What credit score do I need for a personal loan in India?

Most banks want 700+, and the best advertised rates need 750+. Between 650–700, approval comes mainly from NBFCs at higher pricing. Below 650, build 6–12 months of clean repayment history, keep card utilisation under 30%, and dispute report errors before applying.

What is the lowest personal loan interest rate in India in 2026?

As of August 2026, starting rates at large banks cluster around 9.99%–11% p.a. for pre-approved high-score salaried customers; public sector banks start near 10%. Most borrowers with decent profiles pay 11%–16%, while NBFC and app-loan pricing runs 12%–30%+ based on risk.

How much personal loan can I get on my salary?

Two caps apply: an income multiple of roughly 10–24 times net monthly salary, and FOIR — total EMIs within about 40–55% of net income. On a ₹60,000 salary with no other EMIs, that typically means roughly ₹6–12 lakh depending on tenure and lender.

What is FOIR in personal loans?

FOIR (Fixed Obligations to Income Ratio) is existing EMIs plus the proposed EMI as a share of net monthly income. Lenders cap it around 40–55%. If your requested loan pushes FOIR past the cap, the amount is trimmed or the tenure stretched until it fits.

What is a Key Fact Statement (KFS)?

An RBI-mandated disclosure every retail borrower must receive before sanction, showing the APR, every fee and charge, repayment schedule, penal charge policy and grievance contacts. If a lender does not provide a KFS, do not sign the loan agreement.

Are instant loan apps safe in India?

Only when the app discloses an RBI-regulated bank or NBFC as the actual lender, disburses to your own bank account, provides a Key Fact Statement and requests minimal permissions. Upfront fees, contact-list access demands and wallet-based disbursal are scam signals.

Is personal loan interest tax deductible in India?

Not by default. It becomes deductible only through end use: business or professional use, house purchase, construction or renovation under Section 24(b) with documentation, or acquisition of certain capital assets where interest is added to the cost of acquisition. Personal consumption earns no deduction.

Does prepaying a personal loan hurt my credit score?

No. An early-closed loan is reported as closed, which is neutral to positive for your score. The only consideration is financial: any foreclosure charge versus the interest saved — early in the tenure, prepayment almost always saves more than it costs.

Can pensioners get personal loans in India?

Yes — through pension loan schemes at the bank where the pension is credited. Typical terms: 10–18 times monthly pension, EMI capped at one-third to half of pension, and closure by around age 76–78. These schemes are far cheaper and safer than app loans marketed to seniors.

What happens if I miss one personal loan EMI?

You face a bounce charge plus your bank's return fee, a penal charge on the overdue amount, and a credit bureau entry that dents your score even at 1–29 days past due. Pay immediately and maintain at least six clean months to recover.

💼 Loans · 2026 Definitive Guide

Personal Loan in India: Rates, Eligibility, EMI & Approval — Explained Properly

How banks, NBFCs and loan apps really price and approve you. What a loan truly costs beyond the interest rate. Your RBI rights. One honest hub — no rankings, no bias.

✍️ Arthzo Research Desk 🗓️ Updated: 5 Aug 2026 ⏱️ Reading time: 28 min (or jump to what you need) ✅ Checked against RBI rules & live market rates

📉9.99%–30%Interest range (p.a.)

💰₹50K–₹50LLoan amount

🎯700+ scoreTypical eligibility

📅12–84 moTenure

🧾0.5%–3%Processing fee + GST

⚡10 min–7 daysApproval time

🏦5.25%RBI repo (5 Aug '26)

🧮End-use onlyTax benefit

What Is a Personal Loan?

💡In one line:

An unsecured, multipurpose EMI loan — no collateral, approved purely on your creditworthiness.

⚡ 30-Second Answer

A personal loan gives you ₹50,000–₹50 lakh for 12–84 months with no security. In 2026, good profiles pay 9.99%–16% p.a. at banks; riskier profiles pay up to 30%+ at NBFCs and apps. Approval hinges on credit score, income stability, employer category and FOIR. Always compare the APR in the Key Fact Statement — never just the headline rate.

🔓

Unsecured

No gold, property or FD pledged. The lender's only security is your repayment record.

🎯

Multipurpose

Medical bills, weddings, renovation, travel, consolidation — any legal use. Speculation is barred.

💸

Priced for risk

No collateral means higher rates than home or gold loans. Convenience is what you pay for.

A decade ago this meant branch queues and guarantors. Today, a pre-approved salaried borrower can finish in 10 minutes: bureau pull, e-KYC, e-sign, money in account.

That speed is why the RBI keeps tightening the rules — higher risk weights on unsecured lending, Digital Lending Directions, and the mandatory Key Fact Statement.

⚠ The trade-offAfter credit cards, this is the costliest mainstream loan you'll ever take. Use it for genuine needs and consolidation — never lifestyle spending or investing.

Know your real EMI before you talk to any bank

Amortization, FOIR meter and PDF export included.

Calculate EMI →

Who Lends in India — and How Each One Thinks

🏦Why this matters:

Five lender types price the same borrower very differently. Knowing how each assesses risk tells you where you get the best deal.

🏛️

Public Sector Banks

SBI, PNB, BoB, Canara, Union, Indian Bank, BoI, Central Bank, UCO. Relationship-and-stability lenders.

Best rates for govt/PSU/bank staff — often 0.25%–0.75% below card rate
~10%–14% p.a. for good profiles; low, transparent charges
2–7 working days unless pre-approved
Conservative with gig and thin-file borrowers

🏢

Private Banks

HDFC, ICICI, Axis, Kotak, IndusInd, IDFC FIRST, Yes. Speed-and-data lenders.

Pre-approved journeys: 5–15 minutes, same-day money
750+ score + top employer → ~9.99%–11% starting rates
Salary accounts unlock waivers and 24–30× multiples
Watch processing fees, bundled insurance, foreclosure terms

🏪

Small Finance Banks

Built for under-served borrowers: small tickets (₹50K–₹10L), flexible income proof.

Rates between banks and NBFCs — mid-teens to low twenties
The sensible middle path for thin-file borrowers who want a regulated bank

📊

NBFCs

Bajaj Finance, Tata Capital, ABFL, L&T, Hero FinCorp, Poonawalla, Shriram.

Risk-based pricing: approve borderline profiles at higher rates
~10.5% best case to 30%+ for risk; decisions in minutes
Rule: good CIBIL → bank first; weak CIBIL → NBFC, compare KFS line by line

📱

Fintech & Loan Apps

Loan apps, embedded finance and API lending — powered by Account Aggregator data sharing and digital KYC. Fast, but verify who the real lender is.

🏦 RBI RuleEvery legitimate app must lend via a regulated bank/NBFC, disburse straight to your bank account, name the lender, and give you a Key Fact Statement. No named regulated lender = close the app.

❓ Did you know?Two RBI-regulated lenders can lawfully quote the same person rates 6% apart. That's risk-based pricing — and exactly why comparing is worth thousands of rupees.

Compare offers side by side, the honest way

Same amount, same tenure — see the real cost difference.

Open Loan Comparison Tool →

Loan Against Credit Card Limit

💳What it is:

A pre-approved instant loan carved from (or alongside) your card limit, paid to your bank account, repaid in EMIs via your card statement.

⚡ 30-Second Answer

Rates run ~12%–24% p.a. for 6–60 months. Far cheaper than a card cash withdrawal (36%–48%), usually costlier than a bank personal loan. Invitation-only, zero paperwork, instant money. Best for small urgent needs under ₹2 lakh when you already hold a well-managed card.

How it works

Issuer scores you silently

Card vintage, on-time payments and utilisation generate a pre-approved offer in your app.

You accept & pick tenure

Money hits your savings account in minutes. Processing fee ~1%–2.5% + GST.

EMIs ride your card bill

Interest 12%–24% reducing balance, set by your internal risk score. Foreclosure often ~3%.

⚠ Warning"Within-limit" variants block your card limit and spike utilisation — which can dent your credit score. Check which variant you're offered. Track the impact at our credit score guide.

The three-way comparison

Feature	Card loan	Cash withdrawal	Personal loan
Interest (2026)	12–24% p.a.	36–48% from day 1	10–16% (good profile)
Speed	Minutes	Instant at ATM	Hours–days
Amount	Capped by offer	20–40% of limit	Up to ₹50L by income
Verdict	Small urgent needs ✔	Avoid ✘	Larger planned needs ✔

💰 Money-Saving TipNeed over ₹2 lakh, or can wait 48 hours? A regular personal loan is almost always cheaper. And never treat the card's cash-withdrawal button as a loan.

Personal Loan vs Every Alternative

⚖️The principle:

A personal loan is the default option, not automatically the best one. Owning gold, property or FDs can cut your cost by a third.

Option	Rate (2026)	Secured?	Choose when
Personal loan	10–24%	No	No collateral; flexibility needed
Gold loan	9–13%	Gold	Idle gold + short-term need
Loan against property	9–12%	Property	₹10L+, long tenure, can wait weeks
Education loan	8.5–12%	>₹7.5L usually	Study costs — Sec 80E deduction
Vehicle loan	8.75–12%	Vehicle	Buying a vehicle — never a PL
Card EMI / card loan	12–24%	No	Small tickets, existing cardholder
Overdraft against FD	FD +1–2%	FD	You hold FDs — cheapest emergency credit
Cash credit	9–14%	Stock/receivables	Business working capital only
Salary advance	0–18%	No	Employer offers it — always ask first
BNPL / pay-later	0% promo → 24–36%	No	Small tickets only; risky habit
Consumer durable loan	"No-cost" EMI*	Item	*Cost hides in lost discount + fees
Microfinance	20–26%	Group liability	Outside bank coverage
Fintech credit line	14–30%	No	Irregular cash flow — pay only on drawn amount

✅ Expert order of preference1) Employer advance or FD overdraft. 2) Gold loan if you hold gold. 3) Bank PL at 750+ score. 4) NBFC PL if score is weaker. 5) Card loan for small urgent sums. Borrowing to invest: never.

Not sure which route is cheaper for you?

Put two options head-to-head in 30 seconds.

Compare Loans →

The 14 Flavours of Personal Loan

🧩Truth first:

They're all the same product underneath — an unsecured EMI loan — packaged for a purpose. The packaging still changes pricing, tenure and eligibility.

🚨

Emergency

Minutes-to-hours disbursal; slight premium for speed.

🏥

Medical

Some disburse straight to hospitals. Prefer zero-foreclosure variants.

💍

Wedding

Higher tickets. Borrow against a budget, not aspirations.

✈️

Travel

Depreciating "asset" — keep tenure ≤ 24 months.

🪔

Festival

Small seasonal offers, often fee-waived. Fine if borrowing anyway.

📺

Consumer

In-store financing via NBFC tie-ups.

💼

Salary loan

Pre-approved on salary accounts — best pricing most people ever see.

👴

Pension loan

PSB schemes; EMI capped at ⅓–½ of pension; ends by ~76–78.

➕

Top-up

Extra loan after 12+ clean EMIs on an existing PL.

🔄

Balance transfer

Worth it when rate gap > ~2% and > 12 months remain.

🧮

Debt consolidation

One PL closes many cards. Works only with a behaviour change.

🩺

Professional

Doctors/CAs/lawyers: bigger tickets against qualification + practice income.

📲

Digital/instant

App-first, paperless. Verify the RBI-regulated lender. Always.

🪙

Small-ticket

₹5K–₹50K app loans — highest APRs, most mis-selling. Read the KFS twice.

Eligibility: What Lenders Actually Check

🎯The gatekeepers:

Seven levers decide approval, amount and price. Two matter most: your credit score and your FOIR.

⚡ 30-Second Answer

Typical bar: age 21–60 (salaried) or up to 65 (self-employed); net income ₹15,000–₹25,000+; 6–12 months in the current job; score 700+ (750+ for best rates); total EMIs within 40–55% of net income (FOIR).

💵

Income

Floors: ₹15K (PSBs, smaller cities) to ₹25–30K (private banks, metros). Loans cap at ~10–24× monthly salary.

🎂

Age

21 at application; 58–60 at maturity for salaried; 65 for self-employed; ~76–78 for pension loans.

🏷️

Employer category

Govt/PSU → best. Cat-A corporates next. Your bucket moves the rate 0.5%–2%.

📈

Job / business vintage

6–12 months current job; 2–3 years ITRs for business continuity.

⭐

Credit score

<650 mostly declined · 700–749 mid pricing · 750+ unlocks advertised rates. Full playbook: credit score guide.

🏦

Banking behaviour

Regular salary credits, healthy balances, zero bounces in 6–12 months. One recent bounce is a loud negative.

FOIR — the eligibility killer nobody explains

📖 ExampleNet salary ₹80,000. Car EMI ₹12,000. Proposed PL EMI ₹22,000. FOIR = 34,000 ÷ 80,000 = 42.5% → fits a 50% cap ✔. Add a ₹15,000 home-loan EMI → FOIR 61% ✘ → the bank trims your amount or stretches tenure.

💰 Money-Saving TipTo borrow more: close small EMIs first, extend tenure, or add an earning co-applicant. Check your live FOIR on the EMI calculator's FOIR meter.

❓ Did you know?LTV applies only to secured loans. For personal loans, FOIR and the income multiple are the real ceilings — high earners get declined on FOIR every day.

Documents Checklist

🗂️Good news:

For most salaried borrowers, e-KYC plus three salary slips and bank statements (or one Account Aggregator consent) is the whole list.

👔

Salaried

PAN + Aadhaar (e-KYC)
3 months' salary slips
3–6 months' salary account statement / AA consent
Form 16 or employee ID occasionally

🏬

Self-employed

PAN + Aadhaar; business address proof
2–3 years' ITRs + computation; P&L, balance sheet
6–12 months' bank statements
GST / Udyam / trade licence

🩺

Professionals

Degree/registration (Medical Council, ICAI, Bar Council)
1–3 years' ITRs
6 months' statements
Dedicated programmes relax income proof against the qualification

👵

Pensioners & NRIs

Pensioner: PPO + pension account statement (loan from pension-paying bank)
NRI: passport + visa, overseas income proof, NRE/NRO statements, usually an Indian co-applicant — few lenders offer it

Interest Rates — and Every Charge Hiding Around Them

💸The truth:

The interest rate is only part of the cost. The APR in your Key Fact Statement — rate + fees + insurance + GST — is the real number.

⚡ 30-Second Answer

August 2026: banks charge 9.99%–16% p.a. for good profiles; NBFCs and apps 12%–30%+ by risk. Repo rate held at 5.25% today (5 Aug MPC, fourth straight hold) — floating-rate PLs stable, but most PLs are fixed-rate anyway.

Know your rate types

Fixed vs Floating

Fixed (the PL norm): EMI never changes. Floating: linked to repo/MCLR, moves with policy — rarer, mostly PSBs.

Reducing vs Flat

Reducing balance: interest on outstanding only — honest math. Flat rate: "12% flat" ≈ 21–22% reducing. Convert before comparing.

The full charge sheet

Charge	Typical range	Watch out
Processing fee	0.5%–3% + GST (some flat-capped)	Deducted from disbursal — you receive less, APR rises
Loan insurance	0.5%–2%, single premium	Optional. Bundling needs consent; a term plan is often cheaper
GST	18% on all fees	Quietly inflates every fee line (not interest)
Late payment	Reasonable penal charge only	Penal interest is banned — check your KFS reflects this
EMI bounce	₹400–₹750 + GST + bank fee	Also a serious credit-score event
Part-prepayment	Nil–4% of amount	Often free after 12 EMIs; lock-ins of 6–12 EMIs common
Foreclosure	Nil–5% + GST	Nil on floating-rate loans to individuals by regulation

📖 APR example₹5,00,000 at 12% for 36 months with 2% fee (+GST) → APR ≈ 13.7%. A "cheaper" 11.75% loan with a 3.5% fee is actually costlier. Verify any offer in one step on the APR calculator.

Decode any loan offer's true cost

Flat-to-reducing conversion + all-in APR, instantly.

Open APR Calculator →

EMI Math, Amortization & the Prepayment Playbook

🧮The formula:

EMI = P × r × (1+r)ⁿ ÷ [(1+r)ⁿ − 1] — where r is the monthly rate and n the months. Every EMI pays interest first, principal with the rest.

📖 Worked example — ₹5 lakh @ 12% for 5 yearsEMI ≈ ₹11,122. Total interest ≈ ₹1.67 lakh. Month 1: ₹5,000 goes to interest, only ₹6,122 to principal. Month 60: interest is barely ₹110. That front-loading is why early prepayment saves the most.

The tenure trade-off (₹5L @ 12%)

Tenure	EMI	Total interest
2 years	₹23,537	₹64,882
3 years	₹16,607	₹97,858
5 years	₹11,122	₹1,67,333
7 years	₹8,826	₹2,41,382

⚠ Read that againStretching 3 → 7 years cuts the EMI by ₹7,781 — and multiplies your interest 2.5×. Pick the shortest tenure your FOIR comfortably allows.

Prepayment playbook

Prepay early, not late

₹50,000 prepaid in year 1 of the example saves ~₹25–30K interest. The same amount in year 4 saves a fraction.

Choose "reduce tenure"

When prepaying, reducing tenure saves far more than reducing EMI.

Foreclose with windfalls

Bonus or maturity money? If interest-remaining > foreclosure charge — it almost always is early on — close it.

Restructure only in hardship

Tenure extensions and EMI holidays are bureau-reported and raise total interest. A survival tool, not a savings tool.

See your own amortization schedule

EMI, FOIR meter, prepayment impact and PDF export.

Run My Numbers →

Inside the Approval Machine

⚙️Behind "instant decision":

Every lender runs broadly the same seven-step pipeline. Knowing it tells you exactly what to fix before applying.

Bureau pull

Report fetched from CIBIL, Experian, Equifax or CRIF High Mark. Score 300–900: repayment history ~35%, utilisation ~30%, plus age, mix, enquiries.

History scan

DPD strings, settlements, write-offs. An old "settled" flag can outweigh today's decent score.

Income & stability check

Slips or AA-fetched statements verify quantum and pattern — same-date salary credits beat irregular transfers.

FOIR computation

Sets your maximum EMI, hence your amount.

Employer categorisation

Internal lists grade employers by default history. Govt/PSU and Cat-A unlock scheme pricing.

Banking behaviour

Balances, bounces; app lenders add consented digital signals.

Risk model verdict

Approve/decline + amount + risk-based price, all in one scorecard output.

✅ Expert AdviceKeep utilisation under 30%. Zero bounces for 6 months. Space out applications. Apply first where your salary account lives — that lender prices you best. Deep-dive: credit score guide.

Your RBI Rights — The Rules Lenders Must Follow

🛡️Why this section exists:

Most borrowers don't know these rules — and lenders don't advertise them. Every one of them protects your money.

📄

Key Fact Statement

Mandatory before sanction: APR, every charge, recovery policy, grievance contacts. No KFS shown = violation.

📱

Digital Lending Directions

Loans must sit on a regulated entity's books. Disbursal and repayment flow directly between you and the lender — no wallets in between.

🧊

Cooling-off period

Exit a digital loan early by paying principal + proportionate APR — no penalty. Built to undo impulse borrowing.

🚫

Penal interest is banned

Only reasonable penal charges allowed. Penalties can't be added to your rate or compounded.

🕗

Recovery conduct

No odd-hour calls (broadly outside 8 am–7 pm), no abuse or public shaming. Agents must carry ID and authorisation.

🔐

Data privacy

Need-based data only, with consent. Account Aggregator sharing is purpose-bound and time-bound.

The grievance ladder

Lender's grievance officer

Named in your KFS. 30 days to resolve.

RBI Integrated Ombudsman (RB-IOS)

Free, online at cms.rbi.org.in. Binding awards.

Consumer forum / courts

The final escalation if all else fails.

30 Rejection Reasons — and the Fix for Each

🔧Good news:

Almost every rejection reason has a repair path measured in months, not years.

📉

Credit-report reasons

Score below cutoff → 6–12 clean months
Recent EMI delays → wait 6 clean months
"Settled"/write-off flags → pay, get No-Dues, update to "closed"
Too many enquiries → pause 3–6 months
High card utilisation → drop below 30% first
No history at all → secured card for 6–9 months
Guarantor on a stressed loan → resolve it
Report errors → free bureau dispute (~30 days)

💵

Income & FOIR reasons

Income below floor → PSB/SFB or co-applicant
FOIR too high → close small EMIs, trim ask
Cash income → route via bank 6–12 months
Irregular credits → AA cash-flow lenders
Recent job change → wait out 6-month vintage
On probation → wait for confirmation
Negative-list employer → your salary-account bank

🪪

Profile & process reasons

Age outside band → in-band co-applicant
Unserviceable pincode → national lenders
KYC mismatches → fix records first
Statement bounces → 6 clean months
Job hopping → show 2+ yrs cumulative
Purpose "trading" → barred; state real use
Docs incomplete → checklist above
Same-lender stress → regularise it
Fraud flag → demand written reason, dispute
Multiple loans running → consolidate
Declining turnover → apply after better ITR
Business < 2 yrs → SFB/NBFC 1-yr programmes
Address instability → utility/rent trail
Over-asking → align to ~10–20× income
Signature mismatch → update bank records

Loan Scams: The Complete Defence Manual

🚨The golden rule:

A genuine lender never asks for money before giving money. Every "pay a fee to unlock your approved loan" message is a scam. No exceptions.

📱

Fake loan apps

Clones of real NBFC names harvesting contacts and photos, then extorting. Install only from the lender's official site; verify RBI registration.

💳

Advance-fee fraud

"Approval letters" demanding insurance/GST/verification charges to a personal UPI. Real fees are deducted from disbursal.

🎣

Phishing & vishing

Fake bank links and callers wanting OTPs or screen-share apps. Banks never ask for OTPs. Never install "verification" apps.

🕵️

Fake agents

Unauthorised "DSAs" collecting documents and fees. Verify every agent via official customer care first.

🪪

Identity theft

Leaked PAN + Aadhaar used for loans in your name. Check your bureau report quarterly — free annual reports exist. Dispute unknown accounts instantly.

🤖

Deepfake scams

Cloned "bank manager" voices, fabricated video-KYC calls. Independently call the official number before acting on anything.

🚨 Already scammed?Report at cybercrime.gov.in and call 1930 immediately — speed decides whether money is recoverable.

The 8-point safety checklist

✅ Lender is RBI-regulated (verify on RBI site)
✅ KFS received before signing
✅ Disbursal to your own bank account
✅ Zero upfront payments

✅ App permissions minimal
✅ EMI mandate via NACH/e-mandate only
✅ Unresolved in 30 days → RB-IOS
✅ Fraud → 1930 + cybercrime.gov.in

Taxation: When Interest Is (and Isn't) Deductible

🧾Baseline:

No blanket deduction exists for personal loan interest. But the end use of the money can create one.

🏢

Business / profession use

Interest is deductible as a business expense. Keep an audit trail proving the money entered the business.

🏠

House purchase / renovation

Interest can qualify under Section 24(b) within limits (₹2L self-occupied, old regime), with documentation linking loan to property spend.

📈

Income-generating asset

Interest may be capitalised into the asset's cost of acquisition, cutting capital gains on sale. Structure via a CA.

🛍️

Personal consumption

Weddings, travel, gadgets — no deduction. Full stop.

❓ Did you know?The loan amount you receive is not income and is never taxed. But waived principal in a settlement can have tax implications — take advice before settling.

Nine Real-World Borrower Stories

👥Why stories:

The right move differs by profile. Find yourself below.

🏛️

Govt employee — Rajesh, 38

₹72K net. His salary-account PSB's govt scheme: ~10.5%, token fee. His employer category is worth ~2% — wasting it on an 18% app loan would be criminal.

💻

IT employee — Sneha, 29

₹95K. Pre-approved 11.25% vs rival's 10.75% + higher fees. APR comparison: pre-approved wins. Compare APR, never headline rate.

🩺

Doctor — Dr. Verma, 41

₹15L professional loan at ~11.5% against MCI registration + 2 ITRs, vs 14% standard. The hack most professionals never use.

📒

CA — Amit, 33

Lumpy income. A fintech credit line (draw in busy season, repay after fees land) beats a fixed EMI despite higher rates — interest only on drawn days.

🏪

Shop owner — Fatima, 45

Bank declines on thin ITR; SFB approves ₹3L at 18% off her cash flows. Plan: 12 clean months → balance-transfer to ~13%.

👩‍🏫

Teacher — Meera, 35

₹2L medical need; holds a ₹3L FD. FD overdraft at ~8.5% beats every personal loan. The cheapest loan is against your own money.

👨‍💻

Engineer — Karan, 27

₹3.6L of 40% card debt → 13% PL over 3 years. Interest outgo halves. Then two cards go in a drawer — consolidation needs the behaviour change.

🎓

Student — Priya, 22

MBA admit. Education loan at 9.5% + Sec 80E + moratorium beats a 12% PL on every axis. PL is the last resort for study costs.

👴

Pensioner — Shri Sharma, 66

₹42K pension. PSB pension scheme: ₹4L, EMI ≤ ⅓ of pension, closes by 76. Apps quoted 24% — schemes exist so he never needs them.

Should You Take a Personal Loan?

✔ YES — if

The need is genuine: medical, consolidation, essential repair
New EMI keeps FOIR under ~45%
Your score is 700+, so pricing is fair
You compared 2–3 APRs, not one headline rate
You have no cheaper option (FD-OD, gold, employer advance)
Tenure is the shortest you can comfortably afford

✘ NO — if

It funds lifestyle, gadgets or a bigger wedding than the budget
It's for stock/crypto speculation — barred and dangerous
EMIs already eat 50%+ of income
You'd borrow from an app that names no RBI-regulated lender
You're borrowing to pay another loan's EMI (debt spiral)
A secured option is available at two-thirds the cost

30 Myths, 30 Facts

🔍Format:

Myth first, fact after. Every one of these costs real borrowers real money.

Checking my score lowers it — Self-checks are soft pulls. Zero impact.
The advertised rate is my rate — "Starting at" needs 750+ and a top employer.
No CIBIL = good CIBIL — Thin file is itself a risk; many decline it.
Prepayment always has penalties — Nil on floating-rate; often free after 12 EMIs.
High income guarantees approval — FOIR and DPD strings override income.
Loan apps are unregulated — Legit ones lend via RBI entities; the rest are illegal.
Settling closes the matter — "Settled" is a negative flag for years.
One missed EMI is fine — Even 1–29 DPD is reported and dents the score.
Longer tenure = cheaper — Lower EMI, far more total interest.
Banks can charge any penal interest — Banned; only reasonable charges.
Loan insurance is compulsory — Optional; bundling needs consent.
Apply everywhere at once — Enquiry pile-ups look credit-hungry.
Guaranteeing costs nothing — Their default is your liability and FOIR load.
A PL can't hurt home-loan plans — Its EMI directly cuts eligibility.
NBFC loans hurt scores more — Bureaus score behaviour, not lender type.

Zero fee = cheapest — Fees hide in rates; compare APR only.
No-cost EMI is free — Cost hides in lost discounts + fees + GST.
Agents can call anytime — Conduct norms ban odd hours and abuse.
Once rejected, always rejected — Fix the reason; reapply in 3–6 months.
Closing old cards helps — Usually hurts: shorter history, higher utilisation.
The bank keeps documents forever — Return after closure is your right.
Loan money is taxable — Borrowed money is never income.
Co-applicants only help — They're equally liable; delays hit both reports.
Digital loans can't be exited — Cooling-off lets you leave early, penalty-free.
Restructuring is a free pause — Bureau-reported; interest grows.
₹50K salary minimum — Floors start around ₹15–25K.
Rates are non-negotiable — Competing offers move rates and fees.
Repo cuts instantly cut my EMI — Only floating loans reprice, with lag.
Bureau errors can't be fixed — Free disputes; ~30-day corrections.
My own bank needs no comparison — One rival quote improves their offer.

Arthzo Tools for This Decision

🧮EMI CalculatorEMI, FOIR meter, amortization, PDF 🔎APR CalculatorTrue cost with fees + GST ⚖️Loan ComparisonTwo offers, head to head ⭐Credit Score GuideBuild, repair, protect CIBIL

Frequently Asked Questions

What credit score do I need for a personal loan?

Most banks want 700+; the best advertised rates need 750+. At 650–700, approval comes mainly from NBFCs at higher pricing. Below 650, build 6–12 clean months first — on-time payments, utilisation under 30%, errors disputed. Start with the credit score guide.

What is the lowest interest rate right now?

As of August 2026, large banks start around 9.99%–11% p.a. for pre-approved, high-score salaried customers; PSBs near 10%. Most decent profiles land at 11%–16%; NBFC/app pricing runs 12%–30%+. Verify on the lender's site the day you apply.

How much loan can I get on my salary?

Two caps: an income multiple (10–24× net monthly salary) and FOIR (EMIs within ~40–55% of net income). On ₹60,000 with no other EMIs, roughly ₹6–12 lakh by tenure and lender. Test your ceiling on the EMI calculator.

Can I get a loan without a salary slip?

Yes — via bank-statement/Account Aggregator underwriting, NBFC/SFB self-employed programmes using ITRs, or pre-approved offers where your bank already sees salary credits. "No documents at all" offers from unknown apps are a scam signal, not a product.

Can I get a loan without CIBIL history?

Harder but possible: your salary-account bank, SFBs, and cash-flow-underwriting fintechs lend to thin files at higher rates. Faster path: a secured credit card against a small FD for 6–9 months, then apply normally.

Personal loan or gold loan — which is better?

Own gold with a short-to-medium need? Gold loan usually wins: 9–13%, same-day, minimal score dependence. A PL wins without pledging, for longer tenures, or for amounts beyond your gold. Compare both ways on the comparison tool.

Does prepaying hurt my credit score?

No — early closure reports as "closed," neutral to positive. The only math is financial: foreclosure charge vs interest saved. Early in the tenure, prepayment nearly always saves more than it costs.

What is FOIR and why did it cut my amount?

FOIR is existing EMIs + proposed EMI as a share of net income, capped at ~40–55%. Breach it and the system trims your amount or stretches tenure. Quickest fix: close small EMIs before applying.

What is a Key Fact Statement?

An RBI-mandated pre-sanction sheet: APR, every charge, repayment schedule, penal policy, grievance contacts. It makes offers comparable and hidden fees impossible. No KFS shown? Don't sign — and treat it as a red flag.

Are instant loan apps safe?

Only when the app names an RBI-regulated lender, disburses to your own account, shows a KFS, and asks minimal permissions. Upfront fees, contact-list demands or wallet disbursal = uninstall.

Can I have two personal loans at once?

Yes — no legal limit, only FOIR. If combined EMIs fit the cap with clean history, it's approvable. But two PLs usually signals: consolidate into one loan at your best rate instead.

What happens if I miss one EMI?

Three hits: a bounce charge (₹400–₹750 + GST) plus your bank's fee, a penal charge on the overdue, and a bureau entry even at 1–29 days late. Pay immediately, then keep 6+ clean months.

Can I transfer my loan to another bank?

Yes — balance transfer. Worth it when the rate gap exceeds ~2%, 12+ months remain, and savings beat the new processing fee plus any foreclosure charge. Always compare post-fee APR on the APR calculator.

Is personal loan interest tax deductible?

Not by default. End use creates deductions: business use (business expense), house purchase/renovation (Section 24(b) with documentation), or capital-asset acquisition (added to cost). Consumption use earns nothing. Keep the paper trail.

Will the RBI repo rate change my EMI?

Only on floating-rate loans (rare for PLs). The repo is 5.25% as of the 5 August 2026 MPC — the fourth straight hold — so floating EMIs have been stable. Fixed-rate borrowers feel rate cycles only on new loans or transfers.

How fast can money arrive?

Pre-approved: minutes to hours. Fresh digital applications with e-KYC and AA statements: same day to 48 hours. Branch-processed PSB loans: 2–7 working days. The fastest money is rarely the cheapest — match urgency to need.

What is the maximum tenure?

Commonly 12–60 months; some lenders stretch to 72–84 for select profiles. On ₹5L at 12%, going 3 → 7 years adds ~₹1.44 lakh interest. Shortest comfortable tenure wins.

Can pensioners get personal loans?

Yes — pension loan schemes at the pension-paying bank (all large PSBs). Typically 10–18× monthly pension, EMI capped at ⅓–½ of pension, closure by ~76–78. Far safer and cheaper than any app loan aimed at seniors.

What is the cooling-off period?

A regulatory exit window on digital loans: repay principal + proportionate APR-based charges and walk away penalty-free. It exists to undo impulse borrowing — if you regret an app loan within days, use it.

Should I take the bundled insurance?

Optional. Credit-linked cover repays the loan if the borrower dies — useful if family would carry the debt. But single-premium bundles often cost more than a separate term plan. Compare; never accept it as a "condition."

Glossary — 60 Lending Terms, Plain Language

APR — all-in yearly cost: interest + fees. The comparison number.

Amortization — month-wise split of each EMI into interest and principal.

Balance transfer — moving your outstanding to a cheaper lender.

Bounce charge — fee when an EMI debit fails.

Bureau — CIBIL, Experian, Equifax, CRIF High Mark: compilers of credit reports.

CIBIL score — TransUnion CIBIL's 300–900 score; India's most used.

Co-applicant — equally liable second borrower who boosts eligibility.

Cooling-off — penalty-free early exit window on digital loans.

Credit line — sanctioned limit; interest only on drawn amount.

Credit mix — variety of secured/unsecured accounts; mild score plus.

Credit utilisation — card balances ÷ limits; keep under 30%.

DPD — days past due, reported in buckets (0, 1–29, 30–59…).

Debt consolidation — one cheaper loan replacing several costly ones.

Disbursal — the moment money hits your account.

DSA — a lender's outsourced sales agent.

DTI — debt-to-income ratio; FOIR's cousin.

E-mandate / NACH — the auto-debit that pulls your EMI.

EMI — fixed monthly instalment of principal + interest.

End use — what the money is for; speculation is barred.

Enquiry — hard (application pull, small dent) vs soft (self-check, none).

FOIR — EMIs ÷ net income; the eligibility gatekeeper.

Fixed rate — locked for tenure; EMI never changes.

Flat rate — interest on original principal; ≈ double the reducing equivalent.

Floating rate — benchmark-linked; moves with policy.

Foreclosure — closing the loan fully before tenure ends.

Grievance officer — lender's complaint authority; first escalation.

Guarantor — legally repays if the borrower defaults.

Hypothecation — pledging a movable asset while using it.

Pre-approved loan — offer pre-computed from your relationship.

KFS — mandatory pre-sanction disclosure of APR and charges.

KYC — identity/address verification (PAN, Aadhaar, video-KYC).

Lock-in — initial months when prepayment isn't allowed.

MCLR — bank benchmark for floating loans.

Moratorium — sanctioned repayment pause; interest usually accrues.

NBFC — RBI-registered lender that isn't a bank.

No-Dues Certificate — written proof of full repayment; always collect.

NPA — loan overdue 90+ days; recovery begins.

Ombudsman (RB-IOS) — RBI's free dispute scheme; binding awards.

Origination — sourcing, assessing and sanctioning a loan.

Part-payment — lump sum against principal mid-loan.

Penal charge — flat default fee; penal interest is banned.

Pre-EMI — interest-only payments before full EMIs (rare in PLs).

Principal — the borrowed amount itself.

Processing fee — upfront charge, usually cut from disbursal.

Reducing balance — interest on outstanding only; the fair method.

Refinance — replacing a loan with a better-priced one.

Repo rate — RBI policy rate (5.25%, Aug 2026); floating anchor.

Restructuring — modified terms for stressed borrowers; bureau-reported.

Risk-based pricing — each borrower priced to assessed risk.

Sanction letter — formal approval: amount, rate, tenure, conditions.

Settlement — closing by paying less than owed; negative flag.

Soft approval — in-principle eligibility before verification.

Tenure — repayment period in months.

Top-up loan — extra borrowing on a well-repaid loan.

TAT — turnaround time, application to disbursal.

Underwriting — the lender's assessment of you.

Unsecured loan — no collateral; priced for the lender's risk.

Utilisation — see credit utilisation.

Write-off — accounting removal of a bad loan; the stain remains.

Account Aggregator — consent-based digital sharing of bank data.

Plan before you borrow

EMI, FOIR, APR and comparison — all four tools, free.

Start with EMI →

Editorial standards & disclaimer: Educational content, not financial advice or lender solicitation. Arthzo does not rank or recommend lenders; institutions appear only as illustrative examples. Rates, charges, eligibility norms and RBI regulations change — figures reflect market conditions as of 5 August 2026, verified against lender disclosures and RBI publications. Confirm current terms with your lender and read the Key Fact Statement before signing. Grievances: lender's grievance officer first, then the RBI Integrated Ombudsman (cms.rbi.org.in).