collateral free personal loans

How To Get A Personal Loan Without Collateral

June 04, 2022 • 7404 views

Loans are mostly associated with collaterals. Many individuals are unaware that there are many loans that they can avail of without putting up collateral or security. A personal loan is one such option. 

This blog will act as a guide to help you choose the best collateral-free Personal Loans. 

Understanding The Basics

A common mistake made by many borrowers is to read an abstract or two about Personal Loans and rush to the lending institution offering the lowest interest rate. It is a move that causes a lot of concern later on. 

So, we will start with the basics. 

What Is A Personal Loan?

When an individual or a group of individuals borrows a specific amount of money from a lending institution for catering to personal funding requirements, it is a Personal Loan. The borrower repays the loan in equated monthly instalments known as EMI. Borrowers must repay the amount in a specified number of months, referred to as tenure. It is a borrowing instrument that allows borrowers access to funds for tenures ranging from one to five years. 

What Is A Collateral In Loan? 

When a borrower approaches a lending institution for a loan, they require the borrower to put up an asset as a security. The asset is the collateral. Gold, property, fixed deposits, and businesses are some collateral options. A lending institution reserves the right to sell the collateral to recover unpaid dues. 

It sounds scary, but it is not. If the borrowers are able to repay the EMI on time, the lending institution will return the papers and ownership to the borrower. However, searching for a loan that does not require collateral is a good idea to explore. 

Getting A Personal Loan Without Collateral

Getting a collateral-free Personal Loan is an easy task, but it is important to know what to do and, more importantly, the steps to follow. 

How To Get A Personal Loan Without Security 

Meet The Lending Institution’s Eligibility Criteria  

Every lending institution has eligibility criteria you must meet. For example, Poonawalla Fincorp assesses applications based on five main criteria that are: 

  • Age: It is the minimum age at the time of getting the loan and the maximum age at the time of loan maturity.
  • Work experience: It covers the minimum number of overall work experience and the minimum number of years at the current organization.
  • Citizenship: Most Indian lenders lend only to borrowers with Indian citizenship.
  • Employer Category: Eligibility criteria for getting a Personal Loan without security would vary for salaried and self-employed professionals like doctors, chartered accountants, companies, and secretaries.

Ensuring all the documents are submitted

Every online Personal Loan application lists the documents borrowers are required to upload. So, to get collateral-free Personal Loans, here are the most asked documents to submit. 

  • KYC – The Know Your Customer (KYC) is a mandatory requirement that banks and NBFCs are required to check before approving a loan
  • Address proof – Proof of residence to check the veracity of the borrower. It is used to check citizenship with documents like Aadhaar Card.
  • Income proof – As mentioned above, monthly income determines eligibility. Hence, the lending institution will ask for proof of income. 
  • Proof of Employment – Salaried individuals can submit salary slips for three to six months. On the other hand, professionals can submit bank statements.

How To Apply For A Personal Loan Without Collateral

Every lending institution will have its processes to follow when getting a Personal Loan. However, at Poonawalla Fincorp, we have made the process simple and hassle-free. Here is what you need to do:

Determine The Loan Amount

Are you applying for a loan to fund a wedding, medical expenses, travel, or purchasing an item? Determine the loan amount you need.

Check Your Eligibility  

We have already explained the basics in the blog above. Submitting a loan application without meeting the eligibility criteria will lead to rejection and negatively impact the credit score

Collect The Documents  

Even when applying for an online Personal Loan, it is important to collect all the documents in the required format when uploading. 

Calculate the EMI

Use the Personal Loan EMI calculator to determine the monthly instalment. It is a free tool that borrowers can use multiple times to calculate their tenure. 

Fill Out The Application

Just filling out the application is not enough. It is important to fill it out accurately to make the assessment process seamless. 

Submit The Application  

Do not forget to submit the loan application. Once submitted, the borrower gets a tracking number. 

Wait For Confirmation  

If the lending institution approves the Personal Loan, the borrower gets a message. Once accepted, the money is disbursed to the borrower’s account. 

Frequently Asked Questions

What determines my eligibility for a Personal Loan without security?
The eligibility criteria for a Personal Loan without security are as follows:

  • Age: 24 years at the time of loan application and up to 58 years at loan maturity
  • Work experience: Employed in current role for a minimum of 6 months & minimum of 24 months of total work experience
  • Citizenship: Indian citizenship
  • Income: Monthly net take-home salary should be a minimum of Rs.40,000

Does a Personal Loan without collateral come with higher interest rates?

The interest rate of a Personal Loan without collateral can vary from a secured Personal Loan. Despite the change in interest rate, you can rest assured knowing that you don’t have to put up any assets as security against the loan amount.

What's the minimum credit score for a Personal Loan without security?

The ideal credit score that you should possess to avail of a Personal Loan without security is 750 and above. This is considered an excellent credit score and can help you get a Personal Loan at low-interest rates.


Borrowers can easily get a Personal Loan without collateral or security if they meet the criteria and consider the repercussions of not meeting their debt commitments. Take time to calculate the requirements, and don’t overborrow.

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