What is a personal loan?

2 min read

A personal loan is a type of unsecured loan provided by financial institutions such as banks, credit unions, or online lenders. It allows borrowers to access funds for various personal expenses, such as home improvements, debt consolidation, medical bills, or other unforeseen expenses, with a fixed repayment period and interest rate. You can avail of a Bajaj Finserv Personal Loan with minimal paperwork and an easy application process.

What is a personal loan used for?

Personal loans are offered with no end-use restrictions and, therefore can be used for various personal and professional requirements. Following are a few of the goals for which you can use the personal loan funds:

  1. Wedding costs
  2. Medical emergencies
  3. Higher education
  4. Home expenses

Benefits of a personal loan

There are several advantages of a personal loan. These include:

  • No collateral: Personal loans are unsecured, meaning you do not need to pledge any asset to avail of funds.
  • Minimal documentation: The documents required for a personal loan are minimal. It reduces the overall processing time and helps you get quick access to funds.
  • Flexible tenure: You can pick a tenure that suits your repayment capacity. We offer tenures of up to 96 months.

Check if you eligible for a personal loan and get a personal loan in just a few steps.

Types of personal loans

Unsecured personal loan:

An unsecured personal loan doesn't require collateral, making it accessible based on creditworthiness. Borrowers qualify based on their financial history, and interest rates may be higher than secured loans due to the lack of collateral.

Secured personal loan:

A secured personal loan is backed by collateral, typically an asset like a home or car. Collateral reduces the risk for the lender, resulting in potentially lower interest rates, but the borrower risks losing the asset if they fail to repay.

Fixed-rate personal loan:

A fixed-rate personal loan maintains a stable interest rate throughout the loan term. Borrowers benefit from consistent monthly payments, providing predictability and easier budgeting over time.

Variable-rate personal loan:

A variable-rate personal loan has an interest rate that fluctuates with market conditions. While initial rates may be lower than fixed-rate loans, the variability exposes borrowers to potential increases in interest rates, impacting monthly payments unpredictably.x

Documents required for a personal loan

The documentation requirements for a personal loan can vary from lender to lender. Below are the documents that are required to be submitted when applying for a Bajaj Finserv Personal Loan:

  • KYC documents: Aadhaar/ passport/ voter’s ID/ driving license/ Letter of National Population Register
  • PAN card
  • Employee ID card
  • Salary slips of the last 3 months
  • Bank account statements of the previous 3 months

Eligibility criteria for a personal loan

The eligibility criteria for a personal loan differs from lender to lender. You can qualify for a Bajaj Finserv Personal Loan once you meet the five simple eligibility criteria mentioned below:

  • Nationality: India
  • Age: 21 years to 80 years*.
  • Employed with: Public, private, or MNC.
  • CIBIL score: 685 or higher.
  • Monthly salary: Starting Rs. 25,001, based on the city you live in.

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

Personal loan example

Priya obtained a personal loan to cover unforeseen medical expenses for her father's surgery. With a quick approval process, the funds provided financial relief. The fixed-rate loan allowed Priya to manage repayments comfortably, easing the burden during a challenging time and ensuring her father received the necessary medical care.

How does a personal loan work?

A personal loan works in the same way that most loans do. You apply for a loan, present the required documentation, and the bank evaluates your creditworthiness before making a loan offer. If you accept it, the cash are deposited to your bank account, and you can use them for any legal purpose. You can always use personal loan EMI calculator before availing of a personal loan.

How to get a personal loan?

To obtain a personal loan, you must meet all the eligibility criteria mentioned by the lender. You can also use our personal loan eligibility calculator and compare various lenders, interest rates, repayment terms, and fees among different offers to find terms that suit your needs. Apply through the lender's website and complete the application accurately. The lender will review your application, credit history, and financial stability before approving or denying the loan.

What is the interest rate and repayment tenure of a personal loan?

  • Interest rates on personal loans: Personal loan interest rates vary based on factors like credit history, income, tenure, and occupation. Personal loan interest rates remain fixed.
  • Repayment tenure: The loan tenure can be chosen to align with your requirements. Loan repayment happens through equated monthly instalments (EMIs), a consistent amount comprising principal and interest, dependent on the loan amount, tenure, and interest rate.

How do you choose a perfect personal loan?

Choosing the perfect personal loan involves assessing factors like interest rates, loan terms, and fees. Consider your credit score, financial goals, and the loan's purpose. Compare offers from various lenders, review terms and conditions, and ensure the loan aligns with your repayment capacity.

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Frequently asked questions

What is meant by personal loan?

A personal loan is an unsecured financial product that allows individuals to borrow a fixed amount of money from a lender. Repaid in fixed instalments over a specified term, personal loans can be used for various purposes such as debt consolidation, home improvement, or unexpected expenses, without requiring collateral.

What is the maximum personal loan amount that you can borrow?

The maximum personal loan amount varies among lenders and depends on factors like creditworthiness, income, and the borrower's financial profile. In general, personal loans may range from a few thousand dollars to six figures. Lenders determine the maximum amount based on individual eligibility and risk assessments.

Do personal loans have fees?

Yes, personal loans may have fees associated with them, such as origination fees, prepayment penalties, late payment fees, and sometimes annual fees. It's essential to carefully review the terms and conditions before borrowing.

How quickly can I get a personal loan?

With Bajaj Finance Limited, you can get a personal loan within a day of loan approval.

Are there any foreclosure charges on personal loan?

Yes, some personal loans have foreclosure charges, also known as prepayment penalties, which are fees charged for paying off the loan before the agreed-upon term.

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