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What are the Usual Terms and Conditions Applied to Personal Loans in India?

  • Highlights

  • Personal Loan terms outline your responsibility

  • Read the terms and conditions carefully before signing up

  • Pay attention to all costs and fees listed

  • Choose Bajaj Finserv for zero hidden charges

Data from the RBI reveals an increase in takers of personal loans in India in the last decade. This can be credited to the fact that it is both a collateral-free loan that doesn’t risk your assets, and offered instantly online by lenders who often disburse funds the same or next day. However, despite the speedy processing and quick disbursal, it is important that you are well aware of the terms and conditions that govern a personal loan. This way, you can use it to your advantage and avoid any financial hiccups during repayment.

While personal loan rules and regulations in India are usually governed by the RBI and almost identical amongst lenders, it is important you know the more detailed loan terms and conditions set by your specific lender before you sign the dotted line. After all, one of the most important mentions on any terms and conditions of a loan agreement is that you have agreed to all the specified terms by signing the agreement. So, keep the following in mind.

The Use of the Loan

The terms and conditions of a personal loan specify that it is versatile and you can use it for any legal purpose. You can use it towards personal needs like paying your child’s education fees, renovating your home, or even taking an overseas vacation. Apart from this, you can also fund various professional needs with this loan amount without any restriction.

The Eligibility Criteria to Avail of the Loan

Since a personal loan is unsecured, lenders require you to meet personal loan eligibility criteria, which is specified in this portion of the document. You can negotiate for better interest rates and other terms with your lender, should you find yourself meeting every criteria listed here.
To avoid hassles, choose a lender like Bajaj Finserv, which offers fast approval based on simple eligibility criteria that is easy to match up to. To be eligible you must:

  • Be an Indian resident aged between 23 and 55 years

  • Be employed in an MNC, public or private organisation

  • Meet the minimum salary requirement based on your city of residence

Additional Read: Get a Personal Loan with Low CIBIL Score

The Repayment of the Loan

This will tell you the interest rate applicable on your personal loan and how your loan needs to be paid off. While certain portions specify the type of interest rate and an intimation of charges, other parts may state that your personal loan will need to be repaid in the form of EMIs or in the form of a lump sum. These conditions vary based on the personal loan you are applying for and the lender you are applying with.
For instance, Bajaj Finserv offers a Flexi Personal Loan where you can choose to pay interest-only EMIs until the end of the tenor and repay the principal then. The terms and conditions for this loan will be different compared to a regular personal loan.

Foreclosure, Prepayment Policies and their Charges

This section tells you whether you can make part-prepayments and foreclose your loan. It also tells you of the personal loan pre-closure charges or the cost involved in doing so. Some personal loans like the Flexi Personal Loan facility allow you to make part-prepayments and re-draw the funds when needed. Here, you can also find lenders specifying how much of a part-prepayment you can make, so it is best for you to pay close attention. Making part-prepayments or a foreclosure can often help you become debt-free faster and save money.

Other Charges Applicable

The cost of taking a personal loan doesn’t end at interest charges, foreclosure and part-prepayment charges. There are processing charges, penal charges, statement charges, EMI bounce charges, and more. Thus, it is important you read all the personal loan terms and conditions relating to the various charges involved, whether you are likely to incur them or not. It is here that you can spot any unnecessary hidden charges and avoid borrowing from a lender that will make your loan experience an expensive one.

Additional Read: Best Personal Loan Lenders in India

If you are looking for a lender with zero hidden charges, consider Bajaj Finserv. Here, your expenses are kept to a minimum and your repayment is affordable despite the high sanction of up to Rs.25 lakh. What’s more, you can check your pre-approved offer to enjoy a customised deal that caters to your unique requirements and fiscal potential. Apply via this deal to enjoy instant approval.
Now that you are aware of the basic loan terms, you are all set to make good borrowing decisions and leverage your finances. Just ensure you read the fine print thoroughly before signing on.

The content of this document is meant merely for information purposes. The personal loan features mentioned in this article are subject to updation, completion, revision, verification and the same may change materially based on policy revisions. For more details, please visit our Personal Loan terms and conditions page here.

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