How to Apply For Personal Loan Online? Eligibility & Docs Required

Personal Loan

Last Updated on 09/09/2020 by Info idea

Personal Loan in India

Personal loans are short term or midterm loans which are unsecured i.e. no mortgage or collateral security needs to be shown for this kind of loans.

The most important feature of this loans are:-

  1. Easily Available: This kind of loans are easily available and the loan amount is transferred to the borrowers bank account within a short period of time with no or minimal documentations and paperwork.
  2. Flexible: Personal loans are flexible loans and can be used for a wide range of activities from medical expenses to home renovations and from buying a car to wedding expenses.

Every commercial bank operating in India offers personal loans to its customers. With the increasing competition, every bank in India is coming up with new and exciting offers to attract more and more customers to take loans from them.

With high credit limit and long tenure and a very low interest rate, almost every bank in India has come up with best personal loan options for its customers.

In India, maximum loan amount of Rs. 30 Lakhs can be fetched from banks by taking a personal loan with a tenure of 60Months which is 5years.

Personal Loan Interest Rate in India

Personal loan interest rate

Loan interest rate is the most important factor that we take into consideration while opting for a personal loan. When we think about taking a personal loan, the first thing that we take into consideration is the interest rate. We choose that Personal loan which offers the lowest interest rate out of all the other personal loans.

In India, interest rate for personal loans ranges between 8% to 14% of the principal amount.  Personal loans with high loan amount tends to have a high rate of interest. If you are thinking of taking a loan of more than Rs 10 Lakhs then the rate of interest will fall between 10-14% based on the terms and conditions of the respective bank.

Top 10 Best Personal Loans in India

Finding the ideal personal loan with a reasonable credit limit, a feasible tenure and a low interest rate requires a lot of research. So to help you with choosing the ideal loan for you, we have chosen the Top 10 best personal loans in India 2020 based on the credit limit, tenure and Interest rate of the loan.

SR No Banks Credit Limit Tenure Interest Rate
1. State Bank of India >=Rs 25000 and <= Rs 20 Lakhs 6 -72 Months 9.60% to 13.85%
2. Punjab National Bank Up to Rs 10 Lakhs Up to 60 Months 6.90% to 11.65%
3. Indian Bank >=Rs 50000 and <= Rs 5 Lakhs 12-36 Months 8.50% to 11.05%
4. Central Bank of India Up to Rs 10 Lakhs 36-60 Months 9.00% to 10.20%
5. Bank of India Up to Rs 10 Lakhs 36-60 Months 10.35% to 12.35%
6. ICICI Bank Up to Rs 20 Lakhs 60 Months 11.25% to 21.00%
7. HDFC Bank Up to Rs 15 Lakhs 12-60 Months 10.75% to 21.30%
8. Axis Bank Up to Rs 15 Lakhs >= 36 Months 12% to 24%
9. United Bank of India Up to Rs 2 Lakhs Up to 36 Months 13.95% (Working Women) and 14.20%(Salaried Men)
10. Yes Bank >=Rs 1 Lakhs and <=40 Lakhs 12 – 60 Months 13.99% to 16.99%

1. State Bank of India Personal Loan

State bank of India is a public sector bank which is run by the Indian government. Because it is a public sector bank, it has some obligations to its customers and hence offers more credit limit, more tenure and less rate of interest as compared to any other private commercial banks. With up to 20 Lakhs as credit limit, tenure of 72 Months i.e. 6 years and interest rate ranging from 9.60% to 13.85%, SBI’s Personal Loan tops our list of top 10 best personal loans in India.

2. Punjab National Bank Personal Loan

Punjab National bank is the next public  commercial bank out of the list whose interest rate falls as low as 8.50%. With credit limit ranging from >= Rs 50000 and <= 10 Lakhs, PNB’s personal loan has tenure up to 36 Months. The overall Interest falls between 8.50% to 11.50% and hence ranks second in our list.

3. Indian Bank Personal Loan

The next in the list is the Indian Bank’s Personal Loan. They provide mid-term personal loans up to the credit limit of Rs 5 Lakhs. The tenure of such loan falls between 36 months to 60 months. The interest rate is however higher compared to SBI and PNB’s Interest rate i.e. 9% to 10.20%. with credit limit of just Rs 5 Lakhs, Indian Banks Personal Loan’s interest seems a little more as compared to SBI’s 20Lakh credit limit and PNB’s 10 Lakhs credit limit.

4. Central Bank of India Personal Loan

Ranking fourth in our list is The Central Bank of India’s Personal Loan. They provide credit limit up to Rs 10 Lakhs for a period of 36 to 60 Months. Their rate of interest ranges between 10.35% to 12.35%. Because of the Interest rate being higher, it ranks fourth in our list.

5. Bank of India Personal Loan

The fifth bank in our list is the Bank of India.  They offer credit limit up to Rs 10Lakhs for a repayment period of 36 to 60 months. Their personal loan is similar to Central Bank’s personal loan. The only reason they are ranked below central bank of India is because of the interest rate. They have a interest rate ranging between 10.35% to 12.35% which is around 2% more than its competitor Central Bank’s personal loan.

6. ICICI Bank Personal Loan

The next place in the list goes to ICICI Bank’s personal loan. It offers credit Limit up to Rs 20Lakhs for a period z of 60months at a interest rate ranging between 11.25 to 21.00%. The reason it is ranked above HDFC bank despite having a high interest rate in comparison to HDFC’s Personal loan is because ICICI’s personal loan provides more credit limit and a very large repayment period for its customer much higher than HDFC’s 15lakh credit limit and 36 months repayment period. This is why ICICI ranks 6th in our list.

7. HDFC Bank Personal Loan

HDFC Bank has been a very attractive bank so far. With attractive offers with their home loans, car loans etc. they have also managed to bring out an attractive personal loan. With credit limit up to Rs 15 Lakhs and tenure ranging from 12 months to 36 months, HDFC bank provides personal loans at 10.75% to 21.30% interest rate. The reason it’s in the 7th place in our list is because of its very high interest rate and a less amount of time given as a repayment period.

8. Axis Bank Personal Loan

Axis Bank provides personal loans up to Rs 15 Lakhs for a period of 36 Months. It has a very high interest rate as compared to the above mentioned banks which is 12% to 24%. This is why they are 8th in the list.

9. United Bank Personal Loan

United Bank of India is another public sector bank that has made it to our list of top 10 personal loans in India 2020. It offers a short term personal loan with credit limit up to Rs 2 Lakhs. With repayment period up to 36 months and interest rate at 13.95% for working women and 14.20% for salaried men, UBI’s Personal Loan ranks 9th in our list.

10. Yes Bank Personal Loan

The 10th position of our list is held by Yes Bank’s Personal loan. With credit limit up to Rs 1 Lakhs and repayment period of 60 months, It has a high interest rate staring from 11.99% and 16.99% for a very low credit limit as compared to its competitors.. This is why it is ranked the lowest among the lot.

Types of Personal Loans in India

Types of personal loan

Because of easy availability of personal loans, Personal loans are a quick and easy way to collect money as debt from the banks. Be it for medical expenses, educational loans or marriage expenses etc, there are many types of personal loans in India to help you out.

The various types of personal loans are :-

1. Short Term Personal Loan

Short Term Personal Loans are those type of personal loans which offers loans for very small amount of money, as low as Rs 1000. Short Term Personal Loans are received by the borrowers bank account with a few hours of application. This loans are supposed to be paid within a few days or within a month from the date the loan is taken.

2. Wedding Loan

As the name suggests wedding loan’s are taken for the sole purpose of organizing a wedding. This kind of loan’s are taken since these loans are readily available and is transferred to the borrowers bank account within just a few days of application.

3. Top-up loan

 (Taken from same lender to increase the loan amount within existing tenure and interest. Offered only if payment is regular)

Top-up loans are those kind of loans which are added to the existing loans by the Lender on the request of the borrower and is to paid off within the given tenure of the existing loan. This kind of loans are only approved if the borrower is regular in the monthly payments of his existing loan.

4. Vacation Loan

Vacation loans are a type of short term loans which are taken when the borrower plans to go on a vacation and requires money for the same.

5. Agriculture loan

Agriculture loans are taken by farmers for the purpose of agricultural practices. Generally such loans have a few perks i.e. low interest rates or an increase in tenure based on the guidelines of the banks.

6. Home renovation loans

If you are planning to renovate your home then this loan is for you. This type of loan is taken by the borrower when he wants to renovate his home.

7. Medical Loan

Medical Loans are taken to cover sudden medical expenses for which the borrower has previously not planned for.

8. Pension Loan

This kind of personal loan is available only to the pensioners. Pensioners can take a part of their pension as pension loans and can pay them off later. However this kind of loan is only available to a pensioner from a bank from which he draws his pension from.

9. Education Loan

Education loans/higher education loans are taken for study purposes. If you/your child want to study abroad or want to go for higher education but doesn’t have enough money then this is the perfect loan to make your dream come true.

10. Festival loan

Festival loans are taken during the time of festivals for some un-anticipated expenses. This are also a type of personal loans.

11. Gadget Loan

Were you eyeing to buy a new smartphone? Do you want to buy a home appliance? Are you a gamer and are interested to buy a gaming laptop but money is a problem then this loan is for you. Many banks offer gadget loans so that you can buy any gadget without having to worry about money.

12. Relocation Loan

Relocation loan is a loan that helps an individual to cover the cost of shifting from one place to another. This loan is a type of personal loans which are given by various banks to their customers.

Personal Loan Eligibility Criteria

Personal loans are attractive loans that are easily available and are transferred to the borrowers account with a short period of time. However there is a eligibility criteria that you need to pass for you to avail the services of Personal Loans.

The eligibility criteria for personal loan are as follows:-

A. Credit Score

Credit score if the 3 digit number that falls between 300 to 900. This is given by the bank to its customer based on their previous repayment activities of their loans , credit cards etc. The more a customer’s credit score is near 900, the more is his chances of getting approved for the loan.

B. Employer Reputation

Employees reputation is also taken into consideration while approving for personal loans. In India , though both government and private employees get loans, it is often found that banks prefer to give loans to a government employee or a private employee working in a reliable enterprise with regular salary.

C. Age

Minimum age to apply for a personal loan is 18 and maximum age to apply for a loan is 60 in India.

D. Minimum Income

The minimum income of Rs 15000 p.m. is taken into consideration for salaried employees and a gross income of Rs 5 Lakhs is taken into consideration in case of self employed individuals while applying for loans.

E. Work Experience

A salaried employee will have to have a minimum of 2 years work experience to get approved for personal loans by the banks. A self-employed individual must have to be in his present field of business for a minimum of 2 years for availing the services of personal loans form the banks.

Documents required for Personal Loan

  1. Address Proof(Adhaar Card, Driving license, voter card, Passport etc)
  2. Age Proof(Birth Certificate, Adhaar Card, Voter Card, Passport Etc)
  3. Identity Proof (Adhaar Card, Passport, Voter ID, Driving license etc)
  4. PAN Card
  5. Pay Slip of last 3 months (For salaried individuals)
  6. Proof of income (Work order, bill etc for self employed individuals)
  7. Details of any previous loans, credit card etc.

Processing of Personal Loans in India

The following are the steps that are followed while processing a personal loan in India.

  1. The customer visit the bank’s branch.
  2. The customer gets the personal loan application form and enter all the required details.
  3. Relevant documents are submitted  that prove one’s income, age, address and identity.
  4. The lender will then verify the documents and check the eligibility of the applicant.
  5. The loan amount will be transferred to the bank account of the applicant if he/she is found eligible.

How to apply for personal loan Online in India?

  1. You can download the loan application form online, from the respective banks website.
  2. Fill up the form and submit the same to the banks branch.
  3. Bank will access all your details, verify all your documents.
  4. Once your documents are verified and the loan is approved, the loan amount will be transferred to your bank account.

*You can also collect the application form by visiting the respective bank’s branch.

Features and Benefits of personal loan’s in India.

1. Easily Available

Personal loans are made easily available to the customers. For availing a personal loan only a very few documents are required and once approved, amount is received by the borrower within a few days.

2. No limitation for use

There is no limitation in using the money acquired by taking the personal loan. The borrower can use the money any way he please.

3. No collateral/mortgage required

In case of personal loans no collateral security or mortgage is required as Personal Loan is a unsecured loan.

4. Fixed Rate of Interest

Personal loans have a fixed rate of interest. Interest rate doesn’t change through out the course of the loan until the ,loan is paid off in full.

5. Tax Benefits

According to 24B of the Income Tax Act of 1961, if the personal loan is used for construction, renovation of house or making down payments for the house tax deductions can be availed up to Rs 2 Lakh. But to avail the tax deduction, you will have to provide necessary documents to prove that the entire loan amount has been used for this purpose only.

Why are personal loans rejected and how to avoid getting rejected?

1. Poor credit rate

Credit score if the 3 digit number that falls between 300 to 900. This is given by the bank to its customer based on their previous repayment activities of their loans , credit cards etc. The more a customer’s credit score is near 900, the more is his chances of getting approved for the loan.

If you have a low credit score than your loan application will get rejected as the bank after accessing your credit score will feel that you are not capable or efficient enough to pay the loan in time.

In such cases, you need to increase your credit score. You can increase your credit score by paying off all your present debts on time. This will lead to add positive points to your score thus increasing your credit score.

2. Existing higher debts

If the bank sees that you have many existing debts such as loans, credit cards etc then the bank will reject your application as you are already overburdened with debts.

In such cases you need to pay off your existing debts before applying for a new debt.

3. Incorrect Documentation

If there has been an error in filling up the application form or if you have submitted a wrong document then your loan application is likely to be rejected.

To avoid such errors, fill up the application with utmost care. Read all the guidelines and submit the required documents accordingly. Only then the application won’t be rejected.

4. Annual Income Criteria not met

If your income is less that Rs 15000 per month (For a salaried employee) or if your income is less than Rs 5 Lakhs annually (for self-employed individuals) then your application will get rejected.

To avoid such condition you need to approach the lender and ask about all the criteria before applying for a loan. Also there are also various Non-Banking Financial Companies which provide loans and for whom annual income criteria is not a important consideration.

5. Unstable Employment History

If your employment history is unstable and you are constantly changing jobs then the bank is most likely to reject your loan application. People with unstable employment history are not considered worthy by the financial institutions for personal loan and if even accepted, will have to pay a higher rate of interest compared to other customers.

Tips for seeking personal loans in India

  1. Check for the credit limit, tenure and interest rate before applying for a loan.
  2. Calculate the EMI and check if you save enough every month so that you are able to pay the loan’s EMI on time.
  3. Rate your credit score and apply for loans accordingly. With a low credit score it is not advisable to apply for a new loan.
  4. Read the guidelines and conditions mentioned by the banks clearly before filling up the application forms.
  5. If you are over-burdened with debts it is not advisable for you to apply for a new loan.
  6. Study the repayment tenure and process clearly before applying for a loan.

EMI Calculator

One of the major factors that we check while applying for a loan is its EMI. EMI refers to Equated Monthly Installments. EMI is the payment that is done every month to a certain period of time until the loan is paid off.

EMI is calculated on the basis of three parameters, Loan amount which is also known as Principal Amount, Tenure and Interest rate. You can calculate your EMI by the following methods.

1. By using Mathematical Formula;

EMI = P * r * (1 + r)n/{(1+r)n-1}                                                                                                                                                 Where P = Loan Amount or Principal Amount, r = Interest rate and n = Time period/tenure of the loan in months.

For example: Suppose Principal amount of a loan is Rs 2 lakhs. The rate of interest is 20% and the tenure of the loan is 2 years.

To calculate the EMI we need to convert the annual interest rate into monthly interest rate by dividing the annual interest rate by number of months in a year i.e. 20/12 = 1.66 per month.

Now by putting the values into the formula :

EMI= P * r * (1 + r)n/{(1+r)n-1}

EMI= 2000000 * 1.66/100 *(1 + 1.66/100)21/{(1+1.66/100)24-1}

EMI= Rs 10, 179.

2. By using online EMI calculators;

You can also calculate your EMI’s by using the various EMI calculators which are available online.

Repayment Tenure’s and Options

There are two tenure options while opting for a personal loan in India.

  1. Shorter Tenure;

In case of shorter tenure, EMI’s are generally higher as the debts are needed to be repaid in a shorter time frame. If you have a steady income and has enough money every month after all payments and expenses then you can go for the shorter tenure repayment option.

  1. Longer Tenure;

If you want to have low EMI’s as compared to Shorter Tenure Repayment Option then you can go for a Longer Tenure Repayment Option. If you suffer monetary deficit every month after paying off all your expenses then you can go for the longer tenure repayment option.

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