A personal loan is an unsecured loan offered by banks and non-banking financial companies (NBFCs) in India that does not require any collateral. Lenders approve the loan based on the borrower’s creditworthiness, income, and repayment capacity.
Personal Loans Key Features
No collateral: Since these are unsecured loans, you don’t need to pledge assets like a house or car.
Flexible usage: The loan amount can be used for a wide range of personal needs, such as medical emergencies, weddings, travel, education, and home renovations.
Fixed EMIs: Repayment is made through fixed monthly installments (EMIs), which helps in financial planning.
Quick disbursal: Many banks and NBFCs, especially for online and pre-approved loans, offer quick approval and disbursal, sometimes within a few hours or days.
Balance transfer: Some lenders offer the option to transfer an existing personal loan to their institution, often at a lower interest rate.
Personal Loans Eligibility Criteria
While specific criteria can vary by lender, common requirements for a personal loan include:
Age: Typically between 21 and 60 years old.
Nationality: Must be an Indian citizen.
Income: Minimum monthly income is usually ₹15,000 to ₹25,000, but varies by lender and location.
Credit score: Lenders prefer a score of 700 or 750 and above for better chances of approval and more favorable terms.
Employment: Applicants should be salaried employees of a private or public limited company or be self-employed with a stable income source.
Work experience: A minimum of 1–2 years of work experience is often required.
Required Documents for Personal Loans
For a seamless application process, you will generally need to provide the following:
Identity proof: PAN Card (mandatory) and Aadhaar card, Passport, or Voter ID.
Address proof: Aadhaar card, Passport, Driving License, or recent utility bills.
Income proof:
- For salaried: Latest 3–6 months’ salary slips, last 6 months’ bank statements, and Form 16 or recent Income Tax Returns (ITR).
- For self-employed: Last 2–3 years’ ITR, bank statements for the last 6–12 months, and audited financial statements (P&L and Balance Sheet).
Other documents: Passport-sized photographs and a completed loan application form.
Personal Loans Interest Rates
As of November 2025, personal loan interest rates in India typically range from as low as 9.98% to over 20% per annum, depending on the lender and your credit profile. Factors that affect your final interest rate include:
Credit score: A higher score indicates lower risk and can secure you a better rate.
Income: Higher, stable income sources can also lead to lower interest rates.
Lender: Public sector banks like SBI tend to have lower rates than private banks and NBFCs, though they may have stricter eligibility criteria.
Pre-approved offers: Existing customers with good banking relationships often receive preferential, pre-approved loan offers with lower rates.
How to Apply for Personal Loans
You can apply for a personal loan both online and offline:
Online application: Visit the lender’s website or app, fill in the details, upload the required documents, and submit.
Offline application: Visit a branch, fill out a physical application form, and submit it along with your documents.
Verification and approval: The lender will verify your information and documents, and if approved, you will receive a loan offer detailing the amount, tenure, and interest rate.
Disbursal: Upon your acceptance of the offer, the loan amount will be credited to your bank account.
Finding the Right Personal Loans Lender
Choosing the right lender is crucial to getting the best deal on your personal loan. To help you compare multiple banks and NBFCs and find competitive interest rates and terms, Janata Finance can assist you in identifying the right personal loan lender in India based on your specific needs and eligibility.
Important Considerations
Borrow what you need: Only take out a loan for the amount you truly need, as over-borrowing can increase your financial burden.
Maintain a good credit score: Paying your EMIs on time is crucial for maintaining a healthy credit score, which can help with future borrowing.
Compare lenders: Before committing, compare interest rates, processing fees, and other charges from multiple banks and NBFCs to find the best deal.
Watch for hidden charges: Be aware of processing fees (typically 1-3% of loan amount), prepayment penalties, and other charges that can add to the total cost.
Calculate total cost: Use EMI calculators to understand not just the monthly payment but the total interest you’ll pay over the loan tenure.