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Personal Loan EMI Calculator
Loan EMI
23,537
Total Interest payable
64,888
Total Payment
(Principal + Interest)
5,64,888
Break-up of Total Payment
Interest Amount (₹64,888)
Loan Amount (₹5,00,000)

Best Personal Loan Offers from 19 Banks / NBFCs (updated 21 Apr,2019)

Borrow as low as ₹1,000. Repay as fast as in 3 Months. Be Charged as Low as @10.5% pa.

Bank / NBFC Institution Type Minimum Loan Amount Maximum Loan Amount Minimum Tenure Maximum Tenure APR Fees & Charges
Aditya Birla Finance Ltd NBFC ₹25,000 ₹50,00,000 12 months 60 months 16.85% - 17.85% 1% + GST as applicable
Arohan Financial Services Ltd. NBFC ₹1,100 ₹50,000 3 months 24 months 20.70% - 26.99%  1% + GST as applicable
Axis Bank Bank ₹50,000 ₹15,00,000 12 months 60 months 15.75% - 24.00% 1.50% to 2.00% + GST as applicable
Bajaj Finserv NBFC ₹50,000 ₹25,00,000 12 months 60 months  12.99% onwards Up to 3.99% + GST as applicable
Capital First NBFC ₹1,00,000 ₹25,00,000 12 months 60 months 12.00% - 18.00% 1.99% + GST as applicable
Citibank Bank ₹25,000 ₹30,00,000 6 months 60 months 17.99% - 18.99% 2.00% - 3.00% + GST as applicable
Fullerton NBFC ₹50,000 ₹20,00,000 12 months 60 months 20% - 40% Up to 6.5% + GST as applicable
HDB Financial Services Ltd. Bank ₹1,00,000 ₹20,00,000 12 months 60 months 12% - 36% Up to 2% + GST as applicable
HDFC Bank Bank ₹1,00,000 ₹25,00,000 12 months 60 months 15.50% - 21.50% Up to 2.50% + GST as applicable
ICICI Bank Bank ₹50,000 ₹20,00,000 12 months 60 months 11.25% - 22.00% Up to 2.25% + GST as applicable
IDFC Bank ₹50,000 ₹20,00,000 3 months 60 months 12%-19% 2% + GST as applicable
Incred NBFC ₹50,000 ₹7,50,000 12 months 60 months 12%- 24% Up to 3% + GST as applicable
India Infoline NBFC ₹1,00,000 ₹25,00,000 12 months 60 months 13% onward Up to 2% + GST as applicable
Indiabulls NBFC ₹1,000 ₹15,00,000 3 months 24 months 11.99% - 26% Up to 5% + GST as applicable
IndusInd Bank Bank ₹50,000 ₹15,00,000 12 months 60 months 11.25% - 30.00% Up to 2.50% + GST as applicable
Kotak Mahindra Bank Bank ₹50,000 ₹15,00,000 12 months 60 months 10.99% to 24% Up to 2.5% + GST as applicable
RBL Bank Ltd. Bank ₹1,00,000 ₹20,00,000 12 months 60 months 15.5% - 23% 3% + GST as applicable
Standard Chartered Bank Bank ₹1,00,000 ₹30,00,000 12 months 60 months 10.50% - 19.00% Up to 3% + GST as applicable
Tata Capital NBFC  ₹75,000 ₹25,00,000 12 months 72 months 11.25% - 19% 1.50% to 2.00% + GST as applicable
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Personal Loan Details

Personal Loan in India

Banks and non-banking financial organisations provide a Personal Loan to satisfy the personal financing needs of the consumer. A lender will provide a personal loan at some interest rate to the customers for a fixed time period. The borrower then uses the loan amount for any personal purpose. The borrower not answerable to the lender about the usage of the personal loan.

These loans are unsecured loans, which means that there is no need for any kind of collateral to avail a personal loan. There is no need to commit anything to the creditor as security. As such, none of your property or asset at risk, should you fail to repay.

How do Personal Loans work?

Personal Loans have the simplest method of operation.

Let us take a look at the working. The processes mentioned here can differ from lender to lender.

The applicant applies to the lender for a certain amount of loan. Based, on the eligibility of the applicant, the lender issues an offer with the final loan amount, processing charges, interest rate and the tenure and indicative broken period of the loan.

If the applicant likes the offer, they sign a loan agreement. A loan agreement is a legal contract between the lender and borrower.

The loan is disbursed to the applicant, upon signing the loan agreement.

The processing fee involved can be paid by the borrower separately or deducted from the loan amount.

Loan amount is always disbursed one time and in full to the borrower. The borrower, then can utilize the money as per their need and purpose. They do not need to inform the lender about the usage of the loan amount.

Loan repayment starts once the broken period is over. An EMI is deducted per month from the borrowers account on a previously agreed date. The deduction can be through either of the following: NACH, ECS or cheques depending on the loan agreement. This deduction goes on till the full tenure or until the prepayment by the borrower.

In lieu of the loan amount provided, the lender charges some amount on top of the principal amount. This extra amount is call the interest. Interest is always a certain percentage of the principal amount. This percentage is known as the interest rate.

With some lenders, there can be additional processes involved. Also the documentation may vary depending on the borrower’s profile, until the lender is satisfied.

What makes them Choice-worthy?

There are several features which makes them the first choice for anyone who needs money urgently.

They are a highly beneficial financial credit facility in the case of sudden and immediate need of money. And, can be availed in situations whenever there is an unusual expense like child's marriage, renovation of your home or furnishing, children’s higher education, family holiday and from funding your start-up business to purchasing an upgraded gadget. Or, to turn any other dream to reality.

They are also, a great source to maintain and manage your cash flow during cash crunches. The point, which makes it even more useful for the customers, is its wide availability and multipurpose nature.

One can avail personal loans for multiple reasons which can be either personal or professional. 

You also get the option to repay your borrowed amount gradually in the upcoming years.

Just use the simple application form above to apply for a personal loan.

Features & Benefits of a Personal Loan

Life has various ways to provide us surprise in a good manner or in a bad way, we cannot predict. We may need money in both situations. Whether it’s an occasion of happiness or any type of emergency we may need money beyond our savings. In all such cases, personal loans are the smartest option for us.

Let us have a look into the features which make them so.

Multipurpose

Personal Loans are essentially multipurpose loans. There are no limitations on the use of the amount of the loan. You can use this sum of loan however you’d like to.

The availability is primarily based on your capability to pay back the loan. Which means, it’s based on your salary or income, rather than the purpose of the loan.

Affordable Rates of Interest

As compared to other loans such as home loans, a personal loan has lower operating costs by nature along with no hidden charges.

As such, it is generally offered at very affordable interest rates. The current lowest personal loan interest rate is 10.5% p.a.

The Simplicity of Repayment

A personal loan is simple to repay too. Methods of repayments are very easy, you can repay with the aid of EMIs, where you need to repay just a fraction of the total loan amount. And, the EMIs will automatically be debited from your bank account on the day of your choice.

The Speed of the Process

Personal loans have the fastest processing speed. A conventional personal loan generally takes 3-5 days from application to disbursal.

But, now with the digitization of the process, one can get it in as less as two hours.

Lesser Documentation

In addition to all of these, a personal loan requires only minimal documentation. Their paperwork isn’t really that complex. Lender paperwork requires only a few basic documents just to confirm the identity, address and income related proofs to determine the repayment capability of the applicant.

It is for everyone

Anyone can avail a personal loan. It is available to both self-employed and salaried-individuals, provided they satisfy the required eligibility criteria.

Chartered Accountants, Doctors, Engineers, Company Secretaries, and Architects and ICWAI graduates are offered a special loan.

A wide range of Loan Amount

One can avail a personal loan as low as ₹1,000 to as high as ₹5,000,000. The exact loan amount that can be availed varies according to individual eligibility and bank policy and procedures.

Flexible & Long Tenure

Banks offer flexible repayment options, tenure ranging from 12 months to 60 months. The exact tenure offered always depends on the loan amount being borrowed and the repayment capability of the applicant.

Borrowers with a higher salary and comparatively lower loan amount can pay more per month. Conversely, an individual with a lower salary and higher loan amount will be comfortable repaying the loan amount in longer tenure at a lower EMI.

Collateral-free

Personal Loans are hassle-free loans with no collateral, security or guarantor requirements. This implies that, should the borrower fail to repay, the lender cannot recover the loan amount from the borrower by auctioning any of their property or assets. This puts lenders at a higher risk.

As such, lenders charge an interest rate that is higher than a secured loan.

Convenience

One of the biggest benefits is the convenience which it offers to its customers. Applicants have to fill the application form and provide all the required details. This facility is a great advantage for those who do not want to visit banks frequently.

Types of Personal Loans

Personal loans are easily available in India. You just need to fulfil the eligibility criteria and need to have the documents required in place along with a good CIBIL Credit score. Banks and NBFCs offer personal loans with the loan amount typically ranging from ₹50,000 to ₹5,000,000 with the top lenders.

Personal Loan for Debt Consolidation

Availing a personal loan to close all other existing loans and credit cards is called Debt Consolidation. As a result, the borrower is left with just one loan and just one EMI.

This EMI is always lower than the sum total of the previously existing EMIs. As such, debt consolidation helps to reduce the loan burden and help to save money.

Festival Loans

Lenders offer Festival Loans to take care of the festive expenses. Festive loans are generally short-term loans. This is usually a small amount of money borrowed to fund a festival related expenses. The borrowing limit of this loan is low. The tenure period is generally short. This kind of personal loan usually comes with a lower interest rate and the processing fee charged less comparatively.

Wedding Loans

Indian Weddings are a costly affair as most of the people want their wedding to be a grand one and that particular day to be the day to be a memorable one. Even a normal wedding in India involves lots of expenses which include gifts, fancy clothes, jewellery, dinner, reception, decoration and so on.

Fulfilling all such things from savings is not possible for everyone. Hence a number of people come through shortage of money meanwhile.

Wedding loan is the best option in such a situation. Wedding loan offers you money according to your requirement and helps you to make your special day memorable.

Travel Loans

If you want to travel to your favourite location without draining your savings or without affecting your monthly budget, this personal loan can help you to do so. The interest rate is affordable and tenure is also short, all this will help you repay the loan easily without any hassle. Your creditworthiness and your travel destination decides the amount that can be availed.

Home Renovation Loans

Though there are many home loan schemes available in the market, using a personal loan for home renovation loan is also in demand. People often don't go for a home loan as it rquires a collateral or guarantor and the tenure is longer.

Education Loans

Education is becoming expensive day by day. And people go for the typical education loan especially for higher studies. But, it is difficult to get approved for an education loan. The lenders always look for the quality of the educational institution. They consider only good institutions as low risk.

Hence those who are not eligible for a personal loan or who are in urgent requirement can go for a personal loan which will work as an education loan for them.

Consumer Durable Loans

Banks offer Consumer durable loans to the customers for the purchase of consumer durable goods. Consumer durables can either be a home appliance or a gadget such as a television, laptops, and latest phones refrigerators and so on. Such loans offer 100% finance.

Personal Loans for Used Cars

People generally go for a used car in two cases, first- when they have not enough funds to buy a new car. And, secondly when they have to learn driving. In both, the cases opting for a personal loan is an ideal choice.

First and foremost, personal loans are easy to get and widely available. Secondly, you get the instant ownership of your car. In contrast to a used car loan where you get ownership only after the full repayment. The tenure period of a personal loan is also flexible which makes it more favourable to avail.

Advantages of availing a personal loan to buy a used car:

  1. Lower Interest Rate & Lower EMIs: For used car loans, interest rates start from 15% and go till 18% while for a personal loan the interest rate range from 11% to 24%. For credit-worthy borrowers, it is quite possible to get approved at cheaper rates. This will definitely cost you less than a used car loan.
  2. The Loan Amount: If you go with a used car loan you will get finance just up to 70% to 80% of the value of the used car. In this case, you have to use money from your pocket to have the car. But, if you go with a personal loan you can get the exact same loan amount as the price charged for the second-hand car.
  3. Instant Ownership: You get instant ownership of the car as soon as you buy it. You do not have to wait until the loan repayment is complete, to claim full ownership.

Medical Expenses Loan

A medical emergency can arise anytime and may need lakhs to be spent to save the life of our near and dear ones. Medical costs are increasing and people do not have enough accumulated wealth to get medical treatment.

Medical Expense Loans are a great financial remedy. Especially when immediate fund is needed in the times of medical emergency. This personal loan is easily available and affordable too.

Personal Loans for Low CIBIL Score

A low CIBIL score can mean that you have had a bad credit history. This means that either you have not availed any loan in the past. Or, it can mean that you have not paid your installments on time. This means that banks and financial institutions will refrain from giving you a loan in the future.

Anyone with low CIBIL score can avail loan on the name of his wife or anyone close. You can also take loans against assets, (Gold or car).

A benefit of availing a loan when you have low CIBIL score is that you can manage a loan when you need it urgently.

These loans benefit people who do not have fair chances of getting a loan normally.

There are some banks that still provide loan for people with low CIBIL score, like HDFC Bank, Tata Capital, Kotak Mahindra, Aditya Birla, etc.

Same Day Personal Loans

As the name suggests, same day loans are the loans which get disbursed on the same day of applying. These loans can help in cases of immediate or urgent needs like if you need to pay someone in an emergency. These loans do not need guarantors. And, the response time for these loans is very less.

The documentation process is swift and easy. People who need money urgently avail this loan.

HDFC Bank, Tata Capital, Citibank, IndusInd are some of the banks that provide these loans.

Top-up Personal Loans

Personal Loan Top-up is a type of personal loan offered above on an existing personal loan. All the top providers offer this loan.

Interest rate of a top-up personal loan is the same that of a personal loan. They are also hassle-free, as the lender already has the borrower details. And it also can be used for multiple purposes.

Personal Loans for Small Businesses

A personal loan doesn’t require to submit any documents showing the purpose for which of the loan because. Hence it can be used for financing a small business.

But, when is it right to finance a business with a personal loan?

Here is the answer.

  1. Short Term Cash Crunch: If you are facing difficulty in properly running your business because of the shortage of money and that is for a time being, it is advisable to avail a personal loan and use it for your business.
  2. Interest Rate: Interest rates can be a deciding factor between a personal loan and a business loan. The interest rate of personal loans is normally lower than the business loan.
  3. Urgency: If the monetary requirement is urgent and money is needed immediately then a personal loan is the best option. Personal loan disbursal takes a maximum of 5 days compared to 15 days of business loan. It is tough to wait in times of urgency for the business loan process and is advisable to choose a personal loan.
  4. No Collateral: Business loans are secured loans while personal loans are not. Hence the business asset is not at risk in case of defaults. But always keep in mind that you should go for it when your requirement is short term and probably a onetime thing.

Personal Loan Refinance / Balance Transfer

Personal Loan Balance Transfer is the process of transferring outstanding amount of an existing loan, from one lender to another. Thereby, closing the loan account with the previous lender, and starting a new loan account with the new lender.

Private Loans

Private loans are the loans taken from family, friends and local money lenders. They are not taken from any authorized money lender like banks and NBFCs.

Peer to Peer (P2P) Personal Loans

The P2P (Peer to Peer) Lending is a technology-enabled system, which enables a person to borrow from others, without the use of any official financial institution as an intermediary.

P2P is a great alternative to avail a loan, while skipping the hassles of banks personal loan.

In contrast to personal loans, here the lending and borrowing happens between individuals. Therefore, removing the middleman (bank / NBFC) from the process.

Such a lending happens via a platform, where the people who need to borrow and people who are willing to lend, exchange money.

This lending is a form of crowdfunding. As such, people with excess fund invest their money through such platforms. As, such a system helps them earn better ROI than other investment options.

With such platforms, the investors across the country can lend to the borrowers.

Once approved, the borrower immediately receives the loan amount. The borrower repays the loan through EMIs. Which is just like any other personal loan.

Personal Loan for Self Employed

Personal Loans for the self-employed professionals are not as simple to avail as they are for salaried employees.

As such, the lenders take extra precautions, conduct additional checks and require more documentation. And they have a very reason for all such extra efforts. Unlike salaried employees, who are on a guaranteed fixed income, the monthly income of the self-employed professional varies.

Their income can soar sky-high in some months or in some particular situations. And, in some months their income might drop to a very insignificant amount.

The success of all the businesses depends on their existing market conditions. Even if, they are doing everything right, some days or months might not see any income.

A great example to understand this would be of a holiday resort. During the holiday season, it might remain over-booked. While in a non-holiday season, weeks can go without any customer.

As such, lending to self-employed people involves a higher risk for the lender.

However, certain professionals such as Chartered Accountants, Doctors, Engineers, Company Secretaries, and Architects and ICWAI graduates are offered a special loan. All the top lenders considers these as low risk profiles.

Comparison of Personal Loan Rates

Personal Loan Interest Rates Comparison of Top Banks / NBFC (updated 21 Apr,2019)

Bank / NBFC

APR

Fees & Charges

Aditya Birla Finance Ltd

16.85% - 17.85%

1% + GST as applicable

Arohan Financial Services Ltd.

20.70% - 26.99% 

1% + GST as applicable

Axis Bank

15.75% - 24.00%

1.50% to 2.00% + GST as applicable

Bajaj Finserv

12.99% onwards

Up to 3.99% + GST as applicable

Capital First

12.00% - 18.00%

1.99% + GST as applicable

Citibank

17.99% - 18.99%

2.00% - 3.00% + GST as applicable

Fullerton

20% to 40%

Up to 6.5% + GST as applicable

HDB Financial Services Ltd.

12% - 36%

Up to 2% + GST as applicable

HDFC Bank

15.50% - 21.50%

Up to 2.50% + GST as applicable

ICICI Bank

11.25% to 22.00%

Up to 2.25% + GST as applicable

IDFC

12%-19%

2% + GST as applicable

Incred

12%- 24%

Up to 3% + GST as applicable

India Infoline

13% onward

Up to 2% + GST as applicable

Indiabulls

11.99% - 26%

Up to 5% + GST as applicable

IndusInd Bank

11.25% - 30.00%

Up to 2.50% + GST as applicable

Kotak Mahindra Bank

10.99% to 24%

Up to 2.5% + GST as applicable

RBL Bank Ltd.

15.5% - 23%

3% + GST as applicable

Standard Chartered Bank

10.50% - 19.00%

Up to 3% + GST as applicable

Tata Capital

11.25% - 19%

1.50% to 2.00% + GST as applicable

Documents Required for Personal Loan

A personal loan is the simplest loan to apply for. The applicant just needs to meet the required eligibility criteria and provide minimal documentation to the lender.

Here is the complete checklist of the documents required.

The lenders need basic documentation to know and verify the following:

  1. The identity of the applicant.
  2. The address of the applicant.
  3. Employment and income of the applicant.
  4. The credit history of the applicant.

Here is a list of common documents that are required.

  1. Complete loan application form with one passport size photograph.
  2. Valid Proof of Applicant's Identity: Aadhaar Card /  Voter ID Card / Passport / PAN Card / Driving License.
  3. Proof of Residence: Ration Card / Passport / Rental Agreement / Utility Bill.
  4. Proof of Age: Voter ID Card / Passport / PAN Card / Driving License.
  5. Financial Documents: 

    a. Salaried Individuals: Latest 3 month's Salary Slips and Form 16, Bank Statements of 6 months.

    b. Self Employed Individuals: Latest 1 year bank statement for both savings and current account.

Personal Loan Eligibility

Personal loan is available to anyone and everyone who satisfy the basic eligibility requirements of the lender. It doesn’t matter whether you are a self-employed or a salaried individual trying to meet both ends. You always have personal loans as an option.

Eligible Criteria Salaried Self-Employed Professionals
Age(Min-Max) 21 - 60 years 25 - 60 years
Income ₹350,000 ₹480,000
City Mumbai, Delhi NCR, Bangalore, Chennai, Kolkata, Hyderabad and Ahmedabad All over India
Co-applicant Not mandatory Mandatory
Employment Fulltime with at least 2 years of experience Atleast 5 years of earning turnover
CIBIL Required (750-900) Required

Quick Tips to Get Approved

Proper Research before Applying

Doing research before you apply for a personal loan is very important as there are many lenders available in the market offering personal loan at different rates.

One can research for rates, tenure and for the other charges involved which can affect your total cost of borrowing. To research on this, visit websites of different lenders and compare them. Or, just simply use the application form above to know your best personal loan offer.

Checking Credit History & Score

Before you apply for a personal loan from any bank or NBFC, it is very important to check your credit history. This will give you an idea that is it the right time to apply for a loan or not.

A loan application with less CIBIL Score has more chances to get rejected than a personal loan application with a good CIBIL Score. Your CIBIL also gives you an idea about the loan amount that you can receive as the loan amount.

Required Minimum Income

Each and every lender has their own eligibility criteria to approve a personal loan and income of the borrower are such criteria.

To get approved for a personal loan you should beware of the minimum income required by the lender to approve your loan.

Suppose you apply for a personal loan with a lender who needs a minimum income of ₹25,000 to approve a personal loan application, you apply over there and your monthly income is ₹20,000. In this case, you may have to face a loan rejection.

Hence, check for the income criteria and apply only if are able to meet them.

Employment Stability

Employment stability is yet another important factor which decides your personal loan approval. Your employment stability is directly related to your loan repayment capacity.

Lenders generally approve those personal loan applications where borrowers have stable employment. Generally, an applicant with stable employment of a minimum of two years is more likely to be approved for a personal loan that an applicant with unstable employment.

Top Personal Loan Providers

ICICI Bank

ICICI Bank is the second largest private bank in India. The bank provides banking and financing services to its customers. ICICI is known for its customer satisfaction and quick redressal.

The bank provides personal loans at an affordable rate which makes it more appealing to the customer. The eligibility criteria are also basic.

Why should you choose ICICI Bank Personal Loan?

ICICI Bank provides you a personal loan under the tagline of "Jo Bhi Ho Sapna 3 second me loan Apna". This is enough to assure that the processing of ICICI Bank personal loan is really fast.

Features of ICICI Bank Personal Loan:

  1. Flexible payment options: One can choose a tenure ranging from 12 to 60 months for their personal loan.
  2. Attractive Interest Rates: ICICI Bank offers personal loan at attractive interest rate starting from 11.25% p.a. and can go up to 17.99% p.a. depending on the borrower's profile.
  3. Quick Process: With ICICI Bank processes your personal loan really fast followed by quick disbursal.
  4. No Collateral: The personal loan offered by ICICI bank is totally collateral free as they are totally unsecured in nature.
  5. Range of Loan Amount: With ICICI bank you can get a minimum of ₹50,000 and a maximum of ₹2,000,000 through a personal loan.

Details:

  • Interest Rate: 11.25% to 22.00%
  • Loan Tenure: 12 months to 60 months
  • Age: 23 years to 58 years (at the time of loan maturity)
  • Maximum Loan Amount: ₹2,000,000
  • Processing Fee: Starting from ₹999 / - Up to 2.25% + GST as applicable
  • Lock-in Period: 6 months
  • Prepayment / Pre-closure Charges: Up to 5% per annum of the principal outstanding plus service tax

HDFC Bank

Availing personal loans from the premium bank: HDFC Bank is quick, competitive and very transparent. If you are looking for a bank that can give approval in just 5 minutes for a personal loan, then your search ends here. The loan can be availed up to ₹2,500,000 and for a tenure of 5 years.

HDFC Bank's personal loan service is easy to avail it has the ability to meet all your financial needs in a happy manner.

Why should you choose HDFC Bank Personal Loan?

HDFC is India's largest private sector bank with its headquarters in Mumbai. HDFC understands your requirements and hence provides you the best personal loan option available.

Features of HDFC Bank Personal Loan:

  1. HDFC offers a personal loan up to ₹2,500,000.
  2. HDFC has a quick approval process for its personal loan.
  3. Interest Rate offered by HDFC for its personal loan starts from 10.99% p.a.
  4. The approval of HDFC personal loan takes only 10 minutes.
  5. HDFC offers Flexible repayment tenures which ranges up to 60 months.

Details:

  • Interest Rate: 15.50% - 21.50%
  • Loan Tenure: 12 months to 60 months
  • Age: 21 years to 60 years
  • Maximum Loan Amount: ₹2,500,000
  • Processing Fee: Up to 2.50% + GST as applicable
  • Lock-in Period: 12 months
  • Prepayment Charges / Pre-closure Charges:

13-24 Months: 4% of Principal Outstanding

25-36 Months: 3% of Principal Outstanding

>36 Months: 2% of Principal Outstanding

IndusInd Bank

One of the best banks for a personal loan, it has good scrutiny and offers loan for genuine applicants. The first bank rated for pretty good service and offer great options to its customers.

This bank offers fast service with less interest rate. The bank is very transparent and flexible in its eligibility criteria.

It is possible to get personal with just 2 days from this bank if you have all the necessary documentation and if you meet all the criteria. IndusInd Bank has fast approval processes with minimal and easy documentation. Easy processing and quick response.

Why should you choose IndusInd Bank Personal Loan?

The IndusInd bank provides free services to all its customers. It is one of the best places to take a personal loan in India.

Features of IndusInd Bank Personal Loan:

  1. IndusInd Bank offers you option to choose a convenient repayment option for your personal loan.
  2. The IndusInd bank offers a personal loan with simple and easy documentation
  3. No collaterals or guarantors required
  4.  Quick processing followed by speedy disbursal.
  5. With an IndusInd Bank you can choose a loan tenure as per your convenience ranging from 1 to 5 years
  6. IndusInd Bank provides you the convenience of doorstep service.

Details:

  • Interest Rate: 11.25% - 30.00%
  • Loan Tenure: 12 months to 60 months
  • Age: 21 years to 60 years
  • Maximum Loan Amount: ₹1,500,000
  • Processing Fee: Up to 2.50% of the total loan amount plus GST tax
  • Lock-in Period: 12 months
  • Prepayment Charges / Pre-closure Charges: 4% of the principal outstanding

Citibank

Citibank Personal Loan services are considered one of the most approachable and the most inexpensive ones existing in the market.

Citibank's Personal Loan can be used to meet financial requirements like medical expenses, education expenses, travel expenses, home renovation expenses, wedding costs or even for a vacation.

Citibank offers personal loan at low-interest rates for all online applications. All relevant documentation requirements are nominal, and no collateral or guarantor is required.

The top-up option is made available with all Citi Personal Loans according to your eligibility.

Why should you choose Citibank Personal Loan?

Citibank personal loan is one solution for all your financial needs. The bank strives to provide you with the best services that are a hassle-free and quick.

Features of Citibank Personal Loan:

  1. Citibank provides personal loan amount up to ₹3,000,000*
  2. Personal loan by Citibank is disbursed within 48 hours.
  3. Part pre-payment and prepayment options are available with Citibank.

*Final amount depends on the eligibility of the applicant.

Details:

  • Interest Rate: 17.99% - 18.99%
  • Loan Tenure: 12 months to 60 months
  • Maximum Loan Amount: ₹3,000,000
  • Prepayment Charges / Pre-closure Charges: Up to 4% on total principal outstanding plus interest for the ongoing month.
  • Processing Fee: 2.00% - 3.00% + GST as applicable

Axis Bank

Axis Bank Personal Loan offers the most flexible personal loans which would suit all personal needs when needed the most.

Why should you choose Axis Bank Personal Loan?

Axis Bank personal loans are easily available, flexible, quick and convenient and are available on affordable interest rates.

Features of Axis Bank Personal Loan:

  1. No foreclosure charges: To foreclose a personal loan most of the lender charges some amount but with Axis bank, there is no charges to foreclose your personal loan.
  2. To ease your burden, the tenure of your personal loan can range from 12 months to 60 months.
  3. The interest rate at which Axis bank offers personal loan is totally affordable for common people.
  4. As compared to the other personal loan providers Axis bank requires a minimum document.

Details:

  • Interest Rate: 15.75% - 24.00%
  • Loan Tenure: 12 months to 36 months
  • Age: 21 years to 60 years
  • Maximum Loan Amount: ₹1,500,000
  • Processing Fee: 1.50% to 2.00% + GST as applicable
  • Prepayment Charges / Pre-closure Charges: Nil

Which Personal Loan is best in India?

Different lenders offer different features and benefits with their personal loans. These features and benefits offer solutions to different types of borrowers and their needs.

Each borrower has their own need. And, fall into different categories from one another.

While, a high earning individual may need a personal loan for home renovation. On the other hand, a low income employee might need it to cover additional monthly expenses. Expenses which were unforeseen or unavoidable, but without the necessary money to meet them.

As such, the requirements of both these types of borrowers are different from each other and require different solutions to them.

Also, both of these borrowers have different profiles from each other.

Hence, there is no perfect personal loan offer which will suit all borrowers. And, no particular lender would be able to cater to all customer profiles.

Therefore, the best personal loan for you will always depend on your eligibility and needs.

We cannot emphasize enough on comparing personal loans online before applying to get the best offer.

Picking the Best Personal Loan Offer

There is no shortage of either the personal loan lenders or the loan offers. As personal loans are fast in disbursal and need no to minimal paperwork, it is very easy to avail a personal loan. Yet, it is not an easy task to find the best personal loan offer.

Comparing and choosing a best personal loan provider is always a tough task.

It is essential to understand the way they work, banks interest rates, types of loans offered: secured, unsecured, fixed, and variable, overdraft and line of credit, go through the bank’s application checklist and look for the customer reviews & ratings.

There are a lot of websites to compare what is offered by each bank. Use a trustworthy website to choose the top five. Then bring down your list to top 3 and then further narrow it down to the bank that has the best offer.

How to find the Best Personal Loan Offer

The Interest Rate

The interest rate is the first concern for most of us when it comes to choosing a personal loan offer. The total cost of a personal loan is determined by combining the interest rate and the length of the loan repayment period.

So, in order to minimize the cost of borrowing, the loan should be of low-interest rate. Also, the tenure should be short. The interest rate of personal loan differs from lender to lender.

To find a low-interest rate personal loan, one must compare the loan offers of several lenders.

Fees and Charges

The next point to consider are the fee and charges you are to pay to the lender excluding the principal and the interest component. Some lenders may keep the fees like processing fee, documentation fee, etc. high while some others may keep it low to attract customers.

In both cases, one has to be careful enough to dig deep into the matter and find out if the lender has any hidden charges. Finalize a lender only after evaluating all the involved costs to be paid to the lender during the loan tenure.

Repayment Period

The loan repayment period or the loan tenure should also be checked if you are trying to find the best loan offer.

Loan tenure makes a great impact on the total outgo of the loan. Some lenders may offer you a very long loan tenure to make the EMI amount smaller.

But remember the fact that, a longer tenure loan is costlier as the interest is compound interest. So, before you make any decision you can check using the EMI Calculator to determine how long it will take you to pay back the loan.

Repayment Flexibility

Along with all other concerns, one must be aware of the repayment flexibility of the lender. Personal loans are installment loans. Hence, the ideal repayment of the loan is done in EMIs for a fixed tenure.

But during the loan tenure, it may happen that you save some extra fund. And you want to pay it towards the loan repayment to save the interest payment. In such scenarios, the lender should accept the prepayment of the loan.

Some lenders may let you pay a prepayment penalty while some others may not allow you to do the same. So, apply for a personal loan only if the lender accepts prepayment of personal loans.

Top 5 Points to Consider before Applying

Be double sure of the need.

We have mentioned above also that personal loan is an unsecured loan which means no collateral is required for this loan, because of this the lender is at more risk. To reduce the risk factor they charge more interest rate for a personal loan as compared to that of any other loan.

Paying a big amount of your salary as EMI is never a wise thing until and unless it is very important.

It is always advisable that opt for a personal loan only if it is really needed. Many people use it for buying gadgets and other luxuries of life which otherwise are not affordable.

You should avoid such a usage of your personal loan amount.

Before applying for a personal loan, always think twice as it may help at the time but it if affect your budget in the future.

Compare before applying to get the best offer.

Almost all lenders offer personal loans but at different terms and conditions. So, before applying with any particular bank it is very important to compare different banks. This was impossible before digitization as one had to visit each bank to know all the details.

Now almost every bank has their website and you can compare them simply by visiting their website. DSAs like us also offer information about every bank on our websites. One just needs to visit our portal and check for different banks and their interest rate.

This way, you can get the best bank for your personal loan which suits you as well as your pocket.

Check your eligibility in advance to avoid rejection.

Eligibility is deciding, whether you can get a loan or not. Generally, personal loan eligibility depends on factors like- applicant’s age, income, CIBIL score, and applicant's employment stability. Your loan application will get approved only if you satisfy these factors.

Multiple applications and multiple rejections in a short time by different banks or even from a single bank affects your CIBIL score negatively.

So, it is better that before applying with any particular bank or any NBFC you should first check for your eligibility. Apply only if you satisfy the eligibility criteria of that bank.

Use the EMI Calculator.

EMI is one of the most important things to consider when applying for a loan. EMI always depends on the loan amount, interest rate and on the tenure period.

While searching, generally importance is given to the loan amount, interest rate and lender. But before applying for a personal loan, use EMI Calculator first to know your EMIs in advance.

Suppose you apply for a personal loan of ₹500,000 with a bank, but you didn’t check for the EMI and they approved your loan, which costs you ₹15,000 monthly, which can affect your monthly budget adversely. This will be big trouble later on as EMIs have to be paid on time.

Delays and defaults attract penalty and affect CIBIL Score. It is always said it's better to be safe than be sorry! To avoid a situation like this, always use a Personal Loan EMI Calculator and decide loan amount and tenure period accordingly.

Make sure you have all the required documentation.

For any loan, lenders always require some documents such as identity proof, address proof, and income proof. Without these documents, no one can get a loan.

So always make sure that you have the required documents ready and then apply. Failure to provide all the required documents will lead to rejection of the application.

Check the Customer Reviews of the lender.

Before you apply for a personal loan with a particular lender it is important to check customer reviews of the lender.

When you check the review you will get to know the experiences of customers who availed the same service.

Also, you will get to know about the processing, approval, and rejection of your lender who have already availed the service. So, when you get to know your lender is worth only then apply for it.

Consequences of Missing a Payment

Though none of us apply for a personal loan with an intention to miss the EMIs, never to neglect the fact that the future is uncertain. Such situations may arise when you become unable to pay the loan EMIs.

In such situations, one should never wait until the EMI bounces. The best practice during those times will be contacting your lender request for consideration.

Before you apply for a loan, you should be aware of the policies of the lender during such circumstances.

How to Apply for a Personal Loan?

Finance Buddha is not just a loan comparison site, but you can directly apply for a loan at the best bank of your choice.

You just have to update your details such as current company, take-home salary, existing EMI amount, salary account bank, loan requirement, and tenure, and it will auto-calculate the amount that should be paid per bank interest rates, its processing fees, etc.

Once this information helps you to decide the bank you wish to avail loan from, click on “Apply Now” and share your contact. After the successful submission of the personal loan application, our customer support will contact you directly to make your interest executed.

Along with the above information, keep in mind it is possible to negotiate on the personal loan interest with the details of your income, company status, credit rating, payment history and relationship with the bank. Make every effort to reduce the interest and enjoy the benefits to the fullest!

Why choose Finance Buddha for Personal Loans?

Personal Loan is a product which is available with all the banks and because of less documentation and fast disbursement it has gained significant popularity too.

But visiting multiple banks to collect all the information and then apply can get confusing and troublesome. This always leads to taking the wrong decision. So before applying for a personal loan, consider the following points.

Finance Buddha Advantage

Here are a few reasons why you should choose Finance Buddha for Personal Loan.

  1. Finance Buddha is the largest DSA for loans in India and is a partner with all the top banks and NBFCs in India. Just by providing a few details about you, you can see the best offers for you from these top financial institutions, compare them and then choose the one that best suits your needs.
  2. Finance Buddha will provide you 100% accurate information regarding any kind of loan whether it is for the personal loan or home loan or instant personal loans.
  3. We have proper time management and loan management skills. With our skills, you can get your loan within a short duration of time.
  4. You can relax after you apply because you don’t need to visit the bank even for a single time. It will be the Finance Buddha executives who will get everything done for you.
  5. High Quality of Service is provided by us regarding any of our products.
  6. The documentation process will be completed at your home only. It might seem unbelievable to you but Finance Buddha executive will come to you and collect all the required documents.
  7. Most importantly your loan disbursement will be done in a short period time which can be 3 to 4 days only.
  8. Above all, it is FREE for our customers! Finance Buddha does not charges its customers for its services. Whether it is a consultation or entire personal loan application process through us, it is all free of cost.

An Overview of the Process

Personal Loans are a very fast and efficient method of getting the required fund in the time of need. And why not, compared to all other loans, they require minimal documentation and are processed faster. The process starts as soon as it is applied for.

Let us have a look at the steps involved so that you can get an understanding of the entire application process at Finance Buddha. Right from applying to the loan disbursal into your account.

Application

The application process starts when you choose a particular lender and fill up the application form above and hit the Submit button. Once you hit the Submit button, your application gets registered in our database.

Confirmation and Welcome Call

Once we have received your application, someone from our team will get in touch with you to verify that it was really you who applied for the loan. Once verified, our executive will explain to you all the details about the lender and its product that you have applied for.

In the case, if a better offer exists for you, then the same will be suggested to you. After you confirm the application, a schedule will be fixed for the documents collection.

Documents Collection

Our executive will visit the pre-decided place at a time of your choice to collect all the required documents and get your signature on the application form.

Details Verification

Our team will verify all the details provided you for the authenticity once you provide all the required documents and a signed application. All the details will be confirmed only after they have been checked and crossed-checked.

Submission to the Lender

We will submit all your documents and your application form to the lender on your behalf so that you can carry on with what’s important to you. The lender may or may not call you to confirm the details. They will also then carry out a verification process at their end.

Approval and Disbursal

The loan processing is complete after the lender verifies all your information.

The lender then, will inform you in detail about your final loan offer. It is at this stage that you will get to know the following:

  1. Final loan amount.
  2. The interest rate on the loan.
  3. The tenure of the loan.
  4. The processing fee and other charges (if any).
  5. Terms and conditions of the loan.

The lender will convey the same to you on your preferred mode of communication.

If you like the offer, then the lender will ask you to sign a loan agreement. This will complete all the required steps.

The loan amount will be disbursed immediately.

The advantage that you get when you apply for a personal loan with Finance Buddha is that you just need to apply. Everything else thereon, will be carried out by our team, and the loan amount disbursed to your account.

All this happens without any hassles of you running around and visiting any offices be it ours or the lenders.

Just apply for a personal loan and let Finance Buddha take care of everything else.

Debt Consolidation with a Personal Loan

What is Debt Consolidation?

Debt consolidation is a form of debt refinancing that entails availing one loan to pay off many others. The process can secure a lower overall interest rate to the entire debt load and provide the convenience of servicing only one loan.

Eligibility Criteria for Debt Consolidation Loans

  • Age of the applicant should be between 21-60 Years
  • Salaried individual with minimum income of ₹20,000.
  • Should be staying in the city for at least 1 Year
  • Total work experience should be at least 2 Years
  • You would require basic documentation such as your address proof, identity proof, latest bank statements etc

The Process of Debt Consolidation

The bulk of the consumer debt especially that with a high interest, is repaid by a new loan. Most debt consolidation loans are offered from lending institutions and secured as a second mortgage or home equity line of credit. These require the individual to put up a home as collateral and the loan to be less than the equity available.

The overall lower interest rate is an advantage of the debt consolidation loan offers consumers. Lenders have fixed costs to process payments and repayment can spread out over a larger period. However, such consolidation loans have costs: fees, interest, and "points" where one point equals to one percent of the amount borrowed. In some countries, these loans may provide certain tax advantages. Because they are secured, a lender can attempt to seize property if the borrower goes into default.

Personal loans comprise another form of debt consolidation loan. Individuals can issue debtors a personal loan that satisfies the outstanding debt and creates a new one on their own terms. These loans, often unsecured, are based on the personal relationship rather than collateral.

Potential Pitfalls of Debt Consolidation

There are several pitfalls consumers should consider when consolidating debt.

Extending the Loan Term:

Your monthly payment and interest rate might be lower, thanks to the new loan. But pay attention to the payment schedule: If it is substantially longer than that of your previous debts, you might be paying more in the long run. Most debt consolidation lenders make their money by stretching out the term of the loan past at least the average, if not the longest term, of the borrower’s previous debt. This allows the lender to make a tidy profit even if it charges a lower interest rate.

Hurting the Credit Score:

By rolling over your existing loans into a brand new loan, you are likely to see a modest negative impact on your credit score at first. Credit scores favour longer-standing debts with longer, more consistent payment histories.

Replacing debts before the original contract would have called for is viewed negatively. You are also listed as having assumed a larger, newer debt, which increases your risk factor. And, of course, just as with any other type of credit account, a missed payment on a debt consolidation loan goes on your credit report.

Debt-to-Credit Ratio:

In addition, closing out the old credit accounts (once they're paid off) and opening a single new one may reduce the total amount of credit available to you, raising your debt-to-credit utilization ratio. This can also ding your credit score, as lenders may see you with an increased ratio as less financially stable. However, if you consolidate credit card debt and end up improving your credit utilization rate – that is, the amount of potential credit you have that you're actually using – as a result, your score could rise later on.

Personal Loan Balance Transfer

Personal Loan Balance Transfer is the process of transferring outstanding amount of an existing loan, from one lender to another. Thereby, closing the loan account in the former, and starting a new loan account with the latter.

Once complete, the customer will need to repay the loan as per the terms and conditions of the new lender.

Balance Transfer facility is an attempt of banks to increase their portfolio by taking over another bank’s personal loan account. To achieve this, they offer better interest rates and repayment options to the existing customers of other lenders.

As such, a balance transfer works in favour of both the lender and the borrower. While the lender acquires one more customer, the customer gets better repayment options.

Opting for a balance transfer will help you reduce your interest rate and lower the EMIs. Hence, helping you save on the interest that you would have paid. It allows the reassessment of the existing debt, change and modify as per the requirement.

Benefits of Personal Loan Balance Transfer

Some of the benefits that can be availed through Personal Loan Balance Transfer are:

  • Personal Loan Transfer lowers interest rate: All the financial institutions offer lucrative offers on interest rates for personal loan transfer to increase their personal loan portfolio by acquiring more and more customers from the competition.
  • Top-up on existing Loan amount: When applying for balance transfer of personal loan, one can apply for a top-up with the new lender on the existing loan amount at the same interest rates.
  • Lower EMIs, Savings in Interest: With lower interest rate, the EMI also reduces significantly and so does the interest that would have been paid on the outstanding amount.
  • No additional charges: The new lender will apply just the processing fees, and no other fees or charges for the balance transfer.
  •  Safeguard CIBIL Score: There is no need of CIBIL requirements for a balance transfer. This will help you to have the CIBIL scoring intact.
  • Option from 25+ banks: Lot of options is available to choose the best banks that offer good facilities.

When to Refinance Personal Loan?

Personal Loan Refinance and Balance Transfer refer to the same process. Where, the latter explains the first.

Refinancing involves closing an existing loan account and moving it to a new lender. Ideally someone, who offers a better rate of interest.

The existing personal loan rate can be higher because of any of the following reasons:

  1. Poor CIBIL Score & Report at the time of borrowing.
  2. High FOIR.
  3. Low Income.
  4. CAT B, CAT C Employer.
  5. New / unstable employment.

The good news is, that none of these situations are permanent. And, can be improved overtime with regular repayments, closing of other debts, increased income, and changing job or with a stable employment.

Finally, all of these will reflect just one thing. That the borrower now has a better repayment capacity. And, that the risk involved in lending to such a person is now less than what it was previously.

If such a borrower applies for a new loan now, the new lender would definitely reward him: with lower interest rates and a new tenure. This means that for the same loan amount, the borrower will now pay lesser EMIs.

As such, if an existing borrower is sure that they check all the boxes now, that their finances are on an upward trajectory, it is time that they should go for a refinance.

All that they will need to do, is to apply for a fresh loan. Once the new loan is sanctioned, use that money to close the existing personal loan.

And that is it.

Refinance or balance transfer is a great way to save money. It is a sign of a smart borrower.

If things continue to be better for them, they can go with prepayment after the lock-in period is over.

Personal Loan Balance Transfer Eligibility Criteria

  • Annual or Monthly income: The minimum monthly income should be₹20,000.
  • CIBIL Score: The CIBIL Score of the applicant should be above 750.
  • Employment: The applicant should have a stable career record.  
  • Age: for salaried person your age should be 21 to 60 years. Whereas for the self-employed the age limit is up to 65 years.
  • Repayment History: The applicant should have a regular and timely repayment history with the existing lender, and should have repaid a minimum of 12 EMIs with the previous employer.

Documents Required for Personal Loan Balance Transfer:

Documents required by all the financial institutions regarding balance transfer are:

  1. Age proof
  2. Address proof.
  3. Income proof
  4. Identity proof.
  5. Photographs
  6. Application Form

Things to Consider before Personal Loan Balance Transfer

Personal Loan Balance Transfer is a great option to reduce the burden of debt and increase the savings. Here are top points to consider before availing a personal loan balance transfer.

Correct Calculation and Evaluation

The most important consideration of a balance transfer is to save on interest. Hence it is very important to calculate in advance the charges that you would need to pay as foreclosure charges and the new processing fee of the balance transfer along with the new EMIs and interest that you would be paying. Check this against all the offers available and choose the one where the savings are more. 

Check Your Eligibility

Different financial institutions will have different lock-in periods for their personal loan product. Usually it is 12 months, i.e. until you have repaid 12 EMIs on your personal loan you cannot opt for a personal loan prepayment or fore-closure. Before you actually apply for a balance transfer, be sure of your eligibility to prepay the existing loan.

Details & Fine Print

Always read and understand all the terms and conditions, policies and charges before you sign the agreement for the balance transfer. Make sure that there are no hidden charges which would increase the cost involved later on.

Additional Offerings

To lure a customer to opt for a balance transfer to them, financial institutions implement different tactics and may offer multiple benefits and facilities, should you choose to apply with them. It is very important to go through all the terms and conditions of such offerings before jumping the gun.

Long Term Benefits

Always analyse the long term benefits of going for a personal loan balance transfer. If the benefits turn out to be just temporary, it would be better to not go for the transfer and instead wait for some more time for better offers.

PPI with a Personal Loan

The Payment Protection Insurance, also known as PPI is a kind of insurance plan designed to cover any kind of loan. The PPI can cover different kinds of loans.

This type of insurance covers the loan EMIs in case of death or disability of the borrower to pay off the EMIs.

In case of job loss or such situations when you are not earning enough to pay the EMIs, you can claim the insurer to pay the EMIs until you are earning again.

Generally, the PPI is sold along with the credit product by the lender or the partner companies of your lender. Lenders generally advise you to buy a PPI as it minimizes the risk of NPA to a great extent. The PPI policies have to be purchased separately for every credit you owe.

Let's say, you have purchased a PPI for your personal loan. If you become unable to earn enough to pay off your loans, the insurer will pay the EMIs. If you have any other loans due, the insurance will not cover those loans.

The PPI helps a borrower in the cases of:

  1. Illness or disability
  2. unexpected redundancy
  3. circumstances that stop you working
  4. Death (depending on your policy).

Here is when PPI doesn't give you protection:

  1. The insurer doesn't cover EMIs for the first 90 days of being unemployed. During that period, you are to pay the EMIs yourself.
  2. All the illness are not covered by PPIs. There are certain illnesses which are not covered by the insurer. You are to check the list before buying one.
  3. The insurance will not provide you with coverage of pre-existing diseases.
  4. If you are unemployed or retired, you can avail this facility.

When should you consider buying a PPI?

The PPI policies are to be purchased if your loan amount is huge. Bigger loan amount leads to hefty EMI amount. If you are not certain about the regular payment of the EMIs, it is advisable to buy a payment protection insurance

Secondly, if your source of income is not stable, you should definitely opt for payment protection insurance. So if your income becomes less than normal, the insurance will cover the EMI payments.

If your job is associated with risk on life, you should better have PPI for you all kinds of loans. The individuals servicing risky jobs such as fighter pilot, fireman, construction foreman, private detective and so on should purchase payment protection insurance plans to cover the loan repayments.

Also, you should not neglect to buy a PPI if you are the only breadwinner of your family. If there are no other earning member in the family, you should go for PPI to safeguard your family from uncertainties of future.

Personal Loan vs Credit Card

This a question which almost everybody asks. In the times of financial crisis, which of these is a better credit option. Let us have a look at how they compare.

Feature

Personal Loan

Credit Card

Loan Amount

₹50,000 - ₹5,000,000

Depends on Income

Interest Rates

10.5% - 36%

12% - 24%

Collateral Required

None

None

Interest Calculation

On Principal Amount

On Outstanding Amount

Repayment

Fixed EMIs

Flexible EMIs

Personal Loan vs Line of Credit

Both these loan options are great. But, each of these have their own pros and cons. Here is a comparison based on different aspects.

Feature

Personal Loan

Line of Credit

Loan Amount

₹50,000 - ₹5,000,000

₹5,000 - ₹500,000

Processing Time

3-5 Days

2 Hours – 1 Day

Collateral Required

None

None

Interest Calculation

On Principal Amount

On Outstanding Amount

Repayment

Fixed EMIs

Flexible EMIs

Personal Loan vs Gold Loan

Both will serve you to meet urgent cash requirements. But, one requires your gold as collateral. This should be your only point of consideration, if you are eligible for both. Let us have a look at how these compare to each other in certain aspects.

Feature

Personal Loan

Gold Loan

Loan Amount

₹50,000 - ₹5,000,000

Depends on the Value of Gold

Processing Time

3-5 Days

Immediate

Collateral Required

None

Yes, Gold

Interest Calculation

On Principal Amount

On Principal Amount

Repayment

Fixed EMIs

Fixed EMIs

Though personal loan is one of the most popular loan product in the market, people are still not very clear about it and there are a number of myths regarding the personal loan.

It takes a lot of time to process a personal loan

Many people believe that personal loans take a long time process and approve a loan application. But this isn’t true anyway.

Personal loans are the quickest loan available in the market, which even comes with the pre-approved facility and with minimal documentation. The processing of this loan is faster than any other loans. With some of the lenders, it takes only a few hours to disburse a personal loan.

It can never be approved with a Low CIBIL Score.

CIBIL is one of the most important eligibility criteria, common among all the lenders. It represents your financial history, your borrowings and your repayments made. CIBIL is always an evaluating factor.

But it is a myth that a personal loan application with low CIBIL always gets rejected.

A personal loan application with low CIBIL may get approved when your income and repayment capacity is high. As income and repayment capacity is also important eligibility deciding factors.

The interest rate is always high.

It's a misconception among the people that a personal loan always comes with a high interest rate. It is true that the interest rate of a personal loan starts from 10.50% per annum and can go up to 22 or 24% per annum. But when an applicant has a good income, high repayment capacity and a good CIBIL Score then a personal loan can be approved at the minimum interest rate possible.

It has no prepayment option.

It is also a myth that a personal loan does not offers a prepayment option. A personal loan does comes with prepayment option. One just needs to check for this option while selecting their lender.

Available only through banks.

It is totally a misconception among the people that a personal loan is offered only by banks. People think so because a personal loan is an unsecured loan and due to the risk factor involved to the lender, people assume that it is only the banks, who can bear such risks.

Whereas the truth is it is not only the banks who offer a personal loan, it is the NBFCs and many DSAs as well who are into the business of offering personal loans.

There are no tax benefits.

It is totally a myth that there is no tax benefit possible on a personal loan. Tax benefits can be easily availed on a personal loan when one plans it properly.

Advantages & Disadvantages

Advantages of Personal Loans

  1. Multi-purpose: Personal loans are always multipurpose in nature that means you can take a personal loan and use it according to you for any purpose such as for home renovation, higher education, for your vacation and even for medical expenses. You don’t have to submit any paper to show the reason for borrowing and hence it can be used according to you.
  2. Quick Disbursal: Now personal loan through Finance Buddha is a simple, quick and easy process through which you can get a personal loan. It’s fast processing and quick disbursal makes it the best loan for any financial or even sometimes for medical emergencies where money is needed immediately.
  3. Minimal Documentation: Personal loan is the loan with minimal documentation as compared to that of other loans such as home loan, car loan or even education loan. This facilitates borrower ease and a relief from piling up a document file.
  4. No Collateral required: Whenever you borrow either from a bank or from a local lender they will also need collateral or security for lending. Whether, the amount is big or small, it doesn’t matters. As such, those who do not have collateral can’t avail such loans.
  5. But personal loans are exceptional. And you don’t have to give any security or collateral.

Disadvantages of Personal Loans

  1. High-Interest Rates: One of the biggest disadvantages of personal loan is that it has higher interest rates as compared to secured loans. Because it is an unsecured loan, the lenders of personal loan are always at high risk. To compensate for the risk, the interest rate of the personal loan is higher.
  2. It Requires Good Credit Score: As we know that the lenders are at high risk in the case of personal loans. As such, they also want to somehow reduce their risk. So they lend to only those who have a good credit score.
  3. Part-payments and Prepayment: One of the other disadvantages of personal loans are that part payments and pre closures are allowed only by few lenders and for that, they will charge some amount as the pre-closure charge. So, before going for a personal loan check thoroughly each and every terms and condition of the lender.

Dos & Don’ts of Personal Loans

Here are few dos and don’ts to be kept in mind before you apply for a personal loan. It is essential that you read this before applying.

Dos

  1. Borrow exactly as per the Requirement: Borrowing more than the requirement will lead you to pay interest for unnecessary debts. It is essential to consider all requirement for a loan, sum up the amount required and then start looking for loan option, interest rates, monthly EMI, tenure, etc.
  2. Borrow What You can afford to repay: Taking loan that you will struggle to pay is not a good idea. Before taking a loan, make a thorough calculation of how much you will be able to pay.
  3. Use the Money for Necessities: Taking a loan ‘just because it is easy to get one’ is the worst idea. Avoid putting yourself into debt. Be clear why a loan is required and stick to the plan.
  4. Compare and Compare, Again and Again: Irrespective of how convincing the managers in the bank is and how flattering their talks are, it is your need and your hard earned money will be used for repaying. So compare as much as different personal loan offers from various banks, before considering and finalizing.
  5. Think Ahead: Every penny borrowed will have to be repaid with interest, think if there is really a need for a loan. Being tied into long term contract is not a great move; there will be less option for you in case of any other necessities in the future.

Don’t

  1. Turn Greedy: Money will always look attractive and we will have wants. But taking personal loan should be for needs instead of wants.
  2. Jump into Payment Protection Insurance: Check if there is a need for PPI and even if there is a requirement; take it from an independent company instead of the loan provider.
  3. Ignore The Policy And Procedures: It is worth you spending an hour extra now to read the guidelines provided bank instead of later regretting. Ignorance of terms is not an excuse.
  4. Miss Payments: Though it sounds obvious, don’ts list will be incomplete without this point. Missing or delaying one single payment will reflect on all aspects of your financial life. Apart from the extra interest that is required to be paid, you will end up having a weak credit rating score.

A Word on Efficient Usage of Personal Loans

Managing your finances and your personal loan efficiently is a difficult thing.

One of the most important things we should keep in mind while applying for a personal loan is that you should be sure of how much you need. So that you don't borrow more than you need. But once you have it, you need to manage your personal loan efficiently.

Here are some points which you should do to manage your personal loan effectively.

Efficient and proper use of the loan amount

If you have taken a personal loan recently the first thing you should do is you should use the loan amount first for the most important thing for which you have taken the loan.

Don’t spend on anything else just because you can. It always feels good to have so much money available when the loan is disbursed but feels the opposite while repaying. So you should always spend your loan amount wisely.

Never use a personal loan for investments

As we know that personal loan is an unsecured loan and hence has higher interest rates. So it is never a wise thing to use your personal loans for investments.

Investments should provide more returns than the cost. If the returns are not higher than the interest paid on it, it is not worth. So it is better to avoid using personal loans for investments.

Start saving for pre and part payments

Prepayments and part payments are always considered good for a personal loan. Prepayments and part payments facilitate you to pre-close your loan by reducing the tenure period and the loan amount.

For a personal loan of ₹400,000, you pay ₹8,000 monthly as EMI for 4 years. So, if you pay the last ₹200,000 after 2 years at a time as a prepayment and close the loan then it will definitely save you the interest that you would have paid in the next 2 years.

So try to save and prepay this even increases your credit score which will help you avail any loan in future at lowest rates.

Make a monthly budget and spend accordingly

Budgeting is the most important thing which is required to manage your loan efficiently. Even every country makes a budget at the starting of the financial year! So why not you?

Making a budget ensures everything will be planned and worked accordingly. This will make repaying your loan an easy task.

Inefficient or lack of planning will lead you to avail another loan to repay the previous loan.

Tax Benefits on Personal Loan

Apart from the several benefits mentioned above, there are tax benefits too associated with it which many of us do not know.

Yes! They do come with tax benefits, but it totally depends on the end use of the borrowed amount.

If you can prove that the loan amount has been used for the valid expense (regardless of the source of loan), then you can use such personal loans for the purpose of tax savings. You can even claim the tax deduction on the paid interest of the loan.

You can claim the tax benefits on them in certain cases.

Housing Needs

If you have availed the personal loan for your house, then the proper arrangement for the same can create the wonders in terms of tax deductions.

According to Income tax act, section 24(b), the same provides the great relief to the house buyers and provide them tax deductions on the loans, if they have availed a loan to buy a residential property or for the renovation of such properties.

If you have used personal loan amount for the down payment to buy a house, then you can opt for tax exemption.

At the same time, if the amount is used for renovation, home repairs or reconstruction, then all these expenses will fall under valid expenses for the tax deduction purpose.

In order to claim the tax deduction, you will need all the documents as a proof that the loan amount has been used for the house. You need to preserve all the bills related to repairs, reconstructions, repairs, labours etc. to claim the tax deductions.

Higher Education

If you have availed the personal loan for the purpose of higher education, it also can be helpful while calculating the income tax. You can avail the tax deduction on the interest paid by you. If the same has been availed for your child or partner’s education, then you will not be able to take the advantages.

Business Requirements

Now a day, people chose to avail the personal loans for the business purpose as well because it is easily available. One can get a quick disbursal of the loan amount. But, one should not forget that, here the interest paid, will be considered as a business expense. Hence, the same shall result in the lower taxable income.

If used in the appropriate manner, this loan can become your tax saving tools just like it is the tool to meet your urgent, unexpected financial needs.

However, one needs to know how to use the same properly.

How to claim Income Tax Exemptions on a Personal Loan?

The Indian Income Tax Act allows tax deductions on personal loans for specific purposes, such as education, purchase or renovation of your house and business expansion.

Amount used for Business Expansion

When the money borrowed through a personal loan is invested in a business, the interest paid towards the repayment of the personal loan can be claimed for the tax deduction.

Amount invested in Real-estate

When the money borrowed through a personal loan is used to purchase, construct or renovate a house or property the interest paid for the same against the loan can be claimed for tax taxable. This deduction is possible under section 24. The maximum amount which can be claimed for deduction under this ₹200,000.

Loan amount used for buying an asset

In case one uses the loan amount for buying an asset, one does not become eligible to claim a tax deduction immediately, but at the time of sale of that asset. If one has used the personal loan to buy assets, the interest paid on loan will sum up as the cost of acquisition of that particular asset. The amount for tax deducted will be added to the cost of acquisition of the asset. And it will be available at the time you sell that asset.

Is Personal Loan Taxable in India?

Usually, personal loans are not taxable. You can even claim the income tax benefits over personal loans, if you have used the loan amount to construct, reconstruct, repair or acquire a property. As, the interest charged for the personal loans can be higher being an unsecured loan.

Loans are not considered as the part of your income. Thus a personal loan will not be considered as taxable when you file the income tax returns. Hence, this simply means that you will not have to pay any kind of tax on the personal loans.

But, at the same time, it is essential that the personal loan should be from the reliable sources such as Banks, Non-Banking Financial Companies or financial institutions or financial lenders etc. The loan availed from the unknown sources will fall under the category of income and that will be taxable.

How Personal Loan affects Credit Score?

When you avail a personal loan with a registered financial institution, such as bank or NBFC, they report your loan repayment track to the credit rating institutions.

While all such lenders definitely report to CIBIL Transunion, a majority of them also report to Equifax and Experian as well.

The credit score of any individual depends on their overall management of the debt(s).

As such, how good or how bad you are with your loan repayment, will affect your overall credit report.

Loans are good only when the need for them are justified. Along with the desire and capacity to repay them properly. And, when the bad times are over or tenure is over, they should be closed.

Multiple loans, revolving credits, missed EMIs, all of these affect credit score negatively. And, bring them down significantly.

This affects the eligibility of an individual to borrow more in the future. If one had borrowed for the purpose that was not really important, with a bad credit report, he would not be able to borrow in the near future. Even if there is a genuine need.

As such, one needs to be very careful with their loan repayments, once they have it. And, avoid it at all if there is no important need.

Using a Personal Loan to improve CIBIL Score

Along with many other benefits, a personal loan can be a great way to improve the credit score of any individual.

The credit score is a numerical data which represents the creditworthiness of a person. The credit score is determined by credit bureaus based on the credit history of any individual. 

About CIBIL

The CIBIL (Credit Information Bureau India Limited) is India's first Credit Information Company. It collects and maintains records of an individual's credit behaviour. Generally, all financial institutions are supposed to report all the financial activities of customers to CIBIL. And hence, they maintain a record of it.

Based on these pieces of information, it gives out a numerical score ranging from 300 to 900 to each individual. Higher the credit score, better the chances of getting approval on loans.

If you have a low credit score the chances of getting a loan in near future is at risk. You can use a personal loan to help you boost it.

How?

Let's understand how a personal loan can be helpful in increasing your credit score.

Regular payment of EMI is an obvious and the simplest way to boost your credit score. Your EMI amount may be a smaller one or a huge amount. Paying every EMI before the due date, proves you as economically disciplined. And this boost your credit score as well.

Hence, when you refinance a credit card loan with a personal loan, it positively impacts your credit score. Also, your credit score is increases when you consolidate your higher interest loans to a lower interest loan. And such financial activities are as the signs of an economically concerned individual. Hence, the credit score will increase.

Generally, we find that the individuals who have an appreciable credit score typically use a mixed bag of different types of credit, including both revolving and installment loans. As such, if your credit reports show mostly credit cards but few installment loans, it will have a negative impact on your credit score.

And, a personal loan is an installment loan, which can be helpful in improving the credit score.

High Credit Utilization Ratio

A high credit utilization ratio negatively impacts credit score. The credit utilization ratio is the ratio of how much do you currently owe to any lender, divided by the total credit available to you.

For example, if your credit card limit is ₹10,000, and typically carries a balance of ₹9,000 on your card. So, your utilization ratio would be 90%. So, using 90%, 75% or even 50% of your available credit monthly, your credit score is sure to get damaged.

In such cases, a personal loan will prove to be a boon. Additional credit will help you to lower the utilization ratio and boost your credit score.

Process of Closing a Personal Loan

A personal loan is a great help in case of any urgent financial need. However, a personal loan is an unsecured financial tool which has a higher interest rate than a secured loan.

Due to its high-interest rate, repaying it for a long tenure can cost you much. Hence it should be the top priority of a personal loan borrower to close the loan in less time else it can increase your financial and debt burden.

Closing a personal loan not only reduces your financial burden but also provides you mental peace and stress- free life. You become free from one of your major responsibility to pay the monthly EMIs.

Personal loan prepayment will help you to add more cash to your monthly budget. And, one can start savings or investing as well as soon as the personal loan burden is over.

How to close a Personal Loan?

One can either regularly repay the loan close a personal loan by repaying it till the completion of the entire tenure or one can prepay the loan to reduce your debt burden.

What do you need to close a personal loan?

  1. Personal Loan Account Number

The first and the most important thing which you need to close a personal loan is your Personal loan account number. This can be found easily on the loan account statement. One can also get it by using the Netbanking facility, if available.

  1. Identity Proof

ID proof is a must thing required to close a personal loan. One can use PAN card, Aadhaar card, Voter Id card or any other government-issued identity document to show it as an identity proof.

  1. Other Loan Related Documents

Other loan-related documents include a loan approval letter, loan account statement and other documents issued by the lender.

Regular Closure

In regular closure of a personal loan, a personal loan borrower makes regular payments and pays off the loan in the same tenure period as mentioned in the loan agreement.

Charges for Regular Closure

There are no charges imposed with a regular closure of a personal loan. You just need to pay the installments.

Step to follow for a Regular Closure

Step 1: Speak to your lender (bank / NBFC) and inform them about the closure of your loan. This is needed to be done once you pay the last installment of your loan.

Step 2: Carry the required documents with you. The documents for ID proof, a cheque with the final payment (if any), and the loan account number and any other loan-related documents issued at the time of loan approval. All these are required, as the bank will verify the documents before further proceeding for the closure of your personal loan.

Step 3: Get a NOC (No Objection Certificate). A NOC will be issued by your lender against the borrower after the procedure is completed. This certificate state that the borrower has repaid the complete loan and does not have any dues.

Personal Loan Prepayment

A loan is said to be pre-closed when you repay the loan before the loan tenure ends or when you repay the loan in a shorter time which is mentioned on the loan agreement. A pre-closure of a personal loan can save a lot on interest costs when done on right time.

However, different banks have different lock-in periods before which you cannot close the loan. Moreover, there are certain charges imposed by certain banks on the pre-closure of a personal loan known as pre-closure charges.

Charges on prepayment of a Personal Loan

It totally depends on the banks' policies that where they will charge for a pre-closure or not. Generally, the charges vary from bank to bank and it depends on the outstanding amount too.

Additional documents required in case of pre-closure

  1. Pre-closure Quote.
  2. Visit the bank to check the outstanding loan amount and any pre-closure charges or penalties. And once you have the exact amount, you can pay the bank to close your loan.
  3. Demand draft or Cheque for pre-closure of the loan.

Steps to pre-close a Personal Loan

  1. Visit the bank and know their pre-closure policies.
  2. If required you will be told to fill a form or write a letter requesting pre-closure of your personal loan account.
  3. You will have to pay the pre-closure amount.
  4. Sign the pre-closure documents, if any.
  5. It is very important to take acknowledgment of the balance amount you have paid.

Your personal loan account will close once the money is received by the bank. And shortly the bank will dispatch the loan closing papers to you.

Personal Loan Settlement

Personal Loan Settlement also known as loan settlement, credit settlement or debt negotiation.

Loans are settled, when the borrower is not able to repay the loan. As such, both the parties agree to settle for a lower amount.

Hence, it helps to reduce the loan. So that, it becomes easy to repay the outstanding amount.

In a settlement, the borrower has to pay more than the outstanding principal amount. But, has to pay less than the outstanding amount including the interest.

Thus settlement makes the repaying, somewhat easier for the borrower.

What is the process of loan settlement?

First and foremost, the borrower negotiates and convinces the lender, to reduce the total outstanding payable amount. Debt settlement is only possible when the lender grants the permission, and gets ready to accept a lower amount, than the outstanding amount.

For which loans can debt settlement be done?

Usually, the debt settlement happens with unsecured loans. Since, the lender has nothing as a collateral. As such, they do not have any other option to recover money. Hence the only thing they can do, is to agree for settlement. Or else, take some legal action.

How to Get a Personal Loan When Unemployed?

The lenders offer personal loan to an applicant only when they are sure of their repayment capability.

As such, an unemployed individual has no chance to avail an unsecured loan.

But unsecured loans are not the only types of personal loans available.

Apart from personal loans there are multiple options to borrow money. Some of these are:

  1. Gold Loans or a loan against gold.
  2. Loans against Investments, such as fixed deposits, shares or NSCs.
  3. Loan against property, provided the applicant is the owner.

All these are types of secured personal loans. And the borrower is free to use the loan amount for any purpose.

Since, these are secured personal loans, the collateral is at risk, should the borrower fail to repay. In such cases, the lender is legally allowed to sell or auction the collateral to recover their money.

Hence, these should be opted only when the need is genuine and worthy of the collateral risk.

Personal Loan Frequently Asked QuestionsView All

What is a Personal loan?

Personal loan is a 1-5 year unsecured loan given by banks, NBFC’s (Non Banking Finance Companies) or P2P lending platforms without asking for any collateral, guarantor or hypothecation of any assets. The ultimate usage of a personal loan is left to the discretion of the borrower. In our experience, the borrowers generally use a personal loan for debt consolidation, repaying high cost debt, meeting any family or medical emergency, wedding, vacations, home renovation, rental deposits, business needs for an SME, buying certain assets etc.

How is my loan eligibility calculated?

Loan eligibility is dependent on primarily the following factors:
  1. The company where you work. Every bank has a list of companies running into thousands which they have categorised into segments like A, B, C etc depending on the credentials and financials of your employer. The higher the category the higher is the loan eligibility chances.
  2. Quantum of loans and credit card outstanding that you already have. Typically a bank will not give a loan if the total EMI obligation (including the current personal loan that your are trying to apply for) exceeds 50-75% of your total net take home salary.
  3. Your gross/net salary
  4. Your credit score as reflected in your CIBIL or Equifax report. Having a good credit score is a necessary but not a sufficient criteria.

My loan got rejected even though I have a decent salary package?

The final decision to grant a loan lies with the credit department of a bank. Some of the reasons why a loan can be rejected are:

Possible Issue

Already running several loans and hence a bank may not be comfortable with your existing leverage levels vis-a-vis your salary level.

Possible Way Out
  • If you have a spouse who is also working, you can add her as a co-applicant to boost the combined salary levels or
  • Try to pay off some of your debt so that your leverage levels can come down or
  • Do a balance transfer/debt consolidation/re-financing of your existing loans such that the rate of interest on loans can also come down and additional loan can also be provided.

Possible Issue

Issues in your credit history as reflected in your CIBIL, Equifax reports

Possible way out
  • If the issue is a minor one like some delay in payment of credit card due then we can try your application in some other bank who can possibly take a lenient view on the deviation
  • If you think that the credit report is erroneous and you have sufficient documentary proof we will represent the case to the bank and try to convince the credit team
  • If the issue is a major one like write off, settlement of any past dues etc then it might be difficult to obtain a loan. Certain mitigation factor like if you/your spouse/your parents have an own house in India can give comfort to certain banks to give you a loan.

Possible Issue

Most banks have certain internal credit parameters to evaluate a loan which is kept confidential and not shared with us. Several demographic, financial and credit aspects go into these internal evaluation. You might not have met the minimum cut off for obtaining a loan.

Possible way out

We can re-apply for your loan in one of the other 10 plus lenders that we are affiliated to.

ReviewsView All

Nijanthan Sultana

5 / 5

I have a personal loan with ICICI Bank. I went with ICICI as I heard that there is very fast processing. I applied for it through finance buddha online website. the process of applying was very easy and i was done with in just few minutes. My loan was approved on the 3rd day. and i am quite happy with it.
Arulkumar Bhaveshkumar

5 / 5

I used Finance Buddha portal for applying for a personal loan. I applied my loan with ICICI Bank after checking all the rates and charges with other banks. Finance Buddha executives came to my home and collected all the required documents. They helped me throughout the process. Thanks Finance Buddha !
Navin Soni

5 / 5

I have my personal loan from the ICICI Bank. I am happy as the processing of my personal loan was very fast and. The loan was approved within 3 working days and on the 5th day from which i applied the amount was in my personal account.
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