Do you need extra cash right now?

Maybe you have a medical emergency. Or maybe you want to buy that new phone you have been eyeing for months.

You are not alone. Millions of Indians face this exact situation every day.

You might think about asking friends for money. But that can be awkward. You might think about a bank loan. But that often involves long lines and piles of paperwork.

There is a better way. It is called a personal loan.

But what exactly is it? And how can you get one without a headache?

A personal loan is an unsecured loan where a bank, NBFC, or loan app gives you a fixed lump sum that you repay in monthly EMIs with interest over a set tenure. You do not pledge any asset, and approval depends mainly on your income, credit score, and repayment history.

In this guide, we will break down everything you need to know about personal loans.

Let’s get started.

What is a Personal Loan?

A personal loan is money you borrow as a lump sum from a bank, NBFC, or digital lender and repay in fixed monthly EMIs over a chosen tenure. It is usually unsecured, so you do not give collateral. You do not need to tell the lender why you need it. You could use it for:

  • Medical emergencies: Paying hospital bills immediately.
  • Special purchases: Buying a laptop, phone, or home appliance.
  • Travel: Booking tickets for a sudden trip.
  • Debt: Paying off a high-interest credit card bill.

Because there is no collateral, lenders look closely at your income, job stability, and credit score to decide if they will lend to you and at what interest rate.

How does a Personal Loan Work from Application to Closure?

The process of a personal loan works in below simple steps:

Application

  • You share basic details like KYC, income, and bank statements through a branch, website, or app.
  • Many digital lenders allow end-to-end online applications with eKYC.

Assessment

  • Lender checks: income, employer, bank transactions, past loans, and credit score (CIBIL or other bureaus).
  • Lender decides: approve, modify amount/tenure, or reject.

Sanction and agreement

  • If approved, you get a sanction letter with: Loan amount, Interest rate (fixed in most personal loans), Processing fee and other charges, Tenure and EMI amount
  • You accept terms digitally or on paper.

Disbursal

  • Loan amount (after deducting fees) is credited to your bank account, often within 24–48 hours for many NBFCs and digital apps.

Repayment

  • EMI is auto‑debited each month through NACH, debit card, or UPI mandate.
  • You can close the loan early, but prepayment or foreclosure charges may apply, depending on lender policy.

Closure and credit update

  • After final payment, lender updates bureaus and issues a No Dues Certificate or loan closure confirmation.​
  • Clean closure with on‑time EMIs supports a stronger credit profile.

What are the Main Features of a Personal Loan in India?

A personal loan in India usually comes with no collateral, fixed interest rates, fixed EMIs, short to medium tenures, and flexible end use. Below are the key features most personal loans commonly offer:

Core features:

  • Unsecured structure: No property, gold, or vehicle pledge in most cases.
  • Loan amount range: Banks and large NBFCs roughly offer loans from ₹25,000 to ₹40 lakh.​ Many instant loan apps and small‑ticket NBFCs often offer loan from ₹5,000 to ₹10,00,000.
  • Tenure: Shorter than home or education loans, often 3 to 72 months, depending on lender and ticket size.
  • Interest rate type: Mostly fixed rate through the full tenure, so EMI stays constant.​
  • Use of funds: Allowed for almost any legal personal purpose: emergencies, consumption, relocation, or debt consolidation.
  • Speed: Digital lenders often disburse within minutes to 48 hours after approval.
  • No end‑use tracking: Lender usually does not track how you use the funds, unlike home or auto loans.

What are the Different Types of Personal Loans in India?

Lenders classify personal loans by purpose, even though the core structure stays similar. Below are the common types of unsecured personal loans:

General personal loan: Open‑use loan for any personal expense within lender rules.

Emergency or medical personal loan: Tailored for hospital bills, surgeries, or urgent health costs; often faster processing.

Wedding personal loan: For venue, catering, jewellery, and related costs; marketed with wedding‑focused messaging.​

Travel personal loan: For domestic or international trips; often bundled with travel insurance or packages.

Education or skills personal loan: For short‑term courses, certifications, or skill upgrades that do not fit standard education loan products.

Debt consolidation personal loan: Lets you merge multiple card balances or small loans into one EMI at a single rate.​

Top‑up personal loan: Extra loan over an existing personal loan with the same lender, based on updated eligibility.

While names differ across banks and NBFCs, the underlying structure is usually an unsecured term loan with fixed EMIs.

Who is Eligible for a Personal Loan in India?

Eligibility for a personal loan in India generally depends on age, stable income, employment type, residence, and credit score.

Many NBFCs look for a credit score above 700, minimum monthly income near ₹20,000–₹25,000, and a regular job or business profile with some vintage.

Typical eligibility criteria for a personal loan (exact numbers vary by lender):

  • Age: Often around 21 to 60 years
  • Citizenship and residence: Indian citizen with a stable address and valid KYC (Aadhaar, PAN).
  • Income: Many lenders expect at least ₹20,000–₹25,000 monthly income; high‑ticket loans need higher income.​
  • Employment type: Salaried in a recognised company or self‑employed with stable business income.
  • Employment or business stability: Minimum job or business vintage, such as 6–12 months with current employer or a few years of business track.
  • Credit score: CIBIL score usually checked; many lenders see 700+ as a strong profile.​
  • Debt‑to‑income ratio: Existing EMIs plus proposed EMI should not cross a safe share of income (often within 40–50 percent, depending on policy).

Specific digital apps may allow smaller loans for profiles with lower income but compensate with higher interest and smaller tenures.​

What Documents are Required for a Personal Loan?

Most personal loans need standard KYC, income proof, and bank statements. Many lenders accept digital uploads from your phone, which shortens processing time while still allowing full credit checks and verification.

Common document list required for personal loan application in India:

  • Identity proof: Aadhaar card, PAN card, voter ID, passport, or driving licence.
  • Address proof: Aadhaar, passport, utility bill, rental agreement, or bank statement with address.
  • Income proof (salaried): Recent salary slips (often last 3 months), bank statements (commonly 3–6 months), and sometimes Form 16 or employment letter.
  • Income proof (self‑employed): Bank statements (often last 6–12 months), income tax returns, GST returns, or audited financials where needed.
  • Photograph and other details: Passport‑size photo (physical or digital), and basic contact and reference details as per lender policy.

Many app‑based lenders rely heavily on Aadhaar‑based eKYC and bank statement access through secure APIs to create a faster digital process.

How is Personal Loan EMI Calculated and Why does it Matter?

Personal loan EMI is calculated using a standard formula that considers the principal, the monthly interest rate, and the total months of tenure. Knowing this helps you test different combinations of amount, rate, and tenure so your EMI stays within a comfortable share of your monthly income.​

The common EMI formula is:​ EMI = P x R x (1+R)n / (1+R)n – 1

Where:

  • p = principal (loan amount)
  • R = monthly interest rate (annual rate divided by 12 and then by 100)
  • N = number of monthly instalments

For example:

  • Loan amount: ₹10,00,000
  • Annual interest rate: 10.5 percent
  • Tenure: 60 months

Using the formula, the EMI comes to about ₹21,494 per month.​

You can use InstaMoney Personal Loan EMI Calculator for accurate calculations.

How to Apply a Personal Loan on InstaMoney?

In order to apply a personal loan on InstaMoney, you need to follow below exact steps.

Step 1: Check Eligibility Visit the website or download the InstaMoney app. Enter your basic details. You will see your status in about 2 minutes.

Step 2: Choose Your Loan Select how much money you need and how long you want to take to pay it back. InstaMoney offers flexible tenure options to fit your needs.

Step 3: Upload Documents Take photos of your 4 required documents (Selfie, PAN, Aadhaar, Bank Statement) and upload them for verification.

Step 4: Get Money Once verified, the approved amount is transferred directly to your bank account.

It really is that simple. You signup, complete verification, and get approved.

Why Choose InstaMoney Over Banks for a Personal Loan?

Below are the quick reasons to choose InstaMoney over traditional banks for small personal loans:

  • Speed: We approve loans within minutes.
  • No Paperwork: It is 100% digital. No physical forms required.
  • Transparency: You see exactly what you owe. InstaMoney ensures secured transactions and optimum transparency.
  • Usability: You can borrow up to ₹1,00,000 for any need.

Conclusion

In brief, a personal loan should be considered as a support tool for real needs, not as a default way to fund every desire. When you use it for clear purposes, choose the right lender, keep EMIs affordable, and repay with discipline, it can help you handle shocks without long‑term damage to your finances.

You now know what a personal loan is. You know it is safe, fast, and easy to get.

If you are facing a financial crunch or just need some extra cash for a purchase, do not wait.

Download the InstaMoney app now.

Check your eligibility in 2 minutes and get the money you need today.