Personal Loan

• One or Two Passport size color photographs
• Photo Identity Proof
• Residence Address Proof
• Residence Ownership Proof
• Income Proof for Self-employed Individuals
• Job Continuity Proof for Salaried Individual
• Last Six Months Bank Statement:

Different banks and non-banking financial companies offer different interest rates for personal loans. Most banks have their own unique different classification based on which interest rates are calculated. Personal loan interest rates of various banks vary from 10.85 to 18.50% depending on the eligibility criteria, the loan amount and the tenure period of the personal loan.

Personal Loan Interest Rates Table

Bank Name	Interest rates
SBI	12.5% to 16.5% p.a.
ICICI	11.59% to 18.49% p.a.
Axis Bank	15.50% to 24% p.a.
HDFC Bank	15.75% to 20% p.a.
Citibank	14.25% to 19.99% p.a.
Standard Chartered	11.99% to 17% p.a.
TATA Capital	13.99% to 17.5% p.a.
Oriental Bank	11.20% to 12.95% p.a.
Capital First	13% to 18.45% p.a.
IndusInd Bank	11.25% to 26% p.a.
Fullerton India	21% to 40% p.a.
Kotak Mahindra	11.5% to 24% p.a.
Aditya Birla	14% to 16% p.a.

EMI calculation for personal loan is now made easy using the EMI calculator available at BankBazaar.com. The Personal Loan EMI Calculator tool allows users the option of changing the loan amount and tenure while calculating the EMI for the personal loan. EMI loan calculator tool is a great option allowing users to see their monthly installment for the loan, helping them to choose the most suitable loan as per their financial budget.

You can check out the following personal loan EMI calculator table to get an idea about how EMIs are computed for personal loans. It illustrates the different EMIs you will have to pay for different loan tenures according to the loan amount you choose.

For the following table, we have assumed that the interest rate is 10.99% and that the processing fee is 2%. The processing fee is usually a certain percentage of your personal loan amount. If you are using the BankBazaar personal loan EMI calculator, you can specify if you want to make pre-payments or not. You can accordingly select the option. If you want to make pre-payments, you will have to mention the pre-payment frequency, pre-payment fee, and pre-payment amount.

Loan Amount	Interest Rate	EMI for 1 Year	EMI for 2 Years	EMI for 3 Years	EMI for 4 Years	EMI for 5 Years
3 Lakhs	10.99%	26,513	13,981	9,820	7,752	6,521
4 Lakhs	10.99%	35,351	18,641	13,094	10,336	8,695
5 Lakhs	10.99%	44,188	23,302	16,367	12,920	10,869
7 Lakhs	10.99%	61,864	32,622	22,914	18,088	15,216
10 Lakhs	10.99%	88,377	46,603	32,734	25,841	21,737
13 Lakhs	10.99%	1,14,890	60,584	42,554	33,593	28,259
15 Lakhs	10.99%	1,32,565	69,905	49,101	38,761	32,606
20 Lakhs	10.99%	1,76,754	93,206	65,468	51,681	43,475
30 Lakhs	10.99%	2,65,131	1,39,810	98,202	77,522	65,212

• View the small print on your loan document carefully: Make sure you read even the tiniest print on your loan document to be aware of everything regarding your loan. You can read the small print to keep yourself aware of all the terms and conditions of your loan.
• Compare multiple personal loan options: You can compare the annual percentage rate (APR) of several personal loans available in the market. This will help you get a proper idea about the costs that you will incur with this personal loan.
• Choose your personal loan amount by assessing your repayment ability: A personal loan typically ranges from 1 to 5 years. You can fix the loan tenure according to your loan amount, your other monthly expenses, and the income that you earn on a monthly basis.
• Select your personal loan amount as per your convenience: You can choose your personal loan amount depending on your repayment capability, your income, and your expenditures.
• Choose an affordable interest rate: Make certain that you an economical interest rate for your personal loan. With a low-interest rate, your loan expenses will be low and you can repay it without any hassle. You will also avoid any defaults on loans.
• Check your EMIs properly: You will need to compute your EMIs before you fix your personal loan amount. This will help you plan your expenses efficiently. You can multiply this loan EMI with your loan tenure to find out your precise loan amount. You can then choose the lowest loan amount.
• Compare the processing fee: Most banks and NBFCs charge a processing fee for a personal loan. You can compare this fee and then decide which loan product you want.
• Be wary about automatic payments: If you choose standing instruction or ECS as your loan payment mode, you will need to be careful about the direct debiting of money. You should make sure that no additional amount is deducted from your account unnecessarily. You will need to monitor your loan payments on a regular basis to ensure that everything is being done properly.
• Select fixed or variable interest rate according to your preference: When you choose fixed interest rate, your loan payment will remain fixed throughout the loan tenure. When you select variable interest rate, your loan payment will depend on the rate. Hence, the loan payment will increase if the rate increases and the loan payment will reduce if the rate reduces.

Before you apply for a personal loan, you need to make sure that you focus on certain elements carefully so that you make a sensible financial decision.

• Credit history: Before you proceed to apply for a personal loan from any bank or NBFC, you will need to assess your credit history thoroughly. This will give you an idea about the loan amount that you will receive. You need to make sure your credit history looks decent before you apply for a loan. You can go for a fixed rate or a variable rate according to your preferences.
• Interest rate: You need to check the interest rate for your personal loan before you actually apply for one. Since a personal loan is unsecured in nature, your lender may charge a very high-interest rate. You will not be giving any asset as a collateral or security to your lender and hence, your interest rate will be a little high compared to rates charged for other loans.
• Assess the need for your personal loan: You will need to be clear about the need for your personal loan. You can take it for funding your wedding arrangements, for paying your hospital bills, for buying medicines, etc. Before you apply for the loan, you will need to assess if you really want the loan. If you are planning to take a personal loan for investing in shares or other financial instruments, then it may not be a great idea.
• Find out about the various fees and charges associated with your personal loan: When you prepay a personal loan or when you miss your payment deadlines for your personal loan, you will most likely be asked to pay a penalty fee. It will depend on your lender. You will need to assess these penalty fees properly before you apply for a loan.
• Do proper research to get the best rate for your personal loan: You can do online research by visiting third-party financial websites or by going to the banks’ official websites to compare different interest rates for personal loans. You can choose a low-interest rate for your personal loan as it will help you have a cost-efficient loan.

• Unsecured loans
• Convertible loans
• Payday Loans
• Secured loans
• Fixed-rate loans
• Variable-rate loans
• Installment loans
• Single-payment loans
• Personal loan balance transfer
• Personal loan consolidation plans

When you are applying for a personal loan from a bank or an NBFC, you will need to maintain a proper checklist in order to have a smooth lending process.

• First, you need to check if you are eligible for a personal loan. Next, you need to find out if you will receive the loan amount that you are interested in.
• You will need to submit certain important documents mandatorily as sources of proof. You will need to give a proof of your residential address, your photo identity, your income, and your job status or job continuity. You will also need to provide with your bank statements and a recent passport size color photograph.
• For proof of address, you can give your ration card, utility bill or passport.
• For age proof, you can provide your passport, driving license, voter ID card, or PAN card.
• For identity proof, you can furnish your passport, driving license, PAN card, or voter ID card.
• If you are a salaried employee, you can get the most recent salary slips for 3 months, bank statements for a period of 6 months, and Form 16.
• If you are a self-employed individual, you can furnish your income tax returns, profit and loss account, income statement, and balance sheet for income proof. For office address proof, you can give property document, utility bills, or maintenance bills.
• Along with these documents, you will need to submit your duly-filled loan application form with relevant details. You must make sure that you have filled every field with accurate details. If you miss out on filling any of the fields, your loan approval process may get delayed. To avoid any delay or confusion, you can fill the form properly.

If you want to make sure that your personal loan application is accepted, then you can use the following important guidelines.

• Be aware of your credit score: When you plan to apply for a personal loan, you need to be fully aware of your credit score. Only after you have these details, it makes sense to apply for a loan. You should decide your lender and your loan amount as per your credit score. If your credit score is pretty low, you can work on improving it within a specific period and then apply for a loan. This will ensure that you do get your loan approved. If you have made any late payment for your previous loans or credit card bills, then you can try waiting for a few months. You can apply for a new loan after this gap.
• Select your lender as per your credit score: Each lender responds to different credit scores differently. According to your credit score, you can decide a suitable lender that will offer customized loans to you as per your specific needs. Conventional banks and NBFCs may not offer personal loans if you have a pretty low credit score. In such cases, you can approach the new-age lenders who may agree to provide you with a loan with certain terms and conditions.
• Make sure you check your debt-to-income ratio properly: The loan amount that you apply for and the income that you earn on a monthly or annual basis should be proportionate. Your debt amount and income should match each other properly. If you apply for a personal loan quantum which is much higher than your monthly income, then your application may not get accepted. Hence, you should choose your loan amount very sensibly to make certain that you do get the loan.

Do’s:

Do proper research before you apply for a personal loan: Make sure you do good research regarding the various interest rates and prepayment charges implemented by the Reserve Bank of India (RBI) for multiple loans? You will also have to keep yourself updated about modifications made to these charges. Banks tend to change their decisions about fees and interest rates on a regular basis. It is important for you to be aware of these aspects so that you do not get scammed while taking a personal loan.

You will need to do relevant homework about the numerous loan amounts, loan tenures, and loan rates of different banks. When you do your homework sincerely, you will be able to grab a great loan deal that offers a low-interest rate along with meeting your other preferences.

Moreover, when you spend some time on research, you will get to know about new personal loan schemes or special offers on certain schemes. You can save a lot by making use of these offers. You may also be required to pay very low processing fees when you make use of these special loan deals.

Do read the fine print carefully: When you take a personal loan from a bank or NBFC, make sure you read the fine print of your personal loan document cautiously. You should be aware of all the terms and conditions associated with your personal loan. If you find any discrepancies with your loan details, you should immediately ask your lender for clarification. This will avoid any unnecessary confusion later. Take some additional time to read the material written in tiny fonts so that you do not have any problem in the future. If you want, you can take the help of any professional financial consultant to clearly understand your loan terms and conditions.

Do save your money carefully when you are repaying: You may typically take a few years to repay your personal loan completely. During this situation, it is important that you keep aside a part of your funds for emergency purposes and other needs. If you solely focus on clearing your debt without saving anything, you may get yourself into deep trouble. Hence, you should allocate a part of your funds for saving exclusively. This will help you be prepared for your urgent financial needs even during your loan repayment period.

Do pay your loan installment promptly every single time: When you are repaying through monthly installments, you should make certain that you pay each installment amount on time. You should focus on not missing any of your payment deadlines. If you miss any of your payment deadlines, you will unnecessarily have to pay a late payment charge. You may also be treated as a borrower who has defaulted his or her loan. This can affect your credit score negatively. You will need to make the full payment within the timeline assigned for your loan repayment. If you miss even one installment, you will have a negative symbol against your loan account. Hence, push yourself to make the payment on time.

In case you are struggling to repay your loan during any particular month, you can priorities your various payments. You can forego certain expenditures to avoid unrequired additional payments. You can then create a plan to first pay your loan EMI for that certain month and then you’re other bills or payments. When you give first priority to your loan EMIs, you can avoid a negative mark on your credit report and credit score.

Do evaluate your credit score thoroughly: Before you even approach a bank for a personal loan, check your credit score thoroughly. When you are aware of your credit score, you can assess the probability whether your loan will get approved or not. Your credit score also plays a significant role in determining the interest rate for your personal loan. You can check your credit score by using the credit score calculator available on the web portal of BankBazaar. It offers an accurate credit score for free! You only have to key in certain relevant details and you will get your results instantly. The Credit Information Bureau (India) Limited (CIBIL) provides a credit score to an individual only if he or she has taken a credit card or a loan previously.

Do apply for an affordable loan amount: You should make sure that you choose your loan amount only after careful thinking. You should check out the various loan rates and loan fees and also you’re other expenses. Accordingly, you should apply for a particular loan quantum. Do not go overboard while applying for a loan because you should remember that you will only have to repay this entire loan amount. Hence, be watchful about how much you apply for.

Do have a clear picture of what you need the loan for: Do not take a loan just because you can get it easily. Before you apply for a personal loan, you should be fully clear about why you require it. Once you procure the loan from your bank or any other lender, you should stick to the purpose that you had in mind. You do not have to mention the purpose to your lender. However, you will need to stick to it when you are repaying your loan.

Don’ts:

Do not sign your loan documents without understanding every point: You should avoid signing your loan document without comprehending each point. You must read all the terms and conditions given in your loan document before you agree to sign it. If you have any doubt regarding the features of your loan, you will have to immediately contact your bank representative for assistance. It is better to get everything clarified before you sign the document. Once you sign the loan document, the bank may not agree to make any changes even if you do face any issue later.

Do not make several inquiries regarding various personal loans: Make sure you approach a certain bank or NBFC only after you do excellent research. You can shortlist different banks after checking to see what they have to offer. Avoid shopping around for new personal loans or personal loan refinancing options without finalizing on a few options. If you approach numerous lenders to apply for a loan, there will be a record of excessive credit inquiries in your name. This can affect your credit report poorly. Your credit score can also get impacted.

Do not take a personal loan without any serious purpose: It makes sense to apply for a personal loan for making wedding arrangements or for funding your higher education course or for renovating your living space. However, stay away from taking a personal loan for frivolous purposes such as hosting parties, having fancy dinners, or vacationing at some exotic location. When you take a personal loan for such reasons, you may end up getting into trouble. You will end up paying extremely high bills for these purposes with your personal loan and then you may struggle to repay the loan.

Do not be in a hurry to end your loan comparison process: A few lenders may force you to finalize on a particular loan product without giving you time to compare other loans or to read your loan terms and conditions. You should avoid getting pressurized by such lenders. You can take proper time to check out various loan options and compare the different features of each loan option. Accordingly, you can finalize on one. If your lender does not encourage you to compare other options, you will need to be wary about this lender. Such lenders may have a few other intentions to cheat you by taking your money.

Do not forget to pay your loan installments: This tip may seem a little too obvious. However, you should make sure that you never ever miss your payment deadline. If you are clearing your loan through EMIs, you will have to be ready with your amount every month without fail. If you miss paying even one installment, your credit score can get harmed and then your creditworthiness will come down each time you fail to pay. Moreover, you will be asked to pay a heavy penalty whenever you delay any bill payment. Apart from your regular repayments, you will be forced to pay additional heavy amounts as a fine. You can avoid this unnecessary headache by just being a little conscious to pay your EMIs promptly.

Do not accept bad personal loan products: Avoid bad decisions regarding personal loan products. There are multiple types of personal loans available in the market. Hence, you will have to be financially sensible while choosing them. The common personal loans will help you enhance your financial wealth and assist you in attaining your financial goals. However, there are a few bad personal loan options such as payday loans or title loans. These loans require you to pay heavy penalties and they also do not allow you to redeem conveniently.

You can typically stay away from short-term personal loans that will make you pay high-interest rates. You will end up incurring higher expenses compared to the original amount that you would have borrowed.

• When you have urgent financial requirements: You can go for a personal loan when you are in need of money quickly. Whenever you have a financial emergency, you can choose a reliable personal loan to meet your requirements conveniently. A personal loan is generally approved and disbursed very quickly.
• When you want very minimal documentation: The documentation process is also minimal for personal loans. Hence, if you do not have the time to make arrangements for other documents, you can choose a personal loan instead. For other secured loans, you will be required to furnish documents regarding the title deed of the asset, etc. It will take time for you to arrange these documents. If you want to use the funds from a loan for multiple purposes, you can go for a personal loan. You will not have to mention the purpose of your personal loan to your lender. Hence, you do not need to get any supporting documentation for this type of loan.
• When you want to consolidate your debts: You can also go for a personal loan if you are planning to consolidate your debts. You can combine your multiple debts into a single personal loan account and clear your debts together. You can also choose a personal loan for a balance transfer. You can clear your credit card bills with a personal loan. Your interest rates will be lower compared to your personal loan. It is financially sensible to clear off a high-interest debt by taking a low-interest debt.
• When you do not want to hand over any asset to a lender: If you go for any other loan, it will mostly be secured in nature. Hence, if you are not interested in putting any of your assets at risk in the form of a collateral, then you should ideally select a personal loan.
• When you can’t make any other financial arrangement for hospitalization expenses: If you cannot arrange money instantly from other sources for hospitalization bills, you can apply for a personal loan and make sure the treatment is done properly.

Typical personal loan amount: For a personal loan, the loan amount generally depends on your employment status, income, loan tenure, etc. Your lender will find out if you are a salaried employee or a self-employed individual. When you give your monthly income, your lender will typically make sure that your loan EMI is not above 40 to 50% of your monthly income. Your lender will also look into your existing loans or credit card dues (if any) to fix your personal loan amount.

If you are a self-employed individual, your lender will ask you for your profit or loss statement to assess the recent profits that you have earned along with the additional liabilities such as your business expenses, etc. According to this information, your lender will fix your personal loan amount.

The minimum personal loan amount varies in India. However, most banks and NBFCs have fixed Rs.30,000 as the minimum loan principal amount for personal loans.

The maximum personal loan amount will typically be fixed according to a few important aspects such as your income, your present liabilities, and your credit score.

Typical loan tenure or loan period: In India, a personal loan is generally provided for a period of 12 to 60 months or 1 to 5 years. If you are looking for a longer or shorter loan tenure, you can check with your lender if it will be possible.

Time taken generally for loan disbursal: When you apply for a personal loan, it will get disbursed within a period of 7 working days. After your loan application gets sanctioned, you will get an account payee cheque or draft which will be equivalent to your loan amount. Alternatively, your loan amount will be deposited into your savings account via electronic methods.

Know More About: How to Choose Right Personal Loan

What is the Most Important Factor in Approving a Personal Loan Application?

The primary factor that plays a role in determining if your loan application will be accepted or not is your credit score. In India, your credit score and credit reports will be provided by 3 chief credit rating agencies that are authorized by the Reserve Bank of India. They are CIBIL, Experian, and Equifax. These agencies will keep a tab of all your activities associated with acquiring credit. Your lenders including banks, formal lenders, and credit card companies will provide your data to the bureaus every month.

The data includes your repayment behavior, your credit card bill payments, modifications made to your credit card limit, your loan EMI payments, unsettled dues, etc.

With this information, your credit score will be computed with the help of a mathematical formula. The score will denote your overall credit behavior. Hence, your lender will check this score and your credit report thoroughly to analyses your creditworthiness.

A credit report or Credit Information Report (CIR) is a very important report that is used by your lenders. They check this report to analyses if you have proper self-control while handling any credit-associated activities. If you have been repaying your debts promptly on a regular basis, your credit report will look appealing. This will help you in receiving your personal loan easily.

When you have a positive credit report, you can show your lender that you have maintained great lending discipline. Your lender will believe that you will stay away from any kind of severe debt situations. It is the most important aspect that will assist you throughout your financial journey. Hence, you should take additional measures to maintain a good credit report.

It provides a detailed summary of the different types of credit that you have applied for, the way you have repaid each loan or credit card bill, and if you have been prompt about paying every installment for your credit.

Whether you approach a bank or an NBFC for a personal loan, the institution will first look for your credit report to decide if you should be getting the loan or not.

Moreover, when your credit report looks good with very few credit inquiries, you will be able to negotiate with your lender for higher credit limits. You can justify your request for higher loan quantum by just showing your credit report.

What is the Role of My Credit Score in the Loan Process? What is the Minimum Credit Score to Be Eligible for a Personal Loan?

Your credit score explains your financial history from the beginning. It is calculated by Credit Information Bureau (India) Limited (CIBIL) which collects information about your lending behavior right from your first credit.

CIBIL has a list of member banks and NBFCs. These institutions will provide your credit data to CIBIL and they will compute your credit score. If your credit score is good, your loan application will get approved without any hassle. This will make your entire lending process smooth.

Moreover, when a lender offers a loan as per your credit score, the whole process will be transparent and well-organized.

To acquire a personal loan from your lender, your credit score should be at least 750. With this score, you will definitely get a loan provided you meet other eligibility criteria.

In India, a CIBIL score starts from 300 and goes on until 900. If your score ranges from 350 to 550, you will need to pull up your socks and enhance it step by step. If your score ranges from 550 to 660, it is a pretty decent area. Your lender may provide you with a new personal loan scheme. If your credit score is anywhere between 650 and 750, you will get a personal loan without any delay. If your credit score is between 750 and 900, you are an excellent borrower with sensible financial knowledge and proper credit control.

When you apply for a personal loan, there is no exact assurance that you will receive a loan even if your credit score is high. However, it is more likely that you will get a loan if your score is 750 or above.

When your score is below 750, you may most likely not qualify for a loan. However, you can try taking alternative steps to somehow get a loan. You could show your income proof to show that you earn a high income currently and that you will be able to repay the loan on time. You could also offer a collateral or a security to your lender to assure that you will repay your loan promptly. The lender will seize your asset if you fail to pay your loan on time. You could also discuss with your lender that you are implementing appropriate steps in order to bring up your credit score.

Alternatively, you could take some time to enhance your credit score and then apply for a personal loan. You can follow some strict measures until your credit score goes up and then apply for a loan. This will prevent any form of loan rejection and it will also help you avoid too many credit inquiries. Once your credit score is 750, you can just stick to a good schedule of repaying all your installments on time.

When you apply for a personal loan, your lender will check other factors apart from your credit history. These factors include your income, your employment status, your previous payment records, etc.

If you show that you have a good income, your loan application will receive a positive result. If you have a regular flow of income each month, then your lender will be satisfied. The lender will check your documents regarding your employment and your income. If you have moved jobs quite regularly, your loan application may not get approved instantly. This is because your lender will assume that you will not be earning a steady income and that you may struggle to clear your debts. Hence, you can try applying for a personal loan only after you have been with a company for a long period. However, if you are in need of funds urgently, you can go ahead and apply for your loan.

What Factors Affect the Interest Rate on Personal Loans?

• Your income: If you are earning a pretty high income with excellent job stability, your lender will believe that you have a good repayment ability. Hence, if you meet your bank’s income eligibility criteria, your interest rate will be good. You can negotiate with your lender for a good interest rate by giving proper documents to prove your income. The lender will then rely on your capability to repay each installment on time. If you have been shifting from one job to another for a long period, your income flow will get affected and this can affect your interest rate for loans also.
• Your credit history and credit score: One of the most important factors that has an impact on your personal loan interest rate is your credit score. It is ascertained according to your credit history. If you have previously taken a loan or a credit card in your name, you will be given a credit score as per your repayment behavior. If you have repaid your previous credits within the prescribed time limit, your credit score will be good. CIBIL will evaluate your payment ability and create a credit report and provide you with a credit score. In India, a positive credit score is usually above 750. It ranges from 300 to 900 and 300 is the lowest credit score and 900 is the best credit score.
• Your relationship with your lender: If you maintain a good relationship with your bank or NBFC that is offering a personal loan to you, you will be able to procure a good interest rate. If you have opened a savings bank account or a fixed deposit with a bank already, you would have established loyalty with this bank. When you approach the same bank for a personal loan, it is highly likely for you to get a good interest rate. The bank would not want to miss having you as a borrower for a loan and hence, the bank will agree to provide you with an attractive interest rate. To prevent you from going to a competitor bank, your present bank will agree to give you a competitive interest rate for your personal loan.
• Your employer’s reputation or goodwill: If you are working in a well-established company when you apply for a personal loan, you will be able to obtain a great interest rate for your personal loan. On the other hand, if you are employed with a new start-up or a pretty unstable company, you may not be able to get an attractive interest rate. Generally, lenders assume that big and well-established companies provide a steady career to their employees. Hence, they prefer employees with a regular flow of income. Therefore, if your organization is well-renowned and famous, your interest rate will be low.

Apart from these above-mentioned points that are associated with a person’s ability to repay, there are certain external factors that play an important role in determining a loan interest rate. These factors include inflation, changes in government policies, etc. If the government modifies any monetary policy according to the changes in the financial environment, then your interest rates can change. Also, when there is an increase in inflation, your loan interest rates can increase.

Advantages of Personal Loans:

• Unsecured in nature: A personal loan is unsecured in nature wherein you do not have to provide any collateral or security while applying for the loan. You only need to assure your lender that you will pay the loan installments on time. Then, your lender will sanction your loan and get it processed.
• Easily accessible: Personal loans are always easily accessible in different parts of the country. Almost every bank and NBFC offers personal loans with simple documentation at affordable prices. You do not have to mention the reason for applying for the loan and you can obtain it from the bank quickly.
• Minimal documentation process: When you apply for a personal loan, you do not have to fret about arranging numerous documents for the approval. You will have to furnish only your basic documents while applying for the loan and you are good to go. You will not be asked to provide any asset as security and hence, you do not have to give any title or verification for the assets.
• No middlemen: When you are applying for a personal loan, you do not have to worry about getting in touch with a middleman. Getting a loan with the help of a middleman or an agent can delay your loan application process. You will also be forced to pay high brokerage fees when you need the help of a middleman. For a personal loan, you can directly go to a bank or a non-banking financial corporation and start the application process.
• Can be used for any purpose: Your personal loan can be utilized to fund any requirement. You can finance your home renovation, your higher education course, your wedding, your medical expenses, etc. You will not have to specify the purpose of obtaining this loan to your lender. You can decide what you want to do with your funds. However, it is very important that you are clear about how you want to utilize your funds before receiving the money.
• Quick processing of loan: When you apply for a personal loan, it will get processed and approved very quickly. This is because it does not need any security or guarantee.
• Special offers and schemes: Since personal loans are one of the most popular categories of loans, banks and NBFCs release many exclusive offers while providing personal loans. You can also enjoy special schemes for personal loans given by certain lenders. A few professionals such as accountants, lawyers, and doctors get special personal loan offers.

Disadvantages of Personal Loans:

• High-interest rate: Personal loans are generally economical. However, since you do not offer any asset as a security or collateral to your lender, your lender may charge a high-interest rate. Personal loan interest rates are higher when compared to other secured loan interest rates such as home loans, car loans, etc.
• Credit history: If you are interested in a personal loan, you should make sure that you have maintained a good credit history. Otherwise, your personal loan application may get denied. To avoid rejection of your loan, you will need to make sure that you have a decent credit history before you apply for a loan. You should work hard to prevent any form of default of payments. You could try applying for a personal loan from a bank with which you already have a savings account or a fixed deposit. This way, you would have established a good relationship with your banker and hence, it will be easy to get a loan from the same banker.
• No option to pay the loan in parts: Sometimes, when you take a personal loan from certain bankers or NBFCs, you may not be allowed to pay your loan in parts. You may be asked to pay your full loan amount in one go for the full loan tenure. In the beginning of your loan tenure, your payments will mainly comprise the interest and this will result in high expenses.
• Bad loans for people with low credit rating: Certain people with low credit scores may somehow get a loan from certain lenders. However, these lenders may charge extremely high interest rates and offer very low principal amounts.

When you are looking for a personal loan, you are most likely having financial limitations. Hence, you need to be very careful while choosing a personal loan option. You need to consider a few aspects of personal loan options when you want to pick one. The factors include EMIs, loan interest rates, processing fee, documentation, prepayment fee, time taken to approve and disburse the loan, responsiveness to alteration in interest rates after policy changes made by the RBI, and eligibility criteria laid by your lender.

You can compare multiple loan options by keeping these above-mentioned points in mind and you can accordingly select any product.

Personal Loans for NRI

In India, banks and NBFCs offer exclusive personal loans for non-resident Indians (NRIs) according to their specific preferences and needs. You can apply for the loan by visiting a bank branch in India or by going to the official website of the bank. Many banks offer personal loans against fixed deposits. Some banks may require the applicant to be a resident Indian and the co-applicant can be the NRI who is a close relative of the applicant.

The documentation process for NRIs is also minimal and simple. You will need to furnish certain relevant documents such as your visa, passport, salary certificate, and bank statements from both domestic and foreign banks. Generally, the personal loan tenure for NRIs is up to 36 months.

Many banks offer the personal loan balance transfer facility that help you in minimizing the burden of your current loan. You can transfer the balance of your existing loan to a new personal loan account and then get additional finances for your other needs. This facility will help you secure a low interest rate.

• Under this facility, the unpaid principal amount is transferred to another account. This facility is easily accessible if you have not defaulted any of your EMIs.
• Apart from reduced interest rates, you can also enjoy longer loan tenures. You may have to pay a small amount as a balance transfer fee to your lender. This depends on the bank or the NBFC that you have chosen.
• You may also go for a loan balance transfer if your current lender is not offering satisfactory services.
• When you go for a balance transfer, you should make certain that you go for a loan that costs lesser than your current one.
• Also, if your present bank fails to meet certain conditions that were negotiated earlier, then you can go for a loan transfer.
• Moreover, you can get a top-up loan facility to get more funds for your other requirements.
• While comparing balance transfer options, you should take into account the change in EMIs. The new financial institution may offer lower EMIs when you go for the balance transfer. However, in such cases, the interest may increase very drastically. Hence, you should be very cautious when you choose your new lender.
• Next, you should consider the processing fee for your new balance transfer facility. It should be lesser than what you are paying for your present loan product. You should also check the legal fees, technical fees, administrative fees, valuation fees, etc. when you pick a balance transfer option.
• You should be wary about the special offers provided for loan balance transfers. Nowadays, lenders offer exclusive discounts on loan transfers. Before you go for any of these offers, make sure you read the details regarding the offer very carefully.
• You will also need to read the terms and conditions regarding your new personal loan balance transfer programme.
• You will have to make sure you collect all the documents that you had given to your present lender and give them to your new lender.
• If you are asked to give a collateral for your loan transfer, make certain that you give a collateral for a lower value than your original collateral.

When you have a low CIBIL score, if you approach a bank or an NBFC for a personal loan, your application may not get approved very easily. Hence, you will have to take alternative measures to prove to your lender that you will be able to repay your loan on time. When you have a low CIBIL score, your lender will automatically assume that you will struggle to repay the loan and hence, may reject your application. You can use the following guidelines to make your lender believe in you and get your loan application approved:

• Show income proofs to your lender: If you have recently got a salary increment or a better job offer with a good pay hike, then you can show relevant documents to your lender to give proof. When your lender is aware that you are earning better now and that you will not struggle to repay, your lender will accept your application. Meanwhile, you can work on improving your credit score by following stringent measures to clear all your debts quickly.
• Check out peer-to-peer lending: Peer-to-peer lending is not a mainstream form of lending. However, when banks and leading NBFCs are not ready to offer a loan to your due to your CIBIL score, you can shift to peer-to-peer lenders. You may have to pay very high interest rates for such loans. However, since you have no other option, you may have to go for these loan products.
• Take help from your spouse or family member: If your spouse or any other close family member has a better credit score than you, then you can take his or her support to apply for a personal loan. You may also make your spouse to be your joint applicant. Or you can ask your spouse to apply for the loan and you can be the co-applicant.
• Take a secured personal loan: Personal loans are usually unsecured loans. However, if you have a low CIBIL score, you can discuss with your lender and decide to go for a secured personal loan. You can offer any valuable asset as a collateral. In this case, your lender will be ready to ignore your credit report. You can give FDs, assets, shares, or gold as your collateral.
• You can find out about certain NBFCs that offer personal loans in spite of low credit score: Most banks are very strict about applicants meeting eligibility criteria related to credit score. Hence, you can do proper research to find a reliable NBFC that will agree to offer a personal loan in spite of your credit score. You may be required to pay a high interest rate though.

When you want to select your personal loan tenure, you will need to consider your interest rate and your EMI amounts. You need to remember that if you go for a longer loan tenure, your EMIs will be lesser. This way, you will incur less expenses for your personal loan. However, you also need to bear in mind that you will be paying higher interest if you choose a loan for a longer tenure.

You can calculate your EMIs by using a personal loan calculator which is available online. Many third-party websites and official websites of banks have an advanced EMI calculator. You can check out the EMI calculator offered by BankBazaar. After computing your EMIs for different loan tenures, you will get an idea about how much you will spend each year. Accordingly, you can choose your loan tenure.

You should also consider your prepayment terms. When you are sure that you will be prepaying your loan, you can enter these details in the EMI calculator. You will get accurate results accordingly. You will most likely be asked to pay a prepayment penalty when you go ahead. If you want to prepay your loan within 1 or 2 years, you can go for a longer loan period so that your monthly payments will be lesser.

How to Deal with Credit Card Debt Using Personal Loans?

Many financial experts and advisors advise credit cardholders to clear their debts using a personal loan. It is a pretty popular method to handle credit card debts. You can take a personal loan if you are paying very high interest rates for your credit card. With a personal loan, you can get a comparatively lower interest rate. This way, you can save a decent amount of money when you clear your credit card dues with a personal loan.

You can also consolidate your credit card debts with the help of a personal loan into a single loan account. This strategy is very effective especially if you have several credit cards in your name.

You do not have to remember your different payment deadlines. You can instead consolidate your debts into one personal loan account and then avoid late payment fees or overdraft fees. You can track your repayments efficiently in one consolidated account and save funds also.

While repaying your credit card debts with your personal loan, you can be extra careful with your other expenses to make sure that you start a disciplined lending process. You will need to work very hard to ensure that you eliminate your heavy debt situation. You can achieve this by avoiding unnecessary expenses that can be made later.

Every organisation or company in the world requires one key ingredient in order to make profits – Money, and the lack of it can hamper the growth of not just a company but also an entire nation. Banks and lending institutions cater to a large chunk of the financial needs in the country, helping players establish themselves. Getting a loan, is however not as easy for someone who does not have access to banks, especially in rural areas. This is where the concept of Microfinance comes into the picture, ensuring that deserving candidates who require small to medium range loans get sufficient amounts to fund their dreams.

With a majority of the Indian population residing in rural areas, access to banks is limited, with microfinance institutions catering to millions. The concept of inclusive growth has made them a reliable ally, contributing towards the development of the community and thereby the nation. These Microfinance Institutions offer loans to people from the lower income group, people who would generally not be in a position to avail loans from major players. The number of Microfinance Institutions in the country is steadily increasing, ensuring that finance isn’t out of reach for members of the society.

Top 10 Microfinance Companies in India 2017

With the number of microfinance institutions increasing on a steady basis, customers are spoilt for choice, with each MFI bringing something unique to the sector. Listed below are the top 10 MFIs in the country.

1. SKS Microfinance - SKS Microfinance has been catering to the needs of the underprivileged community for over 18 years now, offering small loans ranging between Rs 2,000 and Rs 50,000 to such members. Apart from financial assistance, it also offers training programs to uplift the overall condition of it borrowers. A wide variety of products coupled with their vision to empower women have made SKS Microfinance the preferred choice for thousands.
2. Sahayog Microfinance – Established in 2009, Sahayog Microfinance today has over 75 branches spread across the states of Gujarat, Chhattisgarh, Maharashtra and Madhya Pradesh. Offering loans under three categories, one can get financial aid ranging from Rs 8,000 to Rs 1 lakh, with the interest computed on a reducing basis.
3. Ujjivan Financial Services – With a history of close to 12 years, Ujjivan Financial Services is one of the largest MFIs in the country, with a presence in over 200 districts across India. It caters primarily to women from underprivileged backgrounds, offering collateral free small loans for both groups and individuals. Individuals can avail loans ranging between Rs 2,000 and Rs 10 lakh, depending on their requirement.
4. Madura Microfinance – Madura Microfinance is a popular name in South India, catering to Tamil Nadu and Karnataka. This MFI has the unique distinction of being named one of the most cost efficient MFIs in the world. Low interest rates combined with ease of access have ensured that deserving members get the financial aid they require. Apart from microfinance, it also concentrates on educating people, aiming to provide inclusive growth.
5. Bandhan Financial Services – Bandhan Financial Services is one of the biggest success stories in the MFI sector, and within just 15 years of its establishment finds itself among the best in the country. It has a special interest in Eastern and North-Eastern India, aiming to provide financial assistance to develop this region. Loans ranging from Rs 1,000 to Rs 5 lakh can be availed from Bandhan, which also offers pension schemes and insurance, making it a complete service provider.
6. Cashpor Micro Credit – With its headquarters in Varanasi, Cashpor Micro Credit provides microfinance solutions to the downtrodden across the states of Bihar, Uttar Pradesh and Chhattisgarh. Offering loans to meet multiple contingencies, one can avail financial assistance ranging from Rs 1,000 to Rs 15,000. Competitive interest rates and an onus on the needs of people have made it an extremely popular choice in this region.
7. ESAF Microfinance – Established in 1992 in Kerala, ESAF Microfinance has been catering to the underprivileged society for over 24 years. With a presence in over 6 states and offering financial assistance to close to 7 lakh families, ESAF offers microcredit and social security services to its members. With 14 products designed to cater for different purposes, ESAF ensures that financial aid doesn’t become an impediment towards the growth of an individual.
8. Annapurna Microfinance – Set up in 2007 with an aim to provide financial assistance to the economically weaker section, Annapurna Microfinance is one of the major players in the MFI segment today. With a worth of over Rs 100 crore and over 150 branches in 7 states, it offers financial aid to around 6 lakh people, with an aim to empower 10 lakh individuals in the next 2 years.
9. Utkarsh Microfinance – One of the late entrants into the microfinance sector, Utkarsh Microfinance has grown to become a popular name in certain parts of the country. With over 300 branches across India, it offers a diverse range of products for both individuals and groups. Loans up to Rs 3 lakh can be availed from Utkarsh, which also offers pension assistance to uplift backward communities.
10. Equitas Microfinance – Equitas Microfinance was set up in 1994 with an aim to offer financial assistance to those who didn’t have access to banking products. With an onus on transparency and financial inclusion, it has grown into one of the most popular MFIs in the country, offering products for multiple purposes. The company has expanded to 7 states and has over 350 branches to ensure that financial aid isn’t too far away.

Borrowers can take a personal loan against Mutual Funds or similar debt instruments. In case your income is lower, the mutual fund investment will make up for the lower income and it also enhances your loan eligibility. The debt instruments are a safer option and less volatile. The rate of interest charged on the loan will be lower than the rates provided for unsecured personal loan. To avail a loan against mutual fund, an application has to be filled by the joint holders of the mutual fund portfolio to seek for a loan. The loan amount sanctioned is a percentage of the value of the units held in the folio on the date of giving the loan. If the borrower defaults on the loan, then the lender can ask for the units in the portfolio to be redeemed. The proceeds will be used to pay the lender.

Q. What is Personal loan?

A. Personal loan is an unsecured loan that is given without any security. The end use of the money is not monitored either.

Q. What can I use the Personal loan for?

A. You can take a personal loan to meet any personal financial requirement or to repay your credit card bill, to buy electronic items, to take a vacation or to even meet the expenses of a wedding or any other function.

Q. Who can apply for a personal loan?

A. A salaried individual, self-employed professionals and self-employed non-professionals can apply for a personal loan.

Q. What is the minimum tenure of a personal loan?

A. Most banks will provide personal loan for a minimum of 1 year.

Q. What is the maximum tenure of a personal loan?

A. Most banks will provide personal loan for a maximum of 5 years.

Q. What is the eligibility criteria to avail personal loan?

A. The minimum age of the applicant must be not less than 21 years and the maximum age of the applicant at loan maturity must be 65 years.

Q. Will the banks charge me a processing fee?

A. Yes, usually the banks charge a processing fee of 2-3 percent on the loan amount. You can however negotiate with the bank to reduce the fee.

Q. How can I repay my personal loan?

A. Personal loan can be repaid in equal monthly instalments or EMI. You can provide a post-dated cheque or can give a standing order with your bank or through electronic transfer. Q. What is an EMI?

A. EMI or Equal Monthly Instalment includes principal and interest.

Q. Is part- prepayment allowed on my personal loan?

A. Personal loans can be prepaid in parts or fully at any stage. Some banks might charge a prepayment penalty whereas some banks will not. Some banks will not allow the part-prepayment. So, check all the documents before finalising with the bank.

Q. Will I need a guarantor to take a personal loan?

A. No, you will not need a guarantor to take a personal loan.

Q. Can I club my income with my spouse to take a personal loan?

A. Yes, you can club the income of your spouse to boost your eligibility to avail a personal loan.

Q. How much personal loan can I take?

A. The banks do not usually let you take a loan exceeding 30- 40 percent of your net salary.

Q. What is the minimum loan limit offered for personal loan?

A. Generally, the minimum amount limit that one can take a personal loan is Rs.1,000.

Q. What is the maximum loan limit offered for personal loan?

A. Generally, the maximum loan limit is Rs.15 lakhs.

Q. Do I need to submit any security or collateral to take a personal loan?

A. No, you don’t have to provide any security or collateral to take a personal loan.

Q. Do I get to choose between a fixed and a floating rate of interest for the personal loan?

A. Yes, you have the option to choose either the fixed or floating rate of interest.

Q. What is the rate of interest that will be charged on my personal loan?

A. The interest rate varies from banks to banks and it is within 14-26 percent depending on your profile and the scheme that you opt for.

Q. How many days does it take for the bank to disburse the personal loan amount?

A. Banks disburse the loan within 72 hours to 7 working days provided all the documents are in place.

Q. Will the banks check my CIBIL score while reviewing my application?

A. Yes, banks refer your CIBIL score and credit report and the minimum CIBIL score requirement is 750+.

Q. Will the CIBIL score affect my personal loan interest rate?

A. Yes, the CIBIL score affects the interest rate offered to you. If your CIBIL score is high and if you have a good repayment history, then the bank will offer you a lower interest rate.

Q. How will I be eligible for a relationship discount?

A. If you have been a customer for a particular bank for a while, then the bank might reduce the personal loan interest rate or other such charges. Some banks will also provide you additional services.

Q. What are the documents required to seek a personal loan application approval?

A. You need to submit an identity proof as well as residence proof, your latest salary slip, form no. 16, last 6 months bank statement and a passport sized photograph that is to be affixed on the application form.

Q. Do I need to open a bank account to service my personal loan?

A. If you don’t have a bank account with the bank, it is not mandatory to apply for one. But, if you apply for a loan with your existing banker, then you will be eligible for a relationship discount.

Q. How do I stop executives from calling me to let me know about other loans?

A. Some banks let you register yourself for ‘Do Not Disturb’. The executives will not disturb you with cold sales calls.

Q: What is the best way to apply for personal Loan?

A: The best way to apply for an personal loan is by using the online loan application tool at BankBazaar.com The tool can be accessed on this page allowing users to choose personal loan from various banks and NBFCS as per their selection.

Q: What is the minimum and maximum amount of Personal Loan that I can get?

A: Various banks and NBFC’s offer personal loans ranging from a minimum amount of Rs. 1000 to a maximum amount of Rs. 15 to Rs. 20 Lakhs. The maximum and minimum loan amount depends on the underlying bank as well as the personal financial details of the loan seeker.

Q: What is the tenure for which I can avail a Personal Loan?

A: Various banks offer different tenure for personal loans. The most common tenure period offered by majority of banks and NBFCs ranges between 12 to 60 months.

Q: Can I Track my Loan Application?

A: BankBazaar.com offers it's loan applicants an active tracking tool through both email and SMS allowing them to track daily updates of their loan application.

Q: Is my Data Safe with BankBazaar.com?

A: BankBazaar.com is India’s premier financial market place and takes utmost care in ensuring the all data is sent in electronic form with high level of encryption. BankBazaar.com does not share data with any third party other than the financial institution.

Q: Is BankBazaar.com Personal Loan Tool Free?

A: Yes BankBazaar.com personal loan calculator tool is totally free and the portal does not charge any fee for it's services from members.