Personal Loan for Salaried & Self Employed

A Personal Loan is an unsecured loan that can be availed without the need of pledging any collateral security. A personal loan provides some special offers and does not have any restrictions for end users so as to enable them to finance their immediate expenses easily, be it medical emergencies, wedding expenses, or trips.

• Affordable ROI: 10.49% onwards.
• Loan amounts: Up to INR 40 lakhs.
• Flexible tenure: Up to 5 years.
• Processing Fees – Ranges from 0.5% to 4% of the loan amount

Personal Loan Key Features & Benefits:

• No end-usage restriction
• Minimal documentation
• Quick loan disbursals
• Loan amounts of up to INR 40 lakhs, which can be exceeded at the lender’s discretion
• Repayment tenure of up to 5 years, some banks/ NBFCs offer longer tenures as well
• Applicants with excellent credit profiles may also qualify for pre-approved/pre-qualified personal loans with instant disbursal

Personal Loan Eligibility:

• Age:18 – 60 years
• Income:Minimum INR 15000/ month for salaried applicants and at least INR 5 lakh p.a. in case of self-employed customers
• Credit Score:Preferably 750 & above (A higher Credit score increases the chances of a loan getting approved at lower interest rates) 
• Employment Stability: At least 2 years of experience with a minimum of 1 year in the same job in case of salaried employees
• Business Continuity: At least 2 years of business continuity in case of self-employed
• Type of Employment: Salaried employees working with reputed organizations, Private & Public Ltd Companies, MNCs, Govt. organizations, PSUs, and large enterprises.

As there is a higher income certainty in Personal Loan for Salaried Applicants, banks and NBFCs also prefer lending personal loans to them. Above that, govt. and PSU employees are most preferred due to their higher job security followed by private sector employees. Many lenders also offer preferential interest rates to those working with government/PSUs and top corporates/MNCs.

While most banks do not disclose the interest rates that are offered, below mentioned is the comparison of the interest rates in the case of Personal Loan for Self Employed:

Comparison of Personal Loans in the case of Self-Employed Individuals:

1. Comparison of Personal Loans in the case of Salaried Individuals:

Now let us go through the eligibility criteria for both cases:

In the case of Self-Employed Individuals:

• Applicant must be a self-employed professional/ non-professional.
• Applicant must be at least 21 years old.
• The minimum credit score should be 750 or above.
• Annual income criteria should match the eligibility criteria set by the bank.
• Business shall be in operation for at least 2 years.

1. In the case of Salaried Individuals:

• Applicant must be 21 years of age at the time of loan application and 60 years at the time of maturity of the loan.
• Applicant must be an Indian resident.
• Employees working in a Private Limited company or PSU must have at least 1 year of work experience.
• The applicant shall have a monthly income of at least INR 15000.
• The credit score must be 750 or above.

Documents Required for Loan Application:

In the case of Self-Employed Individuals:

• Duly filled application form along with passport-sized photographs.
• ID Proof: Aadhar Card, PAN Card, Voter ID Card, Driving License, Passport, etc.
• Address Proof: Ration Card,Utility Bills, PAN Card, Aadhar Card, Voter ID, etc. 
• Business Proof: Certificate of Incorporation, Certificate of Registration, Proof of Business Existence
• Income Proof: ITR of last 2 years, Certified P & L Statement

1. In the case of Salaried Individuals:

• ID Proof
• PAN Card
• Signature Proof
• Address Proof
• Employee ID Card
• Salary Slips for the last 3 months
• Bank statements for the last 6 months
• Latest ITR/ Form 16.

Features of Personal Loans Offered to Salaried Employees

Below mentioned are the features of loans offered to salaried employees:

• Salaried individuals are offered personal loans at 10.49%.
• Personal loans offered cannot exceed the loan amount of INR 40 lakh.
• The tenure of the loan is normally up to 5 years. But some lenders may offer it up to 7 years.
• No end usage restriction for salaried individuals.
• Processing fees are up to 4%. Also, some Banks/ NBFCs offer waivers of processing fees during festive offers.
• Some lenders also offer pre-approved instant personal loans to choose the customers based on the monthly income, age, banking history, etc. of their credit profile.

Factors Affecting Personal Loan Interest Rates

Credit score: 

Lenders before approving the loan, check the credit score of the applicant so as to evaluate the creditworthiness. A score above 750 is considered to be good and depicts that the repayments of the loan are being made on a timely basis.

1. Tenure of Business: 

An applicant can get a personal loan at lower rates of interest in case the business is running in profits for at least 2 years due to stability in business.

1. Relationship with Bank: 

In case the applicant is an existing current or savings account holder with the bank or he/ she has an existing loan that is being paid on a regular basis, a new loan can be obtained at a lower rate of interest.