Highlights of Personal Loans

Personal loans come with several attractive features and benefits, making them a preferred choice for borrowers. Here’s what makes them stand out:

Instant Loan Approval & Disbursal

A personal loan can be approved instantly if you meet the required income criteria, have a strong credit score, and demonstrate repayment capacity. Once approved, the lender sanctions the loan after evaluating your profile and notifies you via email or SMS. The loan amount is then disbursed to your account within a few hours of approval.

Flexible Repayment Tenures

One of the biggest advantages of a personal loan is its flexible repayment tenure, typically ranging from 1 to 5 years, allowing borrowers to manage their finances efficiently.

Competitive Interest Rates

Personal loans come with attractive interest rates starting from 10.30% per annum. With the decline in banks’ cost of funds, personal loan rates have also decreased, making them more affordable.

No Collateral Required

Since personal loans are unsecured, you don’t need to provide any collateral or security. The loan approval primarily depends on your income and credit score.

Freedom of Usage

Borrowers can use the sanctioned loan amount for various purposes, including weddings, travel, home renovation, medical emergencies, or any other financial need.

Prepayment Option Available

After successfully paying the first 12 EMIs, you have the option to prepay the loan. Some lenders allow full prepayment, while others may permit partial payments, depending on their policies.

Fees & Charges

A personal loan comes with various charges that borrowers should be aware of:

Interest Rate

The interest rate affects both your monthly EMI and total loan cost. A lower rate helps reduce the overall burden.

Processing Fee

Lenders charge a one-time processing fee for loan approval, which is either a flat fee or a percentage of the loan amount. This fee is deducted from the approved loan amount, though interest is calculated on the full sanctioned amount.

Late Payment Charges

If you miss an EMI payment, lenders levy a penalty of 2% plus GST, calculated daily on the overdue amount.

Foreclosure Charges

If you decide to close your loan early, a foreclosure fee may be applicable based on lender policies.

Personal Loan Eligibility Criteria

Since personal loans are unsecured, lenders ensure borrowers meet certain eligibility conditions before approving the loan.

Age Criteria

Lenders prefer applicants with stable job prospects. The eligibility criteria vary:

• Salaried individuals: Minimum age 21 years, maximum 58 years
• Self-employed individuals: Minimum age 24 years, maximum 65 years

Income Requirement

Minimum net monthly income requirements vary by lender:

• Salaried employees: ₹15,000–₹20,000
• Self-employed individuals: Loan eligibility is based on profits after tax deductions

Existing Loan Obligations

Lenders evaluate current loan obligations before approving a new loan. Your total EMI burden should not exceed 50% of your net monthly income to qualify for a personal loan easily.

Employment Stability

Applicants should have at least 1 year of employment in their current company and 2–3 years of total work experience.

Residence Stability

Applicants must have lived at their current residence for at least 1–2 years, ensuring stability.

Credit Score

A strong credit score of 750 or above enhances approval chances. Scores between 700 and 750 may still be accepted but at slightly higher interest rates. Regular timely payments on loans and credit cards help maintain a healthy credit score.

Type of Organization

Lenders favor applicants working in reputable companies, as job stability affects repayment capacity.

Business Type (For Self-Employed)

Self-employed individuals should operate a stable, year-round business with consistent revenue. Seasonal businesses may pose repayment risks, making lenders cautious about loan approval.