some lenders offer personal loans specifically designed for things like medical bills, home renovations, or weddings.
  6. Debt Consolidation Loans: Struggling with multiple debts? This type of loan combines them into one easier-to-manage payment with a potentially lower interest rate.

Remember: Before you borrow, always compare loan terms, interest rates, and any fees to find the personal loan that best suits your financial situation.

Top Banks and NBFCs/Loan Apps for Personal Loans in India

Finding the right personal loan can feel overwhelming with so many options available. Here’s a breakdown of some popular banks, NBFCs, and loan apps in India to help you narrow down your search:

Traditional Banks:

  1. SBI: SBI, a trusted national bank, offers online Unsecured loans up to ₹20 lakhs.
  2. HDFC Bank: Another trusted lender, HDFC, allows personal loans up to a hefty ₹40 lakhs.
  3. Bank of Baroda: This bank provides personal loans ranging from ₹1 lakh to ₹20 lakhs.
  4. Kotak Mahindra Bank: Get instant personal loans up to ₹40 lakhs at a competitive interest rate of 10.99% p.a.
  5. Axis Bank: Axis Bank offers personal loan tenures up to 60 months and amounts up to ₹40 lakhs, with interest rates starting at 10.49% p.a.
  6. ICICI Bank: ICICI Bank lets you borrow up to ₹50 lakhs for a personal loan, with interest rates starting at 10.75% p.a.
  7. Yes Bank: Yes Bank offers personal loans up to ₹50 lakhs with a tenure up to 72 months. Interest rates start at 10.49% p.a.
  8. Punjab National Bank: PNB stands out with potentially lower interest rates starting at 8.90% p.a. for loans up to ₹20 lakhs.
  9. IndusInd Bank: IndusInd Bank provides personal loans from ₹30,000 to ₹50 lakhs, with an approximate EMI calculated at a 13% interest rate (this is an estimate, actual rates may vary).

NBFCs and Loan Apps:

  1. NIRA Finance: NIRA Finance offers personal loans up to ₹1 lakh with a repayment term of up to 12 months.
  2. Navi App: Navi allows loans up to ₹20 lakhs, with interest rates starting from a competitive 9.9% p.a. (subject to eligibility).
  3. PayMe: This RBI-registered app offers loans up to ₹5 lakhs with a focus on a tech-friendly application process.
  4. KreditBee Digital Loan: App KreditBee provides loans ranging from ₹1,000 to ₹4 lakhs, with potentially lower interest rates compared to some banks.
  5. LazyPay Loan: LazyPay allows applicants to get a loan of up to ₹5 lakhs without the hassle of physical documents.

Other Notable Lenders:

  1. Bajaj Finserv: Bajaj Finance offers personal loans up to ₹40 lakhs with a streamlined paperwork process.
  2. Hero FinCorp: Primarily known for bike loans, Hero FinCorp also offers personal loans up to ₹5 lakhs.
  3. Paisabazaar: Get a collateral-free personal loan up to ₹40 lakhs at an attractive interest rate starting from 10.49% p.a. through Paisabazaar.
  4. Dhani: Dhani allows personal loans up to ₹15 lakhs, with interest rates starting at 13.99% p.a.
  5. TATA Capital: TATA Capital offers personal loans up to ₹35 lakhs, with interest rates starting at 10.99% p.a. (subject to eligibility).
  6. IIFL: IIFL provides Term loan approvals up to ₹5 lakhs in just 2 minutes, with interest rates subject to your eligibility criteria and potentially reaching up to 12.75% p.a.
  7. Home Credit: Home Credit offers instant loans up to ₹5 lakhs, but be aware that interest rates can be high, starting at 21% per annum.
  8. Aditya Birla: Get a personal loan of up to ₹15 lakhs from Aditya Birla with loan tenure options of up to 7 years.

Remember: This list is not exhaustive, and it’s important to compare interest rates, loan terms, and fees from various lenders before making a decision. Always choose a loan that meets your specific needs and financial situation.

How Personal Loans Help You

  1. Emergencies: Cover unexpected costs like medical bills, car repairs, or home fixes.
  2. Debt Consolidation: Combine multiple high-interest debts into one lower-rate loan for easier management.
  3. Home Improvement: Finance renovations to enhance your home’s value and comfort.
  4. Education: Fund expenses like tuition, books, and training courses.
  5. Weddings: Manage wedding costs like venue booking, catering, and decorations.
  6. Travel: Cover dream vacations or personal travel needs.
  7. Business Ventures: Fund small businesses or startups to get them off the ground.
  8. Credit Score Improvement: On-time repayments can build a good credit history for future borrowing.

How Personal Loans Work in India

  1. Research & Compare: Look into different lenders and their rates, fees, terms, and eligibility requirements.
  2. Check Eligibility: See if you qualify based on your age, income, job, credit score, and existing debts.
  3. Apply: Fill out the application form with your personal and financial details.
  4. Submit Documents: Provide ID proof, address proof, income proof, and employment proof.
  5. Credit Check: The lender will assess your creditworthiness.
  6. Loan Decision: You’ll be notified of approval (or denial) with loan details.
  7. Receive Funds: Once approved, the loan amount will be deposited in your bank account (usually in a few days).
  8. Repay on Time: Make fixed monthly instalments (EMIs) to avoid late fees and hurting your credit score.
  9. Loan Closure: After full repayment, request closure and receive a loan closure letter.
  10. Early Repayment: Some lenders allow prepayment, but there might be charges.
  11. Post-Loan Services: Ensure you get a No Objection Certificate (NOC) and an updated credit report reflecting loan closure.

What are Interest Rates in Personal loans?

Interest rates are the cost you pay to borrow money. It’s like a rental charge for using the bank’s cash. Personal loan interest rates in India typically range anywhere between 10% and 40% per year, but the exact rate you get depends on several things.

Factors that Affect Your Interest Rates

  1. Your Credit Score: This is a number that reflects your history of borrowing and repaying money. A higher score (typically above 750) tells the lender you’re responsible and likely to pay back on time, so they might offer you a lower interest rate.
  2. Your Income: The more money you make, the better your ability to repay the loan. This makes you a less risky borrower in the lender’s eyes, potentially qualifying you for a lower interest rate.
  3. The Loan Amount: Generally, smaller loans come with higher interest rates because the lender makes less money overall.
  4. The Repayment Term: Shorter loan terms (the amount of time you have to repay) often come with lower interest rates because the lender gets their money back quicker.
  5. The Lender You Choose: Different lenders have different base rates they offer. It pays to shop around and compare rates from banks, credit unions, and online lenders.
  6. Your Relationship with the Lender: Being a longtime customer of a bank might sometimes get you a slightly better interest rate.

Eligibility Criteria

  • Age: 21 and 65 years.
  • Income: Up to Rs. 10,000 And Above
  • Credit Score: Aim for a good score (usually above 750).
  • Residence Stability: Living in a stable place is preferred.
  • Business: At least up to 2 Years running.
  • Job: Must be a regular job.

Documents Ask

Identity Proof (Pick One):

  • Aadhaar Card
  • Passport
  • Voter ID Card
  • Driving License
  • PAN Card (Permanent Account Number Card)

Address Proof (Pick One):

  • Aadhaar Card (if it has your address)
  • Passport (if it has your address)
  • Voter ID Card (if it has your address)
  • Utility Bills (electricity, water, gas) not more than 3 months old
  • Rent Agreement

Income Proof (Salaried Individuals):

  • Latest Salary Slips (usually for the last 3 months)
  • Bank Statements (usually for the last 3 to 6 months) showing income flow
  • Form 16 (tax document) issued by your employer

Income Proof (Self-Employed Individuals):

  • Income Tax Returns (ITR) for the last 2 to 3 years
  • Profit & Loss Statement for your business
  • Balance Sheet for your business
  • Business Registration Documents (like GST registration certificate, partnership deed, etc.)

Employment Proof (if applicable):

  • Employment Certificate or Letter from your employer stating your job position and how long you’ve been there

Bank Statements (for everyone):

  • Usually for the last 3 to 6 months, providing a record of your income and expenses

Additional Documents (may vary by lender):

  • Passport-size photographs
  • Post-dated cheques for EMI payments (optional, depending on the lender)
  • Guarantor’s documents (if required by the lender)

What Are The Charges

  1. Interest Rate: 10% to 36% per year (annual percentage rate) on the borrowed amount.
  2. Processing Fee: 0.5% to 3% of the loan amount, charged for processing your application.
  3. Prepayment Charges: 2% to 5% of the remaining loan amount if you pay it off early (may not apply to all lenders).
  4. Late Payment Charges: 2% to 4% of the overdue EMI (Equal Monthly Installment) if your payment is late.
  5. Foreclosure Charges: 2% to 5% of the remaining loan amount if you close the loan early (may apply in specific cases).
  6. EMI Bounce Charges: ₹250 to ₹500 per bounce if your EMI payment fails.
  7. Loan Cancellation Charges: Around 1% of the loan amount if you decide to cancel the loan after approval.
  8. Document Verification Charges: Nominal fee (₹500 to ₹1,000) to verify your submitted documents.
  9. Legal and Valuation Charges: ₹1,000 to ₹5,000 or more depending on the loan amount and complexity (may apply in some cases).
  10. Optional Insurance Premium: Varies based on coverage and loan amount, but typically ranges from a few hundred to a few thousand rupees annually.
  11. GST (Goods and Services Tax): 18% on various fees. 2GST Council likely to levy 18% GST Website: MoneyControl Category: News Article

How to Apply for Personal Loan

1 Method: Online Application

  1. Pick a good lender (research online).
  2. Visit their website and find “personal loans.”
  3. Fill out the quick application (your info, job, loan amount).
  4. Upload scans of ID, proof of address, and income (pay stubs).
  5. Submit electronically and wait for approval (a few days).
  6. Approved? Money goes straight to your bank account!

2 Method: offline

  1. Visit a lender’s branch offering loans.
  2. Ask for a “loan application.”
  3. Fill out the form (same info as online).
  4. Attach copies of ID, address proof, and income docs (pay stubs).
  5. Hand it to the loan officer and wait for approval (a few days).
  6. Approved? The loan may come as a check or bank deposit.

3 Method: Loan Apps on Phone

  1. Download the loan app (choose one offering loans).
  2. Sign up and log in to your account.
  3. Fill out the loan app within the app (quick and easy).
  4. Snap pics of your ID, address proof, and income docs with your phone.
  5. Apply electronically, and wait for approval (a few days).
  6. Did you get the green light? Cash goes right into your bank account!

4 Method: Loan Aggregator

  1. Find a loan aggregator website (compares many lenders).
  2. Fill out one application with your details.
  3. Pick lenders you’d like to consider your loan request.
  4. Upload documents as requested by the aggregator.
  5. Submit your application electronically.
  6. Aggregator sends it to your chosen lenders for approval (may take a few days).
  7. Approved? A lender will contact you with the next steps for receiving the loan.

FAQs

  • Which Bank has the lowest interest rate on Personal loans?

    State Bank of India (SBI), HDFC Bank, ICICI Bank, Axis Bank, and Bajaj Finserv are known to offer competitive interest rates on personal loans in India. It’s advisable to compare offers for the best rate.

  • How much Personal loan can I Get?

    The amount of personal loan you can get in India depends on various factors like your income, credit score, existing debts, and lender policies. Typically, personal loans range from ₹5,000 to ₹50 lakhs.

  • How Much is Cibil Score Required for an Unsecured Loan?

    To qualify for a personal loan in India, a CIBIL score of 700 or above is generally considered good. However, some lenders may offer loans to individuals with lower scores based on other factors.

  • Which Bank Gives Personal Loan for 15,000 Salary?

    Banks like State Bank of India (SBI), ICICI Bank, HDFC Bank, and Axis Bank may offer personal loans to individuals with a monthly salary of ₹15,000, subject to meeting other eligibility criteria.

  • How to Calculate Personal Loan Interest Rates?

    To calculate personal loan interest rates, you can use the following formula:Interest Amount = (Principal Loan Amount x Interest Rate x Loan Tenure) / 1001. Principal Loan Amount: The total amount you borrow.2. Interest Rate: The annual interest rate offered by the lender.3. Loan Tenure: The duration over which the loan is repaid in months.For example, if you borrow ₹50,000 at an annual interest rate of 12% for 3 years:Interest Amount = (50,000 x 12 x 3) / 100 = ₹18,000

  • How to get a Personal loan without a Salary slip?

    To get a personal loan without a salary slip, provide alternative income proof such as bank statements, income tax returns, or a letter from your employer. Consider applying with lenders who offer loans based on other criteria.

Article References

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