Personal loans have been designed keeping the salaried / business class in mind, mainly people who have a continuous source of income. In a personal loan, you borrow a fixed amount of money, which will have a fixed rate of interest and a fixed monthly payment. You will have a clear line of sight as to when you will be able to pay off the entire loan. You can even calculate your EMI using loan calculators present online.
- Low CIBIL score– A customer who has a low CIBIL score may struggle to get a personal loan offer from any bank. But ironically, the CIBIL score only shows the customer’s past spending habits and repayment trends. If the customer's earning capacity has increased, it is important to provide sufficient income proofs and other information to banks corroborating the same, basis which the banks may be willing to offer a personal loan to you. There are many Banks and NBFCs who consider a customer's current financial situation before taking the decision to approve or reject his/her loan. Therefore, even if you have a low credit score you need to inform the bank about your current financial situation.
- Personal loan is a multi-purpose loan – The customer can utilize the disbursed amount in many ways as there are no specific guidelines on how to spend the proceeds from the loan. It can be spent on, children's birthdays, education, supporting family wedding, renovating your home and paying off your existing credit card bills.
- Less paperwork – It involves minimal paperwork / loan documentation
- No security – If your financial credentials are approved by the bank, it can offer the loan without any security or collateral
- Flexible repayment option – The Personal Loan can be paid back with various payment options such as post-dated cheques, online payment of EMI, ECS and so on.
- Reasonable interest rates – Intense market competition keeps the variance in interest rates to a minimum, as a result, many banks offer affordable interest rates on personal loans.
Personal loans are the most simplest of all the loans as it entails very less paperwork, which can be submitted online. Any individual who is an Indian citizen or national and has residual income qualifies for the personal loan. By design Personal Loans are unsecured loans and therefore an applicant does not have to worry about furnishing collateral related paperwork. However, the following steps are absolutely crucial when you are applying for a personal loan:-
- Credit Rating: Digitization has given wings to the way our world talks to each other. All your past financial behaviour and records are tracked by credit scoring agencies using your PAN card and other unique Government ids. Our systems are so well connected that any financial ruckus you might have created in the past will likely become a spoiler for the current transaction. Thus, it is vital for an applicant to have a good credit score as per the bank’s standards.
- Income: An applicant should meet the most important criteria i.e. he should be earning the minimal wage criteria defined by the lender and also should be able to repay the loan on monthly, quarterly or yearly basis with on-time payment.
- Age: Various lending players have defined different age limits for extending a personal loan to an applicant. An applicant must qualify within the age limits defined by the lending institution which normally starts from 21 years and is up to 58 years.
- Repayment ability: Applicant should have been employed by his / her current organization or been involved in his/ her own business for a certain number of years. Just to give you a perspective, an applicant must have at least 3 years of total work experience and he/she should have spent a minimum of 3 months with his existing employer.
- Existing EMIs: An applicant should have cleared all his / her previous debts, as this will give the applicant a fair chance of loan application evaluation and will also build up a strong case as the lending institution will be able to gauge loan payback capacity easily. In case a customer has existing EMIs, he / she should clearly be able to demonstrate and prove that he has ample monthly residual income after his monthly recurring expenditures and other EMIs so that he / she is able to service the EMI of the personal loan.
The personal loan entails the simplest form of documents which can be divided broadly into two categories:-
- Documents for Salaried customers
- Documents for Self-Employed
- Identity proof:- Customer can submit the following documents as part of his / her Identity proof : Any one of Aadhar Card / Voters ID / Passport / Driving License / PAN Card.
- Residential proof:- Any one of Lease and License Agreement / Utility Bill (maximum three months old) / Passport.
- Salary Slips:- Latest (last) three months Bank Statement of the account in which salary or income is credited. The salary details or salary slips should be attached.
- Photographs:- Two passport size photographs
- Know your customer [KYC] documents:- The loan application should have an identity proof, address proof and date of birth proof.
- Proof of Residence:- Leave and license agreement, utility bill (should not be more than three months old), and a copy of your passport if, you own one.
- Proof of Income:- Bank accepts the audited financial report for the last two years.
- Bank Statement:- Last six months bank statement should also be part of the document submission.
- Official address Proof:- Official address proof should also be included.
- Proof of residence or Office ownership:- The proof of residence or Office ownership should be part of the document submission.
- Proof of continuity of business:- Testimony that the business is running for certain duration must be enclosed in the set of documents.
Interest Rate:- It is the interest rate which you agree upon before you take the personal loan.
The very first question that comes to our mind when we are looking for a personal loan is how much interest rate one would need to pay. Historically banks and other financial institutions have charged much higher interest rates on this category of loans. But off late, interest rates on these loans have reduced significantly as banks are looking to acquire new customers through these loans. A platform like Afinoz offers an answer to all your doubts and gives you the confidence that the decision you are taking is absolutely right. Our algorithms work basis the information you provide and presents to you all the available options of banks / NBFCs who are willing to extend a personal loan to you. Basis this, you can make a sound decision with whom to move ahead and avail the personal loan from.
The table below shows the interest rates offered on Personal Loans by various banks as of September 2017. Please note that the rates indicated below are subject to change.
|Personal Loan Interest Rates Comparison, Lowest EMI Sep 2017, Best rates|
|Bank||Personal Loan Interest Rates*||Lowest EMI per lakh for Max Tenure|
|HDFC Bank||10.99% - 20.00%||Rs. 2,174 for 60 months|
|ICICI Bank||10.99% - 22.00%||Rs. 2,174 for 60 months|
|Bajaj Finserv||11.99% - 15.50%||Rs. 2,224 for 60 months|
|Citibank||10.99% - 16.49%||Rs. 2,174 for 60 months|
|IDFC Bank||11.00% - 19.50%||Rs. 2,174 for 60 months|
|IndusInd Bank||11.99% - 23.00%||Rs. 2,224 for 60 months|
|Axis Bank||11.25% - 24.00%||Rs. 2,187 for 60 months|
|Tata Capital||11.99% - 18.00%||Rs. 2,224 for 60 months|
|SBI||12.50% - 16.60%||Rs. 2,658 for 48 months|
|Fullerton India||14.00% - 34.00%||Rs. 2,733 for 48 months|
|Kotak Bank||11.50% - 24.00%||Rs. 2,199 for 60 months|
|Standard Chartered Bank||11.49% - 20.00%||Rs. 2,199 for 60 months|
|Union Bank of India||14.40% - 14.40%||Rs. 2,348 for 60 months|
|RBL Bank||13.99% - 16.00%||Rs. 2,326 for 60 months|
|Vijaya Bank||12.50% - 13.50%||Rs. 2,250 for 60 months|
|PNB||12.25% - 15.25%||Rs. 2,237 for 60 months|
|Karur Vysya Bank||13.90% - 16.40%||Rs. 3,413 for 36 months|
|Syndicate Bank||14.20% - 14.20%||Rs. 2,337 for 60 months|
|Indian Overseas Bank||12.70% - 15.25%||Rs. 2,260 for 60 months|
|Andhra Bank||13.05% - 14.30%||Rs. 2,278 for 60 months|
|Bank of Baroda||11.60% - 16.60%||Rs. 3,302 for 36 months|
|Bank of Maharashtra||15.10% - 15.10%||Rs. 3,471 for 36 months|
|Canara Bank||13.65% - 13.65%||Rs. 2,715 for 48 months|
|Corporation Bank||12.75% - 13.75%||Rs. 3,357 for 36 months|
|Dena Bank||13.00% - 14.00%||Rs. 3,369 for 36 months|
|Federal Bank||13.32% - 15.12%||Rs. 2,699 for 48 months|
|IDBI Bank||13.20% - 13.75%||Rs. 2,286 for 60 months|
|Allahabad Bank||13.10% - 13.10%||Rs. 2,280 for 60 months|
|Indian Bank||14.35% - 14.85%||Rs. 3,435 for 36 months|
|Yes Bank||11.99% - 20.00%||Rs. 2,224 for 60 months|
Q. What is a personal loan?
Personal loan is the money lent to an individual from a bank or NBFC for a short-term at pre-determined interest rates. The money can be used to fulfil any immediate or critical needs of an individual.
Q. Who can apply for a personal loan?
The product has been designed to service the salaried class, however the loan is being extended to self-employed individuals as well as non-professionals also.
Q. What is the meaning of EMI?
The term EMI stands for Equal Monthly Instalment which includes both the principal and interest amounts.
Q. Is there any guidance on how to utilize the Personal Loan amount?
There are many ways in which the personal loan amount can be utilized by an individual. For example, it can be used to address any medical exigency, pay your credit card bills, take vacations, getting your child admitted to a school, down payment on your car / vehicle, having a get-together, for marriage related expenses and any other. Personal loan is the perfect solution to all your worries.
Q. What is the minimum tenure one can take personal loan for?
An individual can opt for a personal loan for a minimum period of 12 months.
Q. What is the maximum tenure one can take a personal loan for?
The personal loan can be taken for a maximum period of 60 months.
Q. List of the major financial institutions which are offering personal loans?
There are a lot of players who are offering personal loans of all shapes and sizes and catering to all set of customers. Institutions that are leading the personal loan market in terms of share are: -
Bajaj Finserv (Finance): -They are known to be the juggernaut of the Personal Loan space as the speed at which they approve and subsequently disburse the personal loan is very attractive. They approve personal loans in minutes and the disbursal takes place within the same day or latest within 72 hours. They primarily focus on the salaried class for this product, but offer it to self-employed professionals as well. The maximum loan amount is 25 lakhs implies for salaried class. They have really customized eligibility criteria for income basis the location of the customer. For example for Tier 1 cities, the minimum income criteria is Rs. 40,000/- and for other Tier 2 cities, the income criteria is Rs. 30,000. Additionally, you need to be at least 25 years of age at the time of applying for loan and should have a work experience of 3 years or more. The minimum interest rate is 12.63% for the maximum loan amount and 22.91% for the minimum loan amount. Bajaj Finserv offers flexible pre-payment option of loan up-to six times per calendar year with a minimum amount per prepay exceeding three EMIs.
HDFC Bank: - HDFC Bank personal loan is one of the most aggressive products amongst all the Private Sector Banks. Apart from offering the personal loan they offer personal accidental coverage upto Rs. 8 lakhs along with critical illness cover of 1 lakh. For salaried customer's they have very competitive interest rate i.e. interest rates start at as low as 11.29% to 16%, with the tenure of the loan between 12 - 60 months.
ICICI Bank: -ICICI Bank personal loans are being offered to people from the salaried class. It is also extended to self-employed individuals and professionals. ICICI personal loan rate of interest starts from 11.29% which can go up to 17.99% depending on customer's profile. The customers can avail loans in the range of Rs. 50,000 to 20 lakhs which are disbursed into your account within 72 hours.
State Bank of India Bank: -State Bank of India being the largest Public Sector bank India is the most preferred bank when it comes to availing loans. Like its direct competitors, State Bank of India offers personal loans to both salaried and self-employed individuals such as chartered accounts, doctors, engineers and architects. Your income capacity indicates your personal loan re-payment capacity. For example the minimum income ceiling for the urban areas is kept as Rs.24,000/- and Rs. 10,000/- for rural or semi-urban areas. Whereas the maximum disbursal amount limit is 12 times the net monthly income for salaried people and pensioner's with a cap of Rs.10 lakhs. Technological advancement has played a great role in streamlining the bank's loan processes allowing it to improve the disbursal cycle. State Bank Of India personal loan interest rates are diversified as they have tailored the product which cover almost all types of customers a bank can possible lend a personal loan to.
AXIS Bank: -Axis Bank's personal loan is yet another popular product in the market. Their customer experience and overall approach towards the loan process makes them a force to reckon with. Not only this, they have a reward earn program which allows the customer to earn reward points on taking a personal loan from Axis Bank. This program is called as the Axis eDGE rewards. The Axis Bank personal loan amount ranges from Rs. 50,000 to Rs. 15,00,000 at an interest rate which ranges from 15.50% to 24%. There are no foreclosure charges. They have simplified access to personal loan through minimal documentation. Not only this, you can even transfer existing personal loans to Axis Bank. Like other players Axis bank extends the lending offer of personal loans to salaried customer and self-employed customers. The eligibility age criteria for Axis Bank personal loan is a minimum of 21 years and a maximum of 60 years and the loan applicant must be earning atleast Rs. 15,000 per month. If, you have any questions pertaining to loan, Axis bank customer service department is available round the clock for their customer's support; their customer service department can be contacted by dialling the toll free numbers.
Q. Will I be charged a processing fee?
Yes, the banks do charge processing fee which ranges from 1% to 3% of the total loan amount. The customers can negotiate with the bank and can expect to get a certain level of waiver on the processing charges.
Q. Do I need a guarantor to take a personal loan?
Personal loans are unsecured loans and therefore, do not require a guarantor. But, there are exceptions too. If you have a low Cibil score, there are certain NBFCs which will ask you to provide a guarantor in support of your loan application.
Q. Can I get an option to choose between fixed interest rate or floating interest rate?
Absolutely, you can make a quick choice between which interest rate mechanisms you want to go ahead with. Please be mindful of what you choose because different interest regimes have their own advantages and pitfalls .
Q. How important it is to have a healthy CIBIL score?
It is very important indeed to maintain a healthy CIBIL score. Nowadays almost all the banks and NBFCs check the customer's CIBIL score beforehand. In case, your CIBIL score is not at par or above the Bank's approved score limit, your loan application will get rejected. A CIBIL score above 750 is considered a good score.
Q. How can I apply for personal loan which will give me possibly best loan deal?
Nowadays applying for a loan online is the best way to apply for a personal loan. You can visit www.afinoz.com and enter your credentials to get the best possible solutions for your need at the click of a button from the comfort of your home 24 x 7.
Q. How much time does it take to get the loan approved?
Different Banks and NBFC have different timelines for approval for different loans, so it depends entirely on the bank you are applying to. Typically, the customer can expect to get his loan approved within 72 hours of loan application submission.
Q. How many days does it take to get the loan disbursal done?
Different Banks and NBFC have different disbursal guidelines and timelines. Disbursal of loan post sanction can take upto 7 days from the date of sanction.
Q. Can I track my loan application?
Surely you can. Once you have logged your personal loan application with Afinoz, you will be issued a unique transaction ID. This ID can be used to track your application on www.afinoz.com. We also send SMS alerts to our customer on their registered mobile number informing them about the progress of their loan application, and these alerts carry the real time status of the application.
Q. How to avoid loan rejection?
Afinoz ensures that the customer's application is processed and sent to institutions wherein the customer's profile would qualify for the loan. It is unlike dealing with other players or agents who send out your application without understanding your profile or credit score to multiple ineligible banks / NBFCs. This results in rejected applications from various institutions and also degrades your credit score.
Q. Will Afinoz charge any fee from its customers?
All our services rendered to our customers are free of cost meaning Afinoz will not charge any commission or processing fee from its customers at any stage of the process. Be wary of unknown callers who may use our name and ask you to pay certain fees against your case or loan application.