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Required documents

ABOUT Personal Loans

A Personal Loan is taken by a borrower for his/her individual wants and needs; it is commonly referred to as an unsecured loan because there is no security/collateral against it. It is also called “All-purpose loan” at times as there is no restriction on the end use of the funds.

Personal loan is availed for meeting any unexpected financial exigencies or any personal needs of the borrower like House renovation, abroad trip, purchase of any luxurious items or consumer durables, meeting hospitalization expenses, financial assistance for marriage related expenses, transfer of an existing loan to another bank or any personal aspirations. Usually the repayment tenure varies from a year to five years.

Personal loans have a fixed amount, the amount of which depends on borrower’s credit worthiness. The better it is, the more money can be borrowed. Personal loans are usually unsecured. Interest rates for a personal loan vary from borrower to borrower & lender to lender, depending on their individual credit history and amount borrowed.


All individuals like salaried employees or self-employed professionals seeking funds for personal needs are eligible for a personal loan. Also the following points are to be considered:

  1. Minimum age of Applicant should be 21 Years.
  2. The maximum age of applicant can be 58 years for salaried applicant and 60 years for self employed.
The minimum income of self employed the net income after tax should be Rs.1,00,000/-.

Required Documents

The documents needed vary bank to bank. But the basic documents required are:

    • Proof of identity
    • Proof of residence
    • Income statements
    • Bank Statement for 3-6 months



Personal loans usually have fixed interest rate and do not change for the life of the loan. Factors affecting interest rate are as:

  • The amount of loan as compared to your income.
  • Loan tenure (Longer repayment periods lower monthly repayment, which in turn means more interest).
  • Credit profile (The better your credit score, the lower your interest rate).
Annual income, current EMIs, credit history (CIBIL) of a borrower, work profile is taken in to consideration by the lenders. Since it is an unsecured loan, lenders specifically look at the repayment history and the credit score of a borrower.

CIBIL stands for Credit Information Bureau India Limited. CIBIL's aim is to fulfill the need of credit granting institutions for comprehensive credit information by collecting, collating and disseminating credit information pertaining to both commercial and consumer borrowers, to a closed user group of members. Banks, Financial Institutions, Non-Banking Financial Companies, Housing Finance Companies and Credit Card Companies use CIBIL's services. Data sharing is based on the Principle of Reciprocity, which means that only Members who have submitted all their credit data may access Credit Information Reports from CIBIL.

The establishment of CIBIL is an effort made by the Government of India and the Reserve Bank of India to improve the functionality and stability of the Indian financial system by containing NPAs while improving credit grantors' portfolio quality. CIBIL provides a vital service, which allows its Members to make informed, objective and faster credit decisions.

While applying for a Personal Loan, one should ensure that amount borrowed is within the borrower’s repayment capacity or else it will become a long and tedious process which could affect the credit score which will turn out to be an issue for borrower in availing funds in the future. Also personal loans are one of the most expensive forms of loan available in the market.
Personal loans are more difficult to get because this loan doesn't require collateral as security. But this doesn’t mean that in case of default no action can be taken against the borrower, the lender can report late payments to the credit bureaus, hire a collection agency, and even file a lawsuit.
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