Need a Personal Loan?

A Personal loan is an unsecured credit given to meet current financial needs. Individuals needing funds for lifestyle or emergency needs can apply to leading banks and NBFCs.

A Personal loan is conveniently processed using readily available documents. Salaried employees and Self-employed persons with a regular income can readily secure funds when required as a Personal loan.

To get a Personal loan, a loan seeker needs to apply to a lender; leading Personal loan givers are HDFC Bank, ICICI Bank, Axis Bank, and Kotak Bank.

After processing, the approved loan amount is transferred to the applicant’s bank account in a single transfer. These funds can be used as needed, without any restrictions.

The borrower must repay the loan amount, including interest, to the lender in equal instalments over a fixed term. As a Personal loan requires no security to receive funds, lenders seek surety of repayment via verification and documentation.

Any citizen of India aged 21 or above with a regular income of 25,000/- or more is eligible to apply for a Personal loan. The applicant should have a Bank account to show consistent income and valid documents to prove identity and contactability.

Though the essential criteria are similar, Lenders offering Personal loans can specify their terms and conditions for the segment they are ready to serve.

Funds received as a Personal loan are meant to realise lifestyle expenses. They can be used for various purposes such as family celebrations, vacation expenses, school fees, and even debt consolidation. Medical emergencies and hospital expenses can also be met with a Personal loan.

A valid reason must be provided when applying for a Personal loan; if the purpose is deemed invalid, the application may be rejected. The loan amount cannot be used for investments or nefarious activities.

With digitalisation, Banks have been speeding up processes. Advertising a” Personal loan in 10 seconds,” which may not work for most applicants, the turnaround time has been reduced, particularly for applicants with a pre-approved offer or a salary account.

The average application process time for a Personal loan is 3 to 5 working days, from application to receiving funds.

No charges are to be given upfront when applying for a Personal loan, neither in cash nor by a banker’s instrument. Banks and NBFCS charge fees on the approved loan amount after the application is processed.

The processing fees range from 0% to 2.5% of the disbursed loan amount, depending on the policy. This amount is deducted from the approved and transferred loan amount and transferred to the Bank account.

The minimum amount given as a personal loan is ₹ 50k, and the maximum is ₹ 35 lakhs.

An applicant is free to apply for the amount needed, but it is the lender's prerogative to decide the loan amount to be issued. Banks and NBFCS that forward personal loans use their own matrices to calculate loan eligibility.

The primary concerns are the loan's affordability and the borrower's ability to repay the monthly instalment.

Personal loans are not taxable, as they are borrowed funds to be repaid with interest.

The GST @ 18% applies to process fees and any amounts imposed as penalties, such as unrealised cheques and delayed monthly instalment payments.

GST is also payable on all extra services provided by the Bank in connection with a Personal loan, such as duplicate statements, a change of Bank for instalment payments, and foreclosure penalties.

• Funds received as a Personal loan are deposited as a lump sum in the applicant’s Bank account.
• The repayment is made via EMI (equated monthly instalments) over a tenure of 12 to 60 months.
• The EMI comprises the principal & interest amounts, which are deducted automatically by ECS (Electronic Clearing Services) on a designated date, making payment convenient and stress-free.

The CIBIL (Credit Information Bureau of India Ltd) records and shares individuals' credit transactions, including the number of loans and credit cards, as well as the payments made toward them.

• To quantify the credit record, the CIBIL generates a score, up to 900 points, for the individual based on the credit history.
• A credit score of 720 or above is considered acceptable for processing a personal loan.
• Financial institutions use your credit history and score to determine whether to lend you money or how much.

Banks are keen to deal with individuals with a good CIBIL score, as it reassures them of timely repayments.

A Personal loan is a loan taken from a Bank or an NBFC when needed. It has numerous advantages.

• A Personal loan is unsecured and granted without collateral, based on income and KYC documents.
• Funds from a personal loan are quick to receive in an emergency, and processing takes 72 hours or less.
• The interest rate for a personal loan is low compared to other credit sources, and the repayment tenure is flexible.
• A personal loan helps to consolidate all debts under a single umbrella and build a good credit score.

Borrow wisely for the Usage of a Personal loan, as, if not appropriately managed, the cons listed below can outweigh the pros.

• Interest on the outstanding loan amount will be charged daily for non-payment of an EMI. In addition, penalties will be levied for bounced payments or EMI return charges, further adding to expenses.
• The CIBIL score will be inversely affected by repayment delays; the loan track will show the EMI return and the number of days after which the payment was cleared.
• An applicant who wants to repay the loan before the end of the tenure must adhere to the lender's terms and may incur a penalty on the principal repaid to close the loan.

Personal loans are unsecured, and no collateral or guarantee is required. Banks provide short-term funds through Personal Loans for individual use, based on the applicant's ability to pay the monthly instalment and credit rating.

Personal loans are advertised as quick funds provided by Banks and NBFCs to salaried and self-employed persons. With online digital processing and verification, the personal loan process has been streamlined to provide funds in as little as 48 to 72 hours.

Applicants can apply online from the comfort of their homes or submit hard copies of the documents. The documents received are processed digitally at the Bank's central hub, with physical verification if required. The decision is communicated to the customer via email or SMS.

Any issues the applicant may have can be resolved by contacting the lender's customer service. Therefore, a branch visit is unnecessary unless the applicant's signature does not match the Bank's records.

The instalment for the personal loan repayment will be presented to your salary account on a fixed date every month. The EMI date is set by the Bank close to the date your salary is credited. In case your salary is not credited by the due date, you must maintain the balance required to clear the EMI.

The personal loan EMI date set by Banks is as follows:

• The applicant is informed about the personal loan amount sanctioned by the Bank.
• The customer signs an agreement accepting the loan terms and conditions.
• The terms include the Interest Rate, Processing Fees.
• The Loan amount is then transferred electronically to the customer's salary account.
• The processing fees and pre-EMI charges are deducted from the loan amount.

• A personal loan is conveniently repaid via an EMI (equated monthly instalment).
• The EMI is fixed based on the Loan Amount, Rate of Interest, and repayment tenure.
• The instalment for your personal loan will be automatically deducted from your salary account through ECS (electronic clearing services).

• The interest rate for a personal loan is calculated on a reducing balance.
• Each instalment consists of the principal amount and the interest component.
• Thus, the interest is applied to the principal amount balance.

• The interest rate and instalment are determined at the time of approval.
• They remain fixed for the entire duration of the Personal Loan.
• The interest rate, once fixed, does not change with the market fluctuations.

For the part payment and foreclosure of your Personal Loan:

• Additional amounts can be paid towards the principal loan amount, subject to the terms of the Parent Bank.
• As per the norms of HDFC and ICICI Bank, the lock-in period is 12 months.
• A partial or complete payment of the loan before the end of the tenure may be charged.
• The foreclosure charges for loan amounts of ₹ 10 lakhs and above are nil after 12 months.

• All Banks and NBFCs offer insurance coverage for Lending of unsecured Personal Loans.
• The terms include coverage for life, accidents, illness, or inability to repay EMI due to loss of employment.
• The charges vary with the Loan amount and loan tenure.
• The insurance amount can be paid in one lump sum or added to the monthly EMI.

• A personal loan is issued to self-employed persons for business and individual usage.
• Unsecured amounts from ₹1 lakh to ₹ 35 lakhs are issued as business loans.
• The applicant must fulfil the Bank's eligibility criteria for self-employed persons.
• KYC, Income Tax returns, and other business-related documents are required.
• The residence or office premises must be self-owned.

Banks offering low-interest personal loans include:

• HDFC Bank.
• ICICI Bank
• AXIS Bank
• YES Bank.

The lowest interest rate is offered to the following individuals:

• Applicants working with the listed companies in the upper-tier categories Super A, A and B.
• Applicants with a CIBIL score of 720+ are liable to get a lower interest rate.
• Applicants issued loan amounts of ₹ 10 lakhs and above will be given special rates.

• A customer can apply for an additional personal loan when required, from the same lender or an alternative lender.
• As a top-up to the existing loan or as a secondary or parallel loan.
• An additional loan can be granted from the same or an alternate Bank.
• A three to six-month gap is required before applying for a secondary personal loan.
• The number of personal loans an applicant is granted depends on the applicant's eligibility criteria.
• The maximum number of personal loans an applicant can run simultaneously is 3.

It is advisable to check your eligibility using a personal loan eligibility calculator to get an approximation of the loan amount you are eligible to get. The Bank will determine final eligibility, process the application, and issue the loan amount.

• A Pre-EMI is the amount deducted by the Bank from the Personal Loan amount approved and disbursed from the 23rd to the 30/31 of every month.
• The Pre-EMI covers interest for the extra days, as the instalment for repayment will be debited from the Bank account after 30 days on the 5th, skipping a month after the loan disbursal.
• For example, if your personal loan is credited to your account on June 24th, interest for 6 days will be deducted from your loan amount before disbursal. Thus, the first instalment will be credited to your account on the 5th of August, and thereafter for the number of months as per the designated tenure.

Once the personal loan amount is credited to your account, applicants often forget to retrieve the essential documents they are to receive from the Bank, which include the loan details. These documents are vital and may be required in the future if you want to make any changes to your loan. Getting duplicates may cost you and can be an onerous task.

On approval of your loan, you will receive an email/SMS informing you of the decision, the loan amount approved, with details that include:

• The loan amount was approved.
• The interest rate.
• The repayment tenure.
• The processing fees.

At this juncture, the applicant can request a review of the loan amount, additional funds, a lower interest rate, or a change in tenure, along with processing fees.

Upon acceptance of the terms, the applicant can download and e-sign the agreement, and after that, the funds will be transferred to the salary account.

The welcome kit and documents are issued post-disbursal, either electronically or in hard copies sent to the residence address. These include:

• Copy of the Agreement, giving details of the loan, the monthly EMI due date and other legal implications that include the fees, foreclosure, part payment terms, and delay penalties.
• Repayment schedule: Provides the tenure details and the monthly EMI to be paid, helping track the total number of EMI payments applicable.
• Amortisation track: Contains the break-up of each EMI with the interest and principal amount to be paid with each EMI. The table provides a clear picture of the interest amount payable and the principal balance due after each EMI is repaid.