Over 10 banks and financial institutions in the country offer personal loans to self-employed individuals. The interest rates for such loans usually start at 10.99%. Read on to know more about personal loans for self-employed individuals.
Listed below are a few personal loans that are offered to self-employed individuals by banks and financial institutions in the country:
Interest Rate (p.a.)
11.25% p.a. to 17.99% p.a.
Up to Rs.20 lakh
12 months to 60 months
20% p.a. to 49% p.a.
Up to Rs.30 lakh
Up to 48 months
10.75% p.a. onwards
Rs.1 lakh – Rs.40 lakh
1 year – 5 years
Kotak Mahindra Bank
11.25% - 19.99% p.a.
Rs.50,000 to Rs.15 lakh
1 year – 5 years
11.25% p.a. onwards
Rs.50,000 to Rs.15,00,000
1 year to 5 years
13% p.a. onwards
Rs.50,000 to Rs.10 lakh
12 months to 60 months
16.00% p.a. onwards
Rs.25,000 to Rs.30 lakh
12 months to 60 months
10.99% p.a. to 17.84% p.a.
As per the lender’s terms and conditions
6 months to 60 months
HDB Financial Services
Up to 36% p.a.
Up to Rs.20 lakh
12 months to 60 months
Self-employed individuals between 28 years and 65 years of age can apply for a personal loan from ICICI Bank. Self-employed doctors over the age of 25 years can avail this loan.
For pre-approved customers, the loan amount will be disbursed to their account within 3 seconds.
The lender charges a fixed rate of interest. Thus, the interest charged will not change during the policy term.
Minimum documentation is required when applying for a personal loan from ICICI Bank.
Individuals who are interested in taking a personal loan from ICICI Bank can do so through online channels or by visiting the nearest ICICI Bank branch.
*Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.5 lakh has been availed for a 3-year term at an interest of 14% p.a., with a processing fee of 2.25%.
Pre-payment charges: 5% p.a. of the outstanding principal plus GST
Additional interest on late payments: 24% p.a.
Repayment mode swap charges: Rs.500 per transaction plus GST
Loan cancellation charges: Rs.3,000 plus GST
EMI bounce charges: Rs.400 per bounce plus GST
Legal and incidental charges: At Actuals
Yes Bank Personal Loan for Self-Employed
Yes Bank offers unsecured personal loans up to Rs.40 lakh at attractive interest rates in just 60 seconds. Listed below are the key highlights of the personal loan for self-employed individuals by Yes Bank:
Benefits of Yes Bank Personal Loan for Self-Employed
Customers can choose flexible repayment tenures based on their financial ability.
Yes Bank personal loan approval in 60 seconds.
Quick disbursal of the loan amount.
Personal loan top-up options as well as transfer of existing loans.
*Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.5 lakh has been availed for a 3-year term at an interest of 22% p.a., with a processing fee of 5%.
Collection of cash or cheque: Rs.300
NACH/cheque/ECS dishonour charges: Rs.30
Swap charges: Rs.500
Loan cancellation charges: Rs.1,000
Foreclosure charges: 3% to 7%
Self-employed professionals like doctors, chartered accountants, engineers, company secretaries, MBA consultants, and architects and self-employed individuals like directors, sole proprietors, and partners can apply for this loan, provided they are above the age of 25 years.
The lender has simplified the personal loan application process, with applicants having to submit minimum documentation when applying for a loan from IndusInd Bank.
The lender offers doorstep service.
Applicants do not have to have a guarantor to apply for this loan. Applicants also need not submit any collateral.
*Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.5 lakh has been availed for a 3-year term at an interest of 14% p.a.
Pre-payment/foreclosure charges: 2%% of the outstanding amount
The loan amount will be disbursed to your account in just 48 hours.
The lender charges a fixed rate of interest.
If you require additional funds, you can submit an application for the same to the lender.
For self-employed non-professionals, an interest rate between 17.99% and 18.99% is charged if the loan amount is under Rs.9.99 lakh. If the loan amount is over Rs.10 lakh, an interest rate between 17.49% and 18.49% is charged.
For self-employed professionals, an interest rate between 17% and 17.99% is charged if the loan amount is under Rs.9.99 lakh. An interest rate ranging between 16% and 16.99% will be charged if the loan amount is over Rs.10 lakh.
*Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.5 lakh has been availed for a 3-year term at an interest of 13% p.a., with a processing fee of 1%.
Fore-closure/partial pre-payment charges: Up to 3.75% of the outstanding principal
Cheque return charge: Nil
Cheque swap charges: Nil
HDB Financial Services
This loan can be availed by self-employed professionals, such as chartered accountants, doctors, company secretaries, and architects, self-employed individuals like partners, directors, and sole proprietors, and self-employed private companies and partnerships.
To avail this loan, the applicant has to be over 22 years of age.
The lender offers a quick and hassle-free application process and allows online applications.
*Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.5 lakh has been availed for a 3-year term at an interest of 20% p.a., with a processing fee of 2%.
ECS/cheque bounce charges: Rs.750
Interest on delayed EMI payments: 3% on the overdue EMI amount or the interest amount
ECS/PDC swap charges: Rs.750 per swap
Statement of account charges: Rs.500
Document retrieval charges: Rs.750
Additional repayment schedule: Rs.500
Loan cancellation charges: Rs.1,000
To avail a personal loan, self-employed individuals will need to meet the eligibility criteria listed below:
You will have to be at least 22 years of age.
At the time of the maturity of the loan, the applicant should not be more than 65 years.
The minimum annual income of the individual should be Rs.4.8 lakh.
The applicant should have at least 4 years of post-qualification work experience.
Self-employed non-professionals should have a minimum turnover of Rs.40 lakh, while self-employed professionals should have a minimum turnover of Rs.15 lakh.
Self-employed professionals should have a minimum profit after tax of Rs.2 lakh.
The individual’s business should have been running for at least 5 years. This condition may be relaxed if the applicant is a doctor.
Certain lenders may require applicants to have a relationship with them before applying for a loan.
*Note: The eligibility criteria will vary from lender to lender.
When applying for a personal loan, you will need to submit certain documents along with your loan application. The documents that are commonly requested by banks and financial institutions in the country along with personal loan applications are as follows:
Proof of identity: Applicants can submit their driving licence, passport, voters ID, PAN card, etc.
Address proof: Applicants can submit their utility bills, ration cards, licence and leave agreement, valid passport, sales tax certificate, etc.
Bank statements of the applicant’s current account of the last 6 months
Proof of qualification (highest professional degree will have to be submitted)
Income tax returns of the last 2 years with a computation of income
Profession continuity proof
Proof of age
Address proof of the applicant’s office
*Note: This is a generalised list of documents that you may be asked to submit. Your lender may request additional documents, which will have to be submitted for your loan application to be considered.
Features and Benefits of Personal Loan for Self-employed Persons
Listed below are the features of personal loan for self-employed borrowers:
Self-employed professionals and self-employed individuals can avail a personal loan from a reputed lender in a hassle-free manner.
Competitive interest rates are offered by lenders.
Loans are processed quickly.
The loan amount can be used for personal or business-related expenditures.
Flexible repayment options are offered.
No collateral, security, or guarantor is required to avail personal loans.
The application process is hassle-free.
Transparency is guaranteed by most lenders.
Some banks offer additional benefits like personal accident insurance with the loan.
Things to Consider When Applying for a Personal Loan As A Self-Employed Individual
If you are a self-employed individual and are in need of funds, you can apply to a bank or a financial institution for a personal loan. A number of lenders, currently, offer personal loans to both salaried and self-employed individuals. If you are looking to take a personal loan, make sure to consider the following points:
Eligibility Criteria: Lenders may have varied eligibility criteria with regard to the income, age, business stability, etc., of the applicant. In order for your application to be considered, you should ensure that you meet the lender’s eligibility criteria.
Credit Score: Your credit score is one of the primary factors that is taken into consideration by lenders when deciding whether to approve your loan application or not. Since self-employed professionals may not have a steady source of income, the concerned individual’s credit score is taken as an indication of their repayment capacity and credit-worthiness.
Interest Rate: The interest rate charged for personal loans is not standardised across lenders. Thus, it is in your best interest to compare the interest rates charged by various lenders before availing a personal loan. Make sure to opt for a loan for which the interest rate is not too high, provided that the other terms and conditions of the loan are favourable, as well.
Costs Involved: In addition to the interest that is charged on the loan amount, lenders may levy a number of other costs such as the processing fee, pre-payment charges, payment dishonour fee, loan rescheduling charges, penal charges, legal charges, etc. Cumulatively, these charges can increase the cost of your personal loan. Therefore, when comparing various personal loans, make sure to also check the other costs levied by respective lenders.
Existing Relationship: Certain lenders may require you to have an existing relationship with them for you to be able to apply for a personal loan. Also, if you have an existing relationship with the lender, it is likely that the lender may charge you a lower interest. Thus, if you have a savings bank account, make sure to check if your bank is willing to offer you more favourable terms than other lenders.
Financial Requirements: When it comes to personal loans, it is vital that you don’t borrow more than what you require. Also, you shouldn’t opt for a loan amount that is below your requirement since you may not be able to apply for another loan soon after the first loan is approved and disbursed. Hence, you should make sure that you carefully assess your financial requirements before opting for a particular loan amount.
Repayment Capacity: Given that you may not earn a steady source of income, it is vital that you consider your repayment capacity before applying for a personal loan. The repayment for most personal loans is done through Equated Monthly Installments (EMIs). Thus, you should ensure that you have the required funds to pay the EMIs as per schedule.
How to Apply for a Personal Loan for Self-Employed Individuals?
If you require funds to meet any personal or business requirements, you can avail a personal loan. Self-employed individuals can choose to personal loan through the lender’s website, through a third-party financial services website, or by directly visiting the lender’s branch.
To apply online, through the lender’s website, you will need to first key in certain data and check your eligibility. Post this, you can proceed to apply for a personal loan through the lender’s website. Most lenders will have an online application form on their websites, which you can fill up and submit online, after which a representative from the bank or financial institution will contact you.
If you are looking to apply for a loan through a third-party financial services website like BankBazaar.com, you will need to navigate to the respective website, compare various loans that are listed, check your eligibility, and apply for a loan of your choosing online. In this case, all documents can be submitted online, making the transaction completely paperless.
You can also locate the nearest branch of a lender and visit the branch to apply for a loan. If you wish to apply through a branch, you should ensure that you carry copies of the required documents.
FAQ’s Personal Loan for Self Employed
Is there any benefit to applying for a personal loan online?
Applying for a personal loan through online channels is more hassle-free and convenient in comparison to visiting the branch of a lender to apply for a personal loan. When you apply for a personal loan online, you can submit the loan application from anywhere, and at any time, based on your convenience.
Also, most lenders allow applicants to upload the required documents online, thus making the transaction paperless. The processing time and approval time is also likely to be a lot quicker when you apply for a personal loan online. You can also apply for a personal loan through a trusted third-party financial services website, which will give you the added benefit of comparing various personal loans offered by different lenders on the same webpage.
What is the processing fee?
Ans: Lenders charge a one-time processing fee on the loan amount. The processing fee is a certain percentage of the disbursed loan amount, and this sum will usually be deducted from the loan amount before it is disbursed into your account. The processing fee can vary from 1% to up to 6.5%, based on the lender’s terms and conditions.
Is there any limit to the number of times that I can make pre-payments?
Ans: The number of times that you can make pre-payments towards your loan will vary based on the lender’s terms and conditions. If you intend to make several pre-payments during the loan tenure, you should check whether the lender has any limit with regard to this.
Can I postpone the EMI payment date?
Ans: No, most lenders will not allow borrowers to postpone the EMI payment date. When you borrow a personal loan, you should ensure that you pay the EMI amount within the specified date. If you miss an EMI payment, your credit rating may be adversely affected.
Can I opt for a floating rate of interest when applying for a personal loan?
Ans: Most lenders will charge either a fixed rate of interest or floating rate of interest. Thus, you may not be able to opt for a floating rate of interest if this option is not provided to you. Make sure to compare the type of interest charged by different banks and financial institutions before applying for a personal loan.
A GST rate of 18% will be applicable on banking services and products from 01 July, 2017.
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