A personal loan is an unsecured loan provided by banks, NBFCs (Non-Banking Financial Companies), or online lenders for various personal expenses. Unlike home loans or car loans, personal loans don't require collateral.
Because there's no asset backing the loan, lenders rely on factors like:
Personal loans are extremely popular due to their flexibility, quick disbursal, and minimal documentation. However, interest rates can be higher compared to secured loans.
You can use a personal loan for almost any legal purpose:
Since lenders usually don't restrict usage, personal loans are called "multi-purpose loans".
Here’s a quick comparison of major aspects:
| Feature | Details |
|---|---|
| Loan Amount | ₹10,000 to ₹50 lakh (varies by lender) |
| Tenure | 12 months to 84 months |
| Interest Rates | Starting from 9% p.a. onwards |
| Collateral Required | No |
| Processing Time | 24 hours to 7 days |
You can use our Personal Loan Calculator to quickly estimate how much EMI you will have to pay based on your loan amount, interest rate, and tenure.
Though it varies slightly by lender, generally you must meet:
If you don’t meet eligibility norms, you might face higher interest rates or loan rejection.
Usually, you'll need to provide:
Some lenders also allow instant digital approval if you have verified KYC details.
Your maximum eligible amount depends on:
Most lenders allow a total EMI burden up to 50–60% of your monthly income.
If you want to plan your loan repayment smartly, consider checking our Mortgage Calculator for longer-term planning.
| Advantages | Disadvantages |
|---|---|
| No Collateral Required | Higher Interest Rates vs Secured Loans |
| Quick Disbursal (within 48 hours in many cases) | Strict Credit Score Requirements |
| Flexible End Use | Early Prepayment Charges (in some loans) |
| Simple Application Process | Impact on Credit Score if Defaulted |
Sometimes people confuse personal loans with credit card loans.
Here’s a comparison:
| Criteria | Personal Loan | Credit Card Loan |
|---|---|---|
| Collateral | Not required | Not required |
| Interest Rate | 9–24% p.a. | 18–42% p.a. |
| Usage | Flexible | Limited to card usage or conversion to EMI |
| Loan Tenure | 12–84 months | 3–24 months |
Before jumping into a personal loan, keep these tips in mind:
A personal loan can be a powerful tool if used wisely — helping you bridge financial gaps, consolidate debts, or meet emergencies. But careless borrowing can trap you into high-interest debt cycles.
Always plan repayment smartly, and whenever possible, choose borrowing as the last option — after exhausting savings or low-interest credit options.
For more financial tools and guidance, feel free to explore MoneyReload’s Finance Calculators section where you can explore all our finance tools and improve your finance!
