Shri AgalyaDevi Associates

Personal Interest Rates

A personal loan is an unsecured loan that banks offer without any collateral or security, based on an assessment of your income, employer and credit score.

There are no end-use restrictions these loans and can thus be used for be it a medical emergency, wedding, education.

Features and Benefits of Personal Loan

Given are the features and benefits of a personal loan:-

Unsecured Loan

Personal loan does not require any collateral or security such as a house, car or jewellery. Loan approval is based on your creditworthiness and employment profile which is reflected by your credit score.

Flexible End-use

The loan amount can be used for various purposes like meeting expenses of a medical emergency, travel, house renovation, debt consolidation, etc. There is no end-use monitoring by banks.

Flexible Tenure

You can choose the tenure as per your requirement. The tenure ranges between 2 months to 60 months.

Minimal Documentation

You are only required to submit minimal documents including documents for identity proof, address proof and income proof.

Quick Disbursal

You can have a loan amount credited to your account within 48 hours to 72 hours. If it’s a pre-approved offer then the loan can get sanctioned within a few hours.

Types of Personal Loan

You can avail personal loans for multiple purposes without any restrictions on end-usage. Best personal loans available for specific uses are as follows:-

Travel Loan: is also known as a holiday loan that you can take to meet all the expenses related to vacation and pay the amount later. The added benefit of this loan is that it comes with travel insurance.

Wedding Loan: Many lenders offer which helps you make your or your child’s wedding a memorable event. The funds can be used for organising destination weddings as well as buying jewellery.

Home Renovation Loan: A home renovation loan, also called a home improvement loan, helps you take care of costs like repairing costs, buying new material, labourer’s charges, etc. Unlike a home loan, you do not need to mortgage your house to get a personal loan for home renovation.

Wedding Loan: Many lenders offer which helps you make your or your child’s wedding a memorable event. The funds can be used for organising destination weddings as well as buying jewellery.

Pension Loan: These are the loans for retired people to help them meet medical or daily expenses. The eligibility criteria such as age, work experience, salary credits etc do not apply for a

Personal Loan For Education:Education Loan has existed for decades and has helped many people fulfill their dream. However, this loan only covers tuition fees, hostel fees and all the other expenses related to education. If you study abroad or do not take the hostel facility, then the living cost will not be covered under an education loan. A personal loan for education can be a better option to cover all these expenses as it can be availed for any purpose and interest rates are also lower than an education loan.

Consumer Durable Loan:Banks offer consumer durable loans to people who want to buy white goods or any electric device. Also, sometimes such loans are covered by insurance.

Top Personal Loan Schemes

These are the best personal loan schemes offered by bank for different professions and purposes:-

  • Loan for Government Employees : The loan is offered only to the people who work in the centre or state government and PSU’s. The rates for central govt, state government, PSUs and defense employees may vary in banks. HDFC Bank, ICICI Bank, Kotak Bank offer the lowest rate on personal loan for govt employees.
  • Loan for Self Employed : This scheme is exclusively designed for self employed professionals like CA, CS, Architects, Doctors, Engineers for personal use or to expand their profession etc. The lowest rate on personal loan for the self employed is 13.00% and is offered by Axis Finance.
  • Loan for Bank Employees : Banks offer special rates on personal loans for bank employees. The discount in rate may vary from 0.05% to 0.25% which is an added benefit for bank employees.
  • Loan for Pensioners : If you are a pensioner and you need funds to meet a medical emergency, wedding of your children, renovate your house then this loan is for you. Here is a list of banks which provide this scheme:-
    Bank of Baroda 10.00% - 15.60%
    PNB 8.45% - 14.45%
    • Loan for Pensioners
  • Loan for Doctors : Also, called Physician personal loan comes with no end usage restriction. You can avail Doctor Loan of up to ₹ 50 Lakh for 5 years tenure if you are a medical practitioner. The lowest interest rate on a doctor loan is 10.50% .
    • Loan for Doctors
  • Loan for Home Improvement : This loan is availed if you want finance for renovation or expansion of home. Remember the loan amount can only be used for home improvement and the rate charged on this loan is similar to regular personal loan.
  • Loan for Education : To fulfill your education dreams or your child’s dream, financial institutes offer personal loans for education. The loan amount can be used to pay tuition fees, hostel fees, air tickets and all other expenses related to education.
  • Balance Transfer : A Personal Loan balance transfer is a process where you can transfer your total outstanding loan from one bank to another. You can opt for a lender who offers the loan at a lower interest rate, this way the overall burden can be decreased. Personal loan transfer rates start at 10.25%. Bank that offers the lowest rate on balance transfer is HDFC Bank.
  • Top Up Loan : A Top up loan is a financing option in which you get extra loan amount over and above your existing loan. You can avail top up loans only if you have a good repayment history. The interest charged on top up loan is similar to the rate at which you avail a personal loan.

Personal Loan Eligibility Criteria

While the essential eligibility criteria to avail of a personal loan vary for every financial institution, below listed are standard eligibility parameters required by banks and NBFCs to avail a loan.

  • Age : The minimum and maximum age to avail personal loan is 18 to 65 years. However, many banks require a minimum age of 21 years.
  • Loan Amount : You can get a Loan of upto ₹ 75 Lakh, subject to your eligibility calculated based on your net take-home salary. Some banks usually limit the maximum eligibility to 10 – 27 times of net monthly income.
  • Employment : Salaried persons working in government, private, or MNC companies can avail of a loan by submitting relevant proofs such as ITR and salary slips.
  • Work Experience : The minimum work experience may vary in banks. However, banks prefer individuals with job stability with at least 3 years of total experience and 6-12 months of current work experience.
  • Credit Score : Lenders may only approve your loan at low-interest rates if you have a 650 or more credit score.

How to Get Instant Approval on Personal Loan?

To get instant approval on a personal loan, you need to fulfil the following conditions:-

  • A good relationship with your existing bank is maintained by paying off dues and instalment on time. If you are a savings account holder, ensure that you maintain the minimum required balance per month. This way, the lender develops trust in you and grants you an instant loan based on your financial credibility.
  • Make credit card payments on time and maintain a good balance between no use and excessive usage of your credit card.
  • A good credit score is key to getting a loan quickly. Maintain a good credit score above 650 and get the loan amount sanctioned in the account within no time.
  • If you are working with top corporations and getting timely salary credits, you stand a better chance of getting a loan.

5 Most Important Things to Consider before taking a Personal Loan

Keep these points in mind before taking a personal loan:

  • Interest Rate : Interest rates are one of the crucial factors to consider. Typically the best personal loan offer has the lowest interest rates. As per the current rates, HDFC Bank, ICICI Bank, Kotak Bank provide the lowest personal loan rates of 10.25%.
  • Processing Fees : The financial institutions also charge processing fees on the disbursed loan amount along with the interest rates. Thus, personal loan at Nil or nominal processing fees on your loan is a feasible option.
  • Part-payment & Foreclosure Charges : Having a loan is indeed a burden on your pockets, and you want to repay as soon as possible. If you have ample funds and want to close your loan tenure before the due date, you must be able to do it at nil or nominal charges.The lower the foreclosure and prepayment charges, the better it is.
  • Flexible Repayment Tenure : Banks provide flexible tenure on personal loans ranging from 12 to 60 months. In some cases, you may also get additional flexibility on your loan, such as repaying the loan through a bullet repayment scheme.
  • Quick Disbursal : Borrower prefers a personal loan due to simple documentation and quick disbursal. In case of emergency, you can avail instant personal loan with minimum documentation.

What to do after Closing a Personal Loan?

When you decide to close a personal loan look at these crucial things:-

  • Pre-closure charges : When you decide to close the loan account, check the pre-closure charges which the bank or NBFC levies. The prepayment charges range upto 5% of the outstanding balance. However, some banks offer Nil charges on prepayment under special schemes.
  • Obtaining NOC : No Objection Certificate is proof that shows that you have cleared all the dues and there is no outstanding balance which you need to pay.
  • Obtain all your original documents : When you avail of a loan, you submit your important documents, so make sure that you take all your documents while closing the account.
  • Ensure updation of your CIBIL Score : Once the loan is repaid in full, the bank must update your loan repayment action in the CIBIL database. However, when banks take time to do so, you need to keep a check on your report, and if it is not done, you should ask your lender.

How to Get Instant Approval on Personal Loan?

To get instant approval on a personal loan, you need to fulfil the following conditions:-

  • A good relationship with your existing bank is maintained by paying off dues and instalment on time. If you are a savings account holder, ensure that you maintain the minimum required balance per month. This way, the lender develops trust in you and grants you an instant loan based on your financial credibility.
  • Make credit card payments on time and maintain a good balance between no use and excessive usage of your credit card.
  • A good credit score is key to getting a loan quickly. Maintain a good credit score above 650 and get the loan amount sanctioned in the account within no time.
  • If you are working with top corporations and getting timely salary credits, you stand a better chance of getting a loan.

5 Most Important Things to Consider before taking a Personal Loan

Keep these points in mind before taking a personal loan:

  • Interest Rate : Interest rates are one of the crucial factors to consider. Typically the best personal loan offer has the lowest interest rates. As per the current rates, HDFC Bank, ICICI Bank, Kotak Bank provide the lowest personal loan rates of 10.25%.
  • Processing Fees : The financial institutions also charge processing fees on the disbursed loan amount along with the interest rates. Thus, personal loan at Nil or nominal processing fees on your loan is a feasible option.
  • Part-payment & Foreclosure Charges : Having a loan is indeed a burden on your pockets, and you want to repay as soon as possible. If you have ample funds and want to close your loan tenure before the due date, you must be able to do it at nil or nominal charges.The lower the foreclosure and prepayment charges, the better it is.
  • Flexible Repayment Tenure : Banks provide flexible tenure on personal loans ranging from 12 to 60 months. In some cases, you may also get additional flexibility on your loan, such as repaying the loan through a bullet repayment scheme.
  • Quick Disbursal : Borrower prefers a personal loan due to simple documentation and quick disbursal. In case of emergency, you can avail instant personal loan with minimum documentation.

What to do after Closing a Personal Loan?

When you decide to close a personal loan look at these crucial things:-

  • Pre-closure charges : When you decide to close the loan account, check the pre-closure charges which the bank or NBFC levies. The prepayment charges range upto 5% of the outstanding balance. However, some banks offer Nil charges on prepayment under special schemes.
  • Obtaining NOC : No Objection Certificate is proof that shows that you have cleared all the dues and there is no outstanding balance which you need to pay.
  • Obtain all your original documents : When you avail of a loan, you submit your important documents, so make sure that you take all your documents while closing the account.
  • Ensure updation of your CIBIL Score : Once the loan is repaid in full, the bank must update your loan repayment action in the CIBIL database. However, when banks take time to do so, you need to keep a check on your report, and if it is not done, you should ask your lender.

Illustration on Personal Loan

Maximum Annual Percentage Rate (APR) 10.83% to 36.58%
Representative example of the total cost of the loan, including all applicable fees
Here is an illustration of the total cost of the loan:
  • Total amount borrowed: ₹ 1,00,000
  • Time period: 3 Months to 72 Months
  • Personal Loan Interest Rate: 10.25% to 36.00%
  • Processing Fee payable to: Upto ₹ 3,500
  • Fee payable to MyLoanCare: NIL
  • Total Monthly Cost – From ₹ 1,865 for 72 Months ₹ 1,00,000 loan at 10.25% (lowest rate, longest time period) to ₹ 35,353 for 3 Months ₹ 1,00,000 loan at 36.00% (highest rate, shortest time period). This is inclusive of principal repayment.
  • Annual Percentage Rate (APR) of charge including all applicable fees: 10.83% to 36.58%
  • Total cost payable over loan tenure: ₹ 1,05,213 for 3 Months loan to ₹ 1,37,796 for 72 Months loan

Documents Required for Personal Loan

You need to be ready with the following list of documents to be submitted at the time of personal loan application:-

Identity proof- PAN Card, Aadhaar Card, Voter ID, Passport
Address proof- Passport, Driving License, Election ID card, Utility bills
Income proof- Salary Slip, Bank Account Statement, Form 16
Self-employed professionals are also required to submit last year's ITR and Bank Account Statement.
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