A personal loan agreement does not test ratios, but it does contain loan covenants. They are written as your obligations, and each loan covenant is worth reading before you sign:
- Repay each EMI on its due date: This is the central positive covenant. A missed EMI is a breach in itself.
- Keep the mandate account funded: You agree to keep enough balance in the account linked to auto-debit.
- Report changes: You agree to tell the lender about a change of address, employer, mobile number or email, so it can reach you.
- Give true information: The details in your application must be accurate. False information can be treated as a default.
- Use the money lawfully: Agreements restrict use for illegal or speculative purposes. Read the end-use clause in yours.
No loan covenant here is hard to keep, but a forgotten one, such as an old mobile number or an emptied salary account, can cause a missed EMI.
Divya's loan agreement
Divya, 31, a salaried physiotherapist in Kochi, takes home Rs. 58,000 and holds a 754 CIBIL score. She borrowed Rs. 2.2 lakh for her sister's wedding and a new refrigerator, at an illustrative 14.25% per annum. Before signing, she read each loan covenant in the agreement and noted the one asking her to report a change of employer. She weighed the EMI over 2 years against 3.
EMI = P × R × (1 + R)^N ÷ [(1 + R)^N − 1]. Here P = Rs. 2,20,000, R = 14.25 ÷ 1,200 and N = months.
| Tenure | Monthly EMI (Rs.) | Total interest (Rs.) | EMI as share of salary (%) |
|---|
| 24 months (2 years) | 10,589 | 34,132 | 18.3 |
| 36 months (3 years) | 7,546 | 51,649 | 13.0 |
Last updated: 26th October, 2026
Three years would lower the EMI by Rs. 3,043 and add Rs. 17,517 of interest. She would pay no more than Rs. 9,086 to process the loan. Divya chose 24 months. When she changed hospitals a year later, she kept that loan covenant and updated her employer and salary account in My Account the same week.
What can delay approval: a CIBIL score below 650 or existing EMIs that take up a large share of your income. Names or addresses that do not match across documents, and more than one loan application in the same month, can also slow it down.
Ready to sign a loan agreement? With a Bajaj Finance Personal Loan, you can borrow Rs. 40,000 to Rs. 75 lakh, subject to eligibility. Check your loan offer with your phone number and a one-time password (OTP) → apply online → receive funds within 24 hours* of approval.
