What is a personal loan | how to get personal loan

If you guys want to know What is a personal loan.....then you are at the very right place. Here you will get all the basic details of a personal loan that you should know before taking it.

What is a Personal loan?             

A personal loan is an unsecured loan with high rates of interest. A personal loan is very hassle-free and needs minimum documentation. But, the next question is arising that what is an unsecured loan..????

So, a loan that we get without any collateral security is known as an unsecured loan. In case of loan default, Bank cannot recover loan dues but your Credit score may get affected.

What are the purposes for applying for a personal loan?

1. Education,
2. Vacation,
3. Home Renovation,
4. Wedding,
5. Medical emergency,
6. Home appliances etc.

The loan is provided based on Borrower credit history which means if Borrower CIBIL score is more than 750 then it is a high chance of getting a loan with instant approval.

You can apply for a loan amount of a minimum of Rs.50,000 and a maximum of Rs.25 lakhs from any bank but also these amounts may vary from bank to bank.

The loan Repayment tenure is from 1year to 5years.

Interest rate - 3% - 10% more than a Home loan (It is the most drawback of this loan)

Here are some banks and NBFCs with their current Interest rate on Personal loans:

(as of 6th August 2021)

What banks can not do to recover loans?

S. No.        Banks/NBFCs.               Interest rate.                LoanAmount(Rs.)                  

1.                UCO                               8.45% onwards             up to Rs. 10 lakh

2.                CBI.                                8.45% onwards             up to Rs. 20 lakh

3.                UBI                                 8.90% onwards             up to Rs. 15 lakh

4.                PNB                               8.95% onwards              Rs.25 k to Rs.15 lakh

5.                Indian Bank                   9.05% onwards               As per applicant profile

6.                BOI                                9.35% onwards               up to Rs.10 lakh

7.                IDBI                               9.50% onwards               Rs.25k to Rs.5 lakh

8.                Bank of Maharashtra     9.55% onwards              up to Rs. 20 lakh

9.                SBI                                9.60% onwards               up to Rs.20 lakh

10.              HSBC                            9.75% onwards               up to Rs.30 lakh

11.              Citi Bank                        9.99% onwards               up to Rs.30 lakh

12.              BOB                              10.00% onwards              Rs.50k to Rs.10 lakh

13.              Kotak Mahindra Bank   10.50% onwards              up to Rs.30 lakh

14.              Indian Overseas Bank  10.30% onwards              up to Rs.15 lakh

15.              Federal Bank                10.49% onwards              up to Rs.25 lakh

16.              ICICI                             10.50% onwards              Rs.50k to Rs.25 lakh

17.              IndusInd bank               11.00% onwards              Rs.50k to Rs.15 lakh

18.              Axis Bank                      11.00% onwards              up to Rs.15 lakh

19.              Tata Capital                   11.75% onwards              up to Rs.20 lakh

20.              Kreditbee                       12.24% onwards             Rs.1,000 to Rs.2 lakh

21.              Yes Bank                       12.49% onwards              up to Rs. 50 lakh

22.              HDFC                            12.50% onwards              up to Rs. 25 lakh

23.              India Bulls                      13.99% onwards              Rs.1,000 to Rs.15 lakh

24.              RBL                                14.00% onwards              Rs.1 lakh to 20 lakh

25.              Muthoot Finance            14.50% onwards              Rs.50,000 onwards

*Interest rates are subject to change as per Bank/NBFCs policies. 

What are the eligibility criteria to get a personal loan:

• Customer Profile:

• Salaried/Self-employed/Professional/Business
• Occupation and Income stability minimum for 3 years.

• Repayment Capacity:

• Higher annual Income means the chance of easy repayment of the loan amount.
• Generally Minimum income - Rs.15,000 per month

• Age:
• For Salaried - 21 years to 60 years
• For Professional and Business - 25 years to 65 years

• Credit Score -  CIBIL score should be more than 750.

• Assets and Liabilities
• Bank also checks the assets and liabilities of the borrower. So, it is always necessary that your assets should be more than liabilities.

• No. of dependents:
• More dependents mean more expenses of such person so bank checks the total number of dependents either he will be able to repay the loan amount or not at the given time.

• Spouse income

• Bank also checks the spouse's income, if any. because borrowers can easily repay the loan amount with the help of his/her spouse's income.

Documents needed at the time of apply for Personal loan: (For Salaried, Self-employed (Professional and non-professional):

1.  Application form with photograph duly signed.
2. Identity, age, and residence proof.
3. Last 6 months Bank statement.
4. Last 3 months salary slip only for Salaried person.
5. Form 16/ Income tax return.
6. Processing Fees cheque.
7. Educational Qualification certificates for Salaried and Professional.
8. Proof of Business existence for Non- professional Self-employed only.
9. Business Profile for Non- professional Self-employed only.
10. Last 3 years Income tax return for Self-employed (Professional and non-professionals).
11. Last 3 years Audited Balance sheet and Profit and loss account for Self-employed ( Professional and non-professional).

What are the additional charges are taken by the Bank in personal loan:

• Processing fees - 1% to 2% of the loan amount + GST

• Prepayment and foreclosure charges

1. Floating Interest Rate - Nil in case of payment from own funds - 2% to 3% of the outstanding loan amount, in case of loan transfer
2. Fixed Interest Rate - 2% to 3% of the outstanding loan amount

• GST @18% applicable on all service charges

Despite all the above, I recommend you all avoid this loan because it is very expensive compared to the other loans. It will affect your pocket very badly if you are a single bread earner with a low income in your family.

- Chanchal Singh