8 types of personal loans available in India and everything you need to know about them

Whether it’s fixing something that can’t wait, investing in yourself, or simply staying prepared, borrowing isn’t always a last resort. Personal loans in times of urgent financial needs can be a saviour for many.

They don't just help as a quick fix — they also help you fulfil your bucket list comfortably. But with so many types of personal loans available today, how do you decide what fits best?

In this guide, we’ll unpack the different types of personal loans, how they’re commonly used in India, the benefits and pitfalls to watch out for, and how you can choose one that works for your goals, and not against them.

Why are personal loans such a popular financial choice?
 

You already know what a personal loan is — or at least, you’ve seen it offered in some form while scrolling through your banking app. At its core, it’s a way to borrow money without needing to explain every detail or putting up an asset as security. That’s exactly why it appeals to so many people: it’s simple, quick, and puts the decision-making in your hands.

With so many types of personal loans available today, it’s no surprise they’ve become a go-to option for people across income levels. But what really makes them stand out? Let’s break down the core benefits that make personal loans worth considering, even when you have other choices.

1. No collateral required
 

You don’t need to mortgage your home, gold, or any asset to qualify, making personal loans less risky and more convenient.

2. Flexible usage
 

Personal loans offer unmatched freedom and control. Unlike loans tied to specific goals, these loans can be used however you see fit.

3. Quick processing
 

Reputed lenders like IDFC FIRST Bank often offer instant personal loan approvals with minimal documentation, especially through digital applications.

4. Competitive interest rates
 

With so many options available today, you can easily choose a personal loan with low interest rates, making them cheaper than credit cards or informal borrowing.

5. Simple repayment options
 

With tenures ranging from nine months to five years, personal loans give you the flexibility of choosing a repayment plan that aligns with your financial comfort.

Types of personal loans you can consider

The mix of accessibility, affordability, and flexibility explains why there are so many types of personal loans offered by banks today. As demand continues to increase, some of the most common loan types include:

1. Debt consolidation personal loan
 

If you’re juggling multiple credit card bills or EMIs, a personal loan for debt consolidation allows you to merge them into one. This means a single monthly repayment, often at a lower rate, and far less stress.

2. Personal loans for travel
 

Whether it’s a family holiday or a solo trip abroad, a personal loan for travel can cover flights, accommodation, and experiences without draining your savings upfront. Repayment in EMIs makes planning easier.

3. Personal loan for shopping
 

Big-ticket purchases like electronics, furniture, or festive shopping can be heavy on your wallet. A personal loan for shopping gives you the flexibility to buy what you need upfront and repay in manageable EMIs, instead of relying on high-interest credit cards.

4. Medical emergency loans
 

Health expenses don’t always wait. With instant approvals, these personal loans ensure quick access to funds for hospitalisation, surgery, or urgent treatments — minimising the financial strain during emergencies.

5. Personal loans for home renovations
 

From structural repairs to interior upgrades, home renovation loans let you improve or maintain your property without dipping into long-term investments. Their flexible tenures help spread out the cost.

6. Personal loans for celebrations
 

Weddings, anniversaries, or milestone birthdays often come with big price tags. Taking out a small personal loan for celebrations can help you plan stress-free events, with repayments spread across months or years.

7. Loans for cash flow management
 

Particularly useful for freelancers or small business owners, these loans help smoothen irregular income cycles. They ensure steady working capital, covering operational or household expenses during lean months.

8. Personal loans for upskilling
 

Short-term courses, certifications, or specialised training often don’t qualify for education loans. Choosing the right type of personal loan can help you bridge this gap and invest in your career without financial roadblocks.

Shifts in borrowing patterns across types of personal loans
 

Personal loans are now among the most widely used credit products in the country. A 2023 TransUnion CIBIL report showed a 23% year-on-year increase in personal loans, with growth led by debt consolidation loans and emergency funding. This points to a clear trend: people are choosing personal loans not only for aspirations but also as a dependable safety net.

Loan sizes are also shifting. The share of loans above ₹10 lakh has risen to 30.9% in FY25, reflecting growing confidence in using credit for big-ticket needs. At the same time, small personal loans under ₹1 lakh are gaining popularity thanks to digital platforms and instant approvals. Together, these changes show how personal loans are becoming both inclusive and versatile — serving everyone from first-time borrowers to those seeking the best personal loans for larger commitments.

In short, whether small or high-value, personal loans today are more convenient and widely accepted than ever.

Borrowing smart: How to keep your personal loan experience safe
 

There’s no doubt that the many types of personal loans available today make borrowing more convenient than ever. But with convenience also comes responsibility. Without the right precaution, helpful credit can quickly turn into a burden.

Here are some common pitfalls and risks you should be aware of:

1. Borrowing more than you can repay
 

Choosing EMIs that don’t fit your income can make even the best personal loans overwhelming.

2. Falling for hidden charges
 

Some types of personal loans may appear affordable but include processing fees or penalties that raise the total cost.

3. Late or missed payments
 

Irregular repayments not only add charges but also impact your credit score for future borrowing.

4. Fraudulent lenders or scams

Unverified apps promising instant personal loan approvals often misuse personal data or impose predatory rates.

5. Not comparing options
 

Skipping your research on personal loans with low interest rates can leave you locked into expensive EMIs.

While these risks might sound scary, don't let them discourage you. When you choose a trusted solution, such as a FIRSTmoney personal loan from IDFC FIRST Bank, you can enjoy the benefits of personal loans without the stress.

Meet FIRSTmoney: A personal loan designed for speed and flexibility
 

If you're wondering which is the best type of personal loan available today, look no further. With safety, simplicity, and speed, FIRSTmoney from IDFC FIRST Bank is built to be flexible, transparent, and user-friendly — helping you access funds when you need them, without unnecessary stress.

1. Access up to ₹10 lakh without hassle
 

Cover anything from urgent expenses to big milestones with a high loan amount, backed by a 100% digital application process and zero paperwork.

2. Keep EMIs light with interest rates from 9.99%
 

Borrow smart with low interest rates, helping you save significantly compared to high-cost credit options.

3. Choose repayment on your terms
 

With tenures ranging from 9 to 60 months, you can tailor your EMI to match your monthly budget, whether you want to repay quickly or keep it comfortable.

4. Get money in your account as quickly as within 30 minutes
 

Thanks to a 100% digital process, your loan is approved and disbursed instantly, making funds available right when you need them.

5. Enjoy the freedom to repay early
 

FIRSTmoney charges zero foreclosure fees, giving you complete flexibility to clear your loan ahead of time and reduce your interest outgo.

The best part? Eligibility for a FIRSTmoney personal loan is simple. If you’re between 21 and 60 years old, salaried or self-employed, and have a CIBIL score of 730 or above, you’re already on your way to qualifying for a FIRSTmoney personal loan.

Smart tips to make the most of your FIRSTmoney personal loan
 

Getting a personal loan is only half the journey — handling it wisely is what truly makes the difference. No matter which of the many types of personal loans you choose, responsible repayment is the key to keeping your finances stress-free. Here are some quick tips to help you borrow smart with FIRSTmoney personal loan:

1. Borrow only what you truly need, not the maximum amount you qualify for
2. Use the EMI calculator provided by IDFC FIRST Bank to choose a tenure and repayment plan that fits your budget
3. Prioritise timely EMI payments to protect your credit score and avoid penalties.
4. Whenever possible, use any bonuses to close your loan early and become debt-free without any foreclosure charges

1. Keep track of all loan-related documents and monitor your repayment progress regularly

Why choose IDFC FIRST Bank for your personal loan needs
 

The many types of personal loans available in India can help you achieve different goals — from managing emergencies to funding aspirations. But the real difference lies in choosing a lender who makes borrowing safe, transparent, and truly customer-friendly. That’s where a FIRSTmoney personal loan from IDFC FIRST Bank stands out.

Some of the reasons FIRSTmoney stands out as one of the best personal loans include:

1. Quick, 100% digital process so that you can apply and get funds in your account within minutes 
2. Zero paperwork, with only your physical PAN card needed for video KYC 
3. Flexible repayment options to choose a tenure that fits your income and lifestyle 
4. Competitive interest rates starting from 9.99% p.a.
5. Zero foreclosure charges if you choose to close the loan early
6. Real-time tracking so you always know your application status 
7. Trusted by millions and rated among the World’s Best Banks 2025 by Forbes, in partnership with Statista

A personal loan should simplify life, not complicate it. With FIRSTmoney by IDFC FIRST Bank, you can borrow with confidence, knowing your loan is designed around your needs. Ready to get started? Check your eligibility and apply for a FIRSTmoney personal loan today.