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A personal loan is an unsecured financing option available to both salaried and self-employed individuals. The funds obtained from this loan can be utilized for any personal or business financial needs without any specific usage limitations. Additionally, personal loans require minimal documentation, facilitating faster processing and disbursement compared to other credit options.
| Personal Loan Details | |
|---|---|
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Interest Rates |
10.49% p.a. onwards; some PSUs may offer lower rates |
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Loan Amount |
Up to Rs 40 lakh; some lenders may offer higher loan amounts |
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Tenure |
Up to 5 years (some lenders offer repayment period till 8 years) |
|
Processing Fee |
0.5% to 4% of loan amount (may vary across lenders) |
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A personal loan is a short to medium-term financial solution that individuals can use to fulfill various personal and business requirements, excluding speculative purposes. Typically unsecured, these loans do not require borrowers to provide any collateral or security.
Personal loan interest rates are determined by the applicant’s credit profile and the lender’s credit risk-based pricing model, cost of funds, and other factors. Since the interest rate significantly affects the total borrowing cost, it’s crucial to secure the best rates for your credit profile.
To do this, consumers should first explore offers from lenders where they already have deposits, credit cards, or loan accounts. Next, they should visit online financial marketplaces to compare interest rates from various banks and NBFCs.
Compare Personal Loan Interest Rates 2024
| Interest Rates | Range (p.a.) |
|---|---|
| SBI Personal Loan Interest Rate | 11.25% – 15.40% |
| HDFC Personal Loan Interest Rate | 10.50% onwards |
| Axis Bank Personal Loan Interest Rate | 10.99% onwards |
| ICICI Personal Loan Interest Rate | 10.80% onwards |
| BOB Personal Loan Interest Rate | 11.10% – 18.75% |
| PNB Personal Loan Interest Rate | 10.40% – 16.95% |
| Canara Bank Personal Loan Interest Rate | 10.95% – 16.40% |
| IDFC Personal Loan Interest Rate | 10.99% onwards |
| Yes Bank Personal Loan Interest Rate | 10.99% onwards |
| Navi Personal Loan Interest Rates | 9.90% – 45.00% |
| Union Bank Personal Loan Interest Rates | 11.35% – 15.45% |
| Indian Bank Personal Loan Interest Rate | 10.00% – 15.00% |
| Bank of India Personal Loan Interest Rate | 10.85% – 14.85% |
| Tata Capital Personal Loan Interest Rate | 10.99% onwards |
| Kotak Personal Loan Interest Rate | 10.99% onwards |
| Bandhan Bank Personal Loan Interest Rates | 11.55% onwards |
A Personal Loan EMI Calculator assists consumers in estimating their monthly payments for personal loans. This online tool allows users to swiftly calculate the interest costs and total payable amount for different loan amounts, interest rates, and tenures. Additionally, it helps consumers choose the optimal loan tenure based on their repayment capacity, enabling better loan repayment planning.
To calculate the EMI on your personal loan, you can use the formula:
EMI=P×R×(1+R)N(1+R)N−1\text{EMI} = \frac{P \times R \times (1+R)^N}{(1+R)^N – 1}
where:
Manual calculations can be error-prone, complex, and time-consuming, so using an online personal loan EMI calculator is preferable. This calculator requires only a few basic details such as the interest rate, loan amount, and loan tenure.
Once these details are entered, the EMI amount is calculated instantly. Additionally, the calculator provides the total interest amount and an amortization schedule for easy reference.
Given below are a few personal loan schemes offered by some of the leading banks and NBFCs in India:
| Bank | Best For | Key Highlights |
|---|---|---|
| HDFC Personal Loan | Self-Employed Professional |
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| Kotak Mahindra Personal Loan | Quick Turnaround Time |
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| Tata Capital Personal Loan | Flexible Interest Rates |
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| Standard Chartered Personal Loan | Short-term Requirement |
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| IDFC First Personal Loan | Top-Up Loans |
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| SMFG India Credit Personal Loan | Quick Approval |
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| IIFL Personal Loan | Easy Eligibility Checks |
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| HDBFS Personal Loan | Special Offers |
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| SBI Personal Loan | Different Income Categories |
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| PNB Personal Loan | Affordable Interest Rates |
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| Yes Bank Personal Loan | Quick Approval |
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| Union Bank of India Personal Loan | Suitable for first time borrowers |
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| IndusInd Bank Personal Loan | Flexible tenure |
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| IDBI Bank Personal Loan | Simple application process |
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| Axis Bank Personal Loan | Minimum documentation |
|
Personal loans are a popular choice for financing lifestyle needs and covering fund shortages due to their ease of access, minimal paperwork, and fast disbursal process. Here are the key features and benefits of personal loans:
In addition to standard personal loan schemes, many banks and NBFCs provide various personal loan variants to cater to specific financial needs. These variants typically offer similar features such as tenure and processing fees as regular personal loans. Here’s a brief overview of some personal loan variants:
Instant Personal Loans are typically pre-approved with immediate disbursals. Banks and NBFCs offer these loans to select customers based on their credit profiles.
Short Term Personal Loans have repayment periods ranging from a few days to 12 months, making them ideal for smaller loan amounts. These loans are often processed entirely online, ensuring fast approval and disbursal.
Pre-Approved Personal Loans are offered to existing customers by banks and NBFCs based on factors like credit history, income, and employer’s profile.
The Personal Loan Balance Transfer (PLBT) facility allows borrowers to transfer their outstanding personal loan to a new lender for lower interest rates or better terms. Opt for this only if the savings from the transfer exceed the transfer costs.
Top Up Personal Loans are available to existing personal loan borrowers who need additional funds. This facility is usually offered to borrowers with a satisfactory repayment history or those who have completed a specified number of EMIs.
Personal Loans for Education are designed for individuals needing funds for higher education in India and abroad, vocational courses, and more, especially if they cannot secure a traditional education loan.
Personal loans can be utilized for a wide range of purposes, excluding speculation or illegal activities. Borrowers can use the funds for medical emergencies, home renovations, weddings, vacations, business operations, and more. Additionally, these loans can help manage everyday expenses, cover higher education costs (including courses not eligible for traditional education loans), and consolidate multiple high-interest debts.
Although the fees and charges for personal loans can vary significantly based on the lender and the applicant’s credit profile, the table below provides a general overview of the typical fees and charges imposed by 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 |
Lenders may also impose additional fees and charges, such as documentation fees, verification charges, duplicate statement fees, and charges for obtaining a No Objection Certificate (NOC).
Personal loan eligibility criteria can differ significantly between lenders due to their distinct credit risk policies. Additionally, these criteria may vary based on the loan variant and the applicant’s occupation profile. Here are some common personal loan eligibility criteria used by most lenders:
Banks and NBFCs assess an applicant’s personal loan eligibility based on factors like age, credit score, income, loan repayment capacity, occupation profile, and employer’s profile. Given the varying credit risk policies, eligibility criteria can differ across lenders.
Applicants can check their eligibility for a personal loan by visiting the branches or websites of various banks and NBFCs. Alternatively, applicants can visit Makaan Finance and fill out a simple form to connect with us. Meanwhile, they can check and compare personal loan offers from multiple banks and NBFCs based on their profiles.
When applying for a personal loan, lenders require various documents to verify the applicant’s identity, income, loan repayment capacity, and place of residence. These required documents are generally consistent across different lenders. Here are some common documents you will need to submit:
| 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 |
Securing a personal loan can be facilitated by understanding its unsecured nature, which heightens credit risk for lenders due to the absence of collateral. To enhance approval prospects, banks and NBFCs scrutinize applicants’ credit profiles and adhere to stringent eligibility criteria. Consider these tips to increase your chances of securing a personal loan:
Maintain a High CIBIL Score: Aim to keep your CIBIL score above 750, as this enhances credibility with lenders.
Review Your Credit Report: Check for inaccuracies that could negatively impact your credit score and potentially hinder loan approval.
Compare Loan Offers: Before committing, compare personal loan offers from various banks and NBFCs to find the best deal.
Choose the Right Lender: Apply with a bank or NBFC where your approval odds are highest based on your credit profile.
Avoid Multiple Applications: Refrain from submitting multiple loan applications in a short period, as this can negatively affect your credit score and raise concerns with lenders.
Before you apply for a personal loan, it’s essential to be aware of the following:
Pre-Approved Loan Offers: Many banks and NBFCs extend instant pre-approved personal loan offers to their existing customers based on their credit profiles. These offers often come with quick disbursals and minimal documentation requirements. Additionally, existing customers may also benefit from lower interest rates.
Impact of Credit Score: A higher credit score (750 and above) significantly improves your chances of loan approval and may qualify you for lower interest rates. It also enhances eligibility for pre-approved loan offers.
EMI Affordability: Opting for a longer loan tenure can lower your Equated Monthly Installments (EMIs). This flexibility allows borrowers to adjust their EMI payments according to their financial capacity by choosing longer tenures or smaller loan amounts.
Prepayment and Foreclosure: RBI regulations prohibit banks and NBFCs from charging prepayment or foreclosure fees on floating rate personal loans. However, for fixed-rate loans, lenders may apply such charges at their discretion.
Impact of Multiple Applications: Applying for multiple loans within a short period can negatively impact your credit score. Lenders typically conduct hard enquiries on credit reports for each application, potentially lowering your credit score and reducing your chances of loan approval.
You can apply for a personal loan by visiting your preferred bank or NBFC branch, or through their official website, internet banking platform, or mobile applications.
Interest rates on personal loans start from 10.49% p.a., depending on your credit profile. Public sector banks may offer lower rates to personal loan applicants.
Many lenders offer pre-approved instant personal loans to existing customers with good credit profiles. Check for pre-approved offers with your existing banks and compare offers from various lenders on online financial marketplaces.
A credit score of 750 and above increases your chances of getting a personal loan. Some lenders also offer loans to individuals with lower scores but may charge higher interest rates.
Personal loan tenures typically range from 1 year to 5 years, with some lenders offering extensions up to 6 to 8 years.
Instant personal loans are pre-approved and disbursed quickly, often within minutes of application, for select existing customers with good credit profiles.
Minimum monthly salary requirements vary by lender, with top banks typically requiring Rs. 15,000 and above per month.
Yes, you can submit alternative income proofs like bank statements, Form 16, or employer certificates to qualify for a personal loan.
Yes, you can apply for a personal loan alongside an existing home loan, provided you demonstrate sufficient repayment capacity.
Prepayment charges may apply to fixed-rate personal loans, but not to floating-rate loans as per RBI regulations.
Cancellation terms vary by lender. Generally, cancellation incurs charges and processing fees. Prepayment is usually a more viable option.
Eligible loan amounts vary by lender. Use online financial marketplaces to compare offers based on your repayment capacity, interest rates, and tenure.
Some lenders offer personal loans to individuals with lower incomes. Check online marketplaces for eligibility based on your current income.
Personal loans are typically unsecured, requiring no collateral. Secured options are available but usually require collateral for higher-risk borrowers.
Pros include flexible usage, minimal documentation, and quick processing. Cons include higher interest rates and shorter repayment periods compared to secured loans.
Yes, you can have personal loans from multiple lenders, subject to each lender’s approval based on your repayment capacity and credit profile.
Students can apply if they meet lenders’ eligibility criteria for age, income, and credit score.
Yes, personal loan proceeds can fund business needs, excluding speculative activities.
You can make overdue payments online through bank platforms, UPI, NEFT/RTGS, digital wallets, or visit the branch for offline options like cash or cheque.
Yes, pensioners can get personal loans, known as pension loans, if they maintain a pension account with the lender.
Your lender will issue a no-dues certificate upon full repayment of your personal loan.
