Personal Loan of 1 Lakh: 6 Low Interest Options, Minimum Income Reqd.

Unsecured and secured personal loan are the most profit making product for any financial institutions due to high interest rate and other types of fees charged e.g. processing fee. However when the loan amount required is less (e.g. Rs. 1 Lakh), then it absolutely doesn’t make sense to pay such a high interest. This is because there are low cost alternatives to get personal loan when the amount is small.

In this article we’ll take example of Rs. 1 Lakh personal loan.

If you take unsecured personal loan of Rs. 1,00,000 for 12 months at an interest rate of 15% per annum from commercial bank (typically the interest rate is in the range of 15% – 20%) the EMI will be Rs. 9,026.

Let’s evaluate low cost personal loan options.

Money Saving Options to Get 1 Lakh Personal Loan at Low Interest

  1. Ask friends or relatives: This should be the first option (when own saving is not sufficient to meet the demand). In return, you can give interest to them. Let’s assume you pay 6% interest to your friend. Then you’ll have to pay Rs. 8,561 every month. This way both the parties will benefit mutually with no strict terms and conditions. And higher the EMI you pay, higher would be the saving at the same rate.
  2. Against Fixed Deposit: Loan against FD is a type of secured loan and is one of the most cost efficient option as the interest rate is small compared to unsecured loan. You need to deposit certain amount called as Fixed Deposit Amount and apply for loan against it with highest chance of approval. However the loan amount approved is in the range of 80% – 85% of the FD amount. So for a loan of Rs. 1 Lakh, your FD account should have deposit of Rs.1,25,000 – Rs.1,30,000. Interest rate charged is 2% above the FD interest. So assuming investor gets 8% interest, loan interest would be 10%. At this rate, the EMI would be Rs. 8,792.

The interest rate charged is 1% – 2% less than the unsecured loan.

There are many other advantages of taking loan against FD such as –

  • You continue to earn interest on the account.
  • No prepayment penalty: That is, if you manage to repay the money before the standard tenure, you won’t be charged any extra money. This fee is most of the times charged by banks for unsecured loan.
  • Interest charged only on the amount utilized and not on the complete loan amount. Meaning, even if the loan amount is 1 lakh but you withdraw Rs. 50,000; then the interest is charged on 50,000 only.
  • No income requirement: In case of unsecured loan, banks will always ask for income and related document proofs before approval. But in case of loan against FD there is no minimum income criteria.
  • Money can be used for any purpose.
  • No processing fees
  • Minimal documentation and many others.

Most of the banks in India offers loan against fixed deposit.

3. Against LIC Policy: Another type of secured loan is loan against LIC policy wherein loan applicant has to keep loan LIC policy as a collateral. The loan amount is typically 80% of the surrender value of the policy. Typically you can get loan against ULIP, endowment plan, whole life plans, income plans, which are the types of life insurance policies. The interest rate charged is less and is to be paid only on the amount used and for the duration used.

4. Against Gold: To avail finance, you can also keep gold as collateral. This is called as gold loan. The interest rate is less (11% – 15%) which varies for each lender. Once the gold quality is checked and all the necessary documents are submitted; after successful evaluation, money is credited into the borrower’s bank account. You can keep gold ornaments, coins, biscuits, etc. and get loan against it. Few advantages are – only interest amount is to be paid until the tenure. And when the tenure ends, you pay the principal amount. Loan amount can be used for any purpose. And most importantly, your precious ornament is safe and secured with the lender. In fact, more safe than keeping at home.

5. Against Shares or Mutual Funds: Another way to get secured loan is by pledging shares. If loan applicant holds shares of select companies then he/she can get loan by pledging the shares.

6. From co-operative banks: Financial help at concessional rate is the motto of co-operative bank. Compared to commercial banks, small loan amount of Rs. 1 Lakh can also be availed at a interest rate less than 0.5% – 1%.

You can also get loan under Rs. 1 lakh against Kisan Vikas Patra, National Savings Certificate, etc. But the above listed options are highly recommended.

Minimum income required to get personal loan of Rs. 1,00,000?

It is a myth that to get personal loan approved, the income required is high irrespective of the loan amount. However this is not true. There are many lenders requiring very small income.

Here’s the table showing minimum monthly and annual income required by banks in India:

Name of Bank and Personal Loan ProductMonthly Income Required (Rs.)Annual Income Required (Rs.)
State Bank of India (Xpress Credit)5,00060,000
Canara Bank (Consumer Loan)6,00072,000
The West Bengal State Co-operative Bank Ltd.2,00024,000
The Andaman and Nicobar State Co-operative Bank Ltd.5,00060,000
The National Co-operative Bank Ltd.5,00060,000
Abhyudaya Co-operative8,00096,000
Canara Bank (Canara Budget)10,0001,20,000
Canara Bank (Teachers Loan)10,0001,20,000
The Greater Bombay Co-operative Bank Ltd.10,0001,20,000
State Bank of India10,0001,20,000
HDFC Bank15,0001,80,000
ICICI Bank15,0001,80,000
Axis Bank15,0001,80,000
Fullertoan loan15,0001,80,000
Punjab National Bank15,0001,80,000
Dena Bank (Suvidha)15,0001,80,000

However credit score score plays a significant role when it comes to unsecured loan. So always maintain a good credit score.

Loan for IVF in India: Save Money, Lowest Interest, No Minimum Income Needed

Going through IVF treatment is painful and adding more to the pain is the treatment cost. Private centers charge a very high fee typically costing between Rs. 2,50,000 to Rs. 4,00,000 and varies with each treatment center, city you live in, etc.. And even after putting in so much of money there is no success guarantee.

For high income earners, spending this huge amount of money may not be a problem. But what about poor earning individuals taking loan? How can they afford high interest personal loan for IVF treatment?

Listed below are ways to save money when deciding to take personal finance for In Vitro Fertilization (IVF) treatment:

Apply for Minimum Loan Amount

Try to take smallest amount of loan possible and arrange money as much as possible either from your own savings or from your friends or relatives. In return, you can pay small interest to your acquaintances. This way, they would be more than happy to lend you money. Isn’t this a fair deal and money saving opportunity for you?

Why to bank rich?

Personal Loan against Fixed Deposit

Also called as overdraft loan. If you have invested money in FD and do not want to prematurely close the account then you can avail loan against FD. The interest rate is lowest and is typically 1%-2% above the interest rate offered on FD. Other advantages are the account holder continues to earn interest even after taking the loan. And the interest is charged only on the amount utilized. Compared to traditional personal loan, this financing option is a big money saver as the interest rate is nearly 3%-4% less.

Almost every bank in India offers loan against FD in India:

  • State Bank of India
  • ICICI Bank
  • HDFC Bank
  • Axis Bank and others

This type of secured loan is highly recommended due to the advantages offered. Of course, you have to keep money as collateral with the bank.

Check out low cost IVF treatment centers in India.

Other types of secured loan

For those who are not aware, in addition to fixed deposit, you can also avail loan by keeping securities such as:

  • Gold – Borrower has to deposit gold – ornaments, coins, bars, etc. And depending on the purity, weight; money is lent which is 80%-85% of the value of the gold.
  • Mutual Fund – Another way to receive quick money from banks and NBFC is by pledging the mutual fund. However borrower cannot sell-off units as they are under lien.
  • Shares – Meeting contingency fund is also possible through loan against shares. However the loan amount is less, 50% of the current value of the collateral, which is shares in this case. Moreover credit is offered only against selected securities only e.g. blue chip companies.
  • LIC policy – At an interest rate of 10% which is nearly 40% lower than personal loan, you can get financing against endowment policy from Life Insurance Corporation of India. However borrower must have paid the premium for a longer tenure. You can also get loan against insurance policy from various banks, but the interest rate is on a higher side but lower than the personal loan.
  • Kisan Vikas Patra or National Savings Certificate – Pledging of KVP or NSC is also a lucrative option to avail finance. Loan amount is between 75% – 100% depending on the age of NSC/KVP.
  • Property – Loan is provided against either commercial or residential property provided the said property is in the name of the borrower. Although not everyone has property but this is a good option to avail financial support.
  • Car – If you are looking for personal loan at low interest rate, then pledging your car is another solution. However loan amount depends on various factors such as age of the car, condition, and current value. This is a common option to avail financing in western countries.

The interest rate is low in case of all the above listed collateral similar to overdraft loan. However note that, these belongings go under the control of the lender until you pay-off the loan completely. In case of default, lender has right to auction off gold/mutual fund/shares etc. depending on the security kept, and recover money.

Note: If you are planning to take loan for IVF treatment by pledging above listed securities then you won’t be asked for income nor the lender will check your credit score.

Personal Loan from Co-Operative Bank

Borrowing money from co-operative bank is little cheaper compared to commercial banks because of the low interest rate. Co-operative banks charge interest of 8.5% – 13% whereas commercial bank charge 9.5% – 15%. The eligibility criteria is less strict compared to commercial banks.

Loan against Fixed Deposit FAQ: Amount, Benefits, Tenure & more

When you need instant cash for medical emergency, unplanned travel for an emergency, house renovation, etc. then you have three choices:

  1. Use your own savings (highly recommended)
  2. Ask your friends or relatives
  3. Approach financial institutions for funding i.e. personal loan

Personal loan is most expensive financial service for a borrower and highly profitable for the lender due to high interest rate charged. But there is another type of loan which can be availed against fixed deposit (FD). This is nothing but a secured loan. And interestingly not many people are aware of such a money saving loan product.

Here are some frequently asked questions:

What is loan against FD?

Loan against fixed deposit is a secured loan. The borrower needs to keep his/her FD as a collateral with the lender.

Can I take loan against FD?

Anyone depositing the minimum amount as requested by the bank can avail loan in addition to other eligibility criteria. Most importantly, there is no income and credit score criteria.

Does taking overdraft against FD mean account break?

No. Instead of breaking your fixed deposit and liquidating the savings, you can take loan against it.

Can I get personal loan against existing account or do I need to open a new account?

You can get loan against existing FD account as well or open a new one.

How much loan can you get against FD?

Typically bank offers loan of 80%-85% of the deposited amount. However this percent varies for each bank and borrower needs to keep minimum amount. If your FD tenure is already over 2 years than the amount will be high.

What are the benefits of availing loan against FD?

The most important benefit is low interest rate which is 1%-2% higher than the interest earned on FD. And the interest is charged only on the utilized amount and tenure and not on the whole amount, which is the case with traditional loan. So if your bank is offering 8% on FD then the interest on loan will not be more than 10%. Other advantages are fast processing and disbursal, minimal documentation, flexible repayment options, no prepayment charges, etc.

Will the interest earned on FD stop?

No. This is what attracts small loan borrower as they continue to earn interest.

Can I extend the loan tenure beyond the FD tenure?

No. For e.g. if the FD tenure is 3 years then the loan tenure cannot be more than this.

I have joint FD account, can I take loan?

You can. But both the account holders will have to sign the documents by visiting the bank. But if the account is on a single name then you can apply online.

Should you break FD instead of taking a loan?

In case you want to terminate the fixed deposit account i.e. break, you should evaluate the premature withdrawal charges and interest rate on loan. If the loan required is for a short period of time, which you think can be repaid then go for overdraft. Moreover borrower continues to earn interest on the FD even after taking the loan. However if the loan amount is high and paying back seems difficult then go for premature withdrawal.

For any queries, please mention in the comment box and same shall be replied as early as possible.

Personal Loan FAQ: Income Rs.15,000 or Less, Easiest Way to Get Approved

The need of money can arise anytime. And when all the options of arranging the money fail, then the only solution is personal loan. However there are many doubts borrowers have and listed below are some of the most commonly asked questions and their answers related to personal loan.

Is personal loan unsecured?

Unsecured loan is just one of the type of personal loan, approved based on multiple factors with income being the most important criteria. The other type is secured personal loan offered against securities such as fixed deposit, gold, LIC policy, etc.

What is the biggest advantage of both secured loan and unsecured loan?

Secured loan is money saving since the interest rate is low. And unsecured loan does not require any collateral.

Why banks ask for income?

Income is asked in case of unsecured loan only. Since it involves lending money to unknown without asking for any security, bank asks for income to evaluate whether the borrower has repayment capacity or not.

How much loan amount can I borrow in case of unsecured and secured loan?

In case of unsecured loan, the amount depends on various factors such as income, credit score, age, professional status, city you live in, amongst others. However income plays a key role.

In case of secured loan, the amount depends on the value of the collateral. For e.g. in case of loan against fixed deposit, if the FD amount kept in the bank is Rs. 1,00,000 then the loan amount approved will be in the range of Rs. 80,000-Rs.85,000. That is, 80%-85% loan amount is granted in case of loan against FD.

What personal loans are easy to get approved for?

The easiest personal loan to get is secured loan. However these days, mobile wallet apps such as Mobikwik offers pre-approved loan with no collateral. However the loan amount is small in case of wallet apps.

Why personal loan is an unsecured loan?

This is incorrect, personal loan is not always unsecured. There is another type of loan known as secured loan wherein you deposit collateral (fixed deposit/ mutual fund/gold/shares, and few others) with the bank. It is basically similar to mortgaging.

Can I increase my personal loan amount?

Yes, this is possible. Incremental need of money can arise anytime. For e.g. if you have taken personal loan for medical expenses and due to certain reasons if the cost of the treatment further rises, you can apply for additional loan amount. However in order to get it approved, you should have made regular payment of EMI. Meaning, there are no defaults or delay in repayment in the past.

Which banks has minimum income criteria for personal loan?

Amongst the commercial banks – State Bank of India (SBI) offers Xpress Credit Loan requiring net annual income of Rs. 60,000 i.e. Rs. 5,000 per month. And amongst the co-operative banks, The West Bengal State Co-operative Bank Ltd. (WBSCB) requires net monthly income of just Rs. 2,000 to avail personal loan. Refer this official website link of WBSCB  for more details.

My salary is below Rs. 10,000 per month. What are the options available to get personal loan?

Listed in the below table are the minimum monthly/annual income required for personal loan by various financial institutions. Note that, there are many other banks that offer personal finance but income criteria could not be found.

Name of Bank and Personal Loan ProductMonthly Income Required (Rs.)Annual Income Required (Rs.)
State Bank of India (Xpress Credit)5,00060,000
Canara Bank (Consumer Loan)6,00072,000
The West Bengal State Co-operative Bank Ltd.2,00024,000
The Andaman and Nicobar State Co-operative Bank Ltd.5,00060,000
The National Co-operative Bank Ltd.5,00060,000
Abhyudaya Co-operative8,00096,000
Canara Bank (Canara Budget)10,0001,20,000
Canara Bank (Teachers Loan)10,0001,20,000
The Greater Bombay Co-operative Bank Ltd.10,0001,20,000
State Bank of India10,0001,20,000
HDFC Bank15,0001,80,000
ICICI Bank15,0001,80,000
Axis Bank15,0001,80,000
Fullertoan loan15,0001,80,000
Punjab National Bank15,0001,80,000
Dena Bank (Suvidha)15,0001,80,000

What happens when personal loan is not paid?

This is the biggest mistake you will make. Not paying-off the loan is an invitation to more debt and harassment by the recovery agents. So, if you think repayment won’t be possible, contact your bank beforehand and ask for a solution – defer or reschedule the EMI payments. Debt collectors are aggressive whose job is to recover money in any case.

What if the bank does not defer or reschedule the EMI payment?

In this case, try for balance transfer i.e. move loan account from existing bank to a new one. Your remaining principal loan amount will be transferred to the new bank. The interest rate would be possibly low and EMI amount will change. While transferring you can ask the new bank to extend the tenure. However make sure to calculate the total outflow of the money.

Personal Loan FAQ: Low Salary, Minimum Income Reqd., No Job, Salary Slip & more

Personal loan is the best solution for individuals needing money in case of emergency situations such as medical emergency or home renovation, travel, etc. However there are many queries, loan applicants face on various processes involved.

So listed below are queries and answers related to personal loan.

How to qualify for a personal loan?

There are many eligibility criteria depending on the type of personal loan taken i.e. secured or unsecured. In case of secured loan; the main qualification criteria is the type of security and it’s value. For e.g. in case of loan against fixed deposit, the criteria is the amount and tenure. In case of traditionally applied loan, income is the most important criteria. Note that, the final decision to approve loan is with the bank. And in addition to these criteria, there are many other factors taken into consideration depending on case to case basis such as age, employer, city, and others.

From where can I get personal loan in India?

There are various avenues to get personal finance in India as follows:

  • Banks – Commercial, co-operative & others
  • Peer to Peer Lenders
  • Private money lenders
  • Financial services providers
  • Digital payment app companies

Which is the fastest way to get loan?

Amongst all the above listed options, cash loan is the fastest way to get loan amount in your bank account is cash loan offered by P2PL and mobile payment apps such as MobiKwik and Paytm.

How to get personal loan with bad credit?

The best solution for individuals with bad/no credit score is loan against securities. In India, loan can be availed against securities by keeping following assets as collaterals with the lender:

  • Fixed Deposit
  • LIC Policy
  • Gold
  • Property
  • Mutual Funds
  • Equities
  • Car
  • National Savings Certificate
  • Kisan Vikas Patra

You can also get loan against credit card.

Can you get personal loan without job?

Yes. Secured loan is the solution for individuals with no job. Type of securities that can be kept are listed above. All you need is approach bank and provide details on the securities. But remember that, asset should be in the name of the primary applicant.

How to get a personal loan when the income is low?

There are many financial institutions offering loans to individuals with less income/salary. Here’s the table showing list of lenders and the minimum income required to avail loan:

Name of Bank and Personal Loan ProductMonthly Income RequiredAnnual Income Required
State Bank of India (Xpress Credit)5,00060,000
Canara Bank (Consumer Loan)6,00072,000
The West Bengal State Co-operative Bank Ltd.2,00024,000
The Andaman and Nicobar State Co-operative Bank Ltd.5,00060,000
The National Co-operative Bank Ltd.5,00060,000
Abhyudaya Co-operative8,00096,000
Canara Bank (Canara Budget)10,0001,20,000
Canara Bank (Teachers Loan)10,0001,20,000
The Greater Bombay Co-operative Bank Ltd.10,0001,20,000
State Bank of India10,0001,20,000
HDFC Bank15,0001,80,000
ICICI Bank15,0001,80,000
Axis Bank15,0001,80,000
Fullertoan loan15,0001,80,000
Punjab National Bank15,0001,80,000
Dena Bank (Suvidha)15,0001,80,000

How to get personal loan without bank statement?

Typically bank statement is not always asked by the banks, especially in case of secured loan. However, if the main purpose of the bank asking for bank statement is to verify income, then salaried professional can provide pay slip for the last 6 months and self-employed can produce IT returns for the last 3 years. In both these cases, ideally, producing bank statement should not be a problem because income (salary / business income) typically gets credited in the bank account only.

How can I get personal loan, as my employer gives salary in cash?

This problem is faced by many individuals in India. The best solution is to produce – bank statement, offer letter, official letter from employer, income tax return. However, if financial institution still rejects the loan application, then you can apply for loan against securities.

Check this link for more details on how to get loan when salary is in cash.

What are the best ways to save money on personal loan?

Since interest rate on personal loan is high, saving money should be the objective for everyone. The best solutions are:

  • When opting for a traditional loan, select a lender offering lowest interest rate, minimum or no charges, flexible tenure, no pre-closure penalty and other charges.
  • If you are a regular repayer, ask your bank to reduce the interest rate. Ideally less interest should be charged by the bank.
  • Other money saving option is to go for loan against security as mentioned above. The interest rate is low in case of secured loan.
  • Try to take minimum loan amount and make as much use of own money to meet the need.

Can I cancel loan after approval?

Yes, it can be cancelled. In case loan is just approved (and money is not disbursed), it can be cancelled after providing notice to the bank and paying the processing fees. However if no agreement is signed by the borrower, it can be cancelled directly over phone.

Can I cancel loan after loan amount disbursal?

No. Once the money is credited to your bank account, cancellation is not possible and rules of loan get applied. However if you still want to close it, prepayment charges will be levied or other charges such as high interest, if any. Remember since you are opting out too early, it is not a profitable deal for the bank. So they will try to recover as much money possible from the borrower.

There are endless queries related to personal loan. Should anyone have any queries, please mention the same in the comment section below. And same would be answered as early as possible.

SBI Xpress Credit Personal Loan for Low Income (Rs.5000/month) Earner

Personal loan is the biggest profit making business for a financial institution. This is mainly because of the high interest rate charged in addition to various other fees such as late payment, foreclosure, etc.

And when it comes to borrower, individuals from low income group are mostly in need of personal loan either for medical emergency, short term money need, etc. However this category of individuals are not the main the target audience of the bank despite of the fact that bank need more new customers in order to garner more profit. The biggest reason for this is the high risk associated with poor earners as repayment capacity is considered not to be good, which is practically correct. Failure to make repayment results in rise of non-performing assets which is a loss for any lender.

This is the reason, low salaried individuals in need of personal loan have a belief that financial institutions offer loans only to high income/salaried only. And because of this belief, they approach private money lenders or others giving loan to low income earners in return of high interest and pledging the security. However this is not true.

There are many financial lenders offering personal loan to low salaried individuals and one such lender is State Bank of India, India’s largest public sector bank. And one of their loan product is SBI Xpress Credit Personal Loan is targeted towards low salaried individuals only.

Here is the table showing the important information:

Minimum Net Monthly RequiredRs. 5,000
Minimum Term Loan AvailableRs. 25,000
Maximum Term Loan Available24 times net monthly income or maximum Rs. 15,00,000 (15 Lacs)
Repayment Period5 Years
Interest Rate:
For IT employee with credit bureau score (750 & above)13.15%
For IT employee with credit bureau score (550 - 749)14.15%
For IT employee with credit bureau score (Less than 550 / No Score)15.15%
Government/Central govt. employees12.65% - 14.75%
Co-operatives or unrated companies13.40% - 15.00%
SBI salaried employees with credit bureau score (800 & above)10.75%
SBI salaried employees with credit bureau score (700 - 799)11.25%
SBI salaried employees with credit bureau score (600 - 699)12.25%
SBI salaried employees with credit bureau score (Less than 600)No loan provided
Non-SBI salaried employees with credit bureau score (800 & above)11.00%
Non-SBI salaried employees with credit bureau score (700 - 799)11.50%
Non-SBI salaried employees with credit bureau score (600 - 699)12.50%
Non-SBI salaried employees with credit bureau score (Less than 600)No loan provided

So as you can see, if your net monthly salary is Rs. 5,000 (Rs. 60,000) then you have a good chance to get loan provided you meet other eligibility criteria.

Other benefits of this product

  • Compared to its other loan products, interest rate charged is very low depending on the category of the applicant, as shown in the above table. The reason for high interest rate is the risk associated in personal loan.
  • It is a unsecured loan. Meaning, there is no requirement of providing any type of security.
  • Many of loan products available in the market has high processing fee
  • Upon successful repayment of the loan, borrowers can apply for second loan as well. However the eligibility criteria is overall EMI/NMI ratio of 50%.
  • If there is any overdue amount, then additional interest of 2% per annum will be charged.

Additional reading – list of other banks offering loan to poor income earners.

Eligibility

In addition to the net monthly income, the applicants must be working in following institutions:

  • Central and state government
  • Central PSU
  • Educational institutions
  • Selected companies having business relations with SBI

Things low income earners should keep in mind

1) Never approach multiple banks when applying for the loan as it affects your credit score negatively

2) Always try to complete the loan repayment before the standard loan tenure without foreclosure or any other charges.

Check out tips on how to earn extra income

3) Take successful loan closure letter from the bank once all the money is fully paid-off. This helps for any future dispute with the bank.

4) After closing the loan, check with the bank whether they have updated CIBIL record or not. If not, ask them to do this on priority. This is highly important because you may not get any type of credit in the future if record in CIBIL database is not updated. So when you apply for any loan in the future, the bank will check CIBIL record. And if they found that your previous loan is still active, they may reject your loan application. And at the same time, this rejection will be updated in CIBIL record.

5) In addition to interest rate, personal loan comes with many other charges which are mentioned in the documents. However individuals tend to ignore reading these charges and only when they are levied such charges, they realize such charges exist.

6) Always negotiate with the bank on lowering the interest rate without any hesitation. Especially when your credit score is good, banks may reduce the charges. Negotiating is an extremely good strategy when it comes to any financing.

7) Always compare rates of multiple lenders. The main objective of low salaried individuals seeking personal loan should be to save money wherever possible.

Visit this SBI link for more details about Xpress Credit Personal Loan.

 

 

Low Salaried, Looking for Personal Loan? 7 Ways to Save Money

Getting any type of credit (especially personal loan) is like falling into the debt trap which is created by the lender. Because initially when you get loan amount credited into your bank account, the things start looking greener as your wish of taking loan for whatever purpose comes into reality. But irrespective of taking a personal loan, home loan, car loan, etc. the amount you end up paying by the end of the term sky rockets and is not evaluated often by many. This increase is because of high interest rate and various other charges such as processing fee, pre-payment penalty, cheque bounce, etc. that comes along with the loan.

So how to save money when deciding to take personal finance?

7 ways, individuals looking for personal loan can save money

Do you really need a personal loan? 

Even before you start looking for personal loan, ask yourself – do I really need a personal loan? Many people, take personal finance for going on a foreign trip, buying expensive jewelry, consumer items such as high end gadgets, etc. But do you really need to borrow money for such things? And by not having these things, will your life change, will you make losses in the absence of such things? Definitely not, right?

So the first tip is to take a loan only when it is utmost important e.g. medical emergency. You would be surprised to know the amount of money you will save by not taking a personal loan.

Arrange money from your own savings/investments: If you have decided that borrowing money is the only option then the first solution should be utilizing your own savings. Check out all your bank accounts, investments made, any money lent to friend/relative, and others. For e.g. if you have invested in fixed deposit and the term is nearing to its end, then you can make premature withdrawal. Although there would be a penalty but this amount would be negligible compared to the interest and other charges you will end up pay after taking loan. Especially individuals with low monthly salary or self employed with low income should always remember – taking personal loan from a bank should be the last option. And if you are still short of money, then try the following next option.

Borrow money from your friends/relatives: This should be your second preferred option. If your own saving is not sufficient to meet the objective then borrow money from your acquaintances. There is absolutely no harm or hesitation in asking for money. Either they will agree or disagree. But there is always a 50% chance of your friend saying YES. To further increase your chance, in return, you can pay them interest, lower than what banks or other lenders are charging. This way both of you will be on a winning side i.e. lending person (your friend/relative) will get higher amount of money in return and your purpose will be solved. But make sure to make timely repayment as promised, because trust once lost, takes time to develop. However everyone has their own financial objectives in life. So this alternative solution may not always work. If it doesn’t, try the next option.

Loan against Securities: If your friends/relatives or other known person are not able to help much, then your third option should be to take personal loan against securities. Not many people are aware of getting loan against securities is possible. Such type of loan falls under the category of secured loan. Many financial institutions offer such loan against fixed deposit, physical gold, shares, mutual funds, LIC policy, etc. While it may not be possible for individuals from low income group to have assets such as gold, shares, mutual fund, FD, etc. But if you have any of these, then take loan against these. There are many advantages of availing such loan – low interest, no credit history check, interest is charged on the amount utilized and not on the entire loan amount, and so on.

Opt for Cash Loan: If secured loan is also not possible then apply for cash loan. This is offered by financial services companies and not banks. Cash loan is actually a personal loan but offered for short term and small amount and low interest and processed very fast. In India, you can get such quick loan from NBFCs such as – mobile wallet companies, peer to peer lending companies, or credit finance companies. Read details about getting cash loan.

Approach Co-operative Bank: Before approaching commercial bank, apply for loan at co-operative bank. There are many benefits of availing personal loan from co-operative bank such as low interest, not very stringent terms and conditions, zero prepayment and processing charges, and many others. This article on personal loan from co-operative bank provides detailed information. The table below shows few of the commercial banks and their income eligibility criteria:

Name of Co-operative BankMonthly Income Required
The West Bengal State Co-operative Bank Ltd.Rs. 2,000
The Andaman and Nicobar State Co-operative Bank Ltd.Rs. 5,000
The National Co-operative Bank Ltd.Rs. 5,000
Abhyudaya Co-operative BankRs. 8,000
The Greater Bombay Co-operative Bank Ltd.Rs. 10,000

Loan from Commercial Banks: Finally, if none of the above listed options work, apply for loan from commercial bank. But make sure you bargain on lowering the EMI and ask for flexi repayment option but without extending the term and with no increase in the interest rate. If you have good relationship with the bank and your case is strong, things will be in your favor. Although this would be loss making for the banks but saving money as much as possible should be your ultimate objective.

So bottom line is – If you want a better financial life, try to avoid taking personal loan or any type of loan as much as possible. And if you do so, try to move out of debt as early as possible. And especially for poor income borrowers, personal loan is more expensive and it really affects your finances badly. So for such individuals, saving money should be the prime objective.

5 Ways to Get Personal Loan for Salary Under Rs.15,000/12,000/10,000

Personal loan is the most profit making business for any lender (financial institutions such as commercial banks, co-operative banks) or NBFC’s such as, peer to peer lending companies or financial service providers or private money lenders and others). This is because of the high interest rate charged typically 18% and above and additional fees charged due to cheque bounce, late payment, etc.). But on the other hand, it carries risk as well, because of borrower defaults.

And risk is the reason why financial institutions set minimum income criteria before approving personal loan especially when the required loan amount is high (typically greater than Rs. 15,000 or even more)? Based on the income they evaluate the credit worthy applicant and prevent themselves from giving loan to someone with no/poor repayment capacity thereby reduce the non-performing assets. NPA’s are highly loss making for any lender since it is a unsecured loan. Meaning, in return of credit, lender does not ask for any security. For e.g. home loan – where borrower has to mortgage his/her home till the loan is fully paid.

Let’s understand ‘RISK’ with an example: Suppose you lend Rs. 1,00,000 to your very near friend/relative earning a low salary. And he/she assures you payback the money after 3 months but doesn’t pay. And instead he pays the money back after 1 year. Isn’t this a loss for you? Had you received your money fully and on time, you would have put that money in some safe investment product (e.g. fixed deposit) and earned interest money. And so, would you ever risk of lending money to the same person in the future or other? This is the same logic on which banks work on. In order to check the eligibility of the borrower they first want to know their income in addition to verifying the CIBIL record, documentation, etc.

However not every lender sets high income eligibility for personal loan. Because if they do so, they won’t get new customers especially from the low income group, who are actually in need of money than high income earning person.

But where to apply for loan when you have low monthly salary of Rs. 15,000 or less?

There are following five options to get personal loan when your salary is less than Rs. 15,000 or Rs. 12,000/Rs.10,000 or even less.

  1. Commercial Banks
  2. Co-operative Banks
  3. Cash Loan
  4. Loan against Securities
  5. Private Money Lenders

Commercial Banks

Banks such as City Union Bank, State Bank of India, ICICI Bank, Canara Bank, Axis Bank, Dena Bank, Punjab National Bank. Listed in the below table is the income criteria of the these commercial banks:

Name of Commercial BankIncome Required
City Union BankRs. 6,500
Canara BankRs. 10,000
State Bank of India (Xpress Credit Personal Loan)Rs. 7,500. For state and government, PSUs, selected companies
State Bank of IndiaRs. 10,000 (rural/semi-urban)
HDFC BankRs. 12,000
ICICI BankRs. 15,000 (for individuals from Bangalore, Chennai, Hyderabad, Pune, Kolkata)
Axis BankRs. 15,000
Dena BankRs. 15,000
Punjab National BankRs. 15,000

Co-operative Banks

Commercial banks such as State Bank of India, ICICI Bank, HDFC Bank and others are ready to provide more money in the form of loan but in return they charge high interest rate and in addition to various other fees. So other bank alternatives to get cost effective personal loan are the co-operative banks.

Here is the table showing list of co-operative banks offering personal loan and salary required (less than Rs. 15,000 net).

Name of Co-operative BankMonthly Income Required
The West Bengal State Co-operative Bank Ltd.Rs. 2,000
The Andaman and Nicobar State Co-operative Bank Ltd.Rs. 5,000
The National Co-operative Bank Ltd.Rs. 5,000
Abhyudaya Co-operative BankRs. 8,000
The Greater Bombay Co-operative Bank Ltd.Rs. 10,000

So even if your salary is less than Rs. 12,000/Rs. 10,000 then also you can apply for finance at above listed co-operative banks.

The advantage of borrowing money from co-operative bank is – less interest (15% or less with most of the banks). But in return these banks want the borrower to become their member, buy shares, and keep security and add guarantors. They are money saving due to multiple other reasons as well, such as – no processing or prepayment fee, and flexible terms and conditions.

There are many other co-operative banks from where you can get personal loan even if your net salary is Rs. 15,000 or less. Many of these banks offer loan ‘N’ times of gross monthly salary. You should check with these banks for the loan. Definitely the income criteria with such banks is not high compared to commercial banks.

Cash Loan

It is nothing but a personal loan but loan amount and tenure is short. So if you need instant credit and your salary is poor, then cash loan is a very good solution. You can apply for cash loan at:

Peer to Peer Lending Companies: These are online marketplaces for loan where lenders are individuals. You can decide which lender to take loan from and decide on the interest rate as well. Check out this article for more detail. With P2PL, you can apply for higher loan amount as well.

Mobile Wallets: If you have smartphone and use digital payments app such as MobiKwik, Paytm, PayU then you can get personal loan from these apps companies. However such companies offer small amount loan but with low interest and not very high income eligibility criteria. And this is what low income earner wants – save money. So if money required is small, then you can opt for cash loan from such apps. Typically based on the transactions with the app, the loan is pre-offered. But you can still apply exclusively. Important thing to note is – these app companies themselves do not provide loan and instead they partner with financial lenders (NBFCs) and provide loan.

Credit Finance Companies: These are again non-banking financial companies (NBFC) offering instant cash anytime, anywhere. Read more in detail here.

Taking personal loan from these instant loan providers is best, since there is no banking institution in between and the loan process is extremely fast. And most importantly there is no risk involved. Therefore they are considered as emergency cash partners.

Loan Against Securities

Another option to get loan and at the same time save money on EMI is against securities. This is nothing but a secured loan. So if you are a genuine borrower then keep your assets/belonging as a collateral with the bank such as fixed deposit, shares, mutual funds, LIC policy, gold and get a loan against it. Such loans carry low interest and hence are money savers. But remember that, in case of of default, banks have right to get their money from the assets kept with them as a collateral. Most importantly there is no salary criteria. So even if your salary is Rs. 12,000 or Rs. 10,000 or less you can apply and get loan easily.

Private Money Lenders

Never ever approach such lenders for your finance needs. They charge a very high interest rate which is even more than commercial bank and the risks involved. In case of default they use unethical ways to recover money. Although there are genuine lenders as well, but you should stay away from them because of high interest rate.

So as you can see, there are multiple options to get personal loan when your salary is under Rs. 15,000 per month.

Cash Loan for Low Income Earners: Instant, Short Term, Secured

The need for money typically arises when the month end nears or in the mid of the month. But imagine unexpected crisis arise all of a sudden (e.g. a medical emergency, money gets stolen before marriage, etc.) requiring good amount of money to meet the demand. And at that time you don’t have enough money in your bank account to meet the purpose.

Ideally in such cases, you will approach your friends or relatives for money, which is the best recommended option because it saves time and is extremely cost effective but works on trust. If they are able to help you at the time of need, then nothing better than that. But what if every option fails including your personal savings not able to fulfil your money requirement and you need money only for a very short term. This is typically a scenario when you have small amount of money in your bank or wallet.

Cash Loan – Your Emergency Cash Partner

In such scenario, cash loan is the solution to your problem which acts as a rescuer and act as your emergency cash partners. For certain category of individuals, e.g. low income earners, cash loan is the perfect solution.

Cash loan is nothing but a personal loan or advance loan but typically offered for a very short tenure and small amount. Unlike personal loan, where the tenure is long and fixed and loan amount is high, cash loan repayment can be done anytime and loan account can be closed before the tenure and extended as well, on need basis.

Who offers cash loan in India?

There are few lending companies in India offering such type of financing. Most importantly financial institutions do not offer cash loans in India. But there are lenders who offer loan for a short period (minimum 3 months – 24 months) with amount ranging from Rs. 5,000 to Rs. 5 Lacs.

These are broadly categorized as:

  1. Peer to Peer Lending Companies
  2. Mobile Phone Based Payment Apps
  3. Credit finance companies

Let’s get into details of these companies.

Peer to Peer Lending (P2PL) – Online Lending Marketplaces

Peer to peer lenders are basically non-banking financial corporations but under control by Reserve Bank of India. Since there is no involvement of bank, the loan processing is fast. Few of the prominent P2PL in India are – Faircent, i2ifunding, lendbox.in, and others.

In case of peer to peer lenders, the company themselves do not offer loan. Instead, money is lent by pool of investors (i.e. individuals). P2PL basically create a platform to connect borrowers with lenders. And in return, such companies make money through various fees associated such as joining fee, etc.

Mobile Wallets or Digital Financial Services Platforms

These are the new age fintech companies who make use of latest technologies to make the complete process digital. However financing is one of the service provided by these wallets. Their main business/service is digital payment. Advantages of taking loan from mobile wallets are – Very minimal paperwork, speedy processing, quick disbursement, and so on.

Few of the prominent mobile wallet players in India offering quick credit are:

Paytm: If you are a Paytm user (website or mobile app) then you are likely to get pre-approved loan depending on the transaction history with them.

MobiKwik: Another mobile wallet in India which offers instant loan of upto Rs. 60,000

PayU: In partnership with Reliance Money, PayU offers the smallest loan amount of Rs. 100 extending upto Rs. 1 Lac with a smallest tenure of just 15 days to 2 years. This is an excellent opportunity of getting personal loan for low income earners.

Like P2PL, mobile wallet companies themselves do not offer quick cash loan. Rather they have a tie-up with third party creditors, who actually lend money. Wallets are basically middlemen. For e.g. Paytm has partnership with Home Credit India Finance Private Limited (HCIN) which offers loan instantly.

Credit Finance Companies

These are again non-banking financial organisations offering instant cash anytime, anywhere. The process is 100% online and paperless. Few of these companies are:

Home Credit India Finance Private Limited (HCIN): Offering quick loan of upto Rs. 50,000. So you can even apply when the money required is Rs. 10,000.

OptaCredit Fintech Private Limited: This NBFC also makes use of highly advanced technologies and offers short term loan ranging from Rs. 20,000 to Rs. 5,00,000.

Payme India: Another company offering short term loan starting from minimum Rs. 5000.

However one very important eligibility factor taken into consideration by all the above listed digital loan providers is the credit worthiness of the applicant. So even if you are a high income earner, there is a chance of loan application getting rejected because of poor credit score. However for a first time credit applicant, getting instant money through these lenders is highly recommended.

If you are a poor income earners and wish to take personal loan from bank, then here is the list of banks and minimum income required.

Documents Required

For getting quick credit, low income earners (or anyone) should furnish correct & valid documents for faster processing and quick approvals. Typically the documents required by salaried individuals are:

  • Last 3 months salary slip
  • ID proof
  • Current and permanent residential address proof
  • If the applicant is staying on rent, then he/she needs to produce utility bill in the name of the landlord in addition to home rent agreement, voter ID, driving license, etc. as asked by the lending institution

For self-employed or businessmen, the documents will vary.

Either the applicant has to upload documents on the website/app of the lender or executives from these companies will visit you for collecting the documents. This varies for each company.

How is the money paid by the cash loan providers?

Although the word “cash” sounds confusing but the money is never offered in cash. Once approved, the borrower gets money in his/her bank account via National Electronic Fund Transfer (NEFT) or any other payment transfer method.

How to apply for instant cash loan?

There are three ways to apply for fast credit when going through above listed lenders:

  • On website of the lender
  • On mobile app of the lender
  • Personally visit their branches. However with advanced technology, most of digital finance lenders do not even requires the applicant to visit their office for loan application or any other related work.

Digital fintech companies have made the complete lending process – loan application, verification, approval, disbursement, repayment, closure – speedy and hassle free. This saves money and time of both the parties i.e. loaner and loanee. And most importantly money can be used for online purchases, wedding, medical emergency, vacation, and others.

Gross Income Less than Rs.10,000 – Personal Loan from SBI, Canara & others

If you search your E-mail inbox or SMS inbox or think of how many call communications have happened for personal loan then it won’t be surprising that the count would be high. Definitely each one of us must have done numerous such communications either from lender or agencies who work on behalf of such lenders, forcing you to get personal loan at a lower interest rate and guaranteeing you with 100% approvals or pre-approved loan offers.

However what they don’t disclose is the eligibility criteria during the initial interaction. It is after submitting the application, you come to know that personal loan application is rejected.

One of the biggest factor for personal loan approval is the income (gross or net monthly) of the applicant in addition to documentation, employer, city, etc. In addition to this, there is one factor checked by the lender in the background without your consent is the credit score check done through credit rating agencies such as CIBIL, Experian, ICRA and few others which are prominent in India. However amongst all these factors, gross salary (or net salary) is the most important. This is because, repayment capacity of the applicant is judged on the basis of his/her income.

Here’s the table showing the gross or net monthly income required (less than Rs. 15,000 per month) for personal loan by various lenders in India, mainly the banks.

Name of Bank and Perosnal Loan ProductMonthly Income Required
State Bank of India (Xpress Credit)Rs. 5,000
Canara Bank (Consumer Loan)Rs. 6,000
Abhyudaya Co-operativeRs. 8,000 (after EMI payment)
Canara Bank (Canara Budget)Rs. 10,000
Canara Bank (Teachers Loan)Rs. 10,000
State Bank of IndiaRs. 10,000 (rural/semi-urban)
HDFC BankRs. 15,000
ICICI BankRs. 15,000
Axis BankRs. 15,000
Fullertoan loanRs. 15,000
Punjab National BankRs. 15,000
Dena Bank (Suvidha)Rs. 15,000

As you can see, State Bank of India offers personal loan for low income earning individuals with monthly net income of just Rs. 5,000. So gross income requirement in this case should be around Rs. 6,000.

Benefits of Personal Loan

  • Is the best solution for meeting emergency money requirement
  • It is easy and quick to get. Especially for working professionals it becomes easier due to regular monthly income, which lenders check while evaluating credit worthiness.
  • Tenure can be reduced.
  • It can be prepaid but with extra charges, in some cases.
  • Money can be used for any purpose.
  • These are unsecured meaning applicant does not have to keep any collateral with the lender. Although there are ways to get personal loan against securities.

How can low income earners stop themselves from falling into the personal loan trap:

Bank is at the profit: Remember that, personal loan is the most profitable business for the lender. This is because of the high interest rate charged in addition to the other charges. Although it carries highest risk for the lending financial institutions but that risk is balanced through high interest rate. And also banks have rights to recover money from the borrower through various means.

Should be the last option: Personal loan should be the last option for your money requirement because the EMI can hurt your budget badly. Before seeking the loan, try to ask for money from your friends/relatives and in return pay them interest which is small compared to the high rates charged by the banks over the money granted. This way both the parties at the advantage.

Never agree on paying less EMI in return of long tenure: This looks enticing initially but is very costly when you calculate the total money you have to shell out of your pocket at the end of the tenure. It is always recommended to end any credit line in a short time frame. Longer the tenure, higher the money you will end up paying.

Be aware of extra charges which are hidden in the loan documents: In addition to the EMI, there are many other fees charged by the banks. Although these fees are not hidden but are actually never disclosed at the time of application or are not paid attention by the applicant. Such fees further increases the cost of the loan. The charges include – processing fees, late payment, pre-payment, cheque bounce, etc.

Try other alternatives for personal loan: Apart from commercial bank, poor income earner can also approach co-operative banks for personal loan. Interest rate and income eligibility criteria is low compared to large banks. Peer to peer lenders is another solution for the loan.

Finally signing on dotted line means you are caught in the trap: Because after signing, it becomes extremely difficult to go and win the legal battle against big financial institutions. Chances of winning the legal case are actually very low. And in addition, you will have to pay money to the lawyer, etc.