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Personal Loan

A personal loan is a great credit instrument that helps one meet up money requirements for various purposes. Money required to meet requirements like wedding, medical expenses, home renovation, business requirements. At times it is also taken to consolidate one's outstanding debt into one single loan.

Advantages of Personal Loan

Flexibility of use - The money can be used for a various purposes, as against most of the other loans where the funding is extended for a specific purpose. It gives personal loan an edge over other credit instruments

Easy availability - Personal loan applications are processed very fast. Generally it does not take more than 5 working days for the process to get completed and funds getting credited into account.

Less documentation - Unlike other loans, personal loan requires minimal documentation. One only needs to submit the income documents and KYC (photo identity proof and address proof) for getting the request processed. Ease of documentation is another factor that makes this loan highly popular to raise funds.

No collateral required - Personal loan is extended taking into account the overall profile of the borrower and there is no requirement of collateral being extended by the borrower.

Credit Score and Personal Loan - Since the personal loan is extended primarily considering the profile of customers, credit scores and credit bureau report play a critical role in underwriting decisions. A small error or impairment on a credit report can result in the decline of the loan application.

A low score can also result in getting a far higher rate of interest getting charged that can lead to a very high EMI

Eligibility Criteria - The eligibility criteria may vary from one lender to another,

For salaried Applicants - Lenders generally look at a minimum of Rs 25,000 as net take home salary to consider an application for review. Other criteria like age, number of years in current job or a number of years at current residence among others also get considered differently by different lenders.

For self-employed applicants - An income tax return of Rs 200,000 or above may be required. Again the requirement of income varies from one lender to another. Other criteria like turnover, number of years in business, age of the applicant, any existing relationship with bank play an important role in the underwriting process.

Documents required - The documentation is very simple in the case of personal loans.

For Salaried applicants -

✔ 3 Month Salary Slips
✔ 6M Bank Statements
✔ Pan Card
✔ Adhaar Card
✔ Office ID Card
✔ Photograph.


For Self-Employed applicants –

✔ 1 year Bank Statements
✔ 2 Yrs. ITR & Computation
✔ Pan Card
✔ Adhaar Card
✔ Ownership Proof.


Types of Personal Loans - Different types of loan offers are extended based on the customer segment. The rate of interest being charged to different segment also varies.

There are separate loans for the self-employed professionals under this category.