What is a Personal Loan?
A personal loan is an unsecured loan that helps you meet urgent financial needs — whether it’s medical expenses, wedding costs, travel, home renovation, or debt consolidation. Since it doesn’t require collateral, it’s processed faster than most other loans.
🏦 Key Features of a Personal Loan
Loan Amount: ₹50,000 to ₹40 lakh
Interest Rates: Typically 10% to 24% per annum
Tenure: 1 to 5 years
No Collateral Needed: Unsecured, based on income and credit score
Fixed EMIs: Predictable monthly payments
Flexible Usage: Use it for any personal need
Quick Disbursal: Often within 24–48 hours
✅ Benefits of Taking a Personal Loan
Instant Financial Relief: Quick approval and disbursal make it ideal for emergencies.
No Security Required: You don’t need to pledge assets.
Credit Score Building: Timely repayment boosts your credit history.
All-Purpose Loan: No restrictions on how you use the funds.
Online Process: From application to approval — it’s all digital and paperless.
🧾 Eligibility Criteria
While criteria may vary across lenders, here are the typical requirements:
Age: 21 to 60 years
Minimum Monthly Income: ₹15,000–₹30,000
Employment: Salaried or self-employed with stable income
Credit Score: 700+ improves approval chances
Work Experience: At least 6–12 months
🧮 How Is Interest Calculated?
Most personal loans follow reducing balance method, meaning interest is calculated on the outstanding principal. The EMI amount includes both principal and interest.
⚠️ Things to Watch Out For
Processing Fee: Usually 1–2% of loan amount
Prepayment Charges: Applicable if you close the loan early
High Interest for Low Credit Scores: Always check offers from multiple lenders
Debt Trap Risk: Borrow only what you can repay comfortably
🔍 When Should You Consider a Personal Loan?
✅ Medical emergency
✅ Big-ticket purchases
✅ Family events like marriage
✅ Home renovation
✅ Debt consolidation (to close high-interest credit card dues)
✅ Unexpected travel or relocation
❓FAQs
1. How fast can I get a personal loan in India?
If you’re pre-approved or meet all criteria, funds can be disbursed within 24–48 hours.
2. Will my credit score affect loan approval?
Yes. A score above 700 improves your chances of getting a lower interest rate and faster approval.
3. Can I prepay my personal loan?
Yes, but some lenders may charge a prepayment or foreclosure fee. Read the terms carefully.
4. What documents are required?
Basic KYC (Aadhaar/PAN), income proof (salary slips or bank statements), and address proof are typically needed.
5. Is a personal loan better than using a credit card?
For higher amounts and structured EMIs, personal loans are more affordable than high-interest credit card debt.
Published on : 6th August
Published by : SMITA
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