What Is a Personal Loan?
A Personal Loan is an unsecured loan offered by banks, NBFCs, and digital lenders without requiring any collateral. In 2026, personal loans have become one of the most popular borrowing options due to faster approvals, digital KYC, and flexible repayment options.
Personal loans can be used for almost any financial need, including medical emergencies, weddings, travel expenses, education costs, home renovation, or debt consolidation. Since no asset is pledged, approval is mainly based on income stability, credit score, and repayment history.
Key Features of Personal Loans in 2026
- No collateral or security required
- Fully online application process
- Loan amounts ranging from ₹10,000 to ₹40 lakh
- Flexible tenure between 12 and 72 months
- Quick approval and fast disbursal
- Available for salaried and self-employed individuals
Personal Loan Interest Rates in 2026
Personal loan interest rates vary based on credit score, income profile, employer category, and lender policy. Borrowers with strong credit profiles receive lower rates.
| Lender Type |
Interest Rate Range (p.a.) |
Processing Fee |
Tenure |
| Public Sector Banks |
10.50% – 14.50% |
Up to 1% |
12 – 72 months |
| Private Banks |
10.75% – 22% |
1% – 2.5% |
12 – 60 months |
| NBFCs |
11.50% – 26% |
Up to 3% |
12 – 60 months |
| Digital Loan Apps |
12% – 30% |
App-based |
3 – 36 months |
Personal Loan Eligibility Criteria
- Age between 21 and 60 years
- Minimum monthly income of ₹15,000
- Stable employment or business continuity
- Credit score of 700 or above (preferred)
- Indian resident with valid documents
Documents Required for Personal Loan
- Identity proof (PAN Card mandatory)
- Address proof (Aadhaar, utility bill, passport)
- Income proof (salary slips or ITR)
- Bank statement of last 6 months
- Employment or business proof
Personal Loan EMI Example
If you take a personal loan of ₹5,00,000 for 5 years at an interest rate of 11.5%:
- Monthly EMI: ₹11,012 (approx.)
- Total interest payable: ₹1,60,720
- Total repayment amount: ₹6,60,720
Always calculate EMI in advance to ensure it fits your monthly budget.
Advantages and Disadvantages of Personal Loans
Advantages
- Quick access to funds
- No restriction on end use
- No collateral risk
- Improves credit score if repaid on time
Disadvantages
- Higher interest compared to secured loans
- Strict eligibility for low-credit borrowers
- Penalty charges for late payments
How to Choose the Best Personal Loan in 2026
- Compare interest rates from multiple lenders
- Check total cost including processing fees
- Select the shortest affordable tenure
- Review foreclosure and prepayment charges
- Borrow only the required amount
Frequently Asked Questions (FAQs)
Is a personal loan taxable?
No, the loan amount is not taxable. However, interest may be tax-deductible only in specific cases such as business usage.
Can I get a personal loan with a low credit score?
Yes, but interest rates may be higher and approval chances lower.
Can I prepay or foreclose my personal loan?
Most lenders allow prepayment after a lock-in period, sometimes with additional charges.
How fast is personal loan disbursal?
In 2026, many lenders offer same-day or next-day disbursal after approval.
What happens if I miss an EMI?
Missing EMIs can result in penalties and negatively impact your credit score.
Author: All Finance Store Research Team
Expertise: Loans, Banking, Credit & Personal Finance
Updated: January 2026
Disclaimer: This content is for informational purposes only. Interest rates, eligibility, and loan terms may vary by lender and borrower profile. Always verify details from official bank or lender websites before applying.