What are the usual terms and conditions applied to Personal Loans in India?

What are the usual terms and conditions applied to Personal Loans in India?

Know about the personal loan rules and regulations in India and general clauses you should be aware of when taking a personal loan.
Loan Types

Loan Types

FAQs

FAQs

Video

Video

Rs. 40000 - Rs. 55 lakh

You may be eligible for a pre-approved offer

Check now

Enter mobile and OTP | Check offer | Know the terms

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 is offered instantly online by lenders who often disburse funds the same or next day.


RBI guidelines for personal loan

The RBI has issued some personal loan rules and regulations in india to the lenders and borrowers so that process is beneficial for both the parties. Here are some important points from RBI:

  • All loan applications must include the required information indicating the fees and other charges. This will help the borrowers to compare and make wise decision while opting for a loan.
  • The verification process must be within a specific period. And if additional documents are required, lender must contact the borrower immediately.
  • Borrowers must read the loan agreement before signing it.
  • Lenders should not discriminate based on caste, religion and gender.
     

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 personal loan terms and conditions set by your specific lender before you sign the dotted line. So, keep the following in mind.

Show More
Show Less

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 school or college fees, renovating your home, or even taking an overseas vacation.
 

Additional Read: Personal Loan Glossary & Terminology

Show More
Show Less

The eligibility criteria to avail of the loan

  • Since a personal loan is unsecured, lenders require you to meet personal loan eligibility criteria. You can negotiate for better interest rates and other terms with your lender, should you find yourself meeting every criterion listed here.

    To avoid hassles, choose a lender like Bajaj Finserv, which offers fast approval based on simple eligibility criteria that are easy to match up to:
     

    • Nationality: Indian
    • Age: 21 years to 80 years.
    • Employed with: Public, private, or MNC.
    • CIBIL Score: 685 or higher.
    • Customer profile: Self-employed or Salaried

    *You should be 80 years or younger, at the end of the loan tenure.


    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 sections 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.

Show More
Show Less

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 cost involved in doing so. Some personal loans like the Flexi personal loan facility allow you to make part-prepayments and re-withdraw 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. 55 lakh. What’s more, you can check your pre-approved loan offer to enjoy a customised deal that caters to your unique requirements and fiscal potential.

Now that you are aware of the basic loan terms, you are all set to make good borrowing decisions. Just ensure you read the fine print thoroughly before signing the agreement.
 

Show More
Show Less

Key offerings: 3 loan types

  • Flexi Hybrid Term Loan
  • Flexi Term Loan
  • Term Loan

  • Withdraw and prepay – no extra charges
    You can withdraw from your limit and prepay as many times as you want, without extra charges.

  • Instalment pattern
    You can pay interest-only EMIs for up to 24 months, after which, the EMI will consist of both, the principal and the interest. EMI is applicable only on the withdrawn amount.

  • Flexi facility charges
    Flexi facility charges applicable based on your loan amount.

  • Withdraw and prepay – no extra charges
    You can withdraw from your limit and prepay as many times as you want, without extra charges.

  • Instalment pattern
    Fixed EMIs that cover both the principal and interest on the loan amount you withdraw.

  • Flexi facility charges
    Flexi facility charges applicable based on your loan amount.

  • Amount disbursed in one go
    The entire loan amount is disbursed at the start.

  • Instalment pattern
    Fixed EMIs that cover both the principal and interest.

  • Flexi facility charges
    No Flexi facility charges.

Personal loan interest rate and applicable charges

Type of fee

Applicable charges

Rate of Interest per annum

10% to 31% p.a.

Processing fees

Up to 3.93% of the loan amount (inclusive of applicable taxes).

Flexi Facility Charge

Term Loan – Not applicable

Flexi variant - A fee will be deducted upfront from the loan amount (as applicable below)

  • Up to Rs. 1,999/- for loan amount less than Rs. 2,00,000
  • Up to Rs. 3,999/- for loan amount from Rs. 2,00,000 to Rs. 3,99,999
  • Up to Rs. 5,999/- for loan amount from Rs. 4,00,000 to Rs. 5,99,999
  • Up to Rs. 7,999/- for loan amount from Rs. 6,00,000 to Rs. 9,99,999
  • Up to Rs. 8,999/- for loan amount from Rs. 10,00,000 to Rs. 14,99,999
  • Up to Rs. 9,999/- for loan amount from Rs. 15,00,000 to Rs. 19,99,999
  • Up to Rs. 10,999/- for loan amount from Rs. 20,00,000 to Rs. 24,99,999
  • Up to Rs. 11,999/- for loan amount from Rs. 25,00,000 to Rs. 29,99,999
  • Up to Rs. 12,999/- for loan amount of Rs. 30,00,000 and above

*All the Flexi facility charges above are inclusive of applicable taxes

*Loan amount includes approved loan amount, insurance premium, and VAS charges.
Principal Holiday Facility Fees
  • Up to Rs.1999/- for loan amount less than Rs.2,00,000
  • Up to Rs.3999/- for loan amount from Rs. 200000 to Rs.399999
  • Up to Rs.5999/- for loan amount from Rs. 400000 to Rs.599999
  • Up to Rs.7,999/- for loan amount from Rs. 600000 to Rs.999999
  • Up to Rs.8,999/- for loan amount from Rs.10,00,000 to Rs. 1499999
  • Up to Rs. 9999/- for loan amount from Rs. 15,00,000 to Rs.19,99999
  • Up to Rs.10,999/- for loan amount from RS. 20,00,000 to RS.2499999
  • Up to Rs.11,999/- for loan amount from RS.25,00,000 to RS. 29,99999
  • Up to Rs. 12,999/- for loan amount of Rs.30,00,000 and above

Above charges are inclusive of applicable taxes & will be deducted upfront from loan amount

*(Loan amount includes approved loan amount, Insurance Premium & VAS Charges)

Bounce charges

Up to Rs. 1,200 per bounce.
“Bounce charges” shall mean charges for (i) dishonour of any payment instrument; or (ii) non-payment of instalment (s) on their respective due dates due to dishonour of payment mandate or non-registration of the payment mandate or any other reason

Pre-payment charges

Full pre-payment

  • Term Loan: Up to 4.72% (inclusive of applicable taxes) on the outstanding loan amount as on the date of full pre-payment.
  • Flexi Term Loan (Flexi Dropline): Up to 4.72% (inclusive of applicable taxes) of the total withdrawable amount as per the repayment schedule as on the date of full prepayment.
  • Flexi Hybrid Loan: Up to 4.72% (inclusive of applicable taxes) of the total withdrawable amount as per the repayment schedule as on the date of full prepayment.

Part pre-payment

  • Term Loan: Up to 4.72% (inclusive of applicable taxes) of the principal amount of loan prepaid on the date of such part pre-payment.
  • Not Applicable for Flexi Term Loan (Flexi Dropline) and Flexi Hybrid.

*Foreclosure will be processed post clearance of first EMI

Penal charge

 Delay in payment of instalment(s) shall attract Penal Charge at the rate of up to 36% per annum per instalment from the respective due date until the date of receipt of the full instalment(s) amount.

Stamp duty (as per respective state)

Payable as per state laws and deducted upfront from loan amount.

Annual maintenance charges

Term Loan: Not applicable

Flexi Term Loan (Flexi Dropline): Up to 0.295% (inclusive of applicable taxes) of the total withdrawable amount (as per the repayment schedule) on the date of levy of such charges.

Flexi Hybrid Loan: Up to 0.295% (inclusive of applicable taxes) of the total withdrawable amount during the initial tenure. Up to 0.295% (inclusive of applicable taxes) of total withdrawable amount during subsequent tenure.

Broken period interest / Pre-monthly Instalment interest

Method of recovery of "Broken Period Interest/Pre monthly instalment Interest" would be as follows:


EMI Date : 2nd

Scenario 1: If Loan is disbursed on 1st or post 10th of the month:

For Term Loan: BPI amount will be capitalised, i.e added to Principal amount on Due date / Deducted from disbursement
For Flexi Loans: BPI amount will be capitalised, i.e added to Principal amount on Due date / Added to first instalment

Scenario 2: If Loan is disbursed between 3rd and 10th of the month:
First instalment will consist of interest for actual number of days

Note: Additional cess if any, will be applicable to all charges according to state law.

*Terms and conditions apply.

Related articles

Article 1

Flat vs Reducing Interest Rate

Aug 18, 2025

Read More

 Article 2

Get a Personal Loan without a salary slip

Aug 21, 2025

Read More

 Article 3

Top ten cheapest countries to travel from India

Aug 21, 2025

Read More

You are here

Related Links

Disclaimer

Bajaj Finance Limited has the sole and absolute discretion, without assigning any reason to accept or reject any application. Terms and conditions apply*.