Personal Loan Demand Is Increasing In India

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Over the last 15 years, India’s economy has been on an upswing, creating a massive growth in the middle class population. Having more disposable income and high-end lifestyle aspirations, consumerism amongst the masses is only increasing. For many who seek to improve their standard of living but do not have the income to do so, personal loans have become an accessible way for people to achieve their dreams. 

Personal loans are a form of monetary credit provided by banks, lenders, and other financial institutions or NFBCs (Non-Banking Financial Company). Decades ago, only banks and independent lenders provided loans to individuals and companies. Nowadays, one can get a loan from new-age digital lenders such as Upwards. 

Types Of Personal Loans 

There are essentially two main types of personal loans- secured loans and unsecured loans. A secured loan is when the borrower submits some of their assets (equivalent in value to the amount they want to borrow) as a form of collateral to the bank or lender, who holds onto this collateral as a form of security until the loan is repaid. 

Interest rates on secured loans are attractive. However, it is a big hassle for borrowers to arrange collateral to submit to the lender, simply because they may not have sufficient collateral to pledge against their desired loan amount, or they are unwilling to pledge collateral at all. 

On the other hand, unsecured personal loans do not require any collateral in order to avail them. Unsecured loans have slightly higher interest rates than secured loans; this is because the lender is undertaking a very high risk of default, since they have no collateral to seize if the borrower were unable to repay their loan. 

As a result, unsecured loans are much more accessible by the everyday man, compared to bank loans. Unsecured loans from digital lenders have a lower eligibility criteria to apply; therefore, even if you earn a monthly salary of just Rs. 15,000 in hand, you can be eligible for a loan. This makes it more accessible to the masses. 

Also, they require only a few commonly-available KYC documents and have a fully digital process that eliminates paperwork. Traditional institutional lenders such as banks require numerous documents to apply for a loan; and the application process itself is excessively lengthy and tedious. 

Another reason why getting an unsecured loan is a much better option is because the approval and disbursal time can be as low as 48 hours or less - contrast this by that of banks, which can take several weeks or more, just to process your loan application, let alone disburse the amount! 

Benefits Of Personal Loans 

Unsecured personal loans can be used for anything you need to finance. Here are some of the reasons what you can use a personal loan for: 

1. Paying high utility bills 
2. Down payment for new home 
3. Travelling and vacations 
4. Vehicle loan 
5. Repairs and maintenance costs for home, office or vehicle 
6. Buying new/upgrading your mobile phone, laptop, gadgets and appliances 
7. Medical expenses 
8. Expenses for weddings and family functions 
9. Home furnishings 
10. Gifting your loved one an expensive purchase ...and many other things! 

Whether it be a large or relatively small expense, personal loans are beneficial to financing your requirements. Instead of dipping into your savings account to pay an upfront lump sum for your expenses, personal loans can be paid off in easy EMIs that can easily fit into your monthly budget. 

How To Apply For A Personal Loan In India 

Forget waiting in long queues and filling out heavy paperwork- digital lenders have simplified the loan application process, so you can apply for a loan online, right in the comfort of your home or office! 

Here’s what to keep in mind before you apply for a personal loan. 

1. Know Your Requirements And Finances

Carefully assess where you stand financially, and how much you really need for your requirements. This will help you to apply for an amount you can realistically afford to repay. Also, be sure to check your CIBIL score, as this is one parameter that many lenders first assess on your application. 

2. Select The Right Lenders 

Every lender has a certain set of eligibility criteria, which is a set of parameters by which a borrower can qualify to apply for a loan. This includes income, age, location and CIBIL score and other factors. Therefore, only apply to 2-3 lenders max (over a span of one month), whose eligibility criteria you fully meet. This is to avoid pre-rejection of your loan request, and also prevents your credit score from being negatively impacted by making numerous loan enquiries. 

3. Calculate Your Loan EMI 

Your loan EMI is the most important thing you should look for when you are narrowing down your lender. It’s tempting to select the one that is providing a loan with the lowest interest rate, but this is not a good way to choose your lender. 

For example, a loan of Rs. 1 lakh having an 18% annual interest rate and a repayment tenure of 24 months will have a monthly EMI of Rs 4,992. However, with the same principal amount and interest rate will give you an EMI of Rs. 9,168 when spread across a repayment tenure of 12 months. That’s a whopping 83% increase in the EMI as compared to the loan with the 24 months repayment tenure! This is why knowing your EMI beforehand is so crucial. 

Use the Upwards personal loan EMI calculator to know how much your EMI will amount to. Simply enter your variables of the loan amount, monthly interest rate, and tenure; then, sit back and relax while the loan EMI calculator does the hard work, and instantly displays your amount! 

4. Carefully Fill Out The Application 

Also ensure that you carefully and correctly fill out the application form. Never provide false details of your identity, income or location, as lenders will discover this and reject your application immediately! Instead, read through the form several times before filling it out, and get clarification from the lender if you have any doubts. Also ensure that the requested documents are ready with you, and attached to the loan application in the correct places. 

5. Make EMI Payments On Time

This is extremely important! If you keep making late payments, or end up defaulting entirely on repaying your loan, it gets recorded in your credit report and negatively impacts your CIBIL score. Lenders will be wary of loaning any money to you in the future- and if they do, it will be for very small amounts at very high interest rates. 

This is why it is important to pay your EMIs on time. It boosts your credit score, which increases trust in lenders. They will be willing to give you larger loan amounts with lower interest rates and extended tenures, because you have demonstrated your financial stability and creditworthiness. Imagine how useful this will be in the future if you plan to make a huge purchase, such applying for a home loan or vehicle loan


These days, almost everyone can get a loan if they meet some basic criteria set by lenders. Taking out a loan is a good thing, because you can achieve your dream goals while building a good credit score! 

Before you apply, just be sure to know how much your EMIs will come up to by using the personal loan EMI calculator. This will help you plan your monthly budget with ease and confidence.

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