In today’s financial landscape, a Personal Loan has gained immense prominence as a type of unsecured loan, enabling individuals to fulfil their financial needs. Further, to cater to the individualised needs of borrowers, financial institutions have introduced different types of Personal Loans. Read on to learn in detail about these variants of a Personal Loan.
9 Different Types of Personal Loans in India
There are different types of personal loans available in India - named slightly differently based on their end-use:
1. Wedding Loan
Weddings are expensive. To meet the total expenses without compromising on this big day, you can avail wedding loan to have your dream wedding. Lenders often offer special rates and repayment periods for wedding loans.
2. Home Renovation Loan
If you are planning to renovate your home but are worried about the expenses, personal loan for home renovation is the best option for you. Home renovation loan can be used for maintenance, repair, painting, etc.
Also Read: Maximizing Your Savings: Tax Benefits of Home Renovation Loans
3. Education Loan
Personal loan for education can be utilised by students pursuing higher education. Contrary to the secured education loans, these loans usually have low-interest rates and more extended repayment periods.
4. Travel Loan
Planning a trip with friends/family and falling short on funds? Apply for personal travel loan and pay later. This loan can help you finance your travel expenses. Some lenders even offer travel insurance along with travel loans.
Also Read: How to Plan a Budget Friendly Family Vacation?
5. Debt Consolidation Loan
If you have multiple debts with different interest rates, you can consolidate them into one loan with a lower interest rate. This will make managing your debt easier and save money on interest payments.
6. Pension Loan
Pensioners can apply for a Personal Loan against their pension. These loans typically have lower interest rates and more extended repayment periods.
7. Car Loan
You can use a Personal Loan to finance a car purchase. These loans mostly have higher interest rates than Auto Loans, but the repayment period is shorter. You can also consider a Pre-owned Car Loan from Poonawalla Fincorp if you decide to buy a used car.
8. Personal Loans for Self-Employed
Self-employed individuals can apply for a Personal Loan. These loans have higher interest rates than standard Personal Loans, but the repayment period is shorter.
9. Medical Loan
You can use a Personal Loan to finance medical expenses. These loans typically have higher interest rates than standard Personal Loans, but the repayment period is shorter.
How to Apply for Different Types of Personal Loans in India?
The process of applying for a Personal Loan is simple. You can apply online or visit your nearest financial institution.
You can consider following the steps below to apply for all types of Personal Loan in India:
Step 1: Click on ‘Apply Now’ in the Personal Loan Section to start your loan application process.
Step 2: Enter your details like PAN, date of birth, residential details and monthly income.
Step 3: Upload the necessary documents and click on ‘Submit’.
After verification and approval, you will receive the loan amount in your bank account.
Personal Loan Features and Usages
The points below highlight the different features of a Personal Loan:
- Minimal Documentation
While applying for a Personal Loan, you just need to furnish certain basic papers to prove your eligibility. This makes the loan application process hassle-free and a good option for funding emergency financial needs.
- Quick Disbursal
After completing the verification process, lenders will instantly disburse the loan amount to your bank account. However, it is essential that you fulfil all the eligibility criteria and submit an error-free application form. Once you receive the loan amount, you can easily finance your monetary needs.
- No Usage Barrier
You can borrow a Personal Loan to fulfil any financial requirements. You can opt for this loan to finance major events like weddings, medical expenses, travel or consolidation of loan. Moreover, you do not need to worry about repayment as you can clear your debt conveniently as EMI throughout the loan tenure.
- Competitive Interest Rate
A Personal Loan also offers competitive interest rates starting at 9.99% p.a. Thus, it makes the loan affordable for every eligible individual. You can choose from floating or fixed interest rates as per your financial situation to ensure convenience while repaying your Personal Loan.
- Quick Online Application Process
Most lenders today allow customers to apply for Personal Loan through their online website or app. Consequently, you no longer must visit banks and wait in long queues to apply for a Personal Loan. You can complete the application process easily from the comfort of your home with your mobile or laptop at any time of the day.
- Convenient Repayment
Very often a Personal Loan can help finance urgent needs of funds. To make itself accessible to everyone, lenders allow repayments through EMI. You can clear your outstanding amount as small parts throughout your repayment tenure. With this, you can manage your present finances and clear your debt simultaneously without hampering your savings in the long run.
Eligibility Criteria for Different Types of Personal Loans
The eligibility criteria for a Personal Loan vary from lender to lender, but there are some general guidelines that all lenders follow. Note that the eligibility criteria may differ depending on the types of Personal Loans in India.
- Age: You must be at least 22 years of age and no older than 58 years of age when the loan term ends.
- Citizenship: You must be an Indian citizen.
- Credit Score: You must have a credit score of 750 and above.
- Work Experience: Minimum job experience of 1 year and must be employed under the current employee for at least 6 months.
- Employment: You must be employed as a full-time employee under Central Government, PSU, listed, unlisted companies, MNCs, LLP or internal companies.
- Income: Your monthly in-hand salary must be a minimum Rs. 30,000.
Documents Required for a Personal Loan
The documents required for a Personal Loan varies from lender to lender, but there are some key documents that all lenders request:
- Completed application form: Form with your signature.
- Proof of identity: Passport, PAN card, Voter ID, Driving License
- Proof of address: Utility bill, ration card, rent agreement
- Proof of income: Salary slips of last three months, Form 16
- Bank statements: Past three months statement
- KYC documents: Aadhaar card, PAN card
- Proof of employment: Official mail ID, Confirmation Letter or employee ID card (if former is unavailable).
Personal Loan Interest Rates and Charges
The personal loan interest rate and additional charges for Poonawalla Fincorp are displayed in the table below.
| Interest Rate |
Starting from 9.99% p.a. |
| Pre-Payment Charges | 0% If paid from own sources & 4% If paid from other sources |
| Late Payment Penalty |
3% penalty on overdue EMI amount |
| Loan Processing Fees |
Between 0% to 2% |
|
Hidden Costs | 0 |
| Cheque Bounce Charges |
Rs. 500 per bounce and taxes |
Benefits of a Personal Loan
There are several benefits of a Personal Loan like:
- Quick and easy approval.
- No collateral required.
- Flexible repayment options.
- Competitive interest rates.
- Can be used for several purposes.
- Minimal paperwork.
- Flexible repayment tenures.
Disadvantages of a Personal Loan
There are some risks associated with a Personal Loan, including:
- You may be tempted to spend more than you can afford if you have a high loan amount.
- If you miss a payment, you will be charged a late payment fee.
- You may have to pay a prepayment penalty if you repay your loan early.
- Your interest rate could increase if you make a late payment or miss a payment.
- You could damage your credit score if you default on your loan.
- As these loans do not seek any collaterals, the interest rate can be higher than secured loans
To Conclude
We hope you got a better understanding of the different types of personal loans. Based on your requirement you can choose a personal loan provided you meet the desired eligibility criteria. Explore various types of Personal Loans from Poonawalla Fincorp to meet your financial needs seamlessly and repay them in affordable EMIs.
Frequently Asked Questions
- What are the types of Personal Loans available in India?
There are different types of Personal Loans available in India which include wedding loans, travel loans, home renovation loans, pension loans, education loans, medical emergency loans, etc. Moreover, you can always choose other types of Personal Loans available in India.
- What type of Personal Loan is easier to obtain?
As you must be already aware there are different kinds of Personal Loans with different Personal Loan interest types. As a borrower, you can obtain any Personal Loan easily. While you apply for Personal Loan, you must ensure that you fit into the eligibility criteria set by the lender. Also, before applying for a personal loan, consider calculating your EMI beforehand to know the right loan amount as per your finances.
- Is it wise to take a Loan for a Wedding or a Vacation?
Both weddings and a vacation can be expensive events, and at times there can be various unexpected and unwanted expenses that can impact your budget. Taking a low-interest Personal Loan in India will surely help you manage all your expenses during events like weddings and vacations. Also, you can always choose different Personal Loan categories to deal with similar events and occasions.
- How Much Can You Borrow with the Help of a Personal Loan?
The amount you can borrow with a Personal Loan depends on your income and creditworthiness. Some trustworthy institutions like Poonawalla Fincorp provide ranging between from ?1 Lakh to ?30 Lakh.
- What is the Interest Rate on Personal Loan?
The interest rate on the Personal Loans start from 9.99%. The exact interest rate will be based on your income, employment history, and credit score.
- What are the Charges Associated with a Personal Loan?
Several charges are associated with different types of Personal Loans, including processing fees, prepayment charges, and late payment charges. These charges can vary from one financial institution to another, so compare the fees before applying for a loan. These interest rates can also vary as per different Personal Loan types and your credit profile.
- How do you Repay a Personal Loan?
Personal Loans are usually repaid via fixed monthly instalments. The repayment period is from 12 to 60 months. You can make payments through post-dated cheques, ECS, or auto-debit from your account.