Personal loan for first-time borrowers can be a tricky path. First-time borrowers, also known as New-to-Credit (NTC) individuals, often struggle to access credit, as not many lenders are willing to take a chance on them.
But with the rise of digital lending platforms and changing credit assessment models, getting a personal loan without a credit score is no longer impossible. From smart moves to common slip-ups, we’ll walk you through everything to keep in mind while taking a personal loan.
Personal Loan for New-to-Credit Individuals
First, let’s understand who you are as a borrower and why this matters.
- New-to-Credit (NTC) customers are those who have never taken a loan or used a credit card before, meaning they don’t yet have a credit score.
- A credit score is a three-digit number between 300 and 900 that helps lenders assess your creditworthiness. A credit score is built based on your repayment habits.
While traditional lenders may be reluctant to offer personal loans to individuals without a credit history, many modern fintech companies are actively working to fill this gap. Instead of depending solely on credit scores, these lenders assess creditworthiness using alternative data points such as:
- Your income and spending patterns reflected in your bank statements
- Employment stability and the reputation of your employer
- History of timely payments on rent or utility bills
- Digital behavior, including app usage and payment consistency
This means that even if you lack a formal credit history, you could still be eligible for a personal loan, especially if you have a regular salary and a track record of timely payments. Additionally, some lenders offer secured personal loans to new borrowers, though these often come with higher interest rates than unsecured options.
Building Credit Score as an NTC Customer:
Every strong credit score holder started with no credit score. You can build your credit score easily in the following simple steps:
- Apply for a secured credit card or loan
- Repay your loan timely and never miss an EMI.
- Be thorough with all repayment terms and conditions to be on track.
- Always track your credit score and credit report on Paisabazaar.
When to Take a Personal Loan?
While the reasons can be many, let’s look at a few common ones:
- Medical Expenses: To meet the cost of medical emergencies or treatment
- Education Expenses: To fund your higher education abroad or in India
- Wedding Expenses: To cover parts of the wedding expenses.
- Home renovation: To upgrade or repair your home
- Travel Expense: To pay for travel-related costs
Lenders typically offer personal loans to individuals for all sorts of legitimate activities.
Eligibility for Personal Loan for First-Time Borrowers:
Meeting all the eligibility requirements as a first-time borrower can feel a bit daunting, especially without prior credit experience. But with the right guidance, qualifying for a personal loan becomes much easier.
While the exact criteria may vary from one lender to another, we’ve listed the most common eligibility requirements that most lenders expect you to meet.
- Age: 21 to 60 years
- Employment: Salaried or self-employed
- Income: Minimum ₹15,000 per month
- Work Experience: 6+ months for salaried, 1 to 2 years for self-employed
- Bank Account: Active savings account in your name
- KYC: PAN, Aadhaar, and valid address proof
Questions to Ask Lenders as a First-Time Borrower
Don’t leave any room for uncertainty. Always ask your lender detailed questions and clarify every term. Before you sign the dotted lines, make sure you have a solid understanding of the following areas:
- Interest Rate, Processing Fees & Hidden Charges:
As a first-time borrower, your interest rate is likely to be higher. Besides that, you will also be charged for processing fees, prepayment & foreclosure fees, etc. Make sure your lender is completely transparent and offers you loan terms free of any hidden charges.
- Prepayment & Foreclosure Terms
Most lenders charge a prepayment or foreclosure fee. Additionally, some also have a lock-in period before you close or prepay a loan. Be thorough with the terms of prepayment and foreclosure to avoid last-minute shake-ups.
- EMI Flexibility
Ask if you can choose your EMI date or change it later based on your salary credit. Some lenders offer this flexibility to avoid missed payments.
Also Read: Personal Loan EMI Calculator
- Late Payment Penalties
Missing an EMI can attract penalties and harm your credit score. Understand late fee charges and whether there’s a grace period.
- Credit Score Impact
A personal loan can build or damage your credit score. Timely repayment improves your creditworthiness and future loan eligibility.
Always Compare Your Loan Offers on Paisabazaar
If you’re a first-time borrower, it’s important not to settle for the first personal loan offer you receive. Different lenders offer different interest rates, processing fees, tenures, and benefits. At Paisabazaar, you can easily compare multiple personal loan offers from top banks and NBFCs in one place. This helps you make a smart, cost-effective choice that suits your financial needs and repayment capacity. A few minutes of comparison can save you thousands over your loan tenure.
FAQs on Personal Loan for First-Time Borrowers:
- What are the documents required for a Personal Loan for First-Time Borrowers?
You’ll typically need your PAN card, Aadhaar card, income proof (salary slips or bank statements), and a passport-size photo. Some lenders may also ask for employment or address proof.
- Can I get a personal loan without a CIBIL score?
Yes, many fintech lenders offer loans to New-to-Credit (NTC) individuals using alternative data like income, job stability, and bank transactions instead of credit score.
- What are the eligibility criteria for a Personal Loan for First-Time Borrowers?
Common requirements include being 21 to 60 years old, having a minimum income of ₹15,000/month, stable employment, and a valid KYC-compliant bank account.
- How to apply for a Personal Loan for First-Time Borrowers online?
Visit Paisabazaar, fill in your personal and income details, upload required documents, and submit. Get instant offers and choose the one that suits you.
- How can I get a personal loan for the first time?
Start by checking your eligibility, comparing offers from lenders that accept NTC profiles, and applying online. Keep your documents ready and choose a manageable EMI plan.