Personal Loans in India: What You Need to Know Before You Borrow

When you need cash fast—whether for medical bills, a wedding, or fixing your car—a personal loan, a fixed-sum, unsecured loan offered by banks and fintech lenders in India, typically repaid in monthly installments over 1 to 5 years. Also known as unsecured loan, it doesn’t require collateral but relies heavily on your credit history and income. Unlike home or car loans, there’s no asset backing it, so lenders use your credit score, a three-digit number from 300 to 900 that shows how reliably you’ve paid debts in the past to decide if you qualify and at what rate. A score below 700 can mean higher interest or outright rejection, while a score above 750 often gets you the best deals.

Personal loans in India aren’t one-size-fits-all. Lenders like HDFC, ICICI, Axis, and digital platforms like Bajaj Finserv or MoneyTap each have different rules. Some lend up to ₹40 lakh, others cap at ₹15 lakh. Repayment terms range from 12 to 60 months. The interest rate, the cost of borrowing, usually between 10.5% and 24% per year in India, depending on your profile and lender can make a huge difference. A 2% difference on a ₹10 lakh loan over 5 years means paying over ₹50,000 more. Always check the total cost, not just the monthly EMI. Hidden fees—processing charges, prepayment penalties, insurance add-ons—can inflate your bill. And remember, applying to too many lenders at once can hurt your credit score further.

Many people use personal loans to consolidate high-interest credit card debt. That’s smart—if you lock in a lower rate and stick to a repayment plan. But using a personal loan for non-essential spending? That’s a trap. The average Indian borrower takes out a personal loan for emergencies, not vacations. If you’re unsure whether you can repay it, don’t take it. Your future self will thank you.

What you’ll find below are real, practical guides from people who’ve been there—how to get approved with a low credit score, which lenders offer the fastest disbursal, how to avoid loan scams, and why some people end up paying double what they borrowed. No fluff. No sales pitches. Just what works in India today.