Personal loan is an unsecured loan facility, which can be availed by both salaried and self-employed individuals. Proceeds from the loan can be used to meet any personal and business related financial requirements without any end usage restriction. Personal loan also comes with fewer documentation requirements, which enables quicker processing and disbursal than other credit options.
| Interest Rates | 10.25% p.a. onwards; some PSUs may offer lower rates |
|---|---|
| Loan Amount | Up to Rs 1 Cr, some lenders may offer higher loan amounts |
| Tenure | Up to 6 years (some lenders offer repayment period till 8 years) |
| Processing Fee | 0.5% to 4% of loan amount (may vary across lenders) |
Personal loan is a short to medium term loan, which consumers can avail to meet both personal and business needs other than speculative purposes. They are usually unsecured in nature as consumers do not need to pledge any collateral or security to avail them.
The interest rates offered on a personal loan is determined based on the applicant’s credit profile and the lenders’ credit risk-based pricing model, cost of funds, etc. As the interest rates on your personal loan primarily influences the total cost of your borrowing, one must always look for best interest rates available on their credit profile.
For this, consumers should first check offers from lenders with whom they already have deposit, credit card and/or loan account(s). Then, they should visit online financial marketplaces to compare interest rates offered by other banks and NBFCs.
Many lenders offer pre-approved personal loans with instant disbursals to their select existing customers having good credit profiles. Thus, consumers should first check for such pre-approved offers with banks and NBFCs with whom they have an existing banking relationship. After checking for pre-approved offers, visit online financial marketplaces to compare personal loan offers from various banks and NBFCs offering quick disbursals, preferably within the same day of making the loan application.
Given below are a few personal loan schemes offered by some of the leading banks and NBFCs in India:
| Top Personal Loan Schemes and Offers | |
| HDFC Bank Personal Loan | Bandhan Bank Personal Loan |
| ICICI Personal Loan | Axis Bank Personal Loan |
| Yes Bank Personal Loan | Bajaj Finserv Personal Loan |
| TATA Capital Personal Loan | Kotak Mahindra Personal Loan |
| IDFC Personal Loan | Aditya Birla Personal Loan |
| Axis Finance Personal Loan | Shriram Finance Personal Loan |
| L& T Personal Loan | Indusind Bank Personal Loan |
The interest rates of HDFC Bank personal loan start from 10.75% p.a. The tenure of the scheme can go up to 6 years whereas the loan amount can go up to Rs 40 lakh. The bank also offers pre-approved loans with ‘10 second disbursal’ to its select existing customers based on their credit profiles.
ICICI Bank extends personal loan to cater to the varied financial requirements of its borrowers. The bank also offers Fresher Funding, a special scheme for funding immediate and other financial requirements of younger salaried individuals. For its select existing customers, the bank offers overdraft facility, pre-approved offers and top up loan facility. Its pre-approved offers feature minimal documentation and 3-second disbursals.
Axis Bank’s Personal Loan covers expenses related to wedding, home renovation, travel, medical emergency and much more. The bank also extends pre-approved offers to its select existing customers. Such offers have digital processing and instant approvals. Axis Bank has also collaborated with FinIndia24x7 to extend its select customers pre-qualified offers.
Kotak Mahindra Bank offer loans only to salaried individuals. Existing borrowers of other banks/NBFCs can avail balance transfer facility to transfer their outstanding loan to Kotak Bank at lower interest rates. Those exercising balance transfer facility can also avail top up loans of up to 100% of their loan amount. Kotak Mahindra Bank also offers overdraft facility, giving borrowers the flexibility of withdrawing their funds from their loan account anytime and repaying it as per their convenience.
IndusInd Bank offers multiple personal loan schemes including wedding loan, home renovation loan, loan for medical expenses and loan for education. The bank also offers balance transfer facility to existing borrowers of other banks and NBFCs. For those requiring quick financing, the bank extends instant online loans with quick processing and loan approvals.
Personal loan is a preferred credit option for financing lifestyle goals and fund shortages due to their easy accessibility, minimal documentation and quicker disbursals. Here are the key features and benefits of personal loans:
Apart from the regular personal loan schemes, several banks and NBFCs offer various personal loan variants to help their customers meet their unique financial requirements. The broader features such as tenure, processing fees, etc. offered on these loan variants are more or less the same as those offered on regular personal loans. Here is a brief description of some of the personal loan variants.
Instant Personal Loans are usually pre-approved loans with instant disbursals. These loans are usually offered by banks and NBFCs to their select customers on the basis of their credit profiles.
Short-term Personal Loans have short repayment periods usually ranging from a few days to 12 months. They are usually ideal for borrowing smaller loan amounts. Such loans are usually offered through end-to-end digital process, thereby, ensuring quicker loan approval and disbursals to the applicants.
Pre-approved Personal Loans are usually offered by banks and NBFCs to their existing customers on the basis of their credit history, income, employer’s profile, etc.
Personal Loan Balance Transfer (PLBT) facility allows borrowers to transfer their outstanding personal loan to a new lender for lower interest rates or better loan terms. However, opt for this facility only when the savings made through the transfer outweighs the cost of the loan transfer.
The top up is offered to existing personal loan borrowers who need additional funds to meet their financial requirements. This loan facility is usually offered to select borrowers having satisfactory loan repayment history and/or have completed a specified number of EMIs.
Personal Loan for Education is for individuals requiring funds for pursuing higher education in India and abroad, vocational courses, etc., and are unable to get a conventional education loan.
Personal loans can be availed for any purpose, except for speculation or illegal activities. Borrowers can use the loan proceeds for covering medical emergencies, home renovation, wedding, vacation, business operations, etc. The loan can also be used for managing everyday expenses or for covering higher education costs (including courses not eligible for education loan) and for consolidating multiple high-interest debts.
While the fees and charges of personal loans usually vary widely depending on lender and the credit profile of the loan applicants, the following table will give you a fair idea of the personal loan fees and charges levied by the lenders:
| Particulars | Charges |
| Loan Processing Fees | 0.5% to 4% of loan amount |
| Pre-payment/Part-payment/Foreclosure Charges | For Floating Rate: Nil For Fixed Rate: Usually around 2% – 5% on the principal outstanding |
| Loan Cancellation | Usually around Rs 3,000 |
| Stamp Duty Charges | As per actuals |
| Legal Fees | As per actuals |
| Penal Charges | Usually @ 2% per month; 24% p.a. |
| EMI/Cheque Bounce | Around Rs 400 per bounce |
Other fees and charges levied by the lenders include documentation charges, verification charges, duplicate statement charges and NOC certificate charges.
Personal loan eligibility criteria can vary from one lender to another due to their varying credit risk policies. The eligibility criteria can also vary as per the loan variant and the occupation profile of the applicant. Here are some of personal loan eligibility criteria used by most lenders:
Personal loan lenders require documents from their applicants to establish their identity, income, loan repayment capacity and place of residence. These documents are more or less the same across lenders. Here are the few common set of documents that you will need to submit when applying for a personal loan:
| Requirements | Salaried Individuals | Self Employed |
| Proof of Identity | Passport, Voter’s ID, Driving License, Aadhaar Card or PAN Card | Passport, Voter’s ID, Driving License, Aadhaar Card or PAN Card |
| Proof of Residence | Aadhaar Card, Passport or utility bills | Aadhaar Card, Passport or utility bills |
| Proof of Income | Salary Slips, Bank Account Statement, Form 16 | Previous Years’ ITR, P&L Statement and Balance Sheet, Bank Account Statement |
The unsecured nature of personal loan increases the credit risk for lenders as it leaves them with no collateral or security to compensate their losses in case of a loan default. To mitigate this risk, banks and NBFCs factor in various aspects of their applicants’ credit profiles and follow strict eligibility policies when evaluating their loan applications. Those planning to avail personal loan can improve their chances of approval through these tips:
Before applying for a personal loan, here are a few things you should know:
FinIndia24*7 allows customers to compare personal loan offers from 30+ banks and NBFCs and apply for the best-suited offer online with ease. The steps for the same are as below:
While looking for a personal loan, prospective borrowers should compare offers from as many lenders as possible. While one can check personal loan offers by individually visiting websites of various banks and NBFCs, however, checking it on an online financial marketplace like Fin India 24×7 will make the process faster, easier and more convenient. Here are a few more reasons to apply for personal loans through Fin India 24×7:
Copyright © 2024 For FinIndia 24×7. All Rights Reserved.
Designed By: The Lutetium
