Unsecured personal loans are short-term loans extended by banks to salaried employees, and self-employed professionals (within 21 to 60 years of age) for personal use without the need for any security or collateral.
Unsecured Personal Loans can be obtained in just 6 easy steps:
- The first step is to determine the loan amount and repayment period. The borrower should identify the purpose of the loan, and calculate the loan amount required to meet his or her financial needs.
- The second step is to compare the interest rates provided for unsecured personal loans across the banks, and choose the one offering the minimum interest rate. It is advisable to compare the various service fee (prepayment charge, processing fee, etc.) charged by the banks as well.
- The third step is to obtain the borrower’s credit history, check the credit score, and rectify any errors, if present.
- The fourth step is to check whether the borrower meets the eligibility criteria set by the lender. Eligibility criteria include a steady income, a stable occupation, and a good credit history.
- The fifth step is to submit the necessary documents along with the loan application form. The necessary documents include ID proof, address proof, bank statement, and salary slips.
- The sixth step involves bank verification of the information provided by the applicant.
If the verification process is successful, the bank will approve the loan, and the amount will be credited to the borrower’s account in a short time period.
Factors to consider while applying for a personal loan
There are several factors to be considered before choosing the lender, and applying for personal loan:
Loan amount: If the required loan amount ranges from Rs.50,000 to Rs.30 lakhs, then an unsecured personal loan is a suitable choice for the borrower.
Interest rate: Banks offer higher or lower interest rates depending on the applicant’s age, income, occupation, and credit history. Borrowers should compare interest rates across banks, and choose the one that offers the minimum interest rate.
Repayment period: The loan tenure for unsecured personal loans can vary depending on the loan amount, and the bank, ranging from 6 months to 5 years.
End purpose: Short-term financial needs such as marriage, travel, education, and home renovation expenditure can be met using personal loans. Banks don’t require the applicant to provide an end purpose for the loan. Personal loans can be used for any personal use.
Collateral or security: No collateral or security is needed for unsecured personal loans as they are extended for a short time period.
Time taken to issue the loan: Given the urgent financial need of the borrower, it is advisable to compare the loan issue time across banks. Most banks process, approve, and extend the loan amount within 36 to 48 hours.
Interest rates and Fee details
Listed below are the interest rates and charges applicable for unsecured personal loans:
||Rs.25,000 to Rs.30 lakhs
||6 months to 5 years
||12% to 25%
||Varies with banks
||Varies with banks
Banks offering unsecured personal loans
- State Bank of India offers an online loan submission facility, making it easier for users to apply for SBI Personal Loans from anywhere in the world.
HDFC Personal Loans.
- TATA Capital offers 3 easy steps to apply for a personal loan.