10 Common Types of Personal Loans in India
Personal loans have gained a lot of popularity in recent years, and there are many reasons for this. The primary reason for the popularity of this unsecured loan can be attributed to the usage of funds which include wedding, home renovation, vacation, medical emergency, etc. Also, there is no restriction on the end- use of this loan, unlike most other types of loan.
Features of a Personal Loan
- Flexible end-use
- Flexible tenure
- Hassle-free online application process
- Minimal documentation
- Quick disbursal
While these above features are common to the entire category of personal loans, many lenders classify personal loans into different types based on their end-use. The following section discusses 10 common types of personal loans in India.
Types of Personal Loans in India
- Wedding loan: Weddings in India are expensive affairs, and savings might not be sufficient to bear all the expenses. For exactly such situations, banks offer wedding loans or marriage loans. The loan can then be used for various expenses like food, accommodation for guests, venue, decoration, invitation cards, jewelry, etc.
- Home renovation loan: Whether you are planning to renovate the entire home or fix that old ceiling or have a modular kitchen, a home renovation loan might help you bearing all such expenses without any hassle.
- Travel loan: Do you want to break the monotony of 9 to 6 job or wish to be away from the hustle and bustle of city life and need some quality time with your family? Whatever is your reason for a vacation, travel loan is the quickest and easiest way to fund the entire trip, which includes tickets, accommodation, sightseeing, shopping, etc.
- Medical loan: When a medical emergency occurs unexpectedly, a medical loan can be a great financial help by allowing you to deal with various expenses like medical bills, surgery, room charges, etc.
- Top-up personal loan: A top-up personal loan is offered only if you have an existing personal loan with the bank. With this loan, you can avail additional funds on your existing loan with the option to repay within an extended tenure. For example, if you have taken a personal loan of Rs. 5 lakh from the bank and later realize that you need more funds. You can then contact your lender and easily get a top- up loan if you have a good repayment history, credit score, etc.
- Festival loan: Though less common, some banks/NBFCs still offer festival loans to deal with various festive expenses like new clothes, gifts, home décor, religious ceremonies, etc. Usually, festival loans feature short repayment tenure (less than 12 months) and are often available at low-interest rates.
- Pension loan: This loan facility can be availed by pensioners from the same bank from which they are drawing their pension. Pensioners can borrow a loan amount of up to 10 times of their pension to pay medical bills, go on a vacation, renovate their home, etc.
- Salary advance loan/Short term personal loan (STPL): Salary advance loan or STPL is offered by many digital lenders and the loan amount which can be availed starts from as low as Rs. 1000 and goes up to Rs. 1 lakh. The process to apply for this personal loan is 100% paperless and can get disbursed to your account within a few hours.
- Consumer durable loan: Be it the latest phone, television, or a new refrigerator, you don’t have to wait for your favorite gadget anymore, as, with a consumer durable loan you can purchase it instantly. Also, you can pay back the amount borrowed in easy EMIs without overburdening yourself financially.
- Shopping loan: As the trend for online shopping catches on, it is only natural that many of us find ourselves strapped for cash at the time of a sale. Shopping loans are the perfect solution to this situation with loan amounts starting at as low as Rs. 1,000 and flexible repayment options.
Top Banks Offering Personal Loans in India
The following is a comparison of personal loans offered by various banks in India:
| Particulars | State Bank of India | HDFC Bank | Citibank | Axis Bank | ICICI Bank |
| Interest Rate | Starting from 10.50% p.a. | Starts at 10.75% p.a. | Starts at 10.50% p.a. | Starts at 12% | Starts at 11.25% |
| Tenure | 6 to 60 months | 12 to 60 months | 12 to 60 months | 12 to 60 months | 12 to 60 months |
| Maximum Loan Amount | Rs. 20 lakh | Rs. 40 lakh | Rs. 30 lakh | Rs. 15 lakh | Rs. 20 lakh |
| Processing Fee | Up to 1.50% of the loan sanctioned | Up to 2.50% of loan sanctioned | Up to 3% of the loan sanctioned | Up to 2% of loan sanctioned | Up to 2.25% of loan sanctioned |
Many banks offer the above-mentioned personal loan types. However, not all lenders offer different types of personal loans and instead offer them all together under a single category known as ‘personal loan.’
