Personal Loan Types and Interest Rates

October 15, 2022

The Indian banking sector boasts different Personal Loan types to cater to the diverse set of financial requirements of the customer base. The bank offers its funds to borrowers without any security, making it a popular financial product. The interest and loan amount varies significantly based on the applicant’s profile and requirements. For example, if the applicant has availed of a loan for a medical emergency application and disbursement of the loan would be smooth and convenient and might also be eligible for some discounts in interest rates.

Personal Loan Overview

A Personal Loan is a financial product that provides individuals with funds to pursue their personal goals. The funds allocated to the recipient can be utilised for various avenues such as medical expenses, wedding expenditures, renovation of home, and debt consolidation.

The financial institution that provides this collateral-free financial assistance maintains an easy application process so applicants can access the funds conveniently.

As the nature of the Personal Loan is unsecured, the interest rates charged on the loans are with respect to the applicant’s profile and creditworthiness.

Types of Personal Loans Available in India

The bank offers a diverse range of personal loan types to borrowers in India. The types of personal loans are classed based on their requirements. This segmentation of the personal loan types eases the application process and helps banks and financial institutions to compute the loan amount and the interest rates. The following personal loan types are available in India so that the receipts can meet their financial requirements:

Short-Term Personal Loans

These types of personal loans have been identified as one of the most popular financial options in recent years. As the name suggests, short-term personal loans are offered to the recipient for a short period. This personal loan scheme owes its popularity to quick disbursement and minimal documentation. The repayment tenure can sometimes be short as six months. Almost every digital lender offers this service to its customers.

Noteworthy Features

  • Collateral-free
  • Enhance Credit Score
  • Quick and direct disbursement of money

Wedding Loan

Wedding budgets in India have always been significant. The funds required to facilitate a wedding are considerable. As the wedding ceremonies signify a momentous moment in the bride and groom’s lives, the families often don’t want to leave any stone unturned. It is to be noted that the interest rates on wedding loans are considerably higher during the wedding season due to the demand.

Noteworthy Features

  • A loan amount of up to Rs 25 Lakhs can be availed by the applicant.
  • The tenure on a loan ranges from anywhere between 3 to 72 months.
  • Quick loan disbursal

Travel Loan

The travel loan can allow the recipients to realise their dreams of travelling the globe. The banks and financial institutions have designed this scheme so that they can fund an individual’s dream to experience the richness of the world. The recipient of the loan can also apply for travel insurance to safeguard their trips from all fronts.

Noteworthy Features

  • Flexibility in the Loan Repayment Tenure
  • Loan amount up to Rs 40 Lakhs
  • Flexibility in the repayment period of the loan

Home Renovation Loan

These types of personal loans can be a costly affair for the occupants. The renovation sometimes entails revamping the house from scratch. The amount required to complete the renovation can be significant, and the house owner can apply for a home renovation loan to realise their goals.

  • The loan amount offered to the recipient ranges from Rs 2 Lakhs to Rs 40 Lakhs.
  • The tenure for the loan repayment is up to 30 years.
  • The interest rate charged on loans is 6.85% per annum.

Pension Loan

This type of personal loan offers an avenue for pensioners to obtain funds as they can apply for a loan amount that is 7 to 10 times the pension amount. The pension loan is designed to cater to various fund requirements of senior citizens in India.

Noteworthy Features

  • The loan amount generally ranges from Rs 25,000 to Rs 14 Lakhs
  • The repayment tenure of the loan is up to 60 months
  • The rate of interest on the loan allocated can be as low as 11.70% per annum.

Education Loan

This type of personal loan helps the recipient of the loan to attain their educational goals. The bank provides the loan amount to the recipient to pursue their education without financial constraints. The education loan aims to encapsulate all the budgetary requirements regarding the child’s education.

Noteworthy Features  

  • The repayment tenure of the loan is up to 15 years.
  • The loan interest rate is as low as 6.35% per annum.
  • The applicant can avail of the loan amount up to Rs 20 Lakhs.

Top-Up Loan

The top-up loan option allows borrowers to avail of additional funds on their existing loans. The top-up loan option allows the borrower to repay the original and additional loan amount within that tenure.

Noteworthy Features  

  • No requirement for security
  • The borrower must complete at least 12 EMI payments punctually
  • Quick disbursal of loan amount

Consumer Loan

Another personal loan type that allows the recipient to raise funds from the bank for the obtainment of consumer durable goods. The applicant can easily make the repayment of the loan amount as many banks of no-cost EMIs.

Noteworthy Features  

  • 100% financing option is available to purchase certain products
  • No charges would be levied in case of a foreclosure
  • The recipient can avail of both secured and unsecured loans.

Medical Loans

The bank and financial institutions provide a variety of medical loans to customers to aid them in paying any unforeseen or significant medical expenses. The medical loans assist the recipient in paying medical bills for all treatments. The financial institutions have established a quick and easy disbursal process to cater to the emergency aspect of the loan.

Noteworthy Features

  • The rate of interest charged on this type of loan generally commences from 10.45% per annum.
  • The applicant is not required to produce any collateral against the loan
  • The disbursement of the loan is quick and smooth as minimal documentation is required during the application process for such types of personal loans.

Festival Loan

India is rich in diversity, and various festivals are celebrated throughout the year. That is why many banks offer festive loans to the customers to use the disbursed funds for expenses related to the festival celebrations.

Noteworthy Features

  • This personal loan type allows the customers to obtain funds at competitive interest rates.
  • The processing charges are minimal, with no hidden or administrative costs.
  • No charges would be levied in case of any prepayment or foreclosure.

Personal Loan Interest Rates

There is a diverse assortment of personal loan types offered by the Indian banking market. The interest rates on these types of personal loans vary from bank to bank. The interest rates are competitive, and some banks offer a minimum processing fee to diminish the loan cost. The following table showcases leading banks’ interest rates offered on these personal loan types.

Financial Institution Interest Rates Processing fee
HDFC Bank Commences from 11% upto Rs 4,999
ICICI Bank Commences from 10.75% Up to 2.5%
State Bank of India 10,30% – 15.10% Up to 1.5%
Bank of Baroda 9.70% – 17.05% Up to 2%
Axis Bank Commences from 10.25% 1.5% – 2%
Indian Bank 9.90% – 11.40% Up to 1%
Kotak Mahindra Bank Commences from 10.99% Up to 3%
IDBI Bank 9.50% -14% 1%
Bank of Maharashtra 9.40% – 14% Up to 1%
Yes Bank Commences from 10.99% Up to 2.5%

*It is to be noted that the rate of interest offered on the personal loan are subject to market change.

Related Resource
How to Avail of a Personal Loan without Documents?
CIBIL Score for Personal Loan
Personal Loan Balance Transfer
Personal Loan Tax Exemptions & Details
Personal Loan for NRIs
A Definitive Guide to Statutory Liquidity Ratio (SLR)
Personal Loan for Pensioners

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