Personal loans are a popular means to meet your urgent funding needs. You can borrow the required amount with minimal documentation and zero collateral. In addition, you can repay the personal loan at suitable EMIs over a fixed tenure. However, personal loans do come with their set of limitations. Read on to understand what is a personal loan and if you should apply for it to fulfil your financial needs.
The simplest personal loan definition is a borrowed lump sum amount from a financial institution without restrictions. You often get a personal loan without collateral and repay through convenient EMIs over a fixed tenure. Moreover, personal loans need minimal documentation.
This loan funds day-to-day expenses, and stabilises your cash flow, or any cost from wedding, travel, to buying a costly gadget. So, let us dig deeper to understand the significance of personal loan meaning and how it works.
Unlike other loans, personal loans are uncomplicated. Therefore, it is wise to borrow according to your needs to improve your finances that significantly impact your life. Moreover, you get the amount in a lump sum after the bank evaluates your creditworthiness and documentation. However, there are minor differences between lenders, and you must factor in the following before applying for the loan.
|Loan Amount||Up to ₹20 Lakh|
|Interest Rate||9.9% to 45% p.a|
|Tenure||Up to 72 months|
Of the several advantages of a personal loan, the most beneficial is using the loan proceeds however you wish. Consequently, no bank loan is as diverse and flexible as a personal loan. Thus, let us study some typical personal loan uses for you to explore.
Personal loans are convenient when you require instant funds to meet your needs. Thus, you will be looking for a hassle-free process with minimal documentation. So, here are a few salient features and benefits of personal loans to help make an informed choice.
Personal loans require the following documents:
However, the document list varies from lender to lender, and it is prudent to check with them individually. However, the following are the indicative documents most lenders seek.
Personal loan interest rates are relatively higher than other loans, mainly because they are unsecured and do not have the backing of matching collateral. In addition, every lender offers interest rates deriving them from their MCLR (marginal cost funds-based lending rate), which depends on the RBI’s Repo Rate notified from time to time.
Personal loan interest rates depend on different types of lenders. The following table denotes the major banks and NBFSc you can avail a personal loan from:
|NBFCs||Interest Rates (p.a.)||Processing Fee|
|Navi||9.9% onwards||Up to 7,500|
|Bajaj Finserv||13% onwards||Up to 4% of the loan amount|
|StashFin||11.99% onwards||Up to 10% of the loan amount|
|Faircent||12% onwards||Up to 8% of the loan amount|
|Dhani Loans||13.99% onwards||Up to 3% of the loan amount|
|Muthoot Finance Limited||14% onwards||Up to 3.50% of the loan amount|
|HDB Finance Services||36% onwards||Up to 3% of the loan amount|
|Tata Capital Financial Services LTD||10.99% onwards||Up to 2.75% of the loan amount|
|Pay Sense||16.80% onwards||Up to 2.5% of the loan amount|
|Money View||15.96% onwards||Up to 2% of the loan amount|
|Banks||Interest Rates (p.a.)||Processing Fee|
|HDFC Bank||10.75% onwards||Up to 2.50% of the loan amount|
|State Bank of India||9.60% onwards||Up to 1.50% of the loan amount|
|ICICI Bank||10.50% onwards||Up to 2.50% of the loan amount|
|Axis Bank||10.25% onwards||Up to 2% of the loan amount|
|Kotak Mahindra Bank||10.50% onwards||Up to 2.50% of the loan amount|
|IndusInd Bank||10.49% onwards||Up to 3% of the loan amount|
|Yes Bank||20% onwards||Up to 2.50% of the loan amount|
|Punjab National Bank||8.90% onwards||Up to 1% of the loan amount|
|Bank Of Baroda||9.20% onwards||Up to 2% of the loan amount|
|Bank Of India||10.35% onwards||Up to 2% of the loan amount|
Disclaimer: All the data has been taken from respective banks’ and NBFCs’ websites as on 5 August 2022. The data is for illustrative purposes only, the actual applicable interest rate would be ascertained based on the borrower’s eligibility as per the terms and conditions of the lender
Every lender’s eligibility criteria vary, and you are responsible for checking and ensuring you are eligible for a personal loan.
Follow these steps to get a personal loan from Navi:
After KYC document verification, the loan will be disbursed directly to your account.
Different lenders offer personal loans with varying features to attract customers. However, Navi instantly provides a personal loan through a seamless digital lending app. But, you must still factor in the following before applying for a personal loan.
Personal loans are the answer when you are short of cash and need money immediately. Knowing what a personal loan is can come in handy in many circumstances. However, choose from the lender that offers the best deal in terms of interest rates, tenure, and levy of charges. Accordingly, consider Navi personal loan through their digital lending app for a simple, paperless, instant personal loan with many redeeming features
Ans: The personal loan amount limit varies from lender to lender. However, Navi offers a maximum of Rs.20 Lakh as a personal loan.
Ans: Yes, you can choose your spouse, parents, or siblings as co-borrowers for a joint personal loan. In addition, you get the advantage of a higher amount as the dual incomes determine the loan quantum.
Ans: Foreclosure charges depend on the lender and range from 1 to 2% of the outstanding loan amount. Thus, you must check with the lender before applying for a personal loan.
Ans: If your loan application faces rejection, you can explore alternative means to generate instant funds. The two ready avenues are credit cards and loans against mutual funds.
Ans: Your repayment burden goes up for default in repayment. For example, your interest burden increases with a penal interest levy and tenure extension.
Ans: The primary criteria for a personal loan are your income, repayment capacity, and credit score, which should be more than 650 to apply.
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