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Best Personal Loans from Top Banks & NBFCs

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Choose an amount between ₹50,000 and ₹5,000,000.

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Personal Loan EMI Calculator
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Best Personal Loans from 10 Banks / NBFCs (updated 23 Feb 2024)

Borrow as low as ₹1,000. Repay as fast as in 3 Months. Be Charged as Low as @10.89% pa.

Bank/NBFCInterest RateMin. Loan AmountMax. Loan AmountMin. TenureMax. TenureProcessing Fees Part PaymentApply Now

10.5% - 21%





Up to 2.50% + GST as applicable


10.75% - 20%





Upto 2.50% + GST as applicable


11% - 25%





Upto 2% + GST as applicable


18% - 54%





Up to Rs. 1250 including GST as applicable

Rate of Interest is high ?
Rate of Interest is high ?

Try Applying for a higher Loan Amount as most bank reduce interest rates as loan amount increases

Not getting the desired Loan Amount?
Not getting the desired Loan Amount?

Try Adding the income of a co-applicant like a working spouse

Have multiple existing loans?
Have multiple existing loans?

Financebuddha can help you consolidate all your loans into one to increase your eligibility

Personal Loan Details

Your Search for Personal Loans Ends Here!

Are you a self-employed or salaried individual trying to meet both ends? Have you given a thought about personal loan option? When there is an unusual expense like child's marriage, renovation of your home or furnishing, children’s higher education, family holiday, or any other dream to be turned into reality, make use of the personal loans.

Banks and non-banking financial organisations provide a Personal Loan to satisfy the personal financing needs of the consumer. A lender will provide loan at some interest rate to the customers for a fixed time period. The borrower then uses the loan amount for any personal purpose. The borrower not answerable to the lender about the usage of the personal loan.

Also, personal loans are unsecured loans, which means that there is no need for any kind of collateral to avail them. There is no need to commit anything to the creditor as security. As such, none of your property or asset at risk, should you fail to repay.

How do Personal Loans work?

Personal Loans have the simplest method of operation.

Let us take a look at the working of personal loans. The processes mentioned here can differ from lender to lender.

The applicant applies to the lender for a certain amount. Based, on the eligibility of the applicant, the lender issues an offer with the final loan amount, processing charges, interest rate and the tenure and indicative broken period of the loan.

If the applicant likes the offer, they sign a loan agreement. A loan agreement is a legal contract between the lender and borrower.

The loan amount is disbursed to the applicant, upon signing the loan agreement.

The processing fee involved can be paid by the borrower separately or deducted from the loan amount.

Loan amount is always disbursed one time and in full to the borrower. The borrower, then can utilize the money as per their need and purpose. They do not need to inform the lender about the usage of the loan amount.

Loan repayment starts once the broken period is over. An EMI is deducted per month from the borrowers account on a previously agreed date. The deduction can be through either of the following: NACH, ECS or cheques depending on the loan agreement. This deduction goes on till the full tenure or until the prepayment by the borrower.

In lieu of the loan amount provided, the lender charges some amount on top of the principal amount. This extra amount is call the interest. Interest is always a certain percentage of the principal amount. This percentage is known as the interest rate.

With some lenders, there can be additional processes involved. Also the documentation may vary depending on the borrower’s profile, until the lender is satisfied.

Choiceworthy Benefits of a Personal Loan

There are several features which makes them the first choice for anyone who needs money urgently.

They are a highly beneficial financial credit facility in the case of sudden and immediate need of money. And can be availed in situations whenever there is an unusual expense like marriage, renovation of home or furnishing, children’s higher education, family holiday and from funding your start-up business to purchasing an upgraded gadget. Or, to turn any other dream to reality.

They are also, a great source to maintain and manage your cash flow during cash crunches. The point, which makes it even more useful for the customers, is its wide availability and multipurpose nature.

One can avail these loans for multiple reasons which can be either personal or professional. 

You also get the option to repay your borrowed amount gradually in the upcoming years.

Just use the simple application form above to apply.

Features of a Personal Loan

Life has various ways to provide us surprise in a good manner or in a bad way, we cannot predict. We may need money in both situations. Whether it’s an occasion of happiness or any type of emergency we may need money beyond our savings. In all such cases, personal loans are the smartest option for us.

Let us have a look into the features which make them so.

  1. Multipurpose: The loan amount can be used for any personal use.
  2. Affordable Rates of Interest: The lowest interest rate is 9.60%.
  3. The Simplicity of Repayment: The loan amount gets auto-debited from the bank account in EMIs.
  4. The Speed of the Process: It takes only 3 days from start to finish.
  5. Minimal Documentation: Only basic KYC documents along with bank statement and income proof is required.
  6. It is for Everyone: It is available to both salaried employees as well as self-employed professionals and non-professionals.
  7. A wide range of Loan Amount: The loan amount ranges from ₹1000 to ₹5,000,000.
  8. Flexible & Long Tenure: Tenure ranges from 12 months to 60 months.
  9. Collateral-free: No security or guarantor is required.
  10. Convenience: Can be applied from anywhere, anytime without visiting any lender’s office.

Types of Personal Loans in India

Personal loans are easily available in India. You just need to fulfil the eligibility criteria and need to have the documents required in place along with a good CIBIL Credit score. Banks and NBFCs offer loan amount typically ranging from ₹50,000 to ₹5,000,000.

Below is a list of all the personal loans available in India.

  1. Debt Consolidation Loans
  2. Festival Loans
  3. Wedding Loans
  4. Travel Loans
  5. Medical Expenses Loan
  6. Loans for Low CIBIL Score
  7. Same Day Loans
  8. Top-up Loans
  9. Loans for Small Businesses
  10. Refinance / Balance Transfer
  11. Private Loans
  12. Peer to Peer (P2P) Loans
  13. Personal Loan for Self Employed

An Overview of Personal Loan Process

Personal Loans are a very fast and efficient method of getting the required fund in the time of need. And why not, compared to all other loans, they require minimal documentation and are processed faster. The process starts as soon as it is applied for.

Let us have a look at the steps involved so that you can get an understanding of the entire application process at Finance Buddha. Right from applying to the loan disbursal into your account.

Online Application

The application process starts when you choose a particular lender and fill up the application form above and hit the Submit button. Once you hit the Submit button, your application gets registered in our database.

Confirmation and Welcome Call

Once we have received your application, someone from our team will get in touch with you to verify that it was really you who applied for the loan. Once verified, our executive will explain to you all the details about the lender and its product that you have applied for.

In the case, if a better offer exists for you, then the same will be suggested to you. After you confirm the application, a schedule will be fixed for the documents collection.

Documents Collection

Our executive will visit the pre-decided place at a time of your choice to collect all the required documents and get your signature on the application form.

Details Verification

Our team will verify all the details provided you for the authenticity once you provide all the required documents and a signed application. All the details will be confirmed only after they have been checked and crossed-checked.

Submission to the Lender

We will submit all your documents and your application form to the lender on your behalf so that you can carry on with what’s important to you. The lender may or may not call you to confirm the details. They will also then carry out a verification process at their end.

Approval and Disbursal

The loan processing is complete after the lender verifies all your information.

The lender then, will inform you in detail about your final loan offer. It is at this stage that you will get to know the following:

  1. Final loan amount.
  2. The interest rate on the loan.
  3. The tenure of the loan.
  4. The processing fee and other charges (if any).
  5. Terms and conditions of the loan.

The lender will convey the same to you on your preferred mode of communication.

If you like the offer, then the lender will ask you to sign a loan agreement. This will complete all the required steps.

The loan amount will be disbursed immediately.

The advantage that you get when you apply for a personal loan with Finance Buddha is that you just need to apply. Everything else thereon, will be carried out by our team, and the loan amount disbursed to your account.

All this happens without any hassles of you running around and visiting any offices be it ours or the lenders.

Just apply for a personal loan and let Finance Buddha take care of everything else.

Best Personal Loans in India

Different lenders offer different features and benefits. These features and benefits offer solutions to different types of borrowers and their needs.

Each borrower has their own need. And, fall into different categories from one another.

While, a high earning individual may need a loan for home renovation. On the other hand, a low income employee might need it to cover additional monthly expenses. Expenses which were unforeseen or unavoidable, but without the necessary money to meet them.

As such, the requirements of both these types of borrowers are different from each other and require different solutions to them.

Also, both of these borrowers have different profiles from each other.

Hence, there is no perfect offer which will suit all borrowers. And, no particular lender would be able to cater to all customer profiles.

Therefore, the best personal loan for you will always depend on your eligibility and needs.

We cannot emphasize enough on comparing available offers online before applying to get the best offer.

Best Banks for Personal Loans

#1. ICICI Bank 

ICICI Bank is the second largest private bank in India. The bank provides banking and financing services to its customers. ICICI is known for its customer satisfaction and quick redressal.

The bank provides personal loans at an affordable rate which makes it more appealing to the customer. The eligibility criteria are also basic.

Why should you choose?

ICICI Bank provides you a personal loan under the tagline of "Jo Bhi Ho Sapna 3 second me loan Apna". This is enough to assure that the processing is really fast.


  1. Flexible payment options: One can choose a tenure ranging from 12 to 60 months.
  2. Attractive Interest Rates: Interest rate starting from 10.25 % p.a. and can go up to 17.99% p.a. depending on the borrower's profile.
  3. Quick Process: Fast processing of loan application followed by quick disbursal.
  4. No Collateral: There are no collateral required as they are totally unsecured in nature.
  5. Range of Loan Amount: With ICICI bank you can get a minimum of ₹50,000 and a maximum of ₹2,000,000.


  • Interest Rate: 10.25% to 22.00%
  • Loan Tenure: 12 months to 60 months
  • Age: 23 years to 58 years (at the time of loan maturity)
  • Maximum Loan Amount: ₹2,000,000
  • Processing Fee: Starting from ₹999 / - Up to 2.25% + GST as applicable
  • Lock-in Period: 6 months
  • Prepayment / Pre-closure Charges: Up to 5% per annum of the principal outstanding plus service tax

#2. HDFC Bank

Availing personal loans from the premium bank: HDFC Bank is quick, competitive and very transparent. If you are looking for a bank that can give approval in just 5 minutes for a personal loan, then your search ends here. The loan can be availed up to ₹2,500,000 and for a tenure of 5 years.

The service is easy to avail it has the ability to meet all your financial needs in a happy manner.

HDFC Banks Important Links - 

Why should you choose?

HDFC is India's largest private sector bank with its headquarters in Mumbai. HDFC understands your requirements and hence provides you the best option available.


  1. Loan amount up to ₹2,500,000.
  2. HDFC has a quick approval process.
  3. Interest rate starts from 10.25% p.a.
  4. The approval takes only 10 minutes.
  5. HDFC offers Flexible repayment tenures which ranges up to 60 months.


  • Interest Rate: 10.50% - 21%
  • Loan Tenure: 12 months to 60 months
  • Age: 21 years to 60 years
  • Maximum Loan Amount: ₹2,500,000
  • Processing Fee: Up to 2.50% + GST as applicable
  • Lock-in Period: 12 months
  • Prepayment Charges / Pre-closure Charges:

13-24 Months: 4% of Principal Outstanding

25-36 Months: 3% of Principal Outstanding

>36 Months: 2% of Principal Outstanding

#3. IndusInd Bank

IndusInd Bank is one of the best banks for a personal loan. It has good scrutiny and offers loan for genuine applicants. It is the first bank rated for pretty good service and offer great options to its customers.

This bank offers fast service with less interest rate. The bank is very transparent and flexible in its eligibility criteria.

It is possible to get it within just 2 days from this bank if you have all the necessary documentation and if you meet all the criteria. IndusInd Bank has fast approval processes with minimal and easy documentation along with quick processing and quick response.

Why should you choose?

The IndusInd Bank provides free services to all its customers. It is one of the best lenders to choose in India.


  1. IndusInd Bank offers you option to choose a convenient repayment option.
  2. Simple and easy documentation.
  3. No collaterals or guarantors required.
  4. Quick processing followed by speedy disbursal.
  5. With an IndusInd Bank you can choose a loan tenure as per your convenience ranging from 1 to 5 years
  6. IndusInd Bank provides you the convenience of doorstep service.


  • Interest Rate: 11.00% - 30.00%
  • Loan Tenure: 12 months to 60 months
  • Age: 21 years to 60 years
  • Maximum Loan Amount: ₹1,500,000
  • Processing Fee: Up to 2.50% of the total loan amount plus GST tax
  • Lock-in Period: 12 months
  • Prepayment Charges / Pre-closure Charges: 4% of the principal outstanding

#4. Citibank

Citibank Personal Loan services are considered one of the most approachable and the most inexpensive ones existing in the market.

Citibank offers low-interest rates for all online applications. All relevant documentation requirements are nominal, and no collateral or guarantor is required.

The top-up option is made available with all Citi Personal Loans according to your eligibility.

Why should you choose?

The bank strives to provide you with the best services that are a hassle-free and quick.


  1. Citibank provides loan amount up to ₹3,000,000*
  2. Disbursal within 48 hours.
  3. Part pre-payment and prepayment options are available with Citibank.


  • Interest Rate: 10.50% - 18.99%
  • Loan Tenure: 12 months to 60 months
  • Maximum Loan Amount: ₹3,000,000
  • Prepayment Charges / Pre-closure Charges: Up to 4% on total principal outstanding plus interest for the ongoing month.
  • Processing Fee: 2.00% - 3.00% + GST as applicable

#5. Axis Bank

Axis Bank offers the most flexible personal loans.

Why should you choose?

Easily available, flexible, quick and convenient and are available on affordable interest rates.


  1. No foreclosure charges: Axis Bank does not charges any fee on prepayment.
  2. To ease your burden, the tenure can range from 12 months to 60 months.
  3. The interest rate is totally affordable for common people.
  4. As compared to the others, Axis bank requires minimal documentation.


  • Interest Rate: 12% - 24.00%
  • Loan Tenure: 12 months to 36 months
  • Age: 21 years to 60 years
  • Maximum Loan Amount: ₹1,500,000
  • Processing Fee: 1.50% to 2.00% + GST as applicable
  • Prepayment Charges / Pre-closure Charges: Nil

Best NBFCs for Personal Loans

#1. Capital First

Capital First is the largest NBFC in India offering personal loan across the country with minimal documentation at affordable rates.


  • Online loan processing.
  • Minimal documentation.
  • No mortgage required.
  • Loan Insurance.
  • Faster processing.
  • Foreclosure options available.
  • Affordable interest rate.
  • Doorstep service available.


Interest Rates: 10.49% - 18.00% p.a.

Fees & Charges: 1.99% + GST as applicable

Minimum Loan Amount: ₹100,000

Maximum Loan Amount: ₹2,500,000

Minimum Tenure: 1 year

Maximum Tenure: 5 years

#2. Tata Capital

Tata Capital offers personalized loan quotations for your personal loan. The NBFC offers personal loan to its customers keeping in mind their needs and requirements, and thus attractive interest rates and with multiple features. 


  • Online loan application option available.
  • Flexible repayment option offered.
  • No hidden charges involved.
  • Fast processing.
  • Speedy loan approval.
  • Quick Disbursal.
  • Minimal eligibility criteria required.
  • Excellent customer support system.
  • Pre-closure facility available.


Interest Rates: 10.99% - 19% p.a.

Processing Fees & Charges: 1.50% to 2.00% + GST as applicable

Minimum Loan Amount: ₹75,000

Maximum Loan Amount: ₹2,500,000

Minimum Tenure: 1 year

Maximum Tenure: 5 years

Pick the Best Personal Loan Offer

There is no shortage of either the lenders or the loan offers. As the disbursal is fast and needs no to minimal paperwork, it is very easy to avail. Yet, it is not an easy task to find the best offer.

Comparing and choosing the best personal loan provider is always a tough task.

It is essential to understand the way they work, banks interest rates, types of loans offered: secured, unsecured, fixed, and variable, overdraft and line of credit, go through the bank’s application checklist and look for the customer reviews & ratings.

There are a lot of websites to compare what is offered by each bank. Use a trustworthy website to choose the top five. Then bring down your list to top 3 and then further narrow it down to the bank that has the best offer.

How to find the best offer?

The Interest Rate

The interest rate is the first concern for most of us before applying for any loan. The total cost of a loan is determined by combining the interest rate and the length of the repayment period.

So, in order to minimize the cost of borrowing, the loan should be of low-interest rate. Also, the tenure should be short. The interest rate differs from lender to lender.

To get the lowest interest rate, one must compare the offers of several lenders.

Fees and Charges

The next point to consider are the fee and charges you are to pay to the lender, excluding the principal and the interest component. Some lenders may have high fees like processing fee, documentation fee, etc. while some others may keep it low to attract customers.

In both cases, one has to be careful enough to dig deep into the matter and find out if the lender has any hidden charges. Finalize a lender only after evaluating all the involved costs to be paid to the lender during the loan tenure.

Repayment Period

The loan repayment period or the loan tenure should also be checked if you are trying to find the best loan offer.

Loan tenure makes a great impact on the total outgo of the loan. Some lenders may offer you a very long loan tenure to make the EMI amount smaller.

But remember the fact that, a longer tenure loan is costlier as the interest is compound interest. So, before you make any decision you can check using the EMI Calculator to determine how long it will take you to pay back the loan.

Repayment Flexibility

Along with all other concerns, one must be aware of the repayment flexibility of the lender. As these are installment loans, hence the ideal repayment of the loan is done in EMIs for a fixed tenure.

But during the loan tenure, it may happen that you save some extra fund. And you want to pay it towards the loan repayment to save the interest payment. In such scenarios, the lender should accept the prepayment of the loan.

Some lenders may let you pay a prepayment penalty while some others may not allow you to do the same. So, apply only if the lender accepts prepayment.

Finance Buddha Now Offers Online Personal Loans in India!

You can now get instant online personal loans with Finance Buddha. This online personal loan is a completely online hence paperless. This is not only about saving paper but its best part is reduction in the processing time. The documentation process is online, i.e. the applicant has to upload all the required documents online on the portal itself. This is the simple, quick and effective process which is best suitable in emergency situation because in any kind of emergency every second matters. Online personal loans are unsecured loans in which nothing is required as guarantee or guarantor like any kind of property or any person. Because of this reason only its interest rate is high as compared to the other loans. This online personal loan can be availed in any kind of any emergency. Finance Buddha’s team strives hard to deliver personal loans within 24 hours. It is the quickest, effective and simple process for both the lender and borrower.

The additional features of the online personal loan are:-

  • Instant loan approval
  • 100% online application process.
  • No physical documentation required
  • Loan disbursal within 2 hours of approval
  • Your information is 100% secured.
  • Cash withdrawal up to 100%.
  • E-signing of loan agreement

To see more details and to apply online, visit:

In order to avail the benefits of paperless loan, all you need to do is fill the loan application which is available on the Finance Buddha website. Your application will be processed instantly. If you have any doubt then first go through the information mentioned on the website. The page will show you the best loan offer you are eligible for, and other information regarding your loan. If you choose to apply, upload all the required documents as per mentioned and proceed. As soon as you are done with this is, you will get a confirmation Call for the verification of all your details and to understand your loan requirement in detail. If everything goes fine, sign the Loan Agreement. As soon as the signed agreement is received, your loan amount will get disbursed in your account within 2 hours.


PPI with a Personal Loan

The Payment Protection Insurance, also known as PPI is a kind of insurance plan designed to cover any kind of loan. The PPI can cover different kinds of loans.

This type of insurance covers the loan EMIs in case of death or disability of the borrower to pay off the EMIs.

In case of job loss or such situations when you are not earning enough to pay the EMIs, you can claim the insurer to pay the EMIs until you are earning again.

Generally, the PPI is sold along with the credit product by the lender or the partner companies of your lender. Lenders generally advise you to buy a PPI as it minimizes the risk of NPA to a great extent. The PPI policies have to be purchased separately for every credit you owe.

Let's say, you have purchased a PPI for your personal loan. If you become unable to earn enough to pay off your loans, the insurer will pay the EMIs. If you have any other loans due, the insurance will not cover those loans.

The PPI helps a borrower in the cases of:

  1. Illness or disability
  2. Unexpected redundancy
  3. Circumstances that stop you working
  4. Death (depending on your policy).

Here is when PPI doesn't give you protection:

  1. The insurer doesn't cover EMIs for the first 90 days of being unemployed. During that period, you are to pay the EMIs yourself.
  2. All the illness are not covered by PPIs. There are certain illnesses which are not covered by the insurer. You are to check the list before buying one.
  3. The insurance will not provide you with coverage of pre-existing diseases.
  4. If you are unemployed or retired, you can avail this facility.

When should you consider buying a PPI?

The PPI policies are to be purchased if your loan amount is huge. Bigger loan amount leads to hefty EMI amount. If you are not certain about the regular payment of the EMIs, it is advisable to buy a payment protection insurance

Secondly, if your source of income is not stable, you should definitely opt for payment protection insurance. So if your income becomes less than normal, the insurance will cover the EMI payments.

If your job is associated with risk on life, you should better have PPI for you all kinds of loans. The individuals servicing risky jobs such as fighter pilot, fireman, construction foreman, private detective and so on should purchase payment protection insurance plans to cover the loan repayments.

Also, you should not neglect to buy a PPI if you are the only breadwinner of your family. If there are no other earning member in the family, you should go for PPI to safeguard your family from uncertainties of future.

Peer to Peer (P2P) Personal Loans

The P2P (Peer to Peer) Lending is a technology-enabled system, which enables a person to borrow from others, without the use of any official financial institution as an intermediary.

Traditionally, the need for an extra fund for personal use, is fulfilled by availing personal loans through banks. And to process your personal loan, banks go through quite lengthy procedures. Most noteworthy of these procedures are: checking credit score, verify documents, checking FOIR etc. Because of so many different parameters, it results in a great number of rejected loan applications.

Therefore, P2P is a great alternative to avail a loan, while skipping the hassles of banks personal loan.

In contrast to personal loans, here the lending and borrowing happens between individuals. Therefore, removing the middleman (bank/NBFC) from the process.

Such a lending happens via a platform, where the people who need to borrow and people who are willing to lend, exchange money.

This lending is a form of crowdfunding. As such, people with excess fund invest their money through such platforms. As, such a system helps them earn better ROI than other investment options.

With such platforms, the investors across the country can lend to the borrowers.

Once approved, the borrower immediately receives the loan amount. The borrower repays the loan through EMIs. Which is just like any other personal loan.

How Does a Peer to Peer Lending Work?

A peer to peer lending happens when borrowers take loans from the individuals who are ready to lend their money at an agreed interest rate. The peer to peer platforms display the loan aspirant’s profile which can be accessed or checked by the investors. The investors access the profile of the loan seekers and determine the risk profile. The P2P lending is a collateral free loan hence the risk assessment is always the first priority of the investor. In a P2P lending system, a borrower may get the full amount or a portion of the amount applied for. In such scenarios, the rest of the amount may be provided by another investor. In this way, a borrower may have multiple loan sources hence the repayment of the same has to be made to each of the individual sources.

Benefits of P2P Personal Loans

Easy Application

The P2P loan application is much easier than applying for any other kind of loans. One just needs to put in a few pieces of personal information and the loan application can be approved within minutes. The application of a P2P loan is done online.

Low Interest Rate

The second benefit is the competitive interest rate. If you are earning well and have no records of defaulting loans, you are likely to get a loan cheaper than a bank loan.

Nominal Processing Fee

Unlike a banks personal loan, the processing fee of P2P personal loan is considerably low. Apart from interest charges, traditional banks charge a number of fees such as processing fee, documentation fee, stamp duty charges etc. If you apply for a peer to peer personal loan, you can be saved from paying all those charges.

Personal Loan for Self Employed

Personal Loans for the self-employed professionals are not as simple to avail as they are for salaried employees.

As such, the lenders take extra precautions, conduct additional checks and require more documentation. And they have a very reason for all such extra efforts. Unlike salaried employees, who are on a guaranteed fixed income, the monthly income of the self-employed professional varies.

Their income can soar sky-high in some months or in some particular situations. And, in some months their income might drop to a very insignificant amount.

The success of all the businesses depends on their existing market conditions. Even if, they are doing everything right, some days or months might not see any income.

A great example to understand this would be of a holiday resort. During the holiday season, it might remain over-booked. While in a non-holiday season, weeks can go without any customer.

As such, lending to self-employed people involves a higher risk for the lender.

However, certain professionals such as Chartered Accountants, Doctors, Engineers, Company Secretaries, and Architects and ICWAI graduates are offered a special loan. All the top lenders considers these as low risk profiles.

Personal Loan for Unemployed

The lenders offer personal loan to an applicant only when they are sure of their repayment capability.

As such, an unemployed individual has no chance to avail an unsecured loan.

But unsecured loans are not the only types of personal loans available.

Apart from personal loans there are multiple options to borrow money. Some of these are:

  1. Gold Loans or a loan against gold.
  2. Loans against Investments, such as fixed deposits, shares or NSCs.
  3. Loan against property, provided the applicant is the owner.

All these are types of secured personal loans. And the borrower is free to use the loan amount for any purpose.

Since, these are secured personal loans, the collateral is at risk, should the borrower fail to repay. In such cases, the lender is legally allowed to sell or auction the collateral to recover their money.

Hence, these should be opted only when the need is genuine and worthy of the collateral risk.

Personal Loan vs. Credit Card

This a question which almost everybody asks. In the times of financial crisis, which of these is a better credit option. Let us have a look at how they compare.


Personal Loan

Credit Card

Loan Amount

₹50,000 - ₹5,000,000

Depends on Income

Interest Rates

10.25% - 30%

12% - 36%

Collateral Required



Interest Calculation

On Principal Amount

On Outstanding Amount


Fixed EMIs

Flexible EMIs

Personal Loan vs. Line Of Credit

Both these loan options are great. But, each of these have their own pros and cons. Here is a comparison based on different aspects.


Personal Loan

Line of Credit

Loan Amount

₹50,000 - ₹5,000,000

₹5,000 - ₹500,000

Processing Time

3-5 Days

2 Hours – 1 Day

Collateral Required



Interest Calculation

On Principal Amount

On Outstanding Amount


Fixed EMIs

Flexible EMIs

Personal Loan vs. Gold Loan

Both will serve you to meet urgent cash requirements. But, one requires your gold as collateral. This should be your only point of consideration, if you are eligible for both. Let us have a look at how these compare to each other in certain aspects.


Personal Loan

Gold Loan

Loan Amount

₹50,000 - ₹5,000,000

Depends on the Value of Gold

Processing Time

3-5 Days


Collateral Required


Yes, Gold

Interest Calculation

On Principal Amount

On Principal Amount


Fixed EMIs

Fixed EMIs

Is Personal Loan Taxable in India?

Usually, most of the times, personal loans are not taxable. You can even claim the income tax benefits over personal loans, if you have used the loan amount to construct, reconstruct, repair or acquire a property. As, the interest charged for the personal loans can be higher being an unsecured loan.

Loans are not considered as the part of your income. Thus a personal loan will not be considered as taxable when you file the income tax returns. Hence, this simply means that you will not have to pay any kind of tax on the personal loans.

But, at the same time, it is essential that the personal loan should be from the reliable sources such as Banks, Non-Banking Financial Companies or financial institutions or financial lenders etc. The loan availed from the unknown sources will fall under the category of income and that will be taxable.

Tax Benefits on Personal Loan

Apart from the several benefits mentioned above, there are tax benefits too associated with it which many of us do not know.

If you can prove that the loan amount has been used for the valid expense (regardless of the source of loan), then you can use such personal loans for the purpose of tax savings. You can even claim the tax deduction on the paid interest of the loan. There are many lenders available in the market, that are authentic and they provide easy process to follow for the personal loan along with instant approval features.

You can claim the tax benefits on the personal loan in certain cases.

Housing Needs

If you have availed the personal loan for your house, then the proper arrangement for the same can create the wonders in terms of tax deductions.

According to Income tax act, section 24(b), the same provides the great relief to the house buyers and provide them tax deductions on the loans, if they have availed a loan to buy a residential property or for the renovation of such properties.

If you have used personal loan amount for the down payment to buy a house, then you can opt for tax exemption.

At the same time, if the amount is used for renovation, home repairs or reconstruction, then all these expenses will fall under valid expenses for the tax deduction purpose.

In order to claim the tax deduction, you will need all the documents as a proof that the loan amount has been used for the house. You need to preserve all the bills related to repairs, reconstructions, repairs, labours etc. to claim the tax deductions.

Higher Education

If you have availed the personal loan for the purpose of higher education, it also can be helpful while calculating the income tax. You can avail the tax deduction on the interest paid by you. If the same has been availed for your child or partner’s education, then you will not be able to take the advantages.

Business Requirements

Now a day, people chose to avail the personal loans for the business purpose as well because it is easily available. One can get a quick disbursal of the loan amount. But, one should not forget that, here the interest paid, will be considered as a business expense. Hence, the same shall result in the lower taxable income.

If used in the appropriate manner, this loan can become your tax saving tools just like it is the tool to meet your urgent, unexpected financial needs.

However, one needs to know how to use the same properly.

How to claim Income Tax Exemptions on a Personal Loan?

Yes! Personal loans do come with tax benefits, but it totally depends on the end use of the borrowed amount.

The Indian Income Tax Act allows tax deductions on personal loans for specific purposes, such as education, purchase or renovation of your house and business expansion.

  1. Amount used for Business Expansion

When the money borrowed through a personal loan is invested in a business, the interest paid towards the repayment of the personal loan can be claimed for the tax deduction.

  1. Amount invested in Real-estate

When the money borrowed through a personal loan is used to purchase, construct or renovate a house or property the interest paid for the same against the loan can be claimed for tax taxable. This deduction is possible under section 24. The maximum amount which can be claimed for deduction under this ₹200,000.

  1. Loan amount used for buying an asset

In case one uses the loan amount for buying an asset, one does not become eligible to claim a tax deduction immediately, but at the time of sale of that asset. If one has used the personal loan to buy assets, the interest paid on loan will sum up as the cost of acquisition of that particular asset. The amount for tax deducted will be added to the cost of acquisition of the asset. And it will be available at the time you sell that asset.

Personal Loan Settlement

Settling of a loan is also known as loan settlement, credit settlement or debt negotiation. This is done when the borrower is not able to repay the loan to the lender. This process is to reduce the debt so that it could be easy for the borrower to repay the outstanding amount. In this the borrower has to pay more than the outstanding principal amount and less than the outstanding amount including the interest. This makes the repaying somewhat easier for the borrower.

Process of Settlement

For the process of debt settlement the borrower at first had to negotiate and convince the lender to reduce the total outstanding payable amount. Debt settlement is only possible when the lender grants the permission and gets ready to accept a particular amount which is less than the total payable outstanding amount.

For which loans debt settlement can be done?

In most of the cases debt settlement is done in case of unsecured loan and the reason behind this is they don't have any option to recover from the guarantor or recover the outstanding amount by selling the collateral (mortgage) property. Hence the only thing they can do is do a settlement or take some legal action.

Is a Personal Loan Transfer possible?

If the borrower have co-signers with them for the personal loan then that co-signer is equally responsible for the repayments and everything regarding that very particular loan. But when it comes to transfer of personal loan to someone else it is not possible in any condition.

Though personal loan is one of the most popular loan product in the market, people are still not very clear about it and there are a number of myths regarding the personal loan.

It takes a lot of time to process a personal loan.

Many people believe that personal loans take a long time process and approve a loan application. But this isn’t true anyway.

Personal loans are the quickest loan available in the market, which even comes with the pre-approved facility and with minimal documentation. The processing of this loan is faster than any other loans. With some of the lenders, it takes only a few hours to disburse a personal loan.

It can never be approved with a Low CIBIL Score.

CIBIL is one of the most important eligibility criteria, common among all the lenders. It represents your financial history, your borrowings and your repayments made. CIBIL is always an evaluating factor.

But it is a myth that a personal loan application with low CIBIL always gets rejected.

A personal loan application with low CIBIL may get approved when your income and repayment capacity is high. As income and repayment capacity is also important eligibility deciding factors.

The interest rate is always high.

It's a misconception among the people that a personal loan always comes with a high interest rate. It is true that the interest rate of a personal loan starts from 9.60% per annum and can go up to 22 or 24% per annum. But when an applicant has a good income, high repayment capacity and a good CIBIL Score then a personal loan can be approved at the minimum interest rate possible.

It has no prepayment option.

It is also a myth that a personal loan does not offers a prepayment option. A personal loan does comes with prepayment option. One just needs to check for this option while selecting their lender.

Available only through banks.

It is totally a misconception among the people that a personal loan is offered only by banks. People think so because a personal loan is an unsecured loan and due to the risk factor involved to the lender, people assume that it is only the banks, who can bear such risks.

Whereas the truth is it is not only the banks who offer a personal loan, it is the NBFCs and many DSAs as well who are into the business of offering personal loans.

There are no tax benefits.

It is totally a myth that there is no tax benefit possible on a personal loan. Tax benefits can be easily availed on a personal loan when one plans it properly.

Advantages & Disadvantages

Advantages of Personal Loans

  1. Multi-purpose: Personal loans are always multipurpose in nature that means you can take a personal loan and use it according to you for any purpose such as for home renovation, higher education, for your vacation and even for medical expenses. You don’t have to submit any paper to show the reason for borrowing and hence it can be used according to you.
  2. Quick Disbursal: Now personal loan through Finance Buddha is a simple, quick and easy process through which you can get a personal loan. It’s fast processing and quick disbursal makes it the best loan for any financial or even sometimes for medical emergencies where money is needed immediately.
  3. Minimal Documentation: Personal loan is the loan with minimal documentation as compared to that of other loans such as home loan, car loan or even education loan. This facilitates borrower ease and a relief from piling up a document file.
  4. No Collateral required: Whenever you borrow either from a bank or from a local lender they will also need collateral or security for lending. Whether, the amount is big or small, it doesn’t matters. As such, those who do not have collateral can’t avail such loans.
  5. But personal loans are exceptional. And you don’t have to give any security or collateral.

Disadvantages of Personal Loans

  1. High-Interest Rates: One of the biggest disadvantages of personal loan is that it has higher interest rates as compared to secured loans. Because it is an unsecured loan, the lenders of personal loan are always at high risk. To compensate for the risk, the interest rate of the personal loan is higher.
  2. It Requires Good Credit Score: As we know that the lenders are at high risk in the case of personal loans. As such, they also want to somehow reduce their risk. So they lend to only those who have a good credit score.
  3. Part-payments and Prepayment: One of the other disadvantages of personal loans are that part payments and pre closures are allowed only by few lenders and for that, they will charge some amount as the pre-closure charge. So, before going for a personal loan check thoroughly each and every terms and condition of the lender.

Dos & Don’ts of Personal Loans

Here are few dos and don’ts to be kept in mind before you apply for a personal loan. It is essential that you read this before applying.


  1. Borrow exactly as per the Requirement: Borrowing more than the requirement will lead you to pay interest for unnecessary debts. It is essential to consider all requirement for a loan, sum up the amount required and then start looking for loan option, interest rates, monthly EMI, tenure, etc.
  2. Borrow What You can afford to repay: Taking loan that you will struggle to pay is not a good idea. Before taking a loan, make a thorough calculation of how much you will be able to pay.
  3. Use the Money for Necessities: Taking a loan ‘just because it is easy to get one’ is the worst idea. Avoid putting yourself into debt. Be clear why a loan is required and stick to the plan.
  4. Compare and Compare, Again and Again: Irrespective of how convincing the managers in the bank is and how flattering their talks are, it is your need and your hard earned money will be used for repaying. So compare as much as different personal loan offers from various banks, before considering and finalizing.
  5. Think Ahead: Every penny borrowed will have to be repaid with interest, think if there is really a need for a loan. Being tied into long term contract is not a great move; there will be less option for you in case of any other necessities in the future.


  1. Turn Greedy: Money will always look attractive and we will have wants. But taking personal loan should be for needs instead of wants.
  2. Jump into Payment Protection Insurance: Check if there is a need for PPI and even if there is a requirement; take it from an independent company instead of the loan provider.
  3. Ignore The Policy And Procedures: It is worth you spending an hour extra now to read the guidelines provided bank instead of later regretting. Ignorance of terms is not an excuse.
  4. Miss Payments: Though it sounds obvious, don’ts list will be incomplete without this point. Missing or delaying one single payment will reflect on all aspects of your financial life. Apart from the extra interest that is required to be paid, you will end up having a weak credit rating score.

A Word on Efficient Usage of Personal Loans

Managing your finances and your personal loan efficiently is a difficult thing.

One of the most important things we should keep in mind while applying for a personal loan is that you should be sure of how much you need. So that you don't borrow more than you need. But once you have it, you need to manage your personal loan efficiently.

Here are some points which you should do to manage your personal loan effectively.

Efficient and proper use of the loan amount.

If you have taken a personal loan recently the first thing you should do is you should use the loan amount first for the most important thing for which you have taken the loan.

Don’t spend on anything else just because you can. It always feels good to have so much money available when the loan is disbursed but feels the opposite while repaying. So you should always spend your loan amount wisely.

Never use a personal loan for investments.

As we know that personal loan is an unsecured loan and hence has higher interest rates. So it is never a wise thing to use your personal loans for investments.

Investments should provide more returns than the cost. If the returns are not higher than the interest paid on it, it is not worth. So it is better to avoid using personal loans for investments.

Start saving for pre and part-payments.

Prepayments and part payments are always considered good for a personal loan. Prepayments and part payments facilitate you to pre-close your loan by reducing the tenure period and the loan amount.

For a personal loan of ₹400,000, you pay ₹8,000 monthly as EMI for 4 years. So, if you pay the last ₹200,000 after 2 years at a time as a prepayment and close the loan then it will definitely save you the interest that you would have paid in the next 2 years.

So try to save and prepay this even increases your credit score which will help you avail any loan in future at lowest rates.

Make a monthly budget and spend accordingly.

Budgeting is the most important thing which is required to manage your loan efficiently. Even every country makes a budget at the starting of the financial year! So why not you?

Making a budget ensures everything will be planned and worked accordingly. This will make repaying your loan an easy task.

Inefficient or lack of planning will lead you to avail another loan to repay the previous loan.

Effect of Personal Loan on Credit Score

When you avail a personal loan with a registered financial institution, such as bank or NBFC, they report your loan repayment track to the credit rating institutions.

While all such lenders definitely report to CIBIL Transunion, a majority of them also report to Equifax and Experian as well.

The credit score of any individual depends on their overall management of the debt(s).

As such, how good or how bad you are with your loan repayment, will affect your overall credit report.

Loans are good only when the need for them are justified. Along with the desire and capacity to repay them properly. And, when the bad times are over or tenure is over, they should be closed.

Multiple loans, revolving credits, missed EMIs, all of these affect credit score negatively. And, bring them down significantly.

This affects the eligibility of an individual to borrow more in the future. If one had borrowed for the purpose that was not really important, with a bad credit report, he would not be able to borrow in the near future. Even if there is a genuine need.

As such, one needs to be very careful with their loan repayments, once they have it. And, avoid it at all if there is no important need.

Using a Personal Loan to improve CIBIL Score

Along with many other benefits, a personal loan can be a great way to improve the credit score of any individual.

The credit score is a numerical data which represents the creditworthiness of a person. The credit score is determined by credit bureaus based on the credit history of any individual. 


The CIBIL (Credit Information Bureau India Limited) is India's first Credit Information Company. It collects and maintains records of an individual's credit behaviour. Generally, all financial institutions are supposed to report all the financial activities of customers to CIBIL. And hence, they maintain a record of it.

Based on these pieces of information, it gives out a numerical score ranging from 300 to 900 to each individual. Higher the credit score, better the chances of getting approval on loans.

If you have a low credit score the chances of getting a loan in near future is at risk. You can use a personal loan to help you boost it.

How is a personal loan helpful in improving CIBIL Score?

Let's understand how a personal loan can be helpful in increasing your credit score.

Regular payment of EMI is an obvious and the simplest way to boost your credit score. Your EMI amount may be a smaller one or a huge amount. Paying every EMI before the due date, proves you as economically disciplined. And this boost your credit score as well.

Hence, when you refinance a credit card loan with a personal loan, it positively impacts your credit score. Also, your credit score is increases when you consolidate your higher interest loans to a lower interest loan. And such financial activities are as the signs of an economically concerned individual. Hence, the credit score will increase.

Generally, we find that the individuals who have an appreciable credit score typically use a mixed bag of different types of credit, including both revolving and installment loans. As such, if your credit reports show mostly credit cards but few installment loans, it will have a negative impact on your credit score.

And, a personal loan is an installment loan, which can be helpful in improving the credit score.

High Credit Utilization Ratio

A high credit utilization ratio negatively impacts credit score. The credit utilization ratio is the ratio of how much do you currently owe to any lender, divided by the total credit available to you.

For example, if your credit card limit is ₹10,000, and typically carries a balance of ₹9,000 on your card. So, your utilization ratio would be 90%. So, using 90%, 75% or even 50% of your available credit monthly, your credit score is sure to get damaged.

In such cases, a personal loan will prove to be a boon. Additional credit will help you to lower the utilization ratio and boost your credit score.

Process of Closing a Personal Loan

A personal loan is a great help in case of any urgent financial need. However, a personal loan is an unsecured financial tool which has a higher interest rate than a secured loan.

Due to its high-interest rate, repaying it for a long tenure can cost you much. Hence it should be the top priority of a personal loan borrower to close the loan in less time else it can increase your financial and debt burden.

Closing a personal loan not only reduces your financial burden but also provides you mental peace and stress- free life. You become free from one of your major responsibility to pay the monthly EMIs.

Personal loan prepayment will help you to add more cash to your monthly budget. And, one can start savings or investing as well as soon as the personal loan burden is over.

How to close a Personal Loan?

One can either regularly repay the loan close a personal loan by repaying it till the completion of the entire tenure or one can prepay the loan to reduce your debt burden.

What do you need to close a personal loan?

  1. Personal Loan Account Number

The first and the most important thing which you need to close a personal loan is your Personal loan account number. This can be found easily on the loan account statement. One can also get it by using the Netbanking facility, if available.

  1. Identity Proof

ID proof is a must thing required to close a personal loan. One can use PAN card, Aadhaar card, Voter Id card or any other government-issued identity document to show it as an identity proof.

  1. Other Loan Related Documents

Other loan-related documents include a loan approval letter, loan account statement and other documents issued by the lender.

Regular Closure

In regular closure of a personal loan, a personal loan borrower makes regular payments and pays off the loan in the same tenure period as mentioned in the loan agreement.

Charges for Regular Closure

There are no charges imposed with a regular closure of a personal loan. You just need to pay the installments.

Step to follow for a Regular Closure

Step 1: Speak to your lender (bank / NBFC) and inform them about the closure of your loan. This is needed to be done once you pay the last installment of your loan.

Step 2: Carry the required documents with you. The documents for ID proof, a cheque with the final payment (if any), and the loan account number and any other loan-related documents issued at the time of loan approval. All these are required, as the bank will verify the documents before further proceeding for the closure of your personal loan.

Step 3: Get a NOC (No Objection Certificate). A NOC will be issued by your lender against the borrower after the procedure is completed. This certificate state that the borrower has repaid the complete loan and does not have any dues.

Personal Loan Prepayment

A loan is said to be pre-closed when you repay the loan before the loan tenure ends or when you repay the loan in a shorter time which is mentioned on the loan agreement. A pre-closure of a personal loan can save a lot on interest costs when done on right time.

However, different banks have different lock-in periods before which you cannot close the loan. Moreover, there are certain charges imposed by certain banks on the pre-closure of a personal loan known as pre-closure charges.

Charges on prepayment of a Personal Loan

It totally depends on the banks' policies that where they will charge for a pre-closure or not. Generally, the charges vary from bank to bank and it depends on the outstanding amount too.

Additional documents required in case of pre-closure

  1. Pre-closure Quote.
  2. Visit the bank to check the outstanding loan amount and any pre-closure charges or penalties. And once you have the exact amount, you can pay the bank to close your loan.
  3. Demand draft or Cheque for pre-closure of the loan.

Steps to pre-close a Personal Loan

  1. Visit the bank and know their pre-closure policies.
  2. If required you will be told to fill a form or write a letter requesting pre-closure of your personal loan account.
  3. You will have to pay the pre-closure amount.
  4. Sign the pre-closure documents, if any.
  5. It is very important to take acknowledgment of the balance amount you have paid.

Your personal loan account will close once the money is received by the bank. And shortly the bank will dispatch the loan closing papers to you.

Personal Loan Frequently Asked QuestionsView All

What is a Personal loan?

Personal loan is a 1-5 year unsecured loan given by banks, NBFC’s (Non Banking Finance Companies) or P2P lending platforms without asking for any collateral, guarantor or hypothecation of any assets. The ultimate usage of a personal loan is left to the discretion of the borrower. In our experience, the borrowers generally use a personal loan for debt consolidation, repaying high cost debt, meeting any family or medical emergency, wedding, vacations, home renovation, rental deposits, business needs for an SME, buying certain assets etc.
Loan eligibility is dependent on primarily the following factors:
  1. The company where you work. Every bank has a list of companies running into thousands which they have categorised into segments like A, B, C etc depending on the credentials and financials of your employer. The higher the category the higher is the loan eligibility chances.
  2. Quantum of loans and credit card outstanding that you already have. Typically a bank will not give a loan if the total EMI obligation (including the current personal loan that your are trying to apply for) exceeds 50-75% of your total net take home salary.
  3. Your gross/net salary
  4. Your credit score as reflected in your CIBIL or Equifax report. Having a good credit score is a necessary but not a sufficient criteria.
The final decision to grant a loan lies with the credit department of a bank. Some of the reasons why a loan can be rejected are:

Possible Issue

Already running several loans and hence a bank may not be comfortable with your existing leverage levels vis-a-vis your salary level.

Possible Way Out
  • If you have a spouse who is also working, you can add her as a co-applicant to boost the combined salary levels or
  • Try to pay off some of your debt so that your leverage levels can come down or
  • Do a balance transfer/debt consolidation/re-financing of your existing loans such that the rate of interest on loans can also come down and additional loan can also be provided.

Possible Issue

Issues in your credit history as reflected in your CIBIL, Equifax reports

Possible way out
  • If the issue is a minor one like some delay in payment of credit card due then we can try your application in some other bank who can possibly take a lenient view on the deviation
  • If you think that the credit report is erroneous and you have sufficient documentary proof we will represent the case to the bank and try to convince the credit team
  • If the issue is a major one like write off, settlement of any past dues etc then it might be difficult to obtain a loan. Certain mitigation factor like if you/your spouse/your parents have an own house in India can give comfort to certain banks to give you a loan.

Possible Issue

Most banks have certain internal credit parameters to evaluate a loan which is kept confidential and not shared with us. Several demographic, financial and credit aspects go into these internal evaluation. You might not have met the minimum cut off for obtaining a loan.

Possible way out

We can re-apply for your loan in one of the other 10 plus lenders that we are affiliated to.

Personal Loan ReviewsView All


5 / 5

I was much impressed with the 'Guide to personal loan present in their blog section. I applied for a personal loan and it was so easy and hassle-free process. Thank you Finance Buddha for such excellent service.

5 / 5

Got satisfactory service for my personal loan application. Got it approved at best rates with zero processing fees.
Mausam Subramani

5 / 5

The representatives of Finance Buddha are well trained. The service provided by them at each step of getting the loan disbursed is worth appreciating.
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