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Personal Loan

Whenever you’re short of cash, you can go for a personal loan to meet your short term financial needs. These loans have been particularly designed to fulfill the short term needs of the customers.

What is a personal loan?

A personal loan is a type of consumer credit which is used for financing various personal needs. Normally, it is an unsecured loan. Banks offer these loans with easy repayment terms. Personal loans are also known as signature loans.

We face financial problems often in our life which leads us to trouble in certain occasions; we need to go for financial assistance to overcome our problems. Personal loans are offered for different purposes and the most interesting feature of these loans is that these loans are available with different types of credit situations. Whenever you face a credit crunch, a personal loan can be the ideal solution for you.

The terms and conditions and amount of personal loans can differ from one lender to another. When you apply for a personal loan, you need to pay off the loan in monthly installments. The monthly installments comprise both principal and interest and the rate of interest varies from one loan product to another. The rate of interest is dependent on a range of factors such as the loan amount, repayment term, your creditworthiness and other terms and conditions of the lender. If you go for an extensive repayment term, the interest rate will be high since the lender will have to wait a long period of time to get back their whole amount and they have to compensate for that. In contrast, if the repayment term is short, then the lender will be willing to offer you a cheaper rate because they are getting back their money quickly.

Why a personal loan is an unsecured loan?

A personal loan is known to be an unsecured loan because it is not backed by any security or collateral. They are offered based on the creditworthiness or trustworthiness of the borrower. If the borrower is deemed to have repayment capacity, then only a lender becomes ready to offer a loan to him. The income of the borrower is one of the important factors that are taken into consideration. Personal loans in India comprise consumer durable loans, festival loans, marriage loans, pension loans and personal computer loans.

Types of personal loans

Personal loans can be broadly categorized into fixed rate and variable rate personal loans. A fixed rate personal loan comes with an interest rate which remains constant throughout the repayment tenure of the loan. On the other hand, a variable rate personal loan is subject to market rate changes and the interest rate of this kind of a loan can change from time to time.

Advantages of personal loans

Given below are the key advantages that personal loans offer to the customers:

  1. No security/guarantee is needed
  2. Flexible repayment terms
  3. Quick loan approval
  4. Minimum paperwork
  5. Affordable interest rates

Personal loan providers in India

Given below are the names of the banks and financial institutions in India that offer personal loans to customers with different terms and conditions:

  1. ICICI Bank
  2. Bank of Baroda
  3. HSBC
  4. HDFC Bank
  5. State Bank of India
  6. Andhra Bank
  7. Indian Overseas Bank
  8. Federal Bank
  9. United Bank of India
  10. UCO Bank
  11. IDBI Bank
  12. Axis Bank
  13. Standard Chartered Bank

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