All about Personal Loans: Types, eligibility and documentation

Personal loans offer flexibility and convenience. You can choose your personal loan amount and tenure with a personal loan from IDFC FIRST Bank.

Many individuals avail of personal loans to manage their finances. It is popular because it offers a mix of flexibility and convenience. This article will review various types of personal loans offered by banks in India and their eligibility criteria. We shall also look at the importance of loan EMI calculators—a new-age tool—in the loan application procedure.

What are the types of loans offered by banks?
 

Before looking at the types of personal loans offered by banks, let us see the broad category of loans banks offer.

Consumer Durable Loan
 

A borrower can avail of dynamic credit limits by opting for a consumer durable loan. It helps finance the purchase of household appliances.

Home Loan
 

A home loan helps a borrower finance the purchase of a new property or house. Before applying for a home loan, it is imperative to consult a home loan EMI calculator.

Loan Against Property
 

A loan against property (LAP) is a type of secured loan that a bank sanctions against an asset pledged as collateral.

Car Loan
 

People can also avail themselves of a loan to purchase a new car. An online car loan EMI calculator can help you decide what car you can afford.

Two-wheeler Loan
 

A two-wheeler loan works like a car loan, except it helps you finance the purchase of a two-wheeler instead of a car.

Personal Loan
 

Personal loans are popular because you can use them for any purpose. Whether planning a vacation, marriage, home renovation or meeting an emergency financial need, a personal loan is always handy. The best thing is, you can use a Personal Loan EMI Calculator, easily available online, to efficiently plan your finances and calculate the EMI. 

What purpose do Personal Loans serve?
 

A personal loan is an unsecured loan disbursed by a bank or financial institution to individuals with an urgent financial requirement. Individuals can take personal loans to consolidate their debt, make large purchases such as household appliances, finance a vehicle, cover the expenses incurred by a family wedding, finance a vacation, and emergency expenses.

How many Indians avail themselves of Personal Loans every year?
 

A report published in April 2022 suggests that the number of Indians taking personal loans to meet their financial needs is increasing yearly. The total personal loan origination value doubled in December 2021 to ₹1.47 lakh crore compared to ₹75,000 crores in 2018.

Who is eligible to get a Personal Loan?
 

Certain basic eligibility criteria must be met to apply for a personal loan. While these criteria generally remain the same for all banks, a few other conditions are added by different banks to deem a borrower eligible for a personal loan. There are different criteria for salaried and self-employed individuals to qualify for a personal loan with IDFC FIRST Bank.

For salaried individuals

• The individual's minimum age should be 23 years of age.
• The individual's maximum age at the time of loan maturity must be 60 years or the age of retirement, whichever comes first.

For self-employed individuals

• The individual's business must have existed for a minimum period of three years.
• The individual's minimum age should be 25 years of age.
• The individual's maximum age at the time of loan maturity must be 65 years or the age of retirement, whichever comes first.

What are the different types of Personal Loans?
 

The major types of personal loans offered by banks in India are.

Personal Loan for weddings
 

Since a wedding is a significant event in India, families can avail themselves of a personal loan ranging between ₹ 1000 and ₹ 25 lakh.

Personal Loans to finance travel
 

People who travel often take personal loans to fund their domestic and international trips.

Home renovation Personal Loan
 

Since renovating a house is expensive, many families in India take a personal loan.

Pension Loans
 

Retired individuals can take personal loans as pensioners, called ''pension loans''. This loan can be availed by government, defence, or family pensioners up to 76 years of age.

Education Loans
 

Education loans are taken by lakhs of students in India to finance their studies in India and abroad.

Which documents need to be furnished to avail oneself of a Personal Loan?
 

Generally, while applying for a personal loan with a bank or an NBFC, you will need to produce the following documents.

• KYC (Know Your Customer) documents such as PAN (Permanent Account Number), Aadhaar card, driving license, voter's ID, or passport.
• Bank account details of the customer.
• Employee ID card of the customer.

If you wish to benefit from the various features offered by IDFC FIRST Bank's personal loans, you need to furnish the following documents, in addition to the documents listed above:

• Last three months' bank statements
• Net banking or debit card details to set up e-Mandate
• eSign/eStamp for faster disbursal

Besides the types of loans listed above, there are a lot of other loans that banks offer. Check out IDFC FIRST Bank's loan calculators before applying.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.