Factors affecting your Eligibility for a Personal Loan

For a hassle free loan process, ensure you are up to the mark on each of these parameters

Monthly Income

Your monthly income will be the critical factor determining your loan amount and the interest rate.

Age

The age criteria may differ from lender to lender, but those aged between 21 and 58 years are more likely to get a loan.

Monthly Expenses

Your ability to pay back a loan is judged to some extent from your monthly expense, making it an important factor for evaluation.

Any Other Loan

When it comes to Loans, it’s not more the merrier. Your chances improve if you don’t have another loan to your name.

Credit History

A good credit history is like good health. Maintaining one does not hurt. And it only helps when you want a loan.

Job Stability

Your loan amount eligibility is likely to jump significantly, if you are employed at your current organisation for more than 2 years

Relationship with Lender

A good understanding with the bank goes a long way in negotiating better terms for a loan. Being a known and trusted customer helps.

Category of Your Employer

Working at a well-regarded company adds to your reputation and also your loan eligibility. A Fortune 500 Company on your visiting card helps!

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A personal loan is a non-collateral (unsecured) loan that provides funds to salaried as well as self-employed individuals. A borrower can take a personal loan for any unforeseen financial need. In today's time when everything is digitizing, getting a personal loan is quicker through online process. Whether you are salaried or self-employed, one can easily avail this loan and get the finances instantly to meet their varied personal needs. When it comes to availing this loan, you can easily avail it either online or by visiting the branch near you. However, one of the biggest advantages associated with this unsecured loan is the fact that it does not require any collateral/security. You can get the loan amount instantly at attractive interest rates and flexible tenures. Not only this, in fact a one-time processing fee is also being charged by the banks while offering you this credit facility. 

Why Take a Personal Loan?

A personal loan is a great way to meet up the financial needs in a temporary financial crisis. One of the main reasons why people opt for a personal loan is that it is a non- collateral loan and there are no conditions when it comes to usage of the fund. Yes, the banks/NBFc allows you to avail a personal loan without even asking the actual reason of the same. You can apply for it anytime, from anywhere so as to get the funds instantly. This credit facility comes handy for all your personal needs be it a wedding, travelling, home renovation, medical emergency, credit card debt and so on.

 

Features and Benefits of a Personal Loan

  • Easy Loan Availability: When it comes to availing this unsecured loan, you can easily avail the same as many lenders are available in the market that offer you the same. You can choose a lender of your choice and get the finances to meet your needs. 
  • Simple Documentation: While availing you this credit facility, the lenders do not ask for a long list of documents. Well, as there is no asset verification is required, hence this loan can easily be availed by submitting the minimal documents.  
  • Fastest Approval: In case of a personal loan, less legal formalities and documentation is needed, hence the lenders usually approve the loan application quickly. 
  • No Collateral/ Security Required: A personal loan is given on the basis of the financial stability of the borrower. As a result, the lenders don’t ask for any security or collateral from the borrower. 
  • Multi Purpose Loan: A borrower has the freedom to use the loan money for any purpose. And, the best part is that the lenders don’t even ask the reason of the same. 
  • Flexible Tenures:This credit facility comes with a flexibility tenure option that makes it more convenient for a borrower to repay the loan amount easily in the future.
  • Higher Amount: On the basis of the income profile, generally, a borrower can get a loan ranging between ₹ 50,000 to ₹ 40 Lakhs.
     

 

 

How to Apply for a Personal Loan

The process of applying for this type of loan can be understood in 3 simple steps:

  1. Check Eligibility: Before you apply for a loan, it is important to check your eligibility. Different banks have different eligibility norms, so in order to get the finances, you need to meet the eligibility criteria set by your favorite lender.  
  2. Compare Interest Rates: The next step is to compare the interest rates of all the lenders, offering you the same credit facility. After doing the comparison, it would be easier for you to take a calculative decision. 
  3. Apply Online: After choosing the lender, all you need to do is just apply for a personal loan online. Visit the site, follow few simple steps and it's done! 

Top Banks providing Personal Loans in India

In India, almost all private and public sector banks offer personal loan at attractive rates with the flexible loan amount and tenure period. Here are some of the top banks in India that provide personal loans:

HDFC Bank Personal Loan:

HDFC Bank has special rates and offers for all the HDFC bank account holders. The bank offers instant loan approval at competitive interest rates ranging from 10.99% to 19.50% per annum depending upon the profile of the borrower and the loan repayment capacity. An individual having minimum monthly income of ₹ 12,000/- within the age of 21 years to 60 year acn easily avail this credit facility. 

ICICI Personal Loan:

ICICI Bank personal loan is a multi-purpose loan with no collateral or security to salaried as well as self-employed individuals. A salaried person can take a loan up to ₹ 20 lakhs whereas a self-employed person can avail the maximum loan of ₹ 30-40 lakhs. Also, the interest rate on the loan starts from as low as 11% and goes up to 18.49% per annum with a flexible tenure facility of up to 5 years.

Bajaj Finserv Personal Loan:

Bajaj Finserv provides a personal loan to all the salaried applicants of India at attractive interest rates starting from as low as 11.99%-16% per annum The maximum loan tenure and maximum funding from the noted NBFC are 1-5 years and 25 lakhs, respectively.

Axis Bank Personal Loan:

When it comes to taking a personal loan, Axis Bank is one of the best options available in the financial market of India. Axis Bank loan offers the maximum loan up to ₹ 15 lakhs with interest rates ranging between 15.50%-24.00% per annum. The bank provides flexible loan tenure of 12 months to 60 months.

SBI Personal Loan:

State Bank of India (SBI) offers a personal loan without any security. The bank offers interest rates taht range between 11.90%-16.55% per annum (unsecured), 10.55%-15.65% per annum (secured). The maximum loan amount that can be availed is ₹ 15 lakhs with the flexible tenure of up to 5 year.

Kotak Mahindra Bank Personal Loan:

Kotak Mahindra Bank personal loan is available for all Indian residents who are employees of a reputed company and are between the age of 21 years and 58 years On a personal loan, the bank has attractive interest rates with minimal documentation and flexible repayment options. The maximum loan amount is ₹ 15 lakhs with the interest rates ranging from 11% to 18.85% per annum.

Documents required for a personal loan

The documentation process for a personal loan is easy independent of the bank. Since a personal loan is a non-collateral loan (unsecured loan), the documents required are less as compared to other loans. The general list of documents that a borrower must have if he/she is applying for a loan are as follows:

For Salaried Individuals

  • Loan Application Form
  • 2 Passport size photos
  • Salary Slips for last 3 months
  • Identity Proof PAN Card or Driving License or Voter ID Card or Adhaar Card, etc.
  • Residence Proof (Driving License/Voter ID Card/Adhaar card, etc.)
  • Last 3 months Bank Statements
  • Employment Proof
  • Signature Proof

For Self-employed Individuals

  • Loan Application Form
  • 2 Passport size photos
  • Identity Proof PAN Card or Driving License or Voter ID Card or Adhaar Card, etc.
  • Office Residence Proof
  • Income Proof: Audited financials for the last 2 years
  • Last 6 months Bank Statements
  • Employment Proof
  • Signature Proof

Personal Loan Eligibility

Different banks different eligibility criteria when it comes to offering a personal loan. In general, the eligibility is:

Eligibility for Salaried Individuals

  • Minimum age of the applicant: 21 years
  • Maximum age of the applicant: 58 years
  • Minimum work experience: 1 Year
  • Minimum Net Monthly Income: ₹ 20,000

Eligibility for Self-employed Individuals

  • Minimum age of the applicant: 24 Years
  • Maximum age of the applicant: 65 Years
  • Minimum work experience: 3 Years
  • Minimum Net Annual Income: ₹ 1 lakh

Personal Loan Application Form

To apply for a personal loan, you need to fill an application form first. If you are applying online, you can fill this form by visiting the bank’s site or you can also visit the branch near you. In this application form, you are required to fill your personal as well as professional details such as:

  • Name of the applicant/s
  • Date of Birth
  • Residence Details
  • Purpose of Loan
  • Office Address for self-employed
  • Income Details

 

Personal Loan for Self-employed

 Not even salaried, in fact, a personal loan can also be availed by a self-employed. There are many lenders, i.e. banks/NBFCs that offer this unsecured loan to self-employed applicants as well. But, for a self-employed, the eligibility criteria and the documents required vary as compared to a salaried individual. So, the self-employed applicants need to meet that criteria in order to become eligible for a personal loan. 

 

Personal Loan Rate of Interest

The personal loan interest rates vary from bank to bank depending on the eligibility criteria. The interest rates on this loan for self-employed and for salaried is different in some of the banks. Here are the personal loan interest rates of the top 5 banks in India:

Lenders Interest Rate (p.a) Loan Amount (in ) Tenure (in years) EMI per lac(in ) Processing Fees Prepayment Charges
HDFC Bank 10.99%-19.50% For Salaried-Up to ₹ 25 lakhs. For Self-employed- Up to ₹ 15 lakhs 5 2,419-2,649 Up to 2.50% of the loan amount or Minimum of ₹ 1,000/- & Maximum of ₹ 25000/- for Salaried Customers Up to 4% of the principal outstanding + service tax
ICICI Bank 11%-18.49% For Salaried- Up to ₹ 20 lakhs For Self-employed- Up to ₹ 30 lakhs 5 2,199 Up to 2.25% of loan amount + service tax 5% of principal outstanding + service tax
Bajaj Finserv 11.99%-16% Upto 25 lakhs (only for salaried) 5 2,326 2.25% to 3% of the loan amount 4% on principal outstanding + applicable taxes
SBI 11.90%-16.55% per annum (unsecured), 10.55%-15.65% per annum (secured) Up to ₹ 15 lakhs 5 2,247-2,461 1% of the Loan Amount + applicable Service Tax 3% of the principal outstanding + service tax
Kotak Mahindra Bank 11%-18.45% Up to ₹ 15 lakhs 5 2,199-2,877 Up to 2% of the loan amount+ service tax 5% of principal outstanding + service tax
Axis Bank 15.50%-24.00% Up to ₹ 15 lakhs 5 2,419 1.50% to 2.00% + service tax as applicable NIL

Personal Loan EMI Calculator

Personal Loan EMI calculator is the tool that is used to calculate the monthly installments of the loan amount according to the tenure and rate of interest offered. Since the calculator is available online, a borrower can easily calculate the EMIs in advance. In general, the rate of interest offered on personal type of loan ranges from 11% to 24% per annum. For example, a borrower takes a loan of 15,00,000 for the tenure of 5 years and the interest rate that he/she gets is 12.50% per annum. Now the EMIs he/she will have to pay back to the bank can be seen in the below table:

Table for EMI per month, Total Interest Outgo and Total Amount

Amount (in ) Interest Rate (p.a) Loan Tenure (in Years) EMI (in ) Total Interest Outgo (in ) Total Amount (Principal + Interest) (in )
15,00,000 12.50% 1 13,362 10,349 1,60,349
15,00,000 12.50% 2 7,096 20,306 1,70,306
15,00,000 12.50% 3 5,018 30,650 1,80,650
15,00,000 12.50% 4 3,987 41,376 1,91,376
15,00,000 12.50% 5 3,375 52,481 2,02,481

Amortization Table

Year Principal (in ) Interest (in ) Balance Amount (in )
1 23,039 17,461 1,26,961
2 26,090 14,410 1,00,871
3 29,545 10,955 71,326
4 33,457 7,043 37,869
5 37,904 2,610 0

Can Mutual Funds be used for Personal Loan?

The borrowers who have invested in shares, mutual funds or similar instruments, can take a personal loan against them. The rate of interest offered on personal loan against Mutual Funds or alike instruments is lower as compared to the loan rates on an unsecured loan. In general, the loan against mutual funds interest rates ranges from 10.20% to 18% per annum.

Factors Affecting Personal Loan Eligibility

There are certain factors that are kept in mind while availing the personal loan to the borrower. Some of the common factors that affect personal loan eligibility are:

  • Monthly Income- The monthly income of the individual plays a very important role in the calculation of the loan sanction amount and the interest rate.
  • Age- Banks have set certain age criteria for offering a personal loan. However, the general age limit for an individual is between 21 Years to 58 Years
  • Monthly Expenses- On the basis of the monthly expenses, the loan repayment capacity of an individual is decided by the bank.
  • Any Other Loan- If the borrower is free from any kind of loan repayment, paying off the loan becomes easier.
  • Credit History- A good credit history of the loan applicant is an additional benefit when it comes to a loan.
  • Job Stability- If the loan applicant is stable in his/her job, the eligibility is likely to remain unchanged. The work experience of the borrower is mostly expected to be 2 Years
  • Category of the Employer- If the borrower is working in an MNC, he/she is most likely to get lower rates as compared to the other

FAQ's

Q. What is the minimum loan limit for a Personal Loan?

A. Generally, the minimum loan amount that is offered for a personal loan is ₹50,000/-.

Q. What is the maximum loan limit for a Personal Loan?

A. In general, the maximum loan amount that a borrower can take is ₹40 lakhs.

Q. Is there any security required to take a personal loan?

A. Well,, there is no security required for a personal loan as it is an unsecured loan.

Q. Does CIBIL score matters when it comes to a Personal Loan?

A. Yes, CIBIL score and credit history are important when it comes to PL. Banks often prefer the CIBIL score of 700-750 out of 900.

Q. What is the disbursal time in case of a Personal Loan?

A. If all the documents are ready, a borrower can get a loan within 72 hours to 3-4 working days.