Personal Loan Types

A personal loan is an unsecured loan in the short to medium term which needs no collateral or disbursement insurance. They are usually paid out with little to no documentation within a few hours or a few days. The main feature is the flexible end-use of an individual loan. This unsecured loan can also be used for a variety of needs, from emergency services to planned costs such as home renovations, marriages, etc.


Personal loans, as the name implies, are given to people and not to corporations. Some banks and NBFCs (Non-Banking Financial Companies) provide personal loans to workers and self-employed individuals / professionals. The eligibility requirements for a personal loan differ slightly depending on the form of borrower. Following are some of the main factors for the eligibility of personal loans that need to be kept in mind*:

Particulars Salaried Self-Employed
Age 21 – 60 years 21 – 68 years
Minimum Income Rs. 15,000 per month Rs. 5 lakh per year (gross)
Employment stability Total experience– Minimum 2 years

Experience in the current organization- Minimum 1 year

Minimum 2 years in current business

*The above-mentioned conditions for the eligibility of personal loans are general in nature and the actual eligibility factors can vary from one lender to another.


Personal loans are unsecured loans with adjustable end-use and usually have a period of 12 months to 60 months. If a shorter duration is selected, the individual EMI numbers are higher, while the longer duration results in lower individual EMIs. The main features of a personal loan are as follows:

  • No Collateral/Security Required: You do not need to have any collateral for a personal loan, such as a house or car. The loan is accepted only on the basis of your creditworthiness, which depends on your credit score, wages, history of repayment, credibility of the employer, etc.
  • Flexible End Use: unlike a car loan or a home loan, personal loans can be used for various purposes, such as medical emergency costs, travel, house repair, debt reduction, etc.
  • Flexible Tenure: Personal Loans come in flexible terms, usually from 12 months to 60 months.
  • Minimal Documentation: You can apply for a personal loan online or even offline with minimal documentation. The primary documents that lenders typically require the borrower to provide include proof of identity, proof of address and proof of income.
  • Quick Disbursal: Personal disbursement of the loan can take place within a time as short as a few hours, once the application has been accepted. Turnaround times can also be as low as a few minutes if you can make use of a pre-approved loan deal.
  • Flexible Loan Amount: The qualifying amount of the personal loan is dependent on the history of the individual’s repayment, monthly income, age, occupation, reputation of the employer and other such factors. Lenders offer personal loans of as low as Rs. 10,000 to as much as Rs. 40 lakh.


Most banks and NBFCs have similar guidelines for the documentation needed for personal loans. A general list of such documents has been given below*:

  • Identity Proof: PAN Card/ Voter’s ID/ Aadhaar Card/ Passport/ Driving License
  • Address Proof: Bank Account Statement/ Aadhaar Card/ Lease/ Property purchase Agreement/ Utility Bill (not more than 3 months old)/ Passport/ Driving License
  • Income Proof: 
  • For Salaried Individuals: Salary Slip/ Bank Account Statement/ Form 16
  • For Self Employed: Previous Year ITR/ P&L Statement and Balance Sheet/ Bank Account Statement
  • Business Proof: Certificate of Practice/ Partnership Deed/ GST Registration and Filing Documents/ MOA & AOA/ Shop Act License.

*The actual list of documents needed can vary from lender to lender.