What are the Different Types of Personal Loans?

Last Updated : Dec. 8, 2020, 7:13 p.m.

Personal loans, which you can take for multiple purposes such as marriage, education, travel, medical emergencies and other needs, come in several variants. The first variant is the personal loan you apply for at banks or NBFCs. Secondly, a pre-approved personal loan that you get based on your existing credit card, savings or salary account relationship with the lender. A personal loan balance transfer and a top-up personal loan can be types of personal loans too. Let’s discuss here these types in detail.

Let’s Check How Normal Personal Loans Help Meet Your Needs

Applying for a personal loan is easy with so many banks and non-banking finance companies (NBFCs) ready with their attractive offers. All you need to do is check their interest rate and choose the one that charges the minimum. Besides, check the processing fee and prepayment charges of lenders and see which levies the minimum on this front. We could help you compare personal loan offers of different lenders based on these. Look at the table below and compare.

Conditions to Meet for Getting a Personal Loan in India

Lenders place different conditions for a personal loan, regarding the credit score you need, the amount of work experience and residence stability you should have, etc. Since it’s an unsecured loan, you need to have a credit score of 750 and above for a smooth approval. So, if you are paying any loan or credit card dues, maintain a timely payment routine. It will not only help you get easy approval but also lower personal loan interest rates .

On the work experience front, most lenders would want you to have a minimum experience of 2 years with at least a year in the current organization. Besides, lenders would want you to be staying at your current residence for a minimum of 1-2 years. So before applying, be clear on these requirements so that you don’t face any rejection later.

What If You Get a Loan Without Making Any Application?

Yes, it’s possible with a pre-approved personal loan ! You could get this loan based on your existing credit card, savings or salary account relationship with the lender, which we have pointed above. You could check these offers when accessing internet banking. Lenders could even text you a pre-approved loan offer on your registered mobile number. When you get this loan against your salary or savings account, lenders check your income and the transactions you do in these accounts. A good credit score and a sound repayment track can enable a pre-approved loan for you when offered against a credit card. Let’s check out the loan against credit card offers of different lenders.

Best Top-up Personal Loan Offers

If you already have a personal loan running in your name and require another one to meet your new needs, a top-up personal loan can help you! You can apply for this loan at the existing lender or the new one.

Now, it depends on the lender whether it wants to keep both the loans separate or combine existing and new loans. In a separate structure, the tenure of two loans will differ and even the interest rate. Whereas in a consolidated loan, the tenure for the new loan will be the one left for the existing loan. However, the lender can extend the tenure in case it feels that can ensure smooth repayment. The interest rate will remain the same in a consolidated top-up loan.

Want to check the best top-up loan offers for you? Check out the table below for that information.

What is a Personal Loan Balance Transfer?

A Personal Loan Balance Transfer means the transfer of an existing loan from one lender to another at a lower rate of interest. But don’t do this just for the sake of it! When you do a balance transfer, it becomes a prepayment for the existing lender, which will levy some charges. So, you need to check the offered rate on a balance transfer carefully. Ensure the offered rate is at least 4-6% lower than the existing rate so that the prepayment charges won’t lower your savings much. Secondly, the timing of a balance transfer – you will gain the most when you do it in the early years of the loan.