Modified on : 6 May, 2018
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Personal Loan

Personal Loans are generally sanctioned by commercial banks as Clean Loans i.e. The loan is not secured by any tangible security. As the risk factor in clean loans is higher is higher than that in secured loans, the rate of interest and other charges in personal loans are higher.

The features of Personal Loans by banks are as under :

FeatureDescription
Purpose

Any legitimate purpose whatsoever (e.g. expenses for domestic or foreign travel, medical treatment of self or a family member, meeting any financial liability, such as marriage of son/daughter, educational expenses of wards, meeting margins for purchase of consumer durables, vehicles, other assets etc.)

Eligibility
  • Permanent confirmed employees (minimum 1 - 3 year service) of - Central/ State Govt./ Autonomous Bodies/ Public / Joint sector undertakings, Reputed Limited companies / MNCs & Educational Institutions.
  • Self Employed Professional - Doctors, Architects, Interior Designers, Engineers, Chartered Accountants, Technical & Management Consultants & practicing Company Secretaries, with a stable business (minimum 1-year).
Loan Amount

the personal loan limit is determined by your income and repayment capacity.

Documents Required For Existing customers - Application form on the financing bank's prescribed format with
  • Two Passport size photographs
  • Form 16
  • Any other document(s) required by the bank
For New Customers - All documents required to open a new account with the Bank and above documents.
Margin Generally no margin is required.
Interest Rates: Clean Overdraft Rate
Repayment The loan is generally repayable in 2 - 4 years.
Security Generally no tangible security is required. However, the banks may ask for Check Off Facility (Salary to be received in the bank and deduction of the loan instalment) or Third Party guarantee as security for the loan.
Processing Fee The processing charges vary from bank to bank. Processing charges are generally 2-3% of the loan amount.
Other Charges In addition to Processing Charges, banks also charge varying amounts of various other charges like :
  • Prepayment Charges
  • Late Payment Charges
  • Cheque return charges
  • Amortisation schedule charges
  • Statement of Account Charges
  • Prepayment/Foreclosure Statement Charges
  • Duplicate No Objection Certificate/ No Due Certificate
  • Duplicate Repayment/Foreclosure statement

It is suggested that before finalising your deal for personal loan with a bank, you make detailed enquiries from various banks regarding the rate of interest, processing charges, prepayment charges and other charges. An informed decision will result in substantial saving in the cost of the loan.

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