A personal loan is a type of unsecured loan that helps you meet your current financial needs. It does not require collateral or security and is often offered with minimal documentation. A personal loan in India is an unsecured loan that you can borrow from a bank or NBFC without pledging an asset as security. You can use the loan for personal needs such as medical expenses, education, weddings, travel, home renovation or debt consolidation.
The lender decides your personal loan amount, interest rate and repayment terms based on factors such as your income, employment, credit history and existing financial obligations. You repay the loan through fixed EMIs over a set tenure, along with the applicable interest and fees.
Since a personal loan does not require collateral, its interest rate is generally higher than that of secured loans such as home or car loans. Your actual personal loan interest rate depends on the lender and your financial profile.
Best Personal Loans in India: Compare Interest Rates, Fees & Loan Terms
Before choosing a lender, compare the interest rate, loan amount, repayment tenure, processing fee and foreclosure terms.The table below compares these key loan terms across leading banks to help you see how their personal loan offers differ.
| Lender | Starting Interest Rate | Maximum Loan Amount | Maximum Tenure | Processing Fee | Foreclosure Charges |
|---|
| SBI | From 10.00% p.a. | Up to ₹50 lakh | Up to 7 years | 1.50% of loan amount, min. ₹1,000 and max. ₹15,000 + GST | 3% of outstanding principal; nil if repaid from a fresh SBI loan |
| PNB | From 10.25% p.a. | Up to ₹20 lakh | Up to 7 years | Up to 1% of loan amount | As per applicable loan terms |
| Bank of Baroda | From 10.15% p.a. | Up to ₹20 lakh | Up to 7 years | 1%–2% of loan amount, subject to minimum and maximum limits; applicable GST extra | As per applicable loan terms |
| HDFC Bank | From 9.99% p.a. | Up to ₹50 lakh | Up to 5 years | Up to ₹6,500 + GST | Up to 4% of principal outstanding, depending on number of EMIs paid |
| ICICI Bank | From 9.99% p.a. | Up to ₹50 lakh | Up to 6 years | Up to 2% of loan amount + taxes | 3% of outstanding principal; nil after 24 EMIs |
| IDFC FIRST Bank | From 9.99% p.a. | Up to ₹15 lakh* | Up to 5 years | 2% of loan amount, including GST | Nil |
| Axis Bank | From 9.99% p.a. | Up to ₹40 lakh | Up to 7 years | Up to 2% of loan amount + GST | Depends on amount, repayment period and source of funds |
| Bandhan Bank | From 9.47% p.a.** | Up to ₹25 lakh | Up to 5 years | 1% of loan amount | Nil for loans of ₹10 lakh and above, subject to conditions |
| Kotak Mahindra Bank | From 10.99% p.a. | Up to ₹1 crore | Up to 6 years | Up to 5% of loan amount + taxes | Depends on loan terms and closure timing |
| Aditya Birla Capital | From 10.00% p.a. | Up to ₹50 lakh | Up to 7 years* | Up to 4% of sanctioned loan amount | Up to 7% of principal outstanding, depending on when the loan is closed |
| Tata Capital | From 10.99% p.a. | Up to ₹35 lakh | Up to 6 years | Up to 5% of loan amount + GST | 6.5% within 12 months; 4.5% after 12 months, subject to applicable terms |
How Does a Personal Loan Work?
A personal loan follows a simple process from application to repayment:
Step 1: Apply for the loan: Choose a lender, loan amount and repayment tenure based on your needs.
Step 2: Submit your documents: Provide KYC, income and other documents requested by the lender.
Step 3: Complete the eligibility check: The lender reviews your income, credit history, existing EMIs and other financial details.
Step 4: Receive the loan offer: If you qualify, the lender shares the approved loan amount, interest rate, EMI, tenure and applicable charges.
Step 5: Complete the formalities: Review the loan agreement and complete the required e-sign or other formalities.
Step 6: Get the loan amount: The lender disburses the approved amount after completing its verification and disbursal process.
Step 7: Repay through EMIs: You repay the loan through monthly EMIs until you clear the outstanding amount.
How Is Personal Loan Interest Calculated?
Lenders generally calculate interest on a personal loan using the reducing balance method. You pay interest on the outstanding principal, so the interest component usually falls as you repay the loan.
For a standard EMI calculation, lenders use:
EMI = P × R × (1 + R)ⁿ / [(1 + R)ⁿ − 1]
Here, P means the loan principal, R means the monthly interest rate and n means the number of monthly instalments.
For example, a ₹1 lakh loan at 12% p.a. for 12 months would have an EMI of about ₹8,885.
*The actual EMI and total repayment can vary based on the lender's rate, tenure and applicable charges.
What Are the Personal Loan Eligibility Criteria?
Each lender sets its own personal loan eligibility criteria. However, lenders generally consider:
- Age: The lender sets a minimum and maximum age for applicants.
- Income: Your monthly income or overall earnings should support the proposed EMI.
- Employment: Lenders may accept salaried or self-employed applicants, subject to their criteria.
- Credit score: Your credit history and score help the lender assess your repayment record.
- Existing EMIs: The lender may consider your current loans and other financial obligations.
- Repayment capacity: Your income, expenses and existing commitments help the lender decide whether the proposed loan fits your financial profile.
*Meeting the basic criteria does not guarantee approval. The lender makes the final decision after reviewing your complete application and credit profile.
What Documents Are Required for a Personal Loan?
The exact personal loan documents differ according to the lender, applicant profile and loan amount. The common documents that are required includes:
- KYC and identity proof
- Address proof
- Recent salary slips or other income proof
- Bank statements
- Employment details or documents for salaried applicants
- ITRs, financial statements and business documents for self-employed applicants
Note: The lender may ask for additional documents during verification.Check with your chosen lender before applying for it.
Personal Loans for Salaried Employees
Lenders generally review your salary, employment stability, salary credits, existing EMIs and credit history when you apply for a personal loan. A stable income and manageable existing obligations can support your repayment capacity, but each lender follows its own eligibility criteria, hence it can vary depending upon your lender.
Personal Loans for Self-Employed Borrowers
Self-employed applicants may need to provide income records, ITRs, bank statements and business-related documents. Lenders can also consider business continuity, banking history and repayment capacity while assessing the application.
Personal Loans with a Low CIBIL Score
A low CIBIL score can make personal loan approval more difficult because lenders use credit history as part of their risk assessment. Some lenders may still consider an application but could offer a higher interest rate, lower loan amount or stricter terms.
Your CIBIL score does not work as the only approval factor. *Lenders can also consider income, existing EMIs, employment or business stability and your overall credit profile. Therefore, no particular credit score guarantees personal loan approval.
Longer Tenure vs Lower EMI
A longer tenure can reduce your monthly EMI because you spread the repayment over more months. However, you may pay more total interest over the life of the loan.
A shorter tenure usually means a higher EMI but can reduce the total interest you pay. Choose a tenure that keeps the EMI manageable without extending the repayment period unnecessarily.
What Are the Personal Loan Processing Fees and Other Charges?
The total cost of a personal loan can include more than the interest rate. Before accepting an offer, check:
- Processing fee: The lender may charge a fee for processing the loan.
- GST and applicable taxes: Taxes may apply to eligible fees and services.
- EMI bounce charges: The lender may charge a fee when an EMI payment fails.
- Overdue or penal charges: Delayed payments can attract charges according to the lender's policy.
- Foreclosure charges: Some lenders may charge for closing the loan before the scheduled end of the tenure.
- Part-prepayment charges: Some lenders may charge for repaying part of the outstanding principal early.
- Other service charges: The lender may apply charges for specific services mentioned in the loan agreement.
Check the *lender's Key Fact Statement (KFS), sanction letter and loan agreement for the applicable charges before accepting the loan. RBI guidelines require relevant charges and the Annual Percentage Rate (APR) to be disclosed to borrowers for applicable digital loans.
How to Choose the Right Personal Loan?
Do not choose a personal loan based only on the lowest advertised interest rate. Compare the rate offered to you, monthly EMI, total repayment, tenure, processing fee, foreclosure and prepayment terms, eligibility requirements and the loan amount before making a decision.
The APR and Key Fact Statement can also help you understand the overall cost of a digital loan rather than looking at the interest rate alone.
How to Apply for a Personal Loan Online in India
You can generally apply for a personal loan online by following these steps:
- Compare lenders and check eligibility.
- Choose the loan amount and repayment tenure.
- Complete the online application form.
- Submit KYC, income and other required documents.
- Complete the lender's verification process.
- Review the sanctioned amount, interest rate, EMI, fees and other loan terms.
- Complete the loan agreement and e-sign process, where applicable.
- Receive the loan amount after the lender completes approval and disbursal formalities.
For digital loans, RBI requires the lender to provide a Key Fact Statement before the borrower enters into the loan contract. The KFS includes important information such as the APR and applicable charges.
How Can NoBroker Help You with Personal Loans?
NoBroker InstaCash offers a digital personal loan option for eligible borrowers who prefer an online application. It provides loans from ₹5,000 to ₹10 lakh, with tenures ranging from 3 months to 5 years.
Eligibility includes salaried and self-employed applicants, with a CIBIL score above 700 or Experian score above 750 and an age range of 21 to 65 years. The stated interest rate ranges from 12.99% to 29.99% p.a., with a processing fee of 2% to 4% of the loan amount plus GST.
How Do We Compare Personal Loans?
The interest rate is important, but it is not the only cost to consider. This comparison focuses on four main areas:
- Interest rate: Affects the interest you pay over the loan tenure.
- Processing fee: Adds to the upfront cost of borrowing and varies across lenders.
- Loan amount and tenure: Determine how much you can borrow and how long you have to repay it.
- Foreclosure and prepayment terms: Matter if you plan to repay the loan before the original tenure ends.
Check all four before choosing a lender. A loan with a slightly lower interest rate can still cost more if it carries a higher processing fee or less favourable early-repayment terms.
Disclaimer: NoBroker facilitates the InstaCash loan app and does not provide the loan directly. Read our privacy policy →
Frequently Asked Questions
Q. What is the minimum age to get a personal loan in India? Ans: The minimum age varies by lender, but many lenders require applicants to be at least 21 years old. An 18-year-old may not qualify for a standard personal loan from most major lenders.
Q. Can I get a personal loan with a low CIBIL score? Ans: A low CIBIL score can make approval more difficult or result in a higher interest rate. Lenders also consider income, repayment history, existing EMIs and overall credit profile.
Q. What documents are required for a personal loan? Ans: Lenders may ask for identity and address proof, income documents and bank statements. Self-employed applicants may also need income tax returns (ITRs) or business-related documents.
Q. How much personal loan can I get? Ans: The maximum loan amount varies by lender. Your actual eligibility depends on factors such as income, credit profile, existing obligations and repayment capacity.
Q. What is the usual personal loan tenure? Ans: Personal loan tenures vary by lender and can range from a few months to several years. A longer tenure usually lowers the EMI but can increase the total interest paid.
Q. Can I prepay or foreclose a personal loan? Ans: The lender's terms determine whether you can prepay or foreclose the loan and whether any charges apply. Check these conditions before accepting the loan offer.
Q. Is a bank or NBFC better for a personal loan? Ans: Neither is automatically better. Compare the actual offer, including interest rate, processing fee, tenure, loan amount and early repayment charges, before choosing a lender.
Most Viewed Articles
Kruthi is a Chartered Accountant has worked for various Real Estate firms across India, she is well versed with the legal and financial aspects of all real estate transactions. There are numerous documents and plenty of hidden fees that people get lost in, her goal is to shed some light on it all.
Loved what you read? Share it with others!
✕
Full RM + FRM support
