How to judge the Best Personal Loan in India and apply online

Personal LoanPersonal Loan

Planning a holiday abroad, higher education for your child, home renovation, a marriage in the family, repayment of higher rate existing loan or a pleasant surprise (precious gift) for your loved one, with Personal Loans, you don’t have to worry about financing your dreams and responsibilities.

Personal Loan can be availed without any collateral or security for a fixed period of time at a fixed rate of interest. An applicant has to provide his income documents along with his KYC documents. A personal can be availed by a salaried person, businessman, professional like doctor, CA, engineer etc.,

Looking for a Personal Loan? Calculate your EMI in Easy Steps Using our Personal Loan EMI Calculator.

Salient Features and Advantages

If you want to fulfil your dreams or be ready to face exigencies head-on, personal loan is the perfect match for you.

Let us note the benefits of a Personal Loan

  • No Collateral required: Collateral is the asset which the banks take while giving a loan. Immovable Property, Fixed Deposit, Insurance, Mutual Funds, Gold etc are few forms of collaterals accepted by banks for giving a loan. A Personal Loan is a collateral free loan in which you do not have to offer any of your assets to secure the loan. For this reason, Personal Loan is also called Unsecured Loan.
  • Multipurpose: It is not just you who does multi tasking, your personal loan can also be used for multiple tasks. Be it a family wedding, your child’s higher education, renovation of your home or even retiring an existing loan with the higher interest rate, a Personal Loan can be put to use for any personal use.
  • Easy Repayment: The repayment of Personal Loan is done by way of Equated Monthly Instalments (EMIs) through ECS, Online NEFT payments, Post-dated cheques. With loan tenures as long as six years, personal loan EMIs are easy to pay.
  • Less Paperwork: As compared to any other loan, Personal Loans do not have much of paperwork. Even online loan approvals are also being given now if you upload the required set of documents and use Aadhaar based e-KYC.
  • Affordable Interest Rates: Fierce competition in Personal Loans segment has made the interest rates really affordable. You can check the rate of interest online in a few clicks.

Eligibility Criteria and Documents Required

Eligibility criteria of Personal Loans differs from bank to bank. The documents required are more or less the same. Some of the common parameters for Personal Loans are:

  • Eligibility Criteria for Salaried Applicants
    • Banks target employees of Multinational Companies(MNCs), PSUs, State or Central Govt and Large Private Limited companies having work-experience of at least 2 years
    • These employees should be in the age group of 21-58 years
    • They should be drawing a minimum net monthly salary of Rs.20,000
    • The loan amount ranges from Rs.50,000 to Rs.15,00,000
    • Tenure extended in between 1yr to 6 years
  • Documents required for salaried applicants for Personal Loan
    • Identity Proof(any one)
      • Aadhaar Card/Voter ID/Passport/PAN Card/Driving License etc
    • Address Proof(any one)
      • Passport, Aadhaar Card, Latest Telephone or Electricity bill/Ration Card etc
    • Income Proof
      • Last 3 months payslip
      • Last 6 months Bank Statement in which salary is being transferred by employer
      • Last 2 years Form-16 issued by the employer
  • Eligibility Criteria for Self-employed Professionals
    • Banks target self-employed professionals like Doctors, Chartered Accounts, Engineer etc  practicing for at least 3 years
    • These professionals should be in the age group of 25-65 years
    • They should have filed Income Tax Return(ITR) of minimum Rs.200,000 per year
    • The loan amount ranges from Rs.300,000 to Rs.20,00,000
    • Tenure extended in between 1yr to 4 years
  • Documents required for self-employed professionals for Personal Loan
    • Identity and Entity Proof
      • Aadhaar Card/Voter ID/Passport/PAN Card/Driving License etc
      • Sales Tax or Service Tax Registration number(TIN)
      • Proof of Highest Professional Degree
    • Address Proof(any one)
      • Passport, Aadhaar Card, Latest Telephone or Electricity bill/Ration Card etc
    • Income Proof
      • Last 6 months Bank Statement in which the professional receipts are being transferred
      • Last 2 years Income Tax Return(ITR) along with the computation of income, Balance sheet(B/S) and Profit& Loss(P&L) certified by a CA.
  • Eligibility Criteria for Self-employed Non-Professionals(Businessman)
    • Banks target businessmen who are in the trade for at least 3 years
    • They should be in the age group of 25-65 years
    • They should have filed Income Tax Return(ITR) of minimum Rs.200,000 per year
    • The loan amount ranges from Rs.75,000 to Rs.20,00,000
    • Tenure extended in between 1yr to 4 years
  • Documents required for self-employed professionals for Personal Loan
    • Identity Proof(any one)
      • Aadhaar Card/Voter ID/Passport/PAN Card/Driving License etc
    • Address Proof(any one)
      • Passport, Aadhaar Card, Latest Telephone or Electricity bill/Ration Card etc
    • Entity Proof
      • Trade License/Sales Tax Certificate/Establishment. Certified copy of Partnership Deed incase of partnership firm, Memorandum of Association(MOA), Article of Association(AOA) and Board Resolution incase of a company
    • Income Proof
      • Last 6 months Bank Statement in which the sales turnover or income is being routed
      • Last 2 years Income Tax Return(ITR) along with the computation of income, Balance sheet(B/S) and Profit& Loss(P&L) certified by a CA.

Interest Rates are as low as 10.99% on Personal Loan

Personal loans are handy when it comes to meeting unexpected expenses or exigencies. In a personal loan, you should look for lowest rate, processing fee, and minimum prepayment charges.

The interest rates on personal loans offered are between 10.99% to 19% p.a.

Personal Loan Interest rates for a particular applicant is determined – applicant’s current monthly salary, income and job stability, profession, total work experience, employer category, age, existing loan EMIs, past loan repayment history, etc. For example, someone with a stable, well paying job with high credit score is considered to be a safe borrower and so the rate of interest offered to him/her will be relatively low.

Banks have categorised employers of applicants into different categories. The interest rate is also determined by the category of your employer. These categories are Super Cat-A, Cat-A, Cat-B and unlisted.

First time borrowers having no credit history also face difficulty in getting Personal Loan as the banks find higher risk attached to such kind of borrowers.

As a borrower, it’s always your endeavour get a personal loan at the lowest possible interest rate. Interest rate plays a major role in deciding the bank from which you wish to take a personal loan.

You can check out our personal loan EMI calculator, enter the amount, the interest rate (making an informed guess) and the tenure. You’ll get an idea of the EMI you need to pay.

Also read : Five most common mistakes while looking for a Personal Loan

What are the costs associated with a Personal Loan?

Personal from any bank or NBFCs carries some charges. Evaluation of these charges also play an important role in deciding the best personal loan deal.

  • Processing Fee:

    This fees is charges as a percentage of the loan disbursed. This is highly negotiable and at times waived by banks for applicants with excellent credit history, good profile and working with Super Cat-A employers.

  • Part Prepayment/Foreclosure Charges:

    • Part payment permissible usually only after 6 month of seasoning
    • Some lenders allow maximum 25% of outstanding loan as part-prepayment (without any charges) in a year. 2% of prepaid amount is charged beyond that.
    • Banks like IDBI Bank allow part prepayment or foreclosure after 6 months without any charges and charge 2% incase of part-prepayment or foreclosure requested within 6 months from the date of disbursement.
  • Delay in Payment Charges:

    Usually 2% charge is levied on the overdue amount every outstanding month over the prevailing interest amount for delays in payment of EMIs

Balance Transfer and Top-up on Personal Loan

Customers can also opt for Top-up loan on Personal Loan if they have a clean repayment track record of minimum 12 months. Alternatively, if they get a better rate of interest from other banks, balance transfer with top-up on Personal Loan can also be availed by borrowers.

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Amritha

Thanks for very good information to borrow personal loan. This information helped me a lot to opt for personal loan.

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Team Gullakh

Thanks Amritha for the compliment. Please share it on your FB timeline, it really encourages.

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