Personal loans can be the key to unlock the door to a plethora of dreams, from going on a long-dreamed of vacation, to buying new white goods for the home or maybe even renovating your house itself. They are a means of obtaining funds from banks as well as NBFCs for any personal emergency.
Some of the popular lenders in this category are HDFC Bank, ICICI Bank and Fullerton India.
For starters, personal loans do not require any collateral. Say you're availing of an auto loan, in which case the car you purchase will be hypothecated to the financial institution you've availed the loan from. In the case of a personal loan, there is no security given to the lender - hence, it falls under the category of an unsecured loan product.
Secondly, the end use or the purpose for which you choose to avail of a personal loan is open - you can deploy the funds as per your requirements. If you were to take a home loan for example, it is very clearly for that sole purpose - buying a house or apartment.
Sometimes, depending on a combination of factors including income and current outgoings, it may be required to furnish a co-applicant or guarantor for a retail loan product such as a home or auto loan. For a personal loan however, there is ordinarily no requirement of multiple applicants.
Similar to any other retail loan offering is the verification process. Hence, when you submit an application for a personal loan, a bank would sanction a loan on the basis of your income as well as credit history. The information about your previous repayment records is available via a credit report. A lender uses this information extensively (but not solely) when determining whether to extend credit.
With that information at hand, let us know take a look at the five best personal loans in India today.
With minimal documentation and competitive interest rates ICICI Bank offers personal loans with flexible tenures of up to 60 months, with a fixed rate of interest charged on a monthly reducing basis. Repaying the loan is also a simplified process, with various options such as setting up an ECS mandate, auto debit from your (existing) bank account or offering PDCs available.
For existing Bank customers, there are attractive offers - benefits from reduced documentation as well as pre-eligibility based on your relationship with the Bank via a debit or credit card, or a loan account.
To further sweeten the deal, if all your documentation is in place and you are indeed eligible for a loan, the Bank can disburse the loan as quickly as within 72 hours of document submission.
A personal loan is available for both salaried and self-employed individuals, for a maximum tenure of 48 months. Depending upon your eligibility, your loan amount (if salaried) can be up to Rs. 20.0 lakh and Rs. 30.0 lakh for a self-employed individual.
For existing Fullerton customers, there is an additional benefit to be availed of in terms of reduced processing time as well as the interest rate. Further, Fullerton also offers the option of requesting for a pre-approved top-up on your existing (loan) principal outstanding amount.
For ease of application, the institution also gives a borrower the flexibility to apply online.
With competitive rates and other conditions, also popular is the product being offered by Standard Chartered Bank. As with other providers, do confirm the amount chargeable by way of a processing fee, as this amount - typically a percentage of the loan amount - is deducted from the disbursed amount.
SCB offers loan from rates as low as 12.99% onwards. For ease of use, you can also check your eligibility online, by accessing the eligibility calculator.
In addition to applying online, you can choose to walk in to your nearest HDFC Bank branch and apply for a personal loan. Do not, of course, forget to submit the required documentation to avail of disbursement in as soon as a day from application. Note that this option is available at select branches of the Bank.
Once having applied, you can check the status of your application online.
Stressing the important of loan servicing, the Bank provides multiple channels should you wish to get in touch regarding any query about your loan, namely SMS, Webchat, Click2Talk and PhoneBanking.
Do you hold a salary account with Citibank? If yes, Citibank offers an exclusive personal loan that includes very minimal documentation and a reduced processing time.
In addition, the interest rates are competitive and the Bank allows pre-payment of the loan as well, i.e. should you wish to close the loan earlier than the tenure specified, you may do so.
Typically, interest rates range from between 11.99% to as much as 22% for a personal loan. As with other loan products, lenders check your credit history thoroughly prior to approving your loan. Hence it is prudent to keep track of your credit score in order to be able to avail of the loan at the best personal loan interest rates.