What Is Personal Loan?

  • An unsecured loan that helps to meet a person’s current financial needs is called a personal loan.
  • There is no need to provide any security or collateral while availing it.
  • The personal loan provides you with the opportunity to use the funds as per your convenience and need.
  • For availing a Personal Loan, you need to first check the eligibility criteria. For this, you can visit your nearest bank and apply for a personal loan to finance your needs.
  • To calculate the EMIs for the personal loan and also make sure that you maintain a good credit score to avail of personal loans without any difficulties.
  • There is flexibility while seeking a personal loan as a person can use the amount as per his capacity and according to his convenience.
  • If a person applies for the personal loan, he can use the personal loan for fulfilling any purpose be it buying a house or a car or even for buying groceries or paying bills, etc.

Purpose of personal loan

Personal loans can be availed for any financial purpose. Even the banks which provide personal loans will not go on to monitoring its use. A personal loan can be used for various purposes

  • Buying furniture for decorating your home
  • Marriage purposes
  • Children’s education fee
  • Purchasing any phone or any other electronic gadgets or
  • For paying off medical expenses and for various other personal needs.
  • Buying a new car or paying car’s EMIs
  • Investing in new business
  • Investing in share market
  • Paying house-related expenses, etc.

Eligibility criteria for availing personal loan

Eligibility criteria for a personal loan vary from bank to bank, however, it includes

  • Your occupation
  • Income from the occupation,
  • Capacity to repay the loan on time,
  • Age, and
  • Place of residence.

General eligibility criteria to avail a personal loan

  • A person should be self-employed or a salaried individual or a professional.
  • A person should have a regular income for any business or salary to repay the loan.
  • His employment with the company he is working with.
  • The credit history of the person with the banks, etc.

The eligibility for the salaried individuals

  • Their age must be between 23 – 58 years for a salaried individual.
  • However, the different banks have their own criteria which are more or less the same in all the banks.
  • The person should have a net salary of rupees 3,50,000  per annum while their total time in the job must be between 1 to 2 years.

The eligibility criteria for self-employed individuals

For self-employed individuals, their age must be between 28 to 65 years. Having the net salary of rupees 4,80,000 and above per annum while their total time in business must be between 4 to 5 years.

Documents required to be furnished

Salaried Individuals

  • Bank Account Statement
  • Latest Electricity Bill
  • Telephone Bill
  • Credit Card Bill
  • Employers letter certifying current mail address.
  • Passport (Valid) – provided the passport address is the present address. Mentioned in the application form.
  • Existing Registered House Lease.
  • Government I-card with a photograph.

Self-Employed Individuals

  • Bank Account Statement
  • Electricity Bill
  • Telephone Bill
  • Credit Card Bill
  • Employers letter certifying the current mailing address.
  • Passport(Valid)

Types of personal loans

There are various types of personal loan

Festival Loans

  • India has various states and various people from different religions, different castes who speak different languages, and also celebrate different festivals.
  • India is rich in its cultural heritage and traditions. Every person celebrates festivals in his own way according to his/her own culture and practices.
  • The celebrations a festival in a good way money is needed.
  • To avoid any kind of inconvenience regarding the money, you can opt for festival loans. You can take a festival loan from the bank and pay it back in easy EMIs.

Home Renovation Loan

  • If you want to renovate or upgrade your house, a huge amount of money will be needed.
  • Designing your house the way you want it to be may put you under financial burdens.
  • To avoid this burden you can apply for a home renovation loan from the nearest bank.

Wedding Loan

  • For conducting a wedding a huge amount of money is needed.
  • Although everyone dreams to have a grand and royal wedding.
  • You need to choose good options among venues, invitation cards, jewelry, etc.
  • To cope up with all these money-related aspects you can plan a wedding loan for yourself to get the best things you always wanted to have at your wedding.

Holiday Loan

  • Whenever a person plans a holiday with his family or loved ones it leads to a disturbed budget.
  • Instead of being under the burden of demanding money from a relative or a friend you can simply go for a holiday loan.
  • You can take a holiday loan and go to your favorite destinations and pay the loan in easy EMIs.

Unsecured Business Loans

  • Who doesn’t want to achieve growth for his business? Business loans are the perfect solution to develop the business.
  • You can take unsecured loans, and also you do not require any collateral security.
  • These loans are granted on the repayment capacity of the business which is indicated by the ITR filing and creditworthiness of the business.
  • These are short-term-loans that have short repayment time but are most suitable for a business person.

Duration of personal loan

  • The maximum duration given for personal loans can be 1 year to 7 years or 12 to 60 months.
  • However, it depends on banks and your previous credit history and your profession according to which longer or shorter tenures may be allowed.
  • For example, some banks offer it for a maximum of four years for salaried individuals, but doctors and dentists can avail it for five years.

Disbursing money for a personal loan

  • Bank disburses the money within 7 working days of the loan application to the lender.
  • Once the bank approves your loan amount, the money could be deposited automatically into your savings account digitally or you may soon receive an account payee cheque or draft equal to the loan amount.
  • Honestly, the disbursing of money for the personal loan depends upon the bank in which you apply for the loan amount because banks may take time to approve your loan amount depending on your eligibility.

The loan amount that one can borrow

  • Bank in which you apply for the personal loan will see whether you are salaried or self-employed, and will also look into the regular income you generate through the business or the job.
  • Therefore, the loan amount will be determined by your income.
  • Generally, the banks will restrict the loan amount so that your EMI is not more than 40 to 50% of your monthly income.
  • Your previous credit score for repayment of the loan will also be considered while calculating the personal loan amount.

Minimum loan amount

There is a minimum loan amount for every bank. Though the exact loan amount varies from banks to banks. However, most of the banks have set their minimum personal loan principal amount at rupees 30,000.

Select the Bank for loan

  • Every person before applying for a personal loan should visit various banks to compare the offers and policies of banks. Various Banks like
    • HDFC
    • ICICI
    • Axis Bank
    • Citi Bank
    • Induslnd Bank
    • Standard Charted Bank provides personal loans to individuals.
      • You need to consider some points when deciding on a bank that includes their eligibility criteria, documents required, their policies for repayment of money, interest rates, processing fees, EMI’s, etc.

Short-Term personal loans

  • There are digital lending apps for a short-term personal loan like
    • CASHe
    • Payments
    • StashFin
    • Shubh Loan, and
    • Early salary.
  • These platforms provide for a short-term personal loan to salaried professionals who cannot approach the banks for small-value personal loans.
  • The rising demand for small-value personal loans has led to the creation of these apps. Such lenders provide instant loans with various attractive repayment schemes.
  • The advantage of such short-term personal loans from such platforms is their quick disbursal.
  • However, these apps do not ask for much paperwork and almost 90 percent of the process happens through the mobile application.
  • Only 10 percent of the paperwork part includes post-dated cheques and physical signatures.

How to get a personal loan quickly

Maintain a good credit score

  • To get quick approval for the personal loan, you will have to maintain a good credit score which is based on your credit history.
  • A credit score closer to 900 is excellent and your loan will be approved quickly. But a credit score closer to 300 reduces your chance of getting a personal loan approved.

Choose the appropriate bank

  • Various banks are providing the personal loan, based on their own policies and more or less similar eligibility criteria.
  • Even if a bank provides you a personal loan, you will have to look at the interest rates, loan tenure, loan amount, pre-payment/foreclosure charges, processing fees, etc. before you decide on a personal loan offer.

Carefully decide on the loan amount

  • The higher the loan amount more are the chances of your application for getting rejected.
  • Because banks take various cautions while approving the loan application of big amounts and also banks are careful while giving loans to people who pay multiple EMIs.
  • Also in cases where the bank is willing you to provide a higher loan amount, you need to think carefully about the amount you actually require.

Submit original documents

  • The personal loan does not require much documentation.
  • Even then you need to take care that all the documents you attach with your personal loan application are original so that you do not face inconvenience in getting a personal loan from the bank.

Pre-Payment of personal loan

  • If you are of the mood to making full payment of your personal loan before time, then you must do it in earlier stages because you will be able to save more interest amount.
  • The earlier you pay, the more you will be able to save on the overall interest payment.
  • However, most of the banks have a lock-in period of one year, after which you can pay off the entire outstanding amount.
  • You should also look at the prepayment charges lived by the banks which varies from bank to bank.

Part Payment of personal loan

  • If you cannot make full payment of the personal loan, you can use your extra money for the part-payment of your personal loan.
  • Banks charge interest on the outstanding amount, this will help you to make considerable savings when the principal comes down.
  • Therefore, it is good to make part payment when you have the extra money in your pocket because it will help you to save enough. And the important thing about the part-payment is that you can do it many numbers of times.

Top Banks for a personal loan

  • The personal loan is basically an unsecured loan that is given by the bank to meet the loan applicant’s personal needs.
  • Repayment is usually through fixed EMIs over a fixed term.
  • There is no restriction on the person who gets the personal loan on how to use it.
  • You can see the list of various leading banks for personal loans.

Punjab National Bank 

  • PNB offers personal loans under two categories: Personal loans for public and personal loans for pensioners.
  • Laon offered by PNB bank is suitable for defense personnel, central/state government employees, and self-employees professionals.
  • The loan amount from the bank ranges from Rs. 25,000 for pensioners and Rs. 50,000 for non-pensioners to Rs. 40 lakhs.
  • PNB offers personal loans at interest rates starting from 11.90%.
  • PNB bank officials may consider the income of the spouse while calculating the repayment capacity loan amount approved.
  • For more details, you can visit PNB website:https://www.pnbindia.in/personalloanforpublic.html,


  • The HDFC bank offers personal loans interest rates starting from as low as 10.99%.
  • Most beneficial for salaried and self-employed individuals.
  • Processing is very quick and has become a top choice among applicants who apply for personal loans in India.
  • HDFC Bank provides special offers on interest rates.
  • In certain cases bank has also waived the loan charges.

State Bank of India

  • SBI prefers giving out a personal loan to a salaried person or self-employed individual
  • Personal loan categories under SBI bank are SBI Xpress Credit loan, SBI Saral Personal loan, Loan to pensioners, and SBI Festival personal loan. For more information on these loans, you can visit the SBI website: https://www.sbi.co.in/
  • SBI is the biggest trustworthy bank in the nation and therefore personal loans from SBI can be the right choice.
  • The maximum loan amount approved under SBI personal loan scheme may go as high as 25 times the individual’s monthly salary.
  • The interest rates of SBI personal loans range from 12.45% to 14.95%
  • SBI bank is a suitable bak for the loan as it has many branches across the country.


  • This bank charges interest rates are as low as 11.29%.
  • It offers personal loans under three key categories which are holiday loans, wedding loans, and home renovation loans.
  • Also, it offers loans to both salaried and self-employed individuals.
  • Bank has made the documentation process very easy and also has simple repayment options.