Loans, financial support lending by banks, NBFCs (Non-Banking Financial Companies) or other organizations are registered under RBI. There is a list of loans available in the market that you can avail of for multiple purposes. Although in this article we shall not be focusing on different types of loan available, we will give you a precise idea about personal loan, how it works, the benefits of this loan, where you should use it, and every minor or major detail. Let’s dive a little deep into the ocean of information about “Personal Loans.”

A personal loan is an unsecured loan that one can raise from banks, fintech companies, and the rest of other non-banking financial organizations. A borrower must submit income verification and proof of assets when they borrow the amount.

Verifying assets that one submits should be worth around the borrowed amount. There is no such long procedure involved in raising these loans, and the approval or denial will be informed to you within a few days. The rate of people tending towards personal loans has also increased in the past few years; thus, you can go for it when needed. Let’s now shift our focus to the benefits of personal loans.

1: Applying for a personal loan is quite simple, and there is no need for more documentation.
2: There are banks and NBFCs that offer pre-approved personal loans, and as a result, the need for application processing and eligibility checks gets eliminated.
3: One can avail personal for any purpose. There are no such restriction as other loans. One can borrow it to meet financial needs like medical expenses, home renovation, debt, travel, etc.
4: There is no requirement for collateral security or pledging for the personal loan.

Although there is no hassle in raising the personal loan like other loans, there are some criteria for borrowing personal loans. Let’s now move toward the following points:

1. One borrowing a personal loan must be around 18-21 to 60-65 years old. There is a specific age limit.

2. It is mainly offered to salaried individuals who work at renowned or recognized organizations. However, when a self-employed person asks for it, they must show their business proofs, ITRs, and other required financial documents.

3. Personal loans are not NRIs but only for people who are residents of India.

4. KYC verification is compulsory for documentation.

5. fresher/novice may face problems raising these loans as a certain number of employees or businesses is necessary.

6. Before lending you a personal loan, the lender may also consider your CIBIL (Credit Information Bureau (India) Limited) score.

1: Documents like Aadhar cards, PAN cards, Voter IDs, passports, driving licenses, and so on may be required for KYC verification.
2: An employment ID is required
3: Salary Slip of atleast 3 months
4: Bank Statement of the last 6 months
5: Passport Size Photo
6: Income Tax Return
7: For self-employed applicants, proof of business is required
8: The financial statement is also required for self-employed applicants.
9: Documents that verify your current address is required. It may include (Aadhar Card, Electricity Bill, Rent Agreement, Driving License, Bank Statement, Company HR Letter etc.

It is seen that people often need to improve while raising their loans. Regarding this, we have shortlisted some relevant points that help you avoid mistakes while borrowing personal loans.

1. It is recommended to only apply for personal loans at the same time or when your one application gets rejected because if you do so, it will affect your credit score.

2. Refrain from hiding any of your liabilities when applying for a personal loan.

3. Get an idea about your loan eligibility before proceeding to apply for it.

4. The interest rate should be one of many factors you should check before applying for a loan. Read all the terms and conditions also.

5. Instead of going for the lowest EMI, you should prefer an affordable EMI. Lowest EMI extends the loan tenor and, thus, a high-interest rate.


Conculsion: We have given all the detailed information about personal loans, the benefits related to them, the criteria for borrowing them, the documents required, and the mistakes you should avoid before raising the loan. We have given you sufficient information regarding personal loans. For further details, keep reading our articles.