All About Personal Loans

Why you need a personal loan?

You want to send your child abroad for higher education, here is a personal loan to rescue you in such situation. Are you planning to throw a lavish party for your promotion? But, not enough funds to plan a party. You can take a personal loan. Planning for a vacation or a short international trip? Fund your vacation with most easy personal loan. We can say that personal loan is really simple, fast, and handy to avail. You can use this loan amount for any cause such as your medical expenses, buying a car, renovation of your home, renewal of your policy, be it anything and everything. This is unsecured loan, therefore, you are not supposed to deposit anything with bank as guarantee and to tell them a reason to borrow.

The loan approval is really fast, within two-three working days you will get loan approval. It requires minimal documentation and paper work. Within two weeks the loan amount is disbursed. You can borrow minimum Rs. 50,000 and maximum Rs. 30 lakhs. The amount depends upon your monthly income, your age, expenses, credit history, etc. You are required to repay your loan amount within minimum 6 months to maximum 7 years.

Festive Offer : Get gifts upto Rs 18,490 on disbursal.
Refer to T&C -

Rupees 273,923 crores worth of Personal Loan Applications received! (last updated on 30 June 2016)

Compare Personal Loan Offers from Top Banks - Apply Online and Get e-Approved Instantly.

Loan Amount
Employment Status
  indusind   kotak bank bajaj     hdfc bank   fullerton  

Customers in India take personal loan when they need funds for
1. Credit Card Dues
2. Emergencies like Hospital Expenses
3. Marriage Expenses
4. Margin money for the Home
5. Home Renovation
6. Travel Expenditure

Documents required

To get your personal loan approved, you need to submit these following documents:

For Salaried For Self Employed
• 1 photocopy of PAN Card • 1 photocopy of PAN Card
• Identity Proof • Balance Sheets
• 3 to 6 months Bank Statements • Profit & Loss Account
• Residence Proof • Partnership Deed & other mandatory documents etc.
• Salary Slip  
• Guarantors & their same set of documents  

What do I Compare in the Personal Loan Quotes of different banks?

It is advisable to compare Loan Quotes based on the following factors:

1. Monthly EMI
Compare the monthly EMIs of different banks for loans the same amount and the same tenure.

2. Processing Fee
This is a one time fee. Check which bank charges the lowest fee. The range is between 1.50% - 2%.

3. Prepayment and Part Payment

It is advisable to close a loan before tenure, by paying off the whole or part loan amount, when your cash situation allows it. It will help you reduce your Interest amount. Check which bank offers you these options at no charge. Click here for Prepayment calculator.

4. Turnaround Time
Different banks have different processing and disbursal time. Check who can give you the loan when you need it the most.

Who can get the lowest rate?

The interest rate at which you can get the loan, is defined by:

1. Quality of Employment:
The company you work at matters. If it is a larger known corporate firm, the rates will be lower. People working with small companies are charged a higher rate. Banks generally refuse loans to people working at partnership firms.

2. Salary:
The higher your salary, the lower will be the rates. People with income higher than Rs 75,000 /month get Benchmark Lowest Rates.

3. Credit History:
A good credit history also ensures lower interest rates.

4. Relationship with Bank:
Generally, Banks give special offers (lower rates and processing fees) to customers who have salary accounts with them.

Who is eligible for a Personal Loan?

Loan eligibility is determined by the following factors:

1) Income:
Banks and NBFC lend to those who have an income either from salary or business. Banks prefer salaried customers with an income of more than (Rs.) 20,000/ month. As the income goes up loan amount on offer gets bigger. If eligible, you can get a Personal Loan Amount of between 10 to 18 times your monthly income.

Most Banks give Personal loans to people who have Cibil Score of above 750. Anyone who has credit cards and loans and pay on time, will have a Cibil Score of above 750. So, you can be confident if you are regular with your payments.

If you have no credit cards or loans, your Cibil score is 0, as you are a first time borrower. Don't worry! Just apply with the bank where you have your salary account. They are likely to approve your loan on a 0 Cibil Score.

Flat rate of interest: Flat rate of interest is calculated on the full original amount taken as a loan. The interest rate in this type of loan remains same for the whole tenure without taking a note that periodic payments reduce the loaned amount month-after-month. We can say that the interest rate is charged on the full amount from the first EMI to last EMI repaid in the loan tenure. Thus, the flat interest rate does not consider repaid amount which includes principal and interest amount both. The formula of calculating fixed rate of interest is – Interest Payable per Instalment = (Original Loan Amount * No. of Years * Interest Rate p.a.) / Number of Instalments For example, if you take a loan of Rs 1, 00,000 with a flat rate of interest of 10% p.a. for 5 years, then you would pay: Rs 20,000 (principal repayment @ 1, 00,000 / 5) + Rs 10,000 (interest @10% of 1, 00,000) = Rs 30,000 every year or Rs 2,500 per month. Over the entire period, you would actually be paying Rs. 1, 50,000 (2,500 * 12* 5).
Therefore, as per this example, the monthly EMI of Rs. 2,500 converts to an effective interest rate of 17.27% p.a. Generally, this method is used to calculate the interest for shorter duration of loan such as personal loan and car loans. However, it is not much popular among people as you end up paying higher interest rate and more amount over the period of time.

Reducing rate of interest: Reducing/Diminishing rate of interest is calculated every month on the outstanding balance of loan amount. EMI of every month is compound amount of principal amount plus interest amount. On every EMI repaid, the outstanding loan amount reduces by the amount of principal repayment. Therefore, the interest of the next month is calculated only on the outstanding loan amount as reduced by the principal repayment this month. In this method, as per the above example, if the interest rate is 10%, you will end up paying Rs. 20,000 as interest in the first year, and you will pay Rs. 16,000 in the second year, so on and forth. Therefore, the interest amount keeps changing with every EMI repaid.

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  • Disclaimer: Information is sourced from respective Banks websites. We don't provide Loans on our own but ensures your information is sent to bank/agent which you have opted for and we do not charge any fee from our customers. We don't do short term loans. Deal4loans has no sales team on its own and we just help you to compare loans .All loans are on discretion of the associated Banks/Agents.Read More