Queries before Applying for the Loan

Q1. What is the minimum credit score to get a personal loan?

It depends on the eligibility criteria set by the lender. Most lenders do not specify a minimum credit score for a personal loan. Some lenders might lend to applicants with low credit score (less than 750) but the interest rate applicable is usually higher in such cases.

Q2. What is the minimum salary required to get a personal loan?

The minimum monthly salary required to avail a personal loan varies from lender to lender. However, for large lenders like Banks, the minimum income eligibility is Rs. 25,000 per month and above. Certain fintech lenders may provide loans to customers with lower incomes

Q3. What is the best credit score or CIBIL score to get a personal loan?

Generally, a credit score of 750 and above is considered good. You can improve your credit score by paying credit card bills on time, decreasing your outstanding debt and maintaining old credit card accounts in good standing.

Q4. What role do credit history and score play in getting a personal loan?

Your credit history and credit score reflect your handling of credit in the past. Hence, they not only affect the chances of being approved for a personal loan but often impact the rate of interest too. The higher the credit score, the greater are the chances of approval and receiving a lower preferential interest rate.

Q5. Can a student apply for a personal loan?

Generally, students are not eligible for a personal loan as a stable source of income and a good credit score are necessary prerequisites. However, if you have a stable monthly income and fulfil the lender’s other eligibility criteria, you may easily avail of a personal loan.

Q6. Can I get a personal loan if I have a home loan?

Yes, you can apply for a personal loan even if you already have a home loan. However, the chances of getting the loan approved will depend on your repayment capacity, which in turn depends on your monthly income and credit score.

Q7. Can self-employed individuals apply for a personal loan in India?

Yes, self-employed individuals like doctors, chartered accountants, etc. can apply for a personal loan in India provided they meet the eligibility criteria. Moreover, some banks and NBFCs provide special personal loan offers for doctors, chartered accountants and.

Q8. Should I always choose the lowest possible EMI before accepting a personal loan offer?

Low EMI offers are a result of either low interest rate or long repayment tenure and sometimes both. Thus before selecting a personal loan offer, you should consider both interest rate and loan tenure. It is possible that the lender offering the lowest EMI is also offering the longest tenure, which in turn may increase your total interest payout. 

On the other hand, a personal loan offer with a relatively higher EMI but a shorter tenure may actually prove more economical in terms of total interest paid. Thus, you should always calculate your total interest payout and also take into account your repayment capacity before selecting a specific loan offer.

Q9. Can I get a personal loan without a salary slip?

No, you cann’t get a personal loan without providing salary slips. You can submit your bank account statement/ a copy of Form 16/ employee certificate from the employer along with latest 3 months salary slips as proof of income to fulfill the eligibility criteria. However, it is always recommended to confirm the list of required documents with the lender as it may vary from one bank to another.

Q10. Can I use a personal loan for marriage purposes?

Yes, you can avail a personal loan to meet marriage related expenditure as personal loans come with flexible end-use. Some lenders even provide personal loans specifically named as wedding/ marriage loans.

Q11. Can I take a personal loan from two different banks at the same time?

Yes, you may avail a personal loan from two different lenders at the same time. However, it is not advised to do so as it will not only affect your credit score but also increase your EMI payout. It will be better to take one personal loan of a larger amount than two personal loans of smaller amounts. This way you can pay lower EMIs for a longer tenure and also improve your credit score. Moreover, you will save upon processing fees and other loan-related charges.

Q12. Which is better, a personal loan or a credit card?

Both personal loans and credit cards are means of borrowing money. Which one is better depends on the purpose behind borrowing money. If you need to borrow a fixed amount for a finite period of time, go for a personal loan. On the other hand, if you want revolving credit for a lifetime, go for a credit card.

Q13. Is it good to pay off credit card debt with a personal loan?

Yes, it is often a good idea to pay credit card dues with the help of a personal loan as:

• It allows you to consolidate the debt associated with multiple credit cards, which in turn, will make the repayment process easier.
• The rate of interest applicable on a personal loan is lower than that applicable to the outstanding balance on a credit card. Thus, taking a personal loan also helps you save on the overall interest cost.

Q14. What is the difference between reducing balance rate and flat interest rate?

In case of the reducing balance method, interest is applicable on the outstanding loan balance i.e. on the balance that remains outstanding after getting reduced by the principal amount repaid. As a result, the interest cost keeps decreasing over the loan tenure. On the other hand, a flat interest rate is charged on the entire loan balance throughout the loan term. Thus, the interest payable does not decrease over the loan tenure.

Q15. What is a personal loan balance transfer?

Personal loan balance transfer is the process by which the principal outstanding of an existing loan is transferred to a new lender offering a lower interest rate. This decreases the overall interest payout over the loan tenure.