Compare and Apply for Personal Loans

• No Collateral Required: Personal loan is an unsecured loan which means you don’t need to provide any asset (e.g., a house or a car) as collateral to the bank to avail this loan. Since no collateral needed, a personal loan is sanctioned on the basic of an individual’s credibility that is decided after considering his age, credit score, salary, employer, repayment history, etc.
• Flexible end use: Unlike a home loan or a car loan, a personal loan can be used to deal with multiple purposes without any restriction. It can be used to overcome many financial constraints, which may arise due to a medical emergency, debt accumulation, sudden travel plans, house renovation, etc.
• Flexible Tenure: In a personal loan, an individual gets flexible tenure of up to 5 years to repay the loan amount, thus, making it more preferable than other credit options such as loan against credit cards or gold loans. An individual can choose the tenure as per his repayment ability.
• Simple Documentation Process: To apply for a personal loan, you need to submit minimum documents. Almost all the banks and NBFCs allow their customers to avail a personal loan online, through their app or on the official website and thus, you can easily upload the documents from the comfort of your home.
• Quick disbursal: As the whole process of availing a personal loan takes place online, the documents are uploaded instantly and once approved, the loan amount is disbursed to your account within.
• Flexible Quantum of Loan: Based on an individual’s repayment history, monthly income, age, profession, employer and other such factors, lenders offer personal loan of amount as low as Rs. 10,000 to as high as Rs. 40 lakh. The amount may vary from lender to lender.

The interest rates of personal loans offered by various banks and NBFCs are as follows:

Interest rates by various banks and NBFCs are offered depending on the applicant’s profile and are influenced by many factors including an individual’s age, credit score, repayment history, employer, etc.

Must Check: List of All Banks Personal Loan Interest Rates of 2019

Any Indian citizen be it a salaried professional or self-employed individual is eligible for a personal loan. The eligibility criteria might differ from one lender to another; however, there are a few basic eligibility criteria that are common amongst most lenders. Some of the factors that influence the eligibility criteria of an individual are as follows:

• Credit Score: A good credit score of 750 or above increases the chances of getting your personal loan application approved along with favourable loan amount, interest rate and tenure. It is very important to maintain a good credit score before applying for a personal loan.

Must Read: How to Get your Personal Loan Approved in No Time

• Employment stability: Both salaried professionals and self- employed individuals need to have a stable job or business respectively. As per most banks, a salaried professional having minimum 2 years of working experience with 1 year in current job and a self- employed individual with minimum 2 years in current profession is preferred by the banks.
• Income: An individual should meet the stipulated minimum monthly income (for salaried professionals) or gross annual income (for self- employed individuals) defined by the lender. Most of the lenders prefer a salaried professional with a minimum income of Rs. 15,000 and gross annual income of Rs. 5 lakh.
• Age: An individual also needs to qualify for the age bracket defined by the lender. The age bracket for a salaried professional is usually 21 to 60 years and for a self- employed individual is 21 to 68 years.

The table given below summarizes the basic eligibility criteria required by most banks and NBFCs for individuals requesting a personal loan:

 Important Read: Personal Loan for Salaried Vs Self-Employed

Most banks have similar guidelines for personal loan documentation. A generic list of documents required to apply for personal loan is as follows:

Documents for Salaried Individuals

• Proof of identity (a copy of Passport/Voter ID Card/Driving License/Aadhaar)
• Proof of residence (a copy of Passport/ Voter ID Card/ Driving License/ Aadhaar/Leave and License Agreement/ Utility Bill of not more than 3 months)
• A copy of latest salary slip/current dated salary certificate with the latest Form 16
• Bank statement of previous 3 months
• 2 passport size photographs

Documents for Self-Employed Individuals

• Proof of identity (a copy of Passport/Voter ID Card/Driving License/Aadhaar
• Proof of residence (a copy of Passport/Voter ID Card/Driving License/Aadhaar/Leave and License Agreement/Utility Bill of not more than 3 months)
• Proof of income (audited financials for the last 2 years)
• Proof of office address
• Proof of office ownership
• Proof of continuity of business
• Latest 6 months bank statement
• Two passport size photographs

• Showcase possible lenders: com not only allows you to compare various personal loan options and their interest rates before applying for an ideal one but also showcases the possible lenders who can offer you a personal loan as per the information (age, salary, employment, etc.) you have provided on the website.
• Multiple offers, single platform:com, India's premier loans and cards marketplace has collaborated with various public and private sector banks to offer various personal loan offers on a single online platform.
• Compare different schemes, and then decide:At Paisabazaar.com, you are saved from the hassle of visiting individual sites of banks and other lenders to compare personal loan options available to you. We have a platform where you can compare schemes by different banks and NBFCs offering personal loans.
• Check for loan eligibility: The personal loan eligibility calculatorat Paisabazaar.com checks for the user’s personal loan eligibility in an instant. It helps you know the exact amount that you can borrow as per various eligibility factors such as income, loan tenure, etc.
• Check for loan EMI:Use our Personal Loan EMI Calculator and check what your loan EMI will be before applying for it. If you already decide on an EMI amount, you are better prepared to manage your finances.
• Apply online: No doubt, online services save time as well as money. You can apply for a personal loan at Paisabazaar without any hassle. Also, Paisabazaar eases the experience of online personal loan application by offering customer service to answer all your concerns while you are applying for a loan.
• Get e-Approval, instantly:After successfully submitting your personal loan application online at our website, get an instant e-approval in just a few seconds.
• Privacy and transparency, assured: All personal loan applications submitted with Paisabazaar.com are sent electronically to the concerned bank department assuring complete privacy and transparency.

To apply for personal loan with us, follow these steps:

Step 1. Personal Details: Enter your personal details such as your desired loan amount, residing city, email ID and monthly salary.

Step 2. Eligibility Check: Enter details such as your company name, your name, date of birth and current loan EMI amount (if any).

Step 3. Great Offers: On the basis of your eligibility, a list of offers from different banks and NBFCs will appear. Compare and choose the loan offer that suits your requirements. Fill out the remaining details, which include, personal details, PAN details, employer details, residential address, office address and references.

Step 4. e-Approval: You will get an instant conditional e-Approval from the banks. Furthermore, our team will guide you through the documentation process required to be done for loan processing and disbursal.

Before you apply for a personal loan, it is important that you have a budget in mind as well as an EMI amount that you are comfortable with. The EMI calculation helps you ensure that your monthly budget is not stretched and you minimize the chances of default on your personal loan. Use Paisabazaar’s EMI Calculator to get the EMI amount based on your inputs such as loan amount, interest rate and loan tenure. The personal loan EMI calculator helps you to:

• Identify the right amount you can borrow
• Figure out the amount of interest you would have to pay
• Know the most suited tenure for personal loan
• Borrow with the most competitive personal loan interest rate

Personal Loan EMI Calculator Table

To get an idea about how personal loan EMIs are computed, take a look at the table given below:

Important Points to Consider When Applying for Personal Loan

Some of the points to consider when applying for a personal loan are:

• Assess the amount you need to borrow.
• Check your credit score or CIBIL Score for free.
• Check and compare interest ratesand other charges for different loan offers.
• Look for zero processing fees and zero-penalty for pre-payment option. If it is not available, then prefer loan offer that involves minimal cost. At times, additional costs add up and make a huge difference even after you are offered lower interest rates. Read more about: Is Personal Loan Prepayment a Good Idea?
• Look for payment delivery charges such as early payment charges.
• Carefully look at the risk involved for situation when you are unable to repay the loan amount.
• Always ask for customized personal loan quotes from at least three providers, as many banks offer personalized plans.
• Don’t just fall for lower rates; check whether the banks are offering it on flat interest rate or reducing balance.
• Learn about personal loan guarantor terms and conditions.
• Read the offer document carefully before signing the dotted line as a guarantor and in general.

Ques. Can a student apply for a personal loan?

Ans: A student can apply for a personal loan, provided he/she has a stable and sufficient source of income. Also, his/her age must fall in the acceptable age criteria set by the lender. The student must also fulfil all other required criteria set by the lender.

Ques. Which is better, a personal loan or a credit card?

Ans. A personal loan is better than a credit card as the rate of interest on credit card loan is higher than the rate of interest applicable on personal loans. Read more about: Credit Card vs Personal Loan

Ques. Can I prepay my personal loan without any extra charges?

Ans. Unless there is a special offer from your lender, most banks and NBFCs levy prepayment penalty from 1% to 5% on the outstanding principal amount of a personal loan.

Ques. My credit score is below 750. Will I get a personal loan?

Ans. It depends on the eligibility criteria set by the lender. Some lenders might lend money to applicants with low credit score but the interest rate applicable will be comparatively higher. 

Ques. What is the impact of GST on personal loans?

Ans. The impact of GST on personal loans has not been much. The service tax earlier was levied at 15% and now it is 18%. There has been an increase of 3% in your service tax. Moreover, taxes are not levied on EMIs. However, the one-time costs including processing fee, prepayment charges, etc. will rise as these costs are paid for a service and thus will attract service tax. 

Ques. Can I get a personal loan if I have home loan?

Ans. You can apply for personal loan even if you already have a home loan, provided your lender is assured that you can repay the loan without fail. However, it is not advisable to take several loans simultaneously.

Ques: When Should I Apply for a Personal Loan?

Ans. You can apply for personal loans for ‘n’ number of reasons. Some of them are stated as follows:

• At the time of financial or medical emergency:Personal loans are disbursed quickly, therefore, they are best suited for financial emergencies. Since they can be used for any purpose, you can avail it to fund big medical expenses.
• When you wish for less documentation: To apply for personal loans, you require minimal number of documents. Therefore, its documentation process is simpler and faster as compared to secured loans.
• When you wish to deal with various situations: If you want a single loan to fulfil multiple financial commitments, apply for personal loans as unlike home loan or a car loan it is not limited to a single purpose.
• To consolidate your debts:Finding difficulty to track multiple loan and credit card EMIs? If yes, you can consolidate them by taking a personal loan. Doing so will not only making repaying debts easier but also will save on the interest amount.
• When you do not have collateral:If you do not have collateral or do not wish to put your collateral at risk, apply for personal loans as these loans are unsecured, which implies that it does not require collateral.

Ques: How can I avoid personal loan rejection?

Ans: Loan sanctions are entirely dependent on lenders. Therefore, there is no full-proof formula to get your loan sanctioned. However, you can follow these steps to eliminate all possible reasons of rejection:

• Ensure you meet the bank/NBFCs eligibility criteria.
• Check for inaccuracies of information in your credit report. Get free credit report from Paisabazaar.com
• Pay your existing loan instalments and credit card bills in full and on time.
• Keep your credit utilization ratio below 40%
• Avoid multiple loan applications at once.
• Verify information furnished in the loan application form.
• Try to pay off some of your debt to bring down your leverage levels.

Read More About: 6 Common Reasons For Personal Loan Rejection

Ques: How should I choose the best personal loan offer?

With a plethora of personal loan offers available, choosing the best one can be challenging for some people. To help you find that personal loan offer that suits your requirement best, follow these tips:

• Compare interest rates:Do not go for the first offer that comes your way. Always compare personal loan interest rates offered by different lenders before choosing a deal. Since going to each lender’s website to see personal loan interest rates would be too inconvenient, therefore, visit online lending marketplaces such as Paisabazaar.com as here you will get personal loan interest rates by various banks and NBFCs consolidated at one place.
• Compare other loan fees and charges:Interest rate is a major deciding factor but not the only one. Borrowers before settling for a personal loan offer must look at various loan charges and fees levied by lenders. The fees and charges usually associated with personal loans include processing fees, late payment charges, loan cancellation charges and service tax for each service given by the lender. Out of all this, processing fee is the most important component in a loan and is usually charged between 1% and 3%.
• Look for repayment flexibility and related charges: Personal loans come with prepayment and part-payment charges. This implies that if you want to repay the loan amount in advance (before the tenure ends), you will have to pay a certain small amount for it and some lenders may not levy any foreclosure charges, however, others might charge 2% - 5% of the loan amount. 
• Decide on how much you can afford each month: Before you apply for personal loan, you need to be sure that you will be able to repay the loan on time without any penalties. To ensure you pay each of your loan instalments full and on time, know the estimate of the loan EMI that you will be comfortable in paying each month. Instead of manually calculating that yourself, save time and use Paisabazaar.com’s comprehensive Personal Loan EMI calculator.

Ques. Is it good to pay off credit card debt with a personal loan?

Ans. Yes, it can be a good idea if you have multiple credit card debts. The rate of interest applicable on a personal loan is lesser than the rate of interest applicable on a credit card. Hence, taking personal loan to consolidate your credit card debts will save on the total interest you pay to lenders and also make loan repayment easier.

Ques. What if I don’t pay the EMI of a personal loan?

Ans. If you miss to pay personal loan EMI, then your credit score will decrease and the loan burden on you will increase. In case, there is default on loan, preliminary notices will be sent to the borrower by the lender mentioning the outstanding balance and the penalty charges. The bank may also go for legal proceedings or approach the guarantor (if any).

Ques. What is minimum salary required to get personal loan?

Ans. The minimum salary required to get a personal loan differs from one lender to another. Most banks have set their minimum salary requirement to Rs. 15,000 but an individual with salary more than Rs. 25,000 have a better chance of being approved for a personal loan.

Ques. What is the best credit score or CIBIL score to get a personal loan?

Ans. Your credit score is a 3-digit number between 300 and 900 that gives potential lenders a quick idea of your creditworthiness. Higher your credit score, the better it is. It is generally advisable to have a minimum credit score of 750 to get a loan. But some lenders might ask for a higher credit score to be eligible to apply for a loan. Therefore, keep your credit score or CIBIL score as high as possible.

Read more about: CIBIL Score for Personal Loan

Ques. Does my credit history and score affect my chances of a successful application?

Ans: A personal loan is usually based on criteria such as your monthly net income and your previous credit history including score. Hence, credit score plays a key role in both ensuring the success of the application as well as in determining the interest rate of the loan.

Ques: How can I improve my chances of getting a personal loan?

To ensure your personal loan is approved by lenders, here are 5 simple tips to follow:

• Know your credit score before applying for the loan:Your credit score plays an important role in getting your loan application approved. A high credit score of 750 and above implies that you have maximum chances of getting your loan approved while a low credit score reduces your chances to getting the loan and might also lead to the rejection of your loan application. Knowing your credit score beforehand will save you from unnecessary rejection and hard enquiry.
• Submit all relevant documents: Personal loan requires minimal documentation; hence there is no margin for error. Read through the document requirements carefully before you submit the loan application. Proper documentation results in quick disbursal of funds. Submitting incomplete or incorrect documents will stretch the loan processing time and may also get your loan application rejected.
• Check your debt-to-income ratio:Your income and the loan amount that you wish to apply for should be proportionate. If you apply for a loan amount whose monthly EMI consumes 80% of your income then your loan application will not be accepted. Hence, you should choose your loan amount very sensibly to ensure that you get the loan.
• Apply with only one bank: Choose your preferred bank wisely and apply with it. Do not apply with multiple banks as it gives an impression to the lenders that you are credit hungry and they might not consider you reliable for a loan. The lenders get to know when you apply with multiple banks through your credit report.

Ques. Is there a prepayment penalty on personal loan?

Ans: Yes, most banks and NBFCs charge a prepayment penalty of 1% to 3% on the outstanding principal amount of a personal loan.

Ques. Can I get a personal loan for pensioner if I have a pension account with one of the leading private banks in India?

Ans: There are several private as well as public sector banks, which offer personal loan to pensioners. However, there is certain age cap with every bank, which you must not exceed at the time of repayment period. You can get a personal loan of up to 10-20 times (depending upon banks' T&C) of your monthly pension amount.

Ques. I want to buy a car for commercial purpose. Should I take Car Loan or Personal Loan?

Ans: To buy a car for commercial purpose you would either have to apply for personal loan or commercial vehicle loan. Commercial vehicle loan are comparatively cheaper than personal loan, however there are some specific eligibility criteria that you need to fulfil. In case, it is difficult to meet the eligibility criteria of commercial vehicle loan, you can avail a personal loan.

Ques. How can I bargain for better rate of interest for personal loan?

Ans: Yes, there are certain points that can help in getting lower interest rates for the borrowed personal loan amount.

• Several banks announce schemes on personal loans during festive season. Request for a personal loan quote at this time as such seasonal offers are good to get attractive interest rate deals.
• Credit score can be a reason of rejection, and it can be a reason to get a better deal. You may bargain with banks for best personal loan deal on having a high credit score.
• A good track record for repayment of loans can be helpful in getting attractive deals.

Ques. Are personal loans taken as tax exemptions?

Ans: As per the Income Tax Act (ITA), there is no specific deduction allowed for personal loans. However, if you are taking personal loan for the purpose of home renovation, then you are liable for tax exemption under Section 24 (b)s of the ITA.

Ques. How do I cancel personal loan after the loan is disbursed?

Ans. You cannot cancel personal loan after the loan is disbursed. But you can prepay the loan amount on which your lender may levy prepayment penalty.

Ques. Can I get personal loan without a salary slip?

Ans. Yes, you can get personal loan without a salary slip. However, it also depends on the lender’s policies. Your bank account statement, a copy of form-16 of last two years, employee certificate from your employer, etc. can be enough to proof of your income and employment. To know which document might be acceptable as an income proof, you will have to approach your lender.

Ques. Can I use personal loan for marriage purposes?

Ans. You can use personal loan for any purpose. Be it to fund a medical emergency, consolidate debts or finance a marriage.

Ques. What are the pros and cons of personal loan balance transfer?

Ans. Personal loan balance transfer is one of the effective ways to lower the overall cost of a loan. The advantages and disadvantages of personal loan balance transfer are given as follows: 

Pros:

• Lower rate of interest:If you are burdened with high loan EMIs, then shifting your loan to a lower rate of interest can lighten your load. Before going for personal loan balance transfer calculate the interest burden. Also, notice if there is a change in tenure and also consider the processing fees and other charges.
• Lower tenure:On the basis of your loan repayment capacity, lower tenure can be quite beneficial for you. A lower tenure means you can be debt-free earlier than you expected it to be.
• Improved credit score:It also gives you a chance to enhance your credit score. Paying your EMIs for a longer period can enhance your credit score. However, EMIs should be paid full and regularly.

Cons:

• Processing fees:You will have to pay processing fee twice. First time when you take the loan and the second time when you transferred the balance to a new bank. So, calculate and check whether transferring funds will be beneficial to switch or not.
• Cash outflow:In personal loan balance transfer, you can get easily attracted to the lower rate of interest but at the same time your repayment period will get longer. Therefore, before opting for personal loan balance transfer, it is important to calculate the total amount you will be paying out. The total cash outflow should not be more than what you are required to pay.

Ques. Can I take a personal loan from two different banks at the same time?

Ans. Yes. On the basis of your credit profile, it is up to the lenders to sanction your loan applications. Depending on your loan repayment capacity, credit history and probably other factors, the loan amount will be decided. To increase your chances of getting second personal loan approval, you can apply for loan with a co-applicant that has an excellent credit score.

Ques. What are the alternatives available for personal loans?

Ans. The alternatives available for personal loans are secured personal loans. In this, you can pledge collateral of value equal to or more than the amount of the loan. Other alternatives to personal loans include secured loans such as loan against fixed deposit, gold loan, loan against public provident fund, etc.

Ques. Can a doctor apply for a personal loan in India?

Ans. Yes, doctors can apply for and get personal loan in India. However, they must be eligible for it. Many banks even offer customised personal loans for doctors.

Ques. Should I take a personal loan to fund a startup?

Ans. Yes, you can apply for personal loan to finance your startup. However, business loan is more advisable as it is specially designed for financing a new business or for refinancing a business. Both are unsecured loans, so you can choose whichever seems to fit your requirements.