Personal Loan
Personal loan is an unsecured loan facility, which can be availed by both salaried and self-employed individuals. Proceeds from the loan can be used to meet any personal and business related financial requirements without any end usage restriction. Personal loan also comes with fewer documentation requirements, which enables quicker processing and disbursal than other credit options.
Personal Loan Schemes Offered by Top Banks
| Top Personal Loan Schemes and Offers | |
|---|---|
| HDFC Bank Personal Loan | ICICI Bank Personal Loan |
| Axis Bank Personal Loan | Kotak Mahindra Bank Personal Loan |
| IndusInd Bank Personal Loan | |
HDFC Bank Personal Loan
The interest rates of HDFC Bank personal loan start from 10.50% p.a. The tenure of the scheme can go up to 6 years whereas the loan amount can go up to Rs 40 lakh. The bank also offers pre-approved loans with ‘10 second disbursal’ to its select existing customers based on their credit profiles.
- Interest Rate: 10.50% p.a. onwards
- Loan Amount: Up to Rs 40 lakh
- Tenure: Up to 6 years
- Minimum Salary: Rs 25,000 per month
- Age: 21-60 years
- Credit Score: At least 650
- Processing Fee: Up to Rs 4,999
ICICI Bank Personal Loan
ICICI Bank extends personal loan to cater to the varied financial requirements of its borrowers. The bank also offers Fresher Funding, a special scheme for funding immediate and other financial requirements of younger salaried individuals. For its select existing customers, the bank offers overdraft facility, pre-approved offers and top up loan facility. Its pre-approved offers feature minimal documentation and 3-second disbursals.
- Interest rate: 10.80% p.a. onwards
- Loan Amount: Up to Rs 50 lakh
- Tenure: 1 to 6 years
- Minimum Salary: Rs 30,000/month
- Age: 23 to 58 years for for salaried and 25 to 65 years for self-employed
- Processing Fee: Up to 2.5% of loan amount
Axis Bank Personal Loan
Axis Bank’s Personal Loan covers expenses related to wedding, home renovation, travel, medical emergency and much more. The bank also extends pre-approved offers to its select existing customers. Such offers have digital processing and instant approvals. Axis Bank has also collaborated with My money creator to extend its select customers pre-qualified offers.
- Interest rate: 10.49% p.a. onwards
- Loan Amount: Rs 50,000 to Rs 40 lakh
- Tenure: 1 to 7 years
- Age: 21 to 60 years
- Minimum Monthly Salary: Rs 15,000
- Processing Fee: Up to 2%
Kotak Mahindra Bank Personal Loan
Kotak Mahindra Bank offer loans only to salaried individuals. Existing borrowers of other banks/NBFCs can avail balance transfer facility to transfer their outstanding loan to Kotak Bank at lower interest rates. Those exercising balance transfer facility can also avail top up loans of up to 100% of their loan amount. Kotak Mahindra Bank also offers overdraft facility, giving borrowers the flexibility of withdrawing their funds from their loan account anytime and repaying it as per their convenience.
- Interest Rate: 10.99% p.a. onwards
- Loan Amount: Up to Rs 40 lakh
- Tenure: Up to 6 years
- Credit score: At least 700
- Age: 21-60 years
- Minimum Monthly Salary: Corporate Borrowers – Rs 25,000, Non-corporate Salary Borrowers – Rs 30,000, Employees of Kotak Mahindra Bank – Rs 20,000
- Processing Fees: Up to 3% of loan amount
IndusInd Bank Personal Loan
IndusInd Bank offers multiple personal loan schemes including wedding loan, home renovation loan, loan for medical expenses and loan for education. The bank also offers balance transfer facility to existing borrowers of other banks and NBFCs. For those requiring quick financing, the bank extends instant online loans with quick processing and loan approvals.
- Interest Rate: 10.49% p.a. onwards
- Loan Amount: Rs 30,000 to Rs 50 lakh
- Tenure: 1 to 5 years
- Age: for salaried – 21 to 60 years and for self-employed – 25 to 65 years
- Processing Fee: Up to 3.5% of the sanctioned loan amount
- Minimum Salary: Rs 25,000/month
Features and Benefits of a Personal Loan
Personal loan is a preferred credit option for financing lifestyle goals and fund shortages due to their easy accessibility, minimal documentation and quicker disbursals. Here are the key features and benefits of personal loans:
- Collateral-free loan
- No end-use restriction
- Loan amount of up to Rs. 40 lakh, which can exceed depending on lenders’ discretion
- Repayment tenure up to 60 months, which may exceed on case-by-case basis
- Top up loans for additional requirements are offered by many lenders
- Minimal documentation
- Quick disbursals
Personal Loan Variants
Apart from the regular personal loan schemes, several banks and NBFCs offer various personal loan variants to help their customers meet their unique financial requirements. The broader features such as tenure, processing fees, etc. offered on these loan variants are more or less the same as those offered on regular personal loans. Here is a brief description of some of the personal loan variants:
Instant Personal Loan
Instant Personal Loans are usually pre-approved loans with instant disbursals. These loans are usually offered by banks and NBFCs to their select customers on the basis of their credit profiles.
Short Term Personal Loan
Short-term Personal Loans have short repayment periods usually ranging from a few days to 12 months. They are usually ideal for borrowing smaller loan amounts. Such loans are usually offered through end-to-end digital process, thereby, ensuring quicker loan approval and disbursals to the applicants.
Pre-Approved Personal Loan
Pre-approved Personal Loans are usually offered by banks and NBFCs to their existing customers on the basis of their credit history, income, employer’s profile, etc.
Personal Loan Balance Transfer
Personal Loan Balance Transfer (PLBT) facility allows borrowers to transfer their outstanding personal loan to a new lender for lower interest rates or better loan terms. However, opt for this facility only when the savings made through the transfer outweighs the cost of the loan transfer.
Top Up Personal Loan
The top up is offered to existing personal loan borrowers who need additional funds to meet their financial requirements. This loan facility is usually offered to select borrowers having satisfactory loan repayment history and/or have completed a specified number of EMIs.
Personal Loan for Higher Education
Personal Loan for Education is for individuals requiring funds for pursuing higher education in India and abroad, vocational courses, etc., and are unable to get a conventional education loan.
Processing Fees and Charges
While the fees and charges of personal loans usually vary widely depending on lender and the credit profile of the loan applicants, the following table will give you a fair idea of the personal loan fees and charges levied by the lenders:
| Particulars | Charges |
|---|---|
| Loan Processing Fees | 0.5% to 4% of loan amount |
| Pre-payment/Part-payment/Foreclosure Charges | For Floating Rate: Nil For Fixed Rate: Usually around 2% – 5% on the principal outstanding |
| Loan Cancellation | Usually around Rs 3,000 |
| Stamp Duty Charges | As per actuals |
| Legal Fees | As per actuals |
| Penal Charges | Usually @ 2% per month; 24% p.a. |
| EMI/Cheque Bounce | Around Rs 400 per bounce |
| Other fees and charges | Documentation charges, verification charges, duplicate statement charges, NOC certificate charges, etc. |
Personal Loan Eligibility Criteria
Personal loan eligibility criteria can vary from one lender to another due to their varying credit risk policies. The eligibility criteria can also vary as per the loan variant and the occupation profile of the applicant. Here are some of the personal loan eligibility criteria used by most lenders:
- Age: 18 – 60 years
- Salary: At least Rs 15,000 per month for salaried customers
- Income: At least Rs 5 lakh p.a. for self-employed customers
- Credit Score: Preferably 750 and above as having higher credit scores improve chances of loan approval
- Employment Stability: Usually 1 year with some lenders requiring longer work experience
- Business Continuity: Usually 3 years of business continuity with some lenders requiring longer period of business continuity
- Employment Type: Salaried employees working with reputed organizations, MNCs, Private and Public Limited Companies, Govt. organizations, PSUs, and large enterprises
Documents Required for Personal Loan
Personal loan lenders require documents from their applicants to establish their identity, income, loan repayment capacity, and place of residence. These documents are more or less the same across lenders. Here are the few common sets of documents that you will need to submit when applying for a personal loan:
| Requirements | Salaried Individuals | Self Employed |
|---|---|---|
| Proof of Identity | Passport, Voter’s ID, Driving License, Aadhaar Card or PAN Card | Passport, Voter’s ID, Driving License, Aadhaar Card or PAN Card |
| Proof of Residence | Aadhaar Card, Passport or utility bills | Aadhaar Card, Passport or utility bills |
| Proof of Income | Salary Slips, Bank Account Statement, Form 16 | Previous Years’ ITR, P&L Statement and Balance Sheet, Bank Account Statement |