A personal loan is a type of unsecured loan offered by financial institutions based on criteria such as income level, credit history, repayment capacity, and employment status. Unlike home or car loans, personal loans do not require collateral and offer the flexibility to use the funds for various purposes — whether it’s a medical emergency, travel, home renovation, wedding, or even debt consolidation.
In this blog, we’ll cover all aspects of a personal loan — from how it works and its benefits to eligibility criteria, documentation, and tips for getting approval.
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A personal loan is a short-to-medium-term loan that allows individuals to borrow a fixed amount of money, repayable in monthly installments (EMIs). These loans are generally unsecured, meaning borrowers do not need to pledge any asset as security. Interest rates on personal loans can vary widely based on the applicant’s credit profile and the lending institution’s terms.
Personal loans are one of the most accessible and versatile financial products available today. Here’s a detailed look at the main features that make them a preferred choice for individuals seeking quick financial assistance:
The loan amount offered typically ranges from ₹50,000 to ₹40 lakhs, based on your:
Monthly income
Credit score
Employment status
Existing liabilities
Whether you need funds for a medical emergency, wedding, travel, or debt consolidation, the flexibility in loan size makes personal loans suitable for both small and large expenses.
Personal loans come with a repayment period ranging from 1 year (12 months) to 5 years (60 months). This allows borrowers to:
Choose a shorter tenure for quicker repayment and lower interest outgo
Opt for a longer tenure for lower monthly EMIs to reduce financial strain
This flexibility helps you align the repayment schedule with your financial comfort.
Interest rates on personal loans vary widely, usually between 9% and 24% per annum, and depend on factors such as:
Your credit score (CIBIL)
Loan amount and tenure
Income and employer profile
Relationship with the lender
Borrowers with higher creditworthiness and stable income often get access to lower interest rates.
Personal loans are unsecured loans, meaning:
You don’t need to pledge any asset like property, gold, or fixed deposits
The loan is approved solely based on your financial profile and repayment history
This makes it easier and quicker to apply, especially for salaried individuals and professionals.
Personal loans come with a fixed interest rate and EMI structure, which means:
Your monthly installment stays the same throughout the loan tenure
You can plan and manage your budget with consistency
There are no surprises or fluctuations in your repayment amount
Some lenders may also offer flexi personal loans with variable EMIs or overdraft facilities, depending on your needs.
Once your loan is approved and documents are verified, the loan amount is typically credited to your bank account within 1 to 3 working days. Some fintech platforms even offer same-day disbursal for pre-approved customers.
This fast processing makes personal loans ideal for urgent requirements, such as:
Hospital expenses
Last-minute travel
Business needs
Educational expenses
One of the biggest advantages of a personal loan is its versatility. Unlike home or car loans, which are meant for a specific purpose, a personal loan gives you the freedom to use the funds for any legal financial requirement. Whether it’s a medical emergency, a family wedding, a dream vacation, or even funding your child’s education, a personal loan has you covered. It’s also a popular choice for debt consolidation, helping you merge high-interest debts into a single, manageable EMI.
Personal loans are unsecured, meaning you do not have to mortgage your home, gold, vehicle, or any other asset to get the loan. This makes it especially convenient for young professionals and first-time borrowers who may not have significant assets to pledge. It also reduces the risk on your part since no property or possession is at stake if you default — though timely repayment is crucial for maintaining your credit health.
With the advent of digital lending platforms, personal loan processing has become incredibly fast and efficient. From applying online to uploading documents and receiving approval, the entire process can be completed in a matter of hours. Many financial institutions even offer instant disbursals — ensuring that funds reach your bank account within 24 to 72 hours of approval. This speed is especially useful in urgent situations such as medical emergencies or last-minute travel plans.
When you take a personal loan and repay it on time, your credit score gradually improves. This is because credit bureaus consider timely repayment a strong indicator of creditworthiness. Over time, a good repayment track record can help you qualify for larger loans at better interest rates in the future. So, beyond just solving your immediate financial needs, a personal loan can also help you build a strong financial foundation.
Personal loans come with a pre-defined repayment schedule, usually ranging from 12 to 60 months. You’ll know upfront exactly how much your monthly installment (EMI) will be, allowing you to plan your finances with precision. This predictability removes any guesswork from budgeting and ensures you can manage your income and expenses efficiently without surprises down the line.
While the specific criteria may vary by lender, here are the common requirements:
Age: Between 21 to 60 years
Income: Minimum monthly income of ₹15,000 – ₹25,000 (varies by city and lender)
Employment: Salaried individuals or self-employed professionals
Credit Score: Preferably 700 and above
Here’s a list of commonly required documents:
Identity Proof: Aadhaar Card, PAN Card, Passport, etc.
Address Proof: Utility bills, Aadhaar Card, Passport
Income Proof: Salary slips (last 3 months), bank statements, ITR
Employment Proof: Offer letter, employment certificate
Photographs: Passport-size
CIBIL Score: A higher score (above 700) boosts your chances.
Debt-to-Income Ratio: Lower existing EMIs increase approval chances.
Employment Stability: Working for a reputed organization or stable business is a plus.
Loan Amount & Tenure: Opting for a reasonable amount and shorter tenure improves approval chances.
Multiple Loan Applications: Avoid applying to several lenders simultaneously — it reduces your credit score.
Applying for a personal loan is now easier than ever, thanks to simplified digital processes and quick verifications. Here’s a detailed breakdown of the application journey:
Before applying, it’s essential to verify your eligibility with the lender. Most lenders display basic criteria on their websites or mobile apps. Key factors typically include:
Minimum age (usually 21–60 years)
Minimum monthly income or annual turnover
Employment type (salaried or self-employed)
CIBIL score (generally 685+)
Residence and work stability
Checking eligibility helps you avoid unnecessary rejections and ensures a smoother approval process.
Not all personal loans are created equal. It’s wise to compare offers from multiple lenders based on:
Interest rates (fixed or reducing balance)
Processing fees and other charges
Loan tenure options (typically 1 to 5 years)
EMI flexibility or prepayment options
Customer support and service ratings
Doing your research ensures you pick a plan that fits your budget and long-term financial goals.
Once you’ve chosen a lender, you can apply online or offline. The online route is faster and requires you to:
Fill in a simple loan application form
Upload necessary documents like PAN card, Aadhaar card, salary slips or ITR, and bank statements
Some platforms also allow pre-approved customers to skip parts of the process for quicker approval.
After submission, the lender will:
Review and verify your documents
Check your credit report (CIBIL or other bureau)
Conduct an internal risk assessment
In some cases, a short telephonic or physical verification may be done. This step confirms your creditworthiness and identity.
Once everything checks out, you’ll receive a sanction letter outlining the approved loan amount, EMI, interest rate, and tenure.
Upon your acceptance, the loan amount is disbursed directly to your bank account — usually within 1 to 3 working days. Some lenders offer same-day or even instant disbursal for select applicants.
Personal loans are easier to get when you’re well-prepared. Here are key tips that can significantly improve your chances of quick approval and better terms:
Your credit score is one of the first things lenders check when evaluating your loan application. A score of 685 or above is generally preferred for personal loans. To maintain or improve your CIBIL score:
Pay all EMIs and credit card bills on time
Avoid exceeding credit limits
Keep older accounts active to show credit history
Monitor your credit report regularly for errors
A strong credit score makes you a trustworthy borrower and opens doors to lower interest rates.
Applying to too many lenders at once can harm your credit score. Each application triggers a hard inquiry, and multiple inquiries in a short span signal financial desperation to lenders. Instead:
Use eligibility checkers or pre-approval tools
Shortlist 1–2 trusted lenders before applying
Space out applications if necessary
This keeps your credit report clean and boosts approval chances.
Interest rates and terms vary widely between lenders. Always choose a lender offering:
Competitive interest rates
Reasonable processing fees
No hidden charges
Flexible repayment tenure
Minimal prepayment penalties
Opting for the right lender ensures your loan is both affordable and stress-free.
Lenders evaluate your repayment capacity based on your income and existing financial obligations. Asking for more than you need not only increases your EMI burden but can also lead to rejections. Borrow smart:
Define a clear reason for the loan
Calculate the exact amount required
Keep your monthly EMI within 30–40% of your monthly income
This responsible borrowing approach enhances your credibility and approval rate.
Before applying, always use an online EMI calculator to determine how much you’ll repay every month. This helps you:
Choose the right loan amount and tenure
Plan your monthly budget accordingly
Avoid any financial strain post-disbursal
Proper planning ensures you don’t end up with an EMI that disrupts your lifestyle or savings.
A personal loan is a smart and flexible financial solution to meet urgent or planned needs — from medical emergencies to wedding expenses or debt consolidation. With quick approval, no collateral requirements, and fixed EMIs, it puts financial freedom at your fingertips.
Apply for a Personal Loan with Networth Advisory and experience expert guidance, fast processing, and tailored loan solutions designed just for you. Let us bridge the gap between your needs and your goals — easily, efficiently, and professionally.
Networth Advisory – Your Trusted Financial Bridge.
