Top 5 Types of Personal Loans in India

Banks and other NBFCs provide many types of personal loans to satisfy a variety of needs. Because of tech advancements, the loan application process has become seamless. You may now find it very easy to get access to loans.

The most known lending product in India’s debt market is personal loans. This group features more than 78% of loan requests in India. Many people like these loans since they are unsecured and come with a longer tenure.

Read on to learn more about the five types of personal loans available.

What Are Personal Loans?

Personal loans are loans that banks and NBFCs offer to help people pay for things like a wedding, education, vacation, home improvement, etc. They are like other kinds of loans where the borrower has to pay back the principal amount plus interest to the lender by the end of the loan term.

Personal loan limits are often based on the borrower’s credit history and monthly income. Most banks and credit unions offer individual loan sums that start at Rs. 50,000 and go up to Rs. 15 lakhs.

Different lenders have varied rules about who can get a personal loan. But, there are some general rules that all lenders follow. Additionally, the various types of personal loans may have different eligibility criteria and requirements. 

Five Main Types of Personal Loans

1.  Travel Loan

Trips, especially foreign vacations, may be costly. If you plan a trip to an exotic place with your family or friends, consider taking a travel loan to reduce the money load. A travel loan is a type of personal loan which is used to pay trip costs. Travel loans often come with travel insurance that is free with the loan.

Main Features of Travel Loan

• Easy application and approval process.
• Most firms will provide you with a loan of up to 40 lakhs.
• The loan payback time might last up to 6 years.

2. Home Improvement Loan

People can get a home loan to buy a house, but what should be done if the old home needs major repairs? This is where a home improvement loan comes into play. A home renovation loan is a type of personal loan from a bank or non-bank financial firm for renovating an old sweet house. When you remodel your old property, you not only have a good place to stay or live, but your old house’s economic value also increases.

Main Features of Home Improvement Loan

• The loan sum might range between Rs. 2 lakh and Rs. 40 lakh.
• A home improvement loan has a payback term of up to 30 years.

3. Wedding Loan

India is famed for its lavish wedding rituals. The wedding day is surely one of the most vital days in the life of the groom and bride and the parents & family members. Everyone hopes to make this day unique and memorable, which may need lavish spending, and one may not have as many liquid assets at their disposal. As a result, many families seek a wedding loan.

Main Features of Wedding Loan

• The bride, groom, or family members can apply for a wedding loan.
• The loan sum might range from Rs. 1,000 and Rs. 25 lakhs.
• The payback time for a wedding loan might range from 3 months to 6 years.

4. Education Loan

Personal loans are available from many lenders to help you pay for your education. Secured education loans are given against collateral such as your master’s degree or a real estate property. This education loan may be used to pay your tuition, housing fee, and other academic needs.

Main Features of Education Loan

• Most banks would give you a personal loan for up to 20 lakhs to cover education-related costs.
• A personal loan term used to fund schooling may range between 5 and 6 years.

5. Pension Loan

If you’re a retired person, you may find it hard to make ends meet, mainly if the person has medical costs. Many banks give pension loans to these types of people. A pension loan is a type of personal loan built specifically for retirees. Since it is solely for retired people, pension loans are exempt from the qualifying terms that apply to other personal loans.

Main Features of Pension Loan

• Pension loans are only given to retirees with constant pensions.
• Payback time for pension loans might range between five to six years.

What Are the Eligibility Needs for a Personal Loan?

Personal Loan eligibility needs differ from lender to lender, though there are some common rules that all lenders follow. So let’s discuss them in this section.

• When the loan period starts, you must be at least 22 years old and no more than 58 years old.
• You must be working and have a steady source of income.
• A high credit record is needed.
• You must have identity proof and proof of income. You must own a bank account in your name.

Papers Needed for Personal Loans

Personal Loan papers differ from lender to lender. However, there are a few crucial papers that all lenders will need.

• A signed application form has been filled out.
• Identity proof (PAN card, passport,  Driving License, Voter ID,  etc.)
• Address proof (ration card, utility bill, rent agreement, etc.).
• Income verification (salary slips, Form 16, bank records, etc.).
• Last six months’ bank statements.
• KYC papers (Pan card, Aadhar card, etc.).

How to Apply for Different Types of Personal Loans

Personal loan applications are easy to fill out. You can apply online or go to a bank or credit union closest to you.

Online applications must include personal and financial information. You can apply for a personal loan online through the lender’s website. The lender will review your loan request in a few days and give you the money if you’re eligible.

If you want a personal loan from a bank, you will need to fill out an offline application form and bring it in with the necessary paperwork. The bank will process your loan request in a few days and give you the money if you meet the eligibility criteria. Many banks also offer online applications. You must check with your bank to see if their loan request process is online or offline. 

Conclusion

Now that you know the many types of personal loans in India, you can pick the one that best meets your needs. You may explore and compare the top loan providers online, choose one, meet their conditions, and get fast approval on the personal loan.

When enrolling in any loan plan, review the terms and conditions thoroughly to ensure you completely understand the borrowing & repayment arrangements.

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