Loan Money


It is an unsecured loan from a bank or a non-banking financial company (NBFC) for a short period (1- 5 years) to meet urgent expenses such as medical emergency, children education, marriage etc. Since there is no collateral or asset pledged against the loan, the interest rate is usually higher. The amount and interest depends upon your previous credit record and the repayment capacity.

The interest rate on this type of loan varies between 12-30% depending upon your credit score and bank or NBFC. However, this interest rate is fixed for the tenure and there is no option of floating rate of interest for personal loans. The amount which can be borrowed depends upon one’s income and repayment capacity. Usually the total EMI should not be more than 40-50% of total take home salary, in case of employed, including liabilities. For self-employed this depends upon the previous year’s balance sheet and profit-loss statement. Some banks/ NBFC have set a minimum loan amount which usually is in the range of Rs. 20,000/-.

Documents needed for securing a personal loan includes ID proof (Aadhar Crad, Passport, Driving license etc.), PAN Card, ITR for the last three years, Form 16 for the last two years, 6 months bank statement and salary slip for employed. For self-employed in addition to the above, balance sheet, profit loss statement for the last three years are also needed.

Processing fee is also charged for the processing of the loan and is usually 1-2% of the loan amount.