Overview Personal Loan

Opting for a personal loan is standard requirement for middle class family (especially salaried segment people ) to meet any of their planned or unplanned expenditure. Ranging from 50k to 30 lakhs every one comes across a situation like marriage in family, jewellery, other family functions unexpected medical expense, holiday trip etc.

  • Repayment options - 1 Year to 5 years
  • Loan amount - 50,000 INR to 30,00,000 INR (special deals for corporate and government employees)
  • Loan interest rates - Starts from 10.99 Percentage

Most of the banks are providing personal loans at a very competitive rate that eligible profiles some time opt for a personal loan instead of other loan specified for that purpose for instance home loan top up or a used car loan this is because of easy and quicker process

Personal loan some times are the only option when other specific loans might not consider our requirement as eligible due to their criteria for example some universities might not be eligible for the education loan or purchasing vacant plot/ land which is otherwise not eligible for home loan or a specified used car might not be eligible for providing car loan .

Apart from the interest rate other factors that one must think about while deciding the bank or nbfc from which personal loan has to be availed is the tenure and quickest disbursement time.

Personal Loans are usually of two types i.e. secured personal loan which is secured against the mortgage of securities, high surrender value insurance policies, gold, etc and another is unsecured personal loan which does not require you to mortgage anything.

Unsecured personal loans do not require you to provide any collateral security, though some PSU banks may insist on a third party guarantee. Unsecured personal loan can be taken to finance any short-term requirement like oversea trips, marriage, medical emergencies, etc. The only condition is that the personal loan should not be used for speculative purposes.

Personal loan is a simple hassle free process of funding your personal requirement with minimal documentation and within quick time. In India, Banks as well as Non Banking Financial Corporation (NBFC) finance personal loan.

Some banks offer special interest rates to its customer on the basis of Company, Profile, Residential status, Income per month. Banks offer lowest rates to only CAT A based company employees. So have a look at major banks personal loan interest rates below

Personal Loan Interest Rate

Personal loan Banks Interest Rates Processing Fee
Axis Bank Personal Loans Hyderabad Axis Bank Personal Loan 11.25% 1.50% to 2.00%
Kotak Mahindra Bank Personal Loan Kotak Mahindra Bank Personal Loan 11.50% Upto 2.5%
HDFC Bank Personal Loan HDFC Bank Personal Loan 11.25% Min 0.99%, Max 2.50% Up to Rs. 10,000
Muthoot Finance Personal Loan Muthoot Finance Personal Loan 10.75% Upto 2.5%
Bank Of Baroda Personal Loan Bank Of Baroda Personal Loan 11.60% 2%, Min Rs. 250
Bank of Maharashtra Personal Loan Bank of Maharashtra Personal Loan 15.10% 1%, Min Rs. 1,000
Canara Bank Personal Loan Canara Bank Personal Loan 13.00% 0.50%
Central Bank of India Personal Loan Central Bank of India Personal Loan 11.3% Rs. 500 + applicable tax
Corporation Bank Personal Loan Corporation Bank Personal Loan 12.95% 1.5%, Min Rs. 500
ICICI Bank Personal Loan ICICI Bank Personal Loan 11.25% 0.99%, Up to 2.25%
IDBI Bank Personal Loan IDBI Bank Personal Loan 13.20% 1%
Indian Bank Personal Loan Indian Bank Personal Loan 11.05% 0.5%, Min - Rs. 508
Union Bank Of India Personal Loan Union Bank Of India Personal Loan 12.70% 0.5%, Min Rs. 500
Oriental Bank of Commerce Personal Loan Oriental Bank of Commerce Personal Loan 10.65% 0.5%
Punjab National Bank Personal Loan Punjab National Bank Personal Loan 12.00% 1.8% + taxes
State Bank of India Personal Loan State Bank of India Personal Loan 12.50% In the range of 2% to 3%
Uco Bank Personal Loan Uco Bank Personal Loan 12.30% 1%
Bank of India Personal Loan Bank of India Personal Loan 12.90% - 13.90% 1,000 to ₹10,000 + applicable tax
United Bank of India Personal Loan United Bank of India Personal Loan 12.70% to 13.70% 0.5%
Syndicate Bank Personal Loan Syndicate Bank Personal Loan 13.40% 0.5%, Min Rs. 500
Dena Bank Personal Loan Dena Bank Personal Loan 13.00% 1%

Personal Loan

Personal Loan is commonly known as all purpose loan it can be uses for fulfilling various legitimate personal needs that includes

  • Higher education for self, children, etc.
  • Marriage in the family
  • Dream vacation
  • Festival expenses
  • Medical emergencies
  • Furnishing or renovation of house
  • Purchase of high end consumer goods
  • Purchasing of high end lifestyle products.

Being unsecured in nature, lenders have stricter norms regarding eligibility and sanctioning of personal loan. But some of the basic eligibility criteria the applicant must fulfill are

  • Should be a Resident Indian
  • Should be minimum 21 years of age
  • Should be Salaried or Self Employed Professional / Non professional
  • Should be a permanent employee of the organization, if salaried
  • Should have continuous source of income to service the loan

Most lenders will require borrower to repay the loan within a period of 12 to 60 months maximum. The borrower can repay the loan by paying regular monthly installments also known as Emi or Equated Monthly installments.

Processing fees varies from lender to lender and will be in the range of 0.5% to 3% (excl. service tax) of loan amount. Generally the processing fee for personal loan is not taken upfront, but is deducted from the loan amount disbursed by the lender.

If the personal loan is availed on floating rate of interest the borrower need not pay penalty for early closure of loan but may end up paying penalty if the loan is on fixed rate of interest.

To start the loan process, the lender will require-
Application Form with photograph
KYC Documents –

  • Proof of Identity – PAN / Passport / Driver’s License / Voter ID card / Aadhaar card, etc.) and
  • Proof of Address – Passport / Aadhaar card / Landline Telephone Bill / Electricity Bill, Ration Card, etc.)

A/c. Statement –

  • Statement of bank account for the last six months
  • If any previous loan, then Loan A/c. Statement for last 1 year

For salaried individuals:

  • Form 16 or IT returns – last 2 years
  • Salary slips for last 3 months

For self-employed:

  • IT returns – last 2 / 3 years
  • Audited Balance Sheet & Profit & loss A/c – last 3 years
  • Proof of turnover vide latest sales / service tax returns
  • Proof of continuity of business (Trade License /Establishment /Sales Tax certificate)
  • Office address proofv
  • Qualification or registration proof required for Self-employed Professionals

Documentary proofs required may vary from customer to customer and the financial institute may ask for more documents, if required.