Personal Loan

A personal loan is an unsecured (usually) loan you borrow from a bank, NBFC, or fintech lender for personal use — e.g., home repairs, wedding, medical bills, travel, debt consolidation, etc. It’s typically repaid in fixed monthly instalments (EMIs) over a fixed tenure. Because it’s often unsecured (no collateral), rates depend on your credit score, income, and the lender’s policies.

How a personal loan works

Decide the need & amount
- Decide why you need the loan and how much you need to borrow.
Check eligibility & compare lenders
- Check eligibility criteria (age, income, employment, credit score).
- Compare interest rates (annual rate), processing fees, prepayment terms, and customer reviews.
Get a quote / pre-approval
- Enter details on lender’s site or branch to get an indicative offer (loan amount, rate, EMI, tenure).
Apply
- Submit application online or at branch with documents (ID, address proof, income proof, bank statements, passport-size photos).
Lender verification & sanction
- Lender verifies documents, credit history, employment/income. If approved, you receive a sanction letter showing amount, rate, tenure, fees.
Sign documents & disbursal
- Sign agreement. Lender deducts processing fee (sometimes upfront) and disburses the loan amount to your bank account.
Repay EMIs monthly
- Pay fixed EMIs each month until loan is fully repaid. EMIs include interest + principal portion (interest portion is higher initially).
Prepayment/foreclosure (optional)
- You may prepay part or all the loan — check if lender charges a prepayment/foreclosure fee. Prepaying reduces total interest.
Loan closure & NOC
- After final EMI, lender issues a closure letter / NOC and updates credit bureaus that loan is paid.