How to Get a Personal Loan: Your Hassle-Free Guide

How to get Personal Loan

Financial responsibilities and obligations often drain up the majority of our income, preventing us from enjoying the finer things in life. Say, how many times have you had to cancel your vacation plans due to a cash crunch?  These cash crunches also leave you vulnerable to emergencies such as vehicle repairs, house renovations, or medical visits. As a result, personal loans have become the go-to option for individuals seeking financial assistance. In fact, 67% of Indians have taken a personal loan to meet their financial needs. However, the process of applying for a personal loan can be confusing, with so many different offerings from banks, online lenders, NBFCs, and other financial institutions. This blog guides you through the various steps you need to undertake to avail a personal loan. And, spoiler alert: It is much simpler than you think!


What Is A Personal Loan?

A personal loan is a short-term, unsecured loan that individuals obtain from financial institutions. In simpler words, these loans require no collateral, making them attractive options for borrowers. 

You can use a personal loan: 

  • For debt consolidation 
  • To cover unexpected expenses
  • Facilitate large purchases 
  • To cover relocation costs
  • Finance tax bills 

Treat personal loans as a short-term financial tool rather than a financial obligation. A change of perspective can reduce the stress of applying for loans. 

Steps To Get A Personal Loan

Here’s a tip from someone who triple-checks, even quadruple-checks, every single thing before submitting the documents: there’s no such thing as over preparation. Here’s an extensive checklist of everything you need to do while applying for a personal loan. 

Check The Eligibility Criteria

Most financial institutions offer online tests to check your eligibility criteria. Alternatively, marketplaces like Credmudra for personal loan allow you to easily check your eligibility right from your home.  If you still doubt the result’s authenticity, contact the bank’s loan officials to get a better idea about your eligibility. While the eligibility criteria vary from bank to bank, they all run a credit score check before continuing with your loan application. Credit score refers to your credit history, including all ongoing loans, EMIs, and credit card debt. The credit history includes missed payments, repayment schedules, default loans, and foreclosures. Usually, a score above 700 makes you eligible for personal loans. However, it is better to check with the bank managers as the minimum credit score may vary between 650 and 750. Overall, a higher credit score makes the process smoother and gives you an upper hand in negotiations. 

Here are some other common eligibility criteria:

  • The age of the borrower must be between 21-65 years. Again, the age limit might vary depending on the bank’s rules
  • Salaried individuals with specific years of employment are preferred.
  • Self-employed individuals need to furnish extra documents to meet the eligibility criteria
  • Must possess the required KYC 

Prepare The Documents 

Preparing all the documents earlier helps you get loan approvals before the bank officials can go on their lunch breaks.

Here’s the list of documents you need ready while applying for a personal loan: 

  • For Salaried Employees

Proof of Identity Proof of address Proof of income Work experience
  • Aadhar card 
  • Driver’s License 
  • PAN Car
  • Passport
  • Electricity Bill 
  • Water Bill
  • Passport
  • Aadhar card
  • Last six months’ bank statements
  • Salary slips
  • Form-16
Employment certificate
  • For Self-Employed Individuals

Proof of Identity Proof of Address Proof of Income 
  • Aadhar card 
  • Driver’s License 
  • PAN Car
  • Passport
  • Electricity Bill 
  • Water Bill
  • Passport
  • Aadhar card
  • Last six months’ bank statements
  • ITR for the past 3 years
  • Audited balance sheet and profit/loss statement for the past three years
  • Business registration certificate

Carry multiple self-attested photocopies of the documents and a few passport-size photographs if you go to a local bank branch. On the other hand, for online loan applications, all you need to do is scan these documents and upload them on the bank’s site. 

Also, Read: Get a Personal Loan for Salary of Rs. 12000

Select The Loan Amount And Tenure

There are several factors to consider before selecting the loan amount and tenure. 

Interest Rate

Personal loans are notorious for having higher interest rates than other loan types. You should know that financial institutions are not trying to take advantage of your urgency by charging you more interest. Rather, the higher interest rate only offsets the risk of it being an unsecured loan.  Now, here’s a secret: You can negotiate for a lower interest rate! 

A high credit score increases your creditworthiness and decreases the chances of loan default. You can ask for a lower interest rate from your lenders by leveraging your credit history. The negotiations are also easier if you have an existing relationship with the bank. 

Principal Amount 

The principal amount is the loan amount you borrow and on which the interest is charged. Bank officials might try to upsell and push you to opt for a higher-than-required loan amount. And, this seems tempting at first, but, remember, a higher principal amount attracts higher interest repayments. 

So, finalize a loan amount depending on your requirements and do not budge when offered an upgrade. It prevents the harmless personal loan from becoming a financial burden. 


Interest rate and principal amount have a significant impact on your tenure. If you have a lower principal amount, opt for shorter repayment tenure for lower interest payments. A longer tenure for a larger principal amount reduces your monthly EMI. 

Similarly, choose a shorter tenure for low-interest loans to prevent interest accumulation. If you get a high-interest personal loan due to a low credit score, choose a long tenure for lower EMI amounts. 

Other external factors involve analyzing existing liabilities to manage your ongoing EMI and new ones. Consider opting for a shorter tenure if you are anticipating an upcoming bonus that can be used to pay off the personal loan amount. 

Overall, find a suitable balance between tenure, principal, and interest rate while applying for a personal loan. 

Loan Disbursal

Lastly, check for hidden charges and additional costs associated with the loan. It is best to clarify your doubts with the loan official before moving forward with the process. Then, select the account where you want to receive the money. 

That’s how simple it is to get a personal loan. 

Also, Read: How to Get a Personal Loan with a Salary of ₹20,000?

The short answer: it’s subjective. Let’s look at the different benefits of the online and offline experiences. 

Calculate Your Personal Loan EMI 

Online Loan Application 

  • Online loan applications offer personal loans to a more diverse range of people.

Faster Loan Approval

  • Online lenders and bank portals have a faster loan approval rate than regular brick-and-mortar banks. Some instant loan providers even disburse the loan amount on the same day. 

Prequalify for Loan Amount

  • Financial institutions, with access to your transaction and credit history, will often pre-qualify you for a loan amount. As a result, the loan approval process is smoother and feels less like an interrogation. 

Loan Approval with No Credit Score 

  • Online lenders are more lenient with credit history checks. Instead, the lenders analyze alternative data like utility payment history and recent bank statements while offering loans. 

Offline Loan Application

  • Offline loan applications are for people who prefer face-to-face lending experience. 

Competitive Interest Rates

  • It is easier to negotiate for a lower interest rate with an actual person than with a computer program. 

Access to a Larger Loan Amount

  • People with an established history with their local financial institutions are offered access to larger loan amounts with lower interest rates. Plus, the approval process is faster as the bank usually has access to all the required information. 

Also, Read: Get a Personal Loan Without Credit Score – 5 Fool-Proof Ways


It is a challenge to find the best personal loan with all the varying requirements and loan terms from thousands of lenders. Credmudra is a matchmaking platform that connects prospective borrowers with the best lending partners. 

The benefits of using Credmudra for your personal loan application include: 

  • Easy online application with low documentation requirements
  • Lenient eligibility criteria, with a minimum of ₹9000/month income
  • Flexible repayment period ranging from a few weeks to 5 years
  • Competitive interest rates start at 1.08% per month. 

The best part? Credmudra offers pre-underwriting services that validate creditworthiness by analyzing your employment and income status. As a result, you stand a chance to get a personal loan even with a low credit score. 


1. What is the Minimum Credit Score Required to get a Personal Loan?

A 700+ credit score is recommended to get a personal loan. However, some banks may also offer personal loans, albeit with a higher interest rate, with a 600+ credit score. It is better to check the bank’s policy before opting for the loan amount. 

2. Can you Apply for Personal Loans with irregular Income?

Yes, you can apply for a personal loan with irregular income. You need to furnish extra documents, like ITR and income statements, to assure the bank that you can pay the EMI amount. 

3. Is it Possible to Repay Loans before the End of Tenure?

Yes, it is possible to repay the loan amount before the end of the tenure. Check with the bank about the foreclosure procedure as some levy extra charges.

4. Are the Interest Rates Fixed on a Personal Loan?

While the interest rate on a personal loan is fixed, it is possible to negotiate for a lower interest rate before availing the loan. Remember, the higher your credit score, the higher your negotiation power. 

5. How Long does it take to receive the Loan Amount in the Bank Account?

The loan disbursement duration varies from bank to bank. Some banks may release the loan amount within a few hours, while others may take a few days. It is best to check with the bank while applying for a loan. 


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