• Types of Personal Loan

    Personal loans are unsecured loans in which the bank loans you money on your creditworthiness and no security is required for the money borrowed. However, the interest rates of personal loans are higher than any other loan like home loan or education loan considering the amount of risk involved in lending the sum. Most banks offer personal loans starting from Rs.50,000 to Rs.15 lakh.

    Types of Personal Loans offered in India

    Wedding Loan

    Weddings are important and costly affairs in India. Most people want their wedding day to be memorable and pull out all stops to achieve their dream. Wedding loans are given out by banks to help you make your special day memorable. Loans can be taken by the would-be bride, groom or any of the family members.

    Key Highlights
    • Loan amount from as low as Rs.1,000 up to Rs.25 lakh.
    • Loan repayment tenure ranging between 3 months and 72 months.
    • Minimal documentation process.

    Travel Loan

    Designed especially for holiday goers, you can travel around the world and pay the bills later with holiday loans. Holiday loans often come with the added benefit of travel insurance, so you get protected on all fronts.

    Key Highlights
    • Simple and quick documentation process.
    • Loan amount of as much as Rs.40 lakh
    • Flexible loan repayment period which can be extended up to as much as 72 months.

    Home Renovation Loan

    Home loans are for buying new pieces of real estate. But what about when your old house is in dire need for repairs? People often don’t renovate their house as the cost is too high. Home renovation loans helps you take care of your repairing cost, while simultaneously increasing the economic value of your house on the real estate market.

    Key Highlights
    • Loan amount ranging from Rs.2 lakh to Rs.40 lakh
    • Loan repayment tenure of up to 30 years
    • Rate of interest starting from as low as 6.85% p.a.

    Pension Loan

    Pension loans are exclusively for retired personals, and hence, the usual eligibility criteria do not apply in this special scheme. Under this scheme, some banks provide 7 to 10 times the amount of pension the pensioner drew the month previous to submitting the loan application.

    Key Highlights
    • Loan amount that starts at Rs.25,000 and goes up to Rs.14 lakh
    • Loan repayment tenure of up to 60 months
    • Discounted rate of interest of as low as 11.70% p.a.

    Education Loan

    There are a number of lenders who offer personal loans which can be used for educational purpose. Right from paying the tuition fees of your child to any other academic requirement, you can use the education loan to meet the expenses.

    Key Highlights
    • Loan repayment tenure up to 15 years.
    • Rate of interest starts at as low as 6.35% p.a.
    • Loan amount of up to Rs.20 lakh.

    Eligibility Criteria for Personal Loans

    • For Salaried Individuals:
      • Minimum Age of the Applicant - 21 years
      • Maximum Age of Applicant at Loan Maturity - 60 years
      • Minimum Employment Period - 2 years in total and 1 year at present organization
      • Minimum Income - Rs. 7,500 per month to Rs.15,000 per month
    • For Self Employed Professionals & Businessman:
      • Minimum Age of the Applicant - 25 years
      • Maximum age of Applicant at Loan Maturity - 65 years
      • Minimum Business Period - Minimum 2 to 3 years in current profession/business
      • Minimum Annual Income - Rs.1 lakh

    Please note that eligibility criteria differ from bank to bank. To know the exact eligibility criteria for each bank, use the BankBazaar eligibility calculator tool for exact results, and also compare the criteria’s between your chosen banks.

    Best Personal Loan Interest Rates 2022

    Bank Interest Rate
    HDFC Bank 10.5% p.a. - 21.00% p.a.
    SBI 9.60% p.a. - 15.65% p.a.
    Kotak Mahindra 10.25% and above
    Axis Bank 12% p.a. - 21% p.a.
    Fullerton India 11.99% p.a. - 36% p.a
    IndusInd Bank 11.00% p.a. - 31.50% p.a.

    To know more about the various personal loans on offer from various different banks and financial institutions, make use of the BankBazaar comparison tool.

    Documents required to avail Personal Loans

    • Two passport size photographs
    • Income proof: Bank Statement for the last 3 months (if salaried)
    • Income Tax Returns for the last 2 years (if professional/self-employed)
    • Proof of Continuity in Current Job - Form 16/Company Appointment Letter (if salaried)
    • Proof of Identity (Passport/PAN Card/Driving License/Voters ID/Aadhar Card)
    • Proof of Residence (Passport/Ration Card/Aadhar Card/Utility Bill/Voter ID/LIC Policy Receipt)
    • Credit (CIBIL) score

    Besides the ones listed above, some banks might offer other types of personal loans. Women often get special offers on personal loans, making the particulars different from the usual personal loan on offer, but the type being the same. For example, a wedding loan taken by a woman and a man from the same bank might get different loan particulars offered, but essentially both will be getting wedding loans.

    Choosing the type of loan to opt for finally rests on your requirements. Compare and choose the personal loan that covers your need.

    FAQs on Types of Personal loan

    1. What are the types of personal loans available in India?
    2. The following is the list of the types of personal loans available in the country:

      • Wedding loan
      • Vacation loan
      • Festival loan
      • Home renovation loan
      • Consumer durables loan
      • Top-up loan
      • Bridge loan
      • Agricultural loan
      • Pension loan
      • Personal computer loan
    3. What is a wedding loan?
    4. A wedding loan is granted when you don’t have the funds required to meet the expenses of your wedding. The interest rates on these loans are higher during the peak wedding season.

    5. What is a vacation loan?
    6. A vacation loan or travel loan is taken when you want to finance an upcoming holiday trip. The quantum of the loan depends on your income level and your credit score.

    7. What is a festival loan?
    8. A festival loan is taken to cover the expenses involved in celebrating a festival. Banks usually keep a borrowing limit of Rs.50,000 on these loans.

    9. What is a home renovation loan?
    10. This loan helps you with the funds you need when you want to make renovations to your home. Home improvement loans can help to increase the value of your house on the real estate market.

    11. What is a consumer durables loan?
    12. A consumer durables loan is one that is taken to buy consumer goods. These include refrigerators, televisions, washing machines, and other items like these. You can get funds of up to Rs.5 lakh under this loan.

    13. What is a top-up loan?
    14. A top-up personal loan is a sum of money that you can take over and above an existing personal loan you’ve already taken. For example, if you’ve already taken a personal loan and want another loan, you can opt for a top-up loan instead. This will help consolidate the repayments for both loans under one EMI.

    15. What is a bridge loan?
    16. A bridge loan is one that you can take when you need money only for a short period of time. These loans come with short tenures (about 12 months at the most) and high interest rates. Some may even require you to put up collateral.

    17. What is an agricultural loan?
    18. An agricultural loan is a financial aid that a farmer or an agriculturalist can get. These loans are specifically meant for people involved in farming activities. They come with lower rates of interest, flexible repayment options, and other features to help farmers.

    19. What is a pension loan?
    20. A pension loan is given to individuals who are retired and drawing a pension. It helps you get the funds needed to tide you over a financial emergency even if you are not currently working.

    21. What is a personal computer loan?
    22. This is a loan that can help you buy a personal computer or laptop. Given that computers are an integral part of our lives today, banks offer specific loans to help people buy computers for themselves. Some banks also offer you small loans to buy software.

    23. What are the advantages of taking a personal loan?
    24. A personal loan, as the name suggests, is a loan you can take for any financial need. They are processed faster than other loans and also require fewer documents. The application process is simple, and you will ideally get the money within 2 to 5 days.

    25. Are there any disadvantages of taking a personal loan?
    26. The first thing to note is the interest rates. Personal loans come with higher interest rates than most other loans. And since it’s easy to get these loans, there is always a tendency to get carried away. You may be tempted to apply for a loan even if you don’t need one. Or you may apply for an amount larger than what you need. In case you are unable to repay what you borrow, it can result in heavy penalties. Your credit score will also be affected.

    27. Is it wise to take a loan for a wedding or a vacation?
    28. While loans are available for wedding expenses and vacations, exercise prudence before applying for one. While a wedding may warrant getting a loan, ask yourself whether you really need to take a loan to go on vacation. Consider the interest costs. If your vacation can wait till you can pay for it with your own funds, then don’t take a loan right now.

    29. How can I find the right personal loan that suits my needs?
    30. There are a number of loan options available in the market. You can find the best one by comparing their features and what they offer you. BankBazaar helps you identify the best loan in a matter of minutes.

    31. What should I keep in mind before I apply for a personal loan?
    32. Before you apply for a loan, you need to remember to do the following:

    33. What should I look for while applying for a personal loan?
    34. While applying for a loan, you must keep the following in mind:

      • Look for an affordable interest rate.
      • Check if the bank offers flexible repayment options.
      • Ask for the processing fee and get the actual figure.
      • Make sure that the bank has a reliable customer care service to answer queries at a later date.
    35. Are there any benefits of applying for a personal loan online?
    36. Applying for a personal loan online is much faster than doing it physically at a bank’s branch. Also, if you do it through a loan aggregator, you may get additional benefits such as sign-up gifts.

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