Personal Loan

When a little more is all that you want…..
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  • When you must go on that magical vacation
  • When you have plans to renovate your home
  • When you want to go for higher studies
  • When you face an unexpected emergency
  • A little more cash in hand could make the path smoother.

What is a Personal Loan?

Personal loans are any purpose loans which are given without any collateral or guarantor. This is a very unique loan product wherein the borrower is at his/her discretion to do whatever they need. In other words, unlike a car loan or a housing loan, a personal loan can be used by the borrower for any of his/ her personal needs. There is no restriction for the usage of such loans though it should not be used for speculative purposes and investment in tax saving instruments.  The loan can be repaid like all other loans through the equated monthly instalment (EMI) process where a fixed amount is paid each month.

Personal Loans has the following features:

  • They are provided without any specific purpose.
  • They are given without a collateral or guarantor.
  • They come at an attractive rate of interest.
  • They are relatively short term loans vis a vis other loans(i.e 3 to 5 years)
  • Personal Loan can get disbursed as fast as 24 hrs if the documents are in order.

Personal loans are currently offered from Rs 50,000 to Rs 50 Lakhs and are typically repaid in tenures ranging from 1 to 5 years.

Higher Loan Amount + Least Loan Tenure = Low Interest Amount

Documents Required for Personal Loan:

The general list for obtaining a Personal Loan are as follows:
  1. Photograph
  2. Identity proof
  3. Address proof
  4. Income proof
  5. Bank Statements
  6. Continuity Proof
  7. Qualification proof( applicable only for Self Employed Professionals)
Identity Proof (Any one of the following)
  • Copy of PAN Card
  • Copy of Passport
  • Copy of Driving Licence
  • Copy of Government ID card
  • Copy of Voter ID card
  • Copy of Company ID Card (for select Corporates)
Address Proof (Any one of the following)
  • Copy of Passport (Can also be used as proof of identity)
  • Copy of Telephone Bill (both landline and post paid mobile connection)
  • Copy of Driving licence
  • Copy of Voter ID card
  • Copy of Ration card
  • Copy of Electricity bill
  • Copy of bank statement ( computerised statements only)
  • Copy of Life Insurance premium receipt
  • Copy of any title deed( Sale deed/ Index II)
  • Copy of Property tax receipt
  • Copy of Leave & License Agreement
  • Copy of latest credit card statement
Age Proof (Any one of the following)
  • Copy of PAN card
  • Copy of Passport
  • Copy of Birth Certificate issued by competent authority
Signature Verification Proof ( Any of the following)
  • Copy of PAN Card
  • Copy of Passport
  • Copy of Driving License
  • Signature verification from Bank
Income Documents (Any one of the following)
  • Copy of latest three salary slips
  • Copy of appointment letter or Form No. 16 indicating proof of continuity in employment
  • Bank statements for the last 3 months

For Self-employed Individuals :

  • Copy of last two year IT returns along with computation of income, Balance sheet and Profit & Loss a/c , audited reports ( in case of audited financials)
  • CA certified financials ( in case of unaudited financials)
  • Bank statements of last six months of the main business banking

FAQs on Personal Loan

Where can I get a personal loan from?

Personal Loans are offered by nationalized banks, private banks and a few Non Banking Finance Companies.

What is a Personal Loan?

Personal Loans are unsecured loan which does not require any security or collateral. It also does not require any guarantor.

Who can apply for a Personal Loan?

Any individual who has got a source of income as salary or business income can apply for a personal loan.

What if a few EMIs are not paid in time?

It is in the interest of the borrower to repay all the EMIs as per schedule. Delay in payment of EMIs or default would badly affect the credibility of the borrower. Moreover getting a loan at a later stage would be difficult. Genrally banks share the credit history of a borrower with credit bueareu and in turn they share data of credit history of a boroower with other banks.

What if I want to prepay my personal loan?

Most banks allow its customers to prepay personal loans  after 6 months of disbursement . Generally, banks charge a penalty as prepayment charges on the principal outstanding.

Can I get a rebate on the interest rate & processing fee?

Yes, a few banks offer special rates for those who have a relationship with their bank. The relation ship could be a bank account, exisiting loan, a credit card etc.

How much time does it take to get a personal loan?

Generally it takes 1 to 3 working days to sanction a personal loan after completion of all formalities in terms of compliance in documentation.

What is the rate of interest that will be charged on my personal loan?

Rate of interest is a factor of prime lending rate (PLR) as announced by respective banks from time to time which varies with market  conditions.

Is there any moratorium period for repaying personal loan?

No, moratorium is not applicable for personal loans. Generally first EMI starts within 45 days of the disbursement of loan.

How do I repay a personal loan?

Personal loans are generally repaid by way of  equated monthly instalments( EMI)

Is there any fee for availing a personal loan?

Yes, you have to pay processing charges as decided by the bank from time to time.

What is the maximum tenor for a personal loan?

The  tenor of personal loan ranges from  12 months to 60 months. However it should be noted that tenor is the discretion of the bank and also in most of the case, the tenor is restricted to 36 months.

What is the maximum one can get as a personal loan?

Personal loans are available in the range of Rs. 50,000 to  Rs. 50 lacs  depending on the income eligibility of an applicant. However banks  also have specially designed products to offer  higher loans.

When can one apply for a personal loan?

You can apply for a personal loan in order to fulfill any of your  personal needs which requires   financial assistance . The loan can be used for  buying a plot, wedding expenses, hospitalization  expenses, holiday packages, buying jewellery, higher education  etc.

Is there any security or collateral for a personal loan?

Personal loans does not require any  collateral or security. Exceptionally in some cases, a Co-applicant is required if certain norms are not met by the applicant.