FAQs

Q) What is a personal loan?

A personal loan is a type of unsecured loan that that you can borrow from a bank or financial institution if you require funds to pay for your financial needs.

Q) How does a personal loan work?

You borrow a loan when you are in need of credit. Once you submit your loan application to a lender for a personal loan, the lender verifies and approves it. Post this, the loan amount is disbursed into your bank account. Once you receive the loan amount, you will need to repay the lender via EMIs over the course of the loan repayment tenure.

Q) What is an EMI?

EMI or Equal Monthly Installment is the amount that a borrower pays each month towards an outstanding loan to clear off the debt within a specific time frame. EMI includes principal and interest.

Q) What is a credit score? Why is it important?

A credit score or rating is a number that indicates how you repay debt. It is important because your score determines whether you qualify for loans, credit cards, and other credit facilities.

Q) How does my credit score impact the calculation of my loan amount?

Your credit score is an indicator of how you handle your finances. It considers your credit card bill payment history, repayment of past and current loans, and other criteria. Your credit rating tells lenders how likely you are to repay them if they grant you a loan. The better your credit score, the better the chances are of getting a higher loan amount.

Q) What is the maximum amount of loan I can get?

The maximum amount of loan depends on your monthly income. In India, there are lenders who offer up to Rs.40 lakh.

Q) What is a prepayment and how does it help in repaying my loan?

If you happen to get some extra money, you can pay it towards your loan even before the EMIs are due. This is called a prepayment. Every prepayment you make goes towards reducing the outstanding principal component of your loan. And since the principal reduces, your interest cost will also reduce. Also, your tenure gets shortened this way, helping you pay off the loan ahead of time.

Q) How much loan can I get if I earn a monthly salary of Rs.60,000?

For personal loans, most lenders fix the minimum monthly income requirement between Rs 15,000 and Rs 25,000. Thus, if you have a monthly income of Rs.60,000, you can be fairly certain that you won’t find it difficult to borrow a loan. The exact amount that you will be offered will, however, vary based on your repayment capacity, debt-to-income ratio, the lender’s terms and conditions, etc.

Q) Is the PAN card mandatory when applying for personal loans?

Yes, you are required to have a PAN card.

Q) How much loan can I get if my salary is Rs.25,000?

With a monthly salary of Rs.25,000, you are likely to be eligible to borrow a loan. However, the lender will also check if you have any other outstanding loans, your credit score, repayment capacity, etc. before deciding how much you can borrow. You can use a personal loan eligibility calculator tool to know how much you are eligible to borrow with a monthly salary of Rs.25,000.

Q) Is there an upper age limit for personal loans?

Yes, the upper age limit to apply is 60 years. This may, however, vary from lender to lender.

Q) Is Form 16 required to borrow a personal loan?

Yes, lenders will require you to submit your Form 16.

Q) Is it mandatory to submit my Aadhaar card to borrow a personal loan?

Yes, most lenders will require you to submit your Aadhaar card.

Q) What is the minimum salary that an individual is required to earn to apply for a personal loan?

The minimum salary requirement will vary from lender to lender. Most lenders, however, will require you to earn at least Rs.15,000. If you reside in a metropolitan city, you may have to earn between Rs.20,000 and Rs.25,000.

Q) Can you get a personal loan if you are retired?

A number of banks offer loans for pensioners. Thus, if you are a pensioner, you will be able to borrow a personal loan.

Q) Can I get a personal loan with a credit score below 500?

If your credit score is under 500, there is a good chance that your loan application may be rejected by the lender. Even if your application is approved, you may have to pay a high rate of interest for the loan.

Q) Can I borrow a personal loan to pay for my house deposit?

Yes, you can. Banks and financial institutions that offer loans do not lay down any restrictions on how the loan amount can be used.

Q) How long does it take to get approved for a personal loan?

It may take anywhere between a few seconds to up to 48 hours. If you are a pre-approved customer, your loan amount will be approved very quickly. Else, you may have to wait for up to 48 hours to get approval.

Q) Will borrowing a personal loan affect my credit score?

Once you borrow a loan, your credit score will improve if you pay the required EMIs as per the schedule specified by your lender. On the other hand, your credit score will drop if you miss EMI payments.

Q) Is borrowing a personal loan better than using a credit card?

Personal loans are a good option if you need funds for a large expense or wish to consolidate multiple debts. The key benefit of a personal loan is that you can pay monthly instalments to repay your borrowed loan amount. Further, you can also choose a repayment tenure between 1 year and 5 years to suit your repayment ability. Credit cards, on the other hand, are a good choice if you want to finance smaller expenses, provided that you can repay your balance in full at the end of every month.

Q) Is it smart to consolidate my debts with a personal loan?

Yes, if you have multiple outstanding debts, it is best to avail a loan and consolidate your debts. Doing this will make repayments a whole lot easier and help you clear off your consolidated loan amount in affordable instalments.

Q) What is the best reason to give when applying for a personal loan?

Most lenders will not require you to provide a reason when applying for a loan.

Q) How long do I have to be employed for to get a personal loan?

Most lenders will require you to have a work experience of at least 2 years. This condition, however, varies from lender to lender.

Q) Can I use a personal loan to purchase a car?

Yes, you can use a loan to purchase a car. That said, if the sole purpose of the loan is to purchase a car, it is highly recommended that you avail a car loan since it is likely that you will be offered a lower rate of interest.

Q) How will I know if my personal loan had been approved?

You can track the status of your loan application through online/offline channels. Also, the lender will let you know if your application has been approved.

Q) How can I access the funds that I receive through my personal loan?

Most lenders disburse the loan amount into your savings bank account.

Q) How do I get a top-up on my personal loan if I require more funds?

Keep in mind that not all lenders offer top-up personal loans. However, if the lender does offer top-up loans, you can apply for the same through online or offline channels.

Q) Will I get a loan account statement detailing my payments and outstanding balance?

You can log into your lender’s customer portal to view your loan account statement.

Q) What should I do if I want to repay my loan (partially or in full) during the loan repayment term?

Most lenders will allow you to make pre-payments or pre-close your loan during the loan repayment term. You will, however, have to pay a nominal charge to the lender for doing the same. Keep in mind that most lenders will only allow you to prepay or pre-close your loan after 1 year of borrowing the loan. If you want to prepay/pre-close your loan, ensure that you inform your lender of the same.

Q) Do personal loans offer tax exemptions?

Personal loans only offer tax exemptions if you are using the loan amount for renovation of your house, to pay for educational expenses, or to expand your business.

Q) What is the impact of GST on personal loans?

Prior to the implementation of the Goods and Services Tax (GST), a service charge of 15% was applicable to personal loans. Post the introduction of the GST on 1 July 2017, a service tax of 18% is applicable on personal loans. Thus, there is a 3% increase in the payable service tax. The service tax, however, is only levied on the processing fee, prepayment charges, etc., and not on EMI payments.

Q) Can I get a personal loan without submitting my salary slips?

If you are a salaried employee looking to borrow a personal loan, you should submit your salary slips as proof of employment and income. Lenders will not process your application unless you submit the required documents.

Q) How do I cancel my personal loan after the loan is disbursed?

You can cancel your loan application before the loan amount is disbursed into your account by submitting a written application for the same. You will also need to pay the loan cancellation fee to the lender. Once the loan amount has been disbursed into your account, most lenders will not allow you to cancel it. You can, however, pre-close the loan. If you are thinking of cancelling your loan because you pay a high interest rate on your loan, you can consider transferring your outstanding loan balance to another bank or financial institution.

Q) Since a longer tenure means lower EMIs, should I always choose a longer tenure?

No, not necessarily. This depends on your ability to repay the loan. In other words, how much you can afford to repay every month. If you’re able to afford only a smaller amount each month, choose a longer tenure. But remember that this will result in you paying more interest over the longer duration. Also, it will keep you indebted to the lender for a longer time.

Q) How can I repay my personal loan?

There are a number of ways by which you can repay your loan. These include:

• Via Electronic Fund Transfer (EFT)
• By cheque
• By physically paying at a branch of the lender
• Via standing instruction for automatic deduction from your account

Q) How often should I repay my loan?

This depends on the lender you choose. Normally, every personal loan repayment is calculated on the basis of a monthly repayment pattern. It includes the principal and interest components that you’re expected to repay each month.

Q) How can I avoid defaulting on my personal loan repayments?

The measures given below can help you pay your loan instalments on time:

• Apply only for a loan amount that you can afford to repay on time
• Don’t apply for a larger loan simply because you’re eligible for it
• Choose the tenure wisely. It will determine how much you have to repay every month
• Choose a loan with a low interest rate
• Look out for other rates, charges, and hidden fees
• Plan your finances well
• Give the utmost priority for your EMI in your monthly budget
• Make a repayment schedule of your own
• Set reminders for each month’s repayment

Q) What will happen if I default on my loan repayment when I have offered collateral?

Personal loans are usually unsecured loans. Sometimes, if you don’t fulfil the loan criteria, you may be able to get a loan by offering collateral. In such cases, you have to be extra careful about repaying the loan on time. If you default on your repayment, the lender may take possession of your collateral to cover their losses. Defaulting in such circumstances could make you lose your collateral.

Q) If I have a guarantor, what will happen if I default on my EMIs?

A guarantor is someone who guarantees repayment on your behalf. So, if you’re unable to repay the loan as and when the installments are due, your guarantor will be asked to pay.

Q) If I have a co-applicant, what will happen if I don’t repay my loan on time?

All co-applicants for a loan are equally responsible for repaying the loan. If one applicant is unable to repay the loan, the remaining applicants are expected to do so. So, if you’re not able to pay the EMIs on time, your co-applicant is expected to pay. If your co-applicant also fails to pay the installments on time, it will result in a repayment default.

Q) Are there any charges for prepaying my personal loan?

Some lenders may ask you to pay a fee if you want to prepay a part of your loan. Others may either waive the fee or may not have prepayment charges at all.

Q) How is my prepayment fee calculated?

This depends on your lender. Some lenders charge you a fixed fee for each prepayment. Others may charge you a percentage of the amount outstanding or a percentage of the amount prepaid.

Q) Can I offer collateral and get a loan if I have bad credit?

Yes, you can. This is another way to get a personal loan even if your credit rating is bad. Some lenders may offer you a loan if you’re willing to offer them something as collateral. But keep in mind that the lender has every right to possess your collateral if you don’t repay the loan as promised.

Q) Will I be able to get a loan along with a co-applicant if I have bad credit?

Yes, applying for a loan along with a co-applicant who has good credit can help you get a loan even if you have bad credit. The scores of both applicants are considered when processing a joint-loan application. This way, the good credit of your co-applicant will help balance out your poor credit. But, remember that your co-applicant will be held responsible for repaying the loan if you are unable to do so.

Q) What credit rating should I have to get a loan?

A score of 700 and above is considered to be good. This should be enough to get you a loan without any hassles. But, a score of 800 or more will get you into the good books of lenders. This could get you better interest rates and repayment options.

Q) Why should I take a personal loan?

An unsecured loan can help you during tough financial situations. You can easily apply for one if you qualify for it. Lenders usually process your loan quickly. You won’t have to offer any collateral either.

Q) What does the process of applying for a loan include?

The process of applying for a loan includes the following steps:

• Searching for the right loan
• Getting the required documents ready
• Applying for the loan
• Submitting the documents
• Application verification and approval
• Loan sanctioning and disbursement

Q) What do I need to apply for a personal loan?

To apply for a loan, you need to make sure that you are first eligible for it. Don’t apply for a loan for which you aren’t eligible. This can hurt your credit score. Apart from checking your eligibility, you also need to make sure that you have all the necessary documents in hand before applying.

Q) What will happen if I don’t have one or two of the required documents?

Lenders usually require you to have all the required documents in order before you apply. However, if you don’t have one or more of these, you can talk to the lender and find out if there is an alternative solution. If these are vital documents, your loan will not be sanctioned till you give them.

Q) When will a bank reject my loan application?

A bank can reject your loan application if you apply for a loan for which you are not eligible. It can also reject your application if you fail to submit the documents it requires.

Q) Is part- prepayment allowed on my personal loan?

Personal loans can be prepaid in parts or as a whole at any stage. Some banks may charge a prepayment penalty for the same. Some banks do not allow part-prepayment. So, check all the documents before finalising on the loan with the bank.

Q) Will I need a guarantor to take a personal loan?

No, you will not need a guarantor.

Q) Can I club my income with my spouse to take a personal loan?

Yes, you can club the income of your spouse to boost your eligibility to avail a personal loan.

Q) How will I be eligible for a relationship discount?

If you have been a customer for a particular bank for a while, then the bank might reduce the loan interest rate or other such charges. Some banks will also provide you additional services.

Q) Do I need to open a bank account to service my personal loan?

If you do not have an account with the bank, it is not mandatory to apply for one. But, if you apply for a loan with your existing banker, then you will be eligible for a relationship discount.

Q) How do I stop executives from calling me to let me know about other loans?

Some banks let you register yourself for ‘Do Not Disturb'. If you opt for this, the executives will not disturb you with cold sales calls.

Q) What is the best way to apply for personal Loan?

The best way to apply for a personal loan is by using the online loan application tool at BankBazaar.com The tool can be accessed on this page allowing users to choose loan from various banks and NBFCS as per their selection.

Q) How to Track Personal Loan Application status?

BankBazaar.com offers it's loan applicants an active tracking tool through both email and SMS allowing them to track daily updates of their loan application.

Q) Is my Data Safe with BankBazaar.com?

BankBazaar.com is India's premier financial marketplace and takes utmost care in ensuring that all data is sent in electronic form with high level of encryption. BankBazaar.com does not share data with any third party other than the financial institution.

Q) Is BankBazaar.com Personal Loan Tool Free?

Yes BankBazaar.com personal loan calculator tool is totally free and the portal does not charge any fee for its services from users.

Q) How do I obtain a Duplicate Repayment Schedule for my loan account?

You can request the bank for a personal loan duplicate repayment schedule either via your net banking account, or by calling the customer care unit or by writing to them via your registered email ID.

Q) How can I get my address changed in my loan account?

You can change your address of residence linked to your loan account via your net banking account or by visiting the bank branch. At the bank branch, you will have to fill in the address-change form and submit relevant address proof documents that are authorised or attested by the State or Central Government.

Q) How can I make sure I get approved for a personal loan?

Ensure that you meet the eligibility criteria set by the bank, such as your age, credit score, minimum monthly income, work experience and that there are no discrepancies in the documents that you submit to the financial lender.

Q) Do personal loans affect mortgage?

Not necessarily, but it depends on your current credit score or past repayment record as well as your net monthly income and lender’s discernment if you can repay the loan without any payment lapses.

Q) Can you get a mortgage loan if you have a personal loan?

Yes you can, but it depends on your income and your ability to pay the EMIs of both the home loan and the personal loan.

Q) How many personal loans are too many?

Most lenders do not allow a customer to avail a second personal loan if he/she is still repaying the first personal loan. However, while it is still possible to have multiple personal loans at once, banks take into consideration the debt-to-income ratio of the individual, which will increase the chance of the personal loan being rejected if he/she has existing loans.

Q) What is RTGS?

Real Time Gross Settlement (RTGS) is a real-time money transfer interbank transfer system. Individuals or institutions can send larger amounts of money via RTGS and once the amount is credit in the account of the beneficiary, it is irreversible.

Q) What is NEFT?

National Electronic Funds Transfer (NEFT) is a fund transfer facility between one NEFT-enabled bank account to another. NEFT transfers are not real time like RTGS are the transfers are carried out in batches during the working hours of the bank.

Q) What is SI (Standing Instructions)?

Standing instructions is basically instructions given by a bank customer to the bank to make a payment to another bank account or to the bank at regular intervals or as a one-time payment - as per the requirement. As per the instructions, the money in the bank account of the customer will be debited and remitted in another account as per the specified time of the customer.

Q) How to check personal loan balance?

Bank customers can check their personal loan balance through the repayment schedule that will be issued by the lender.

Q) What happens if a personal loan is not paid?

If the borrower fails to pay the EMI, the bank charges a penal interest on the overdue amount. Financial lenders usually charge a penal interest of 2%-3% per month of the overdue amount.

Q) Where can I get a personal loan with bad credit and no checking account?

It could be hard to get a traditional personal loan from a bank with a poor credit score and no checking account. However, certain lenders offer types of personal loans such as payday loans for those with a poor credit score. That said, the interest charged will be quite high.

Q) Can I pay more than my EMI in personal loan?

Over your EMI, after a certain period following the disbursement of the loan, you can make a part-payment towards the loan. The part payment will further deduct the outstanding principal amount of the loan.

Q) Is it good to top up personal loan?

Opting for a top-up loan is better than availing a fresh personal loan, as the documentation process might not be required, the interest rates will be attractive, and the loan amount will be disbursed quickly.

Q) Can a fresher get a personal loan?

Yes, individuals who have just started working can apply for a personal loan offered by certain lenders. Also, some lenders list a minimum of 3 months’ experience and a minimum monthly income of Rs.15,000 to apply for a personal loan.

Q) What is pre-approved personal loan?

A pre-approved loan is one where the customer can apply for a loan and possibly doesn’t need to submit documents or go through the verification process as he/she shares a healthy relationship with the bank as an existing customer and has a clean repayment record.

Q) Do personal loan pre-closures have certain terms and conditions?

Yes, financial lenders have their terms and conditions when it comes to personal loan foreclosures. Usually, financial lenders allow loan pre-closures only after the payment of 12 EMIs and charge a foreclosure charge + GST on the outstanding loan amount.

Q) Is it possible to get a personal loan for a self-employed individual with no income proof?

Most banks and financial lenders require income proof as verification prior to the approval of the loan application. However, for some lenders, the proof of work experience and bank statements of the individual will suffice.

Q) What is reducing rate of interest in personal loan?

If the borrower has opted for the reducing balance interest rate, then the interest will be as per the outstanding amount. As the loan amount decreases with every EMI, the interest rate will be applied only on the outstanding balance. With the flat interest rate option, the interest will remain the same irrespective of the reducing principal amount.

Q) Is the overdraft facility available for salaried individuals?

Yes, it is.