Personal Loan

Yes, you can get a personal loan without providing salary slips. You can submit your bank account statement/ a copy of Form 16/ employee certificate from the employer, etc. as proof of income to fulfil the eligibility criteria. However, it is always recommended to confirm the list of required documents with the lender as it may vary from one bank to another.

Yes, you can apply for a personal loan even if you already have a home loan. However, the chances of getting the loan approved will depend on whether you have adequate repayment capacity to repay the proposed loan.

Lenders are free to levy prepayment/foreclosure charges on personal loans availed at fixed interest rates. However, the RBI has barred the lenders from levying these charges on loans availed at floating interest rates.

In some cases, you may cancel a personal loan after disbursal subject to the terms and conditions of the lender. Loan cancellation will lead to cancellation charges and processing fees. Please note that all banks do not allow loan cancellation once the amount is disbursed. However, you can always prepay the loan amount as per the terms and conditions of the bank and save on the interest component.

Some lenders use EMI/NMI ratio while some may use a multiplier method to determine their applicant’s eligible loan amount. As these ratios may differ across lenders, the maximum loan amount that you can avail on Rs 60,000 salary would also vary.

Traditionally, personal loans are unsecured loans, which implies that the borrower does not need to pledge collateral or security to avail the loan. However, some lenders also offer secured personal loans wherein the borrower needs to provide security or collateral to avail the loan. An applicant should opt for the secured loan facility only when he is ineligible for availing unsecured loan or is charged very high interest rates for it.

Pros: Personal loan comes with several benefits like no restrictions on end usage (other than speculation), no collateral/security requirements, minimal to no documentation and quick processing. Cons: The interest rates are usually higher than its secured alternatives like gold loan, loan against property, etc. Also, its short repayment period/tenure (usually till 5 years) leads to higher EMIs, which in turn reduces the EMI affordability and overall loan amount eligibility of the borrower.

The minimum income requirements set for availing personal loans vary across lenders. While the minimum monthly salary requirements set by top lenders usually ranges between Rs. 15,000 and Rs 30,000, some lenders also offer loans to applicants having lower monthly income.

Yes, you may avail personal loans from multiple lenders at the same time, provided the lender of your second personal loan is satisfied with your repayment capacity. However, it is better to take a single loan of a larger amount from the lender providing lower interest rates and/or better terms and conditions.

Yes, the proceeds of a personal loan can also be used for financing various business requirements except for any speculative activities.

You can make personal loan EMI overdue payments online through the bank’s internet banking platform, mobile application, UPI app or other digital payment systems such as NEFT/RTGS, digital wallets (e-Wallets) and payments apps. You can also visit the lender’s branch to make overdue payments through offline modes like cash, cheque and demand draft (DD).

Lenders offer personal loans to pensioners in the form of pension loans. However, these loans are offered only to those pensioners who maintain their pension account with the respective bank.

Those who had availed their personal loans at higher interest rates and are now eligible for lower interest rates due to their improved credit profile should avail balance transfer facility. However, before making the transfer, they should calculate the net savings from the transfer after factoring in various costs associated with the transfer. If the savings are not significant, then they should continue with their existing loan.

Your existing lender will provide you with a no-dues certificate after the complete repayment of your personal loan.

Students can apply for personal loans only if they satisfy the various eligibility requirements related to age, income, credit score, etc. set by the lenders.

Personal loan tenure usually ranges from 1 to 5 years. However, some lenders offer maximum loan tenure of 6-8 years.

Reducing rate of interest refers to a method wherein the interest is calculated on the outstanding loan balance each month. The EMI comprises both the interest on the current outstanding amount and a portion of the principal.

Currently, most personal loans are offered at fixed rates as most of them have a relatively short tenure of up to 5 years.

No, a personal loan cannot be directly transferred from one person to another, as it is sanctioned on the basis of the borrower's credit profile. However, you may transfer the outstanding loan to another lender offering lower interest rates.

To increase the chances of personal loan approval ensure that you pay all your EMIs and credit card dues in time, check your credit report regularly for errors and maintain stable income and employment. You also need to choose the right loan amount and tenure, do not apply for loans simultaneously and maintain a healthy relationship with the bank to enhance the chances.

Yes, Non-resident Indians (NRIs) can apply for personal loans from leading financial institutions. However, the eligibility criteria and documents required from lenders shall differ from those of resident Indians.

Personal loans can negatively or positively affect your credit score. If you pay your entire loan EMIs in time it shall positively impact your credit score. However, applying for personal loan can bring a dip in your credit score due to a ‘hard enquiry’ as termed by the Credit Bureaus. Personal loan further helps in building credit history and improves credit utilization making a positive impact on your credit score.

The EMI for a Rs. 2 lakh personal loan depends upon the offered interest rates, desired loan amount and repayment tenure. Assuming the personal loan rate of interest of 10.50% p.a. and loan tenure of 1 year the EMI for a Rs. 2 lakh personal loan shall be Rs. 17,630 and total interest payable shall be Rs. 11,557.

Certainly, there are few lenders who offer ‘Temporary EMI Freeze’ or ‘EMI Moratorium’ service in which the borrower is given relief for not paying EMIs for a defined period. However, the interest continues to add on the outstanding loan amount.

If due to any unforeseen circumstance, you are unable to pay your personal loan EMIs then you shall have to pay late payment charges, your credit score will be lowered, your loan becomes NPA (if not repaid within 90 days) and it becomes tough to get future credit products.

The basic documents required for a personal loan include Identity proof (Aadhaar card, Driving License, Voter ID, passport); Address Proof (Aadhaar card, Utility Bills, Passport, Driving license); Income Proof for Salaried (Latest 6 months' salary slips, last 3 months' bank statements, Form 16, ITR).

Usually, it takes anywhere from a few hours to a few business days to disburse a personal loan. However, it depends on the lender’s policies, processes, and related timelines. However, if you are a pre-approved customer of a bank or NBFC then you can get instant approval with quick disbursals.

To get a personal loan without documents, you need to be a pre-approved customer of the bank or NBFCs. If not, you can still avail personal loan without documents but at higher interest rates by checking out for Instant personal loan apps, and search Fintech lenders and NBFCs offering personal loans without documents.

Let’s assume the rate of interest of 10.50% p.a. and loan tenure of 5 year. The Equated Monthly Instalment (EMI) for a Rs. 10 lakh personal loan shall be Rs. 21,494 and total interest payable will be Rs. 2,89,634.

Most lenders offer top-up personal loans to existing borrowers with a good repayment track record. The eligibility depends on factors like repayment history, income, and the lender’s policies.

GST is not levied on the personal loan EMI amount. However, GST at 18% is applicable on loan-related charges such as processing fees, foreclosure charges and penal interest.

The processing fee is calculated as a percentage of the sanctioned loan amount. For example, a 2% fee on a Rs 5 lakh loan would be Rs 10,000.

You can use online Personal Loan EMI calculators to easily calculate your EMI based on different loan amounts, interest rates, and tenures.

If your EMI bounces, the lender may charge penalty fees, EMI bounce charges, or cheque bounce charges. Additionally, the default can be reported to credit bureaus, which may negatively impact your credit score.

Many lenders offer pre-approved personal loans with instant disbursals to their select existing customers having good credit profiles. Thus, consumers should first check for such pre-approved offers with banks and NBFCs with whom they have an existing banking relationship. After checking for pre-approved offers, visit online financial marketplaces to compare personal loan offers from various banks and NBFCs offering quick disbursals, preferably within the same day of making the loan application.

The minimum income requirements set for availing personal loans vary across lenders. While the minimum monthly salary requirements set by top lenders usually ranges between Rs. 15,000 and Rs 30,000, some lenders also offer personal loans to applicants having lower monthly income.

Personal loans can be availed for any purpose, except for speculation or illegal activities. Borrowers can use the loan proceeds for covering medical emergencies, home renovation, wedding, vacation, business operations, etc. The loan can also be used for managing everyday expenses or for covering higher education costs (including courses not eligible for education loan) and for consolidating multiple high-interest debts.

Your chances of loan approval may vary from one lender to another based on the varying credit risk assessment of the applicants and the internal credit risk policies of the lenders. On rejection of your personal loan application, first approach banks/NBFCs with whom you maintain your deposits, loans and/or credit card accounts as many lenders prefer to lend personal loans to their existing customers. Then, visit online financial marketplaces to compare the personal loan offers from other lenders and then, apply for the loan accordingly.

Choosing the right tenure for your personal loan is crucial as it directly impacts your EMIs as well as the total interest cost of the loan. Note that your EMI decreases with the increase in the loan tenure and vice-versa whereas longer loan tenure results in higher total interest cost and vice-versa. Thus, opt for longer tenure only when you lack adequate repayment capacity after considering your monthly contributions for your unavoidable financial goals. Otherwise, opt for a shorter tenure.

Yes, you can close your personal loan before the tenure of the loan ends. But you would need to pay pre-closure charges to the lender Bank or NBFC. Pre-closure charges vary lender to lender and are usually 2%-5% of the outstanding loan amount. Generally, the earlier you close your loan, higher the pre-closure charges. For instance, HDFC Bank charges 4% of the principal outstanding if you close the loan in the first 24 months, 3% in case of 24-36 months and 2% if you close after paying 36 months of EMIs. Do note you also pay GST on the pre-closure charges. Once you pay the pre-closure charges along with the full outstanding amount of the personal loan, ensure you get a no dues or loan closure certificate from the lender.

Personal loan insurance can provide financial security by covering your outstanding loan repayments in case of unforeseen circumstances like death, serious illness or disability. However, purchasing this insurance is not mandatory while availing personal loan. If your existing life insurance policy already offers adequate coverage for loan repayment, you may not need to purchase additional loan protection policies.