What is a Personal Loan? Complete Beginner's Guide
This is a very common question among salaried professionals: what is a personal loan and how to get one. In this guide, we will understand its meaning, process, and other related details for the personal loan application process.
A personal loan is generally an unsecured form of credit that does not require borrowers to provide an asset as collateral. A personal loan can be availed for all kinds of personal financial needs, such as medical expenses, wedding expenses, travel needs, or any form of financial emergency. Once you're clear about personal loans and how it works, you can make the right decisions.
How Does an Online Personal Loan Work?
To understand how online personal loans work, you need to look at the relationship between the borrower, digital lending platform, and lending partners.
Through the digital lending app, the borrower applies for a loan, submits the required documents, completes identity verification, and receives a loan offer. The RBI-registered lenders evaluate the credit profile and documentation. After successful verification, the sanctioned loan amount is credited to the provided bank account.
Key Features of an Online Personal Loan
| Feature | Detail |
| Loan Type | Unsecured |
| Minimum Loan Amount | Rs5,000 |
| Maximum Loan Amount | Rs1,50,000 |
| Repayment Tenure | 45 days |
| Interest Rate | Up to 1% per day |
| Processing Fee | Up to 10% |
| Foreclosure Charges | Nil, no charges for closing your loan early |
| Application Process | 100% digital and paperless |
| Identity Verification | Aadhaar-based eKYC (mandatory) |
| Disbursal Method | Directly credited to the borrower’s bank account |
Step-by-Step Online Personal Loan Application Process
The online personal loan application through a digital lending platform remains completely paperless and follows a digital sequence. You need to register on the lending app and complete the authentication with mobile-based OTP verification.
Submit your employment type, monthly income, bank statements, Aadhaar card, PAN card, address proof, salary slip, and other documents required by the lending partners. Once the lender reviews them and shares the loan offer, you need to sign and complete the verification.
After the entire loan process completes, you'll get the loan disbursal directly to your bank account.
What Every First-Time Borrower Should Know About Responsible Borrowing
For anyone applying for a loan for the first time, it's important to know the personal loan meaning and responsible borrowing. First, you need to ensure that you can manage your EMI easily with your monthly income.
Next, review the loan agreement from the lending partners before even completing the eSign verification. Confirm the loan amount, interest rate, and total repayment. Always remember that the final loan disbursal amount remains without processing fee and GST. At the same time, the final repayment will be the complete sanctioned amount along with interest.
Why Apply Digital Personal Loan with Kreditbuddha?
An online personal loan through Kreditbuddha is one of the best decisions to get immediate funds digitally. Our digital lending platform offers loans from RBI-registered lending partners for salaried individuals. You can submit your personal loan application through the most transparent and paperless process.
Kreditbuddha doesn't offer direct loans to individuals but acts as a digital medium to apply an unsecured personal loan from available lending partners. Every personal loan application gets processed in a defined, regulated, policy-oriented, and transparent manner.
The digital lending platform discloses all applicable terms, charges, and repayment requirements even before the borrower signs. Further, you can also track your loan application in real time through the Kreditbuddha app directly or reach out to customer support team too.
Visit Kreditbuddha and apply to know more about how personal loans work and send your application.
Read More :-
Personal Loan for Low CIBIL Score: What Are Your Options?
Paperless Personal Loans: How the Digital Loan Process Works
Top Reasons Why Personal Loan Applications Get Rejected
Frequently Asked Questions
What is an online personal loan?
An online personal loan allows borrowers to get immediate funds without any collateral. Loan eligibility is decided based on income, credit profile, and documentation.
How does a personal loan application work?
Once you submit the personal loan application through the digital lending platform, it goes to the RBI-registered lending partners through a fully digital process. The borrower needs to complete eKYC verification, eSign, and other paperless processes to receive and accept the loan offer.
Who is eligible for a personal loan?
Any salaried professionals (between the ages of 21 and 56 years) with a minimum monthly income of INR 25,000. Further, a CIBIL score of 500 and above is also important for loan eligibility.
What is the interest rate on a personal loan?
The interest rate on a digital personal loan is decided by the lenders after reviewing the borrower's documents, income proof, CIBIL score, and more factors.
What documents are needed for a personal loan application?
You need to share your Aadhaar card, PAN card, bank statement for the last three to six months, salary slips for the last three months, residence address proof, and a photograph where required.
