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How to Get a Personal Loan in 7 Steps
Securing a personal loan begins with assessing your financial profile and finding the loan offer that best suits your needs.
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Updated Oct 14, 2024 · 3 min read
Written By: Shanti and Mayank
Lead Writer 
Edited by Priya K
Fact Checked
Steps
1. Check Your Credit
Before applying, review your credit score to gauge your chances of approval and find potential loan terms. Higher scores improve your approval chances and may help you secure lower rates. Here’s how scores typically rank:
Credit scores typically fall into these categories.
- 750 and above: Excellent credit.
- 700-749: Good credit.
- 650-699: Fair credit.
- Below 650: Poor credit.
MinEmi Tip:
Check your score for free on Minemi, and review your credit report from credit bureaus like CIBIL or Experian. Correct any errors that might affect your score, and prioritize timely payments and low credit utilization.
2. Calculate Your Loan Payments
First, decide how much you need to borrow, factoring in potential processing fees. Many lenders charge a processing fee of 1%-3%, which they deduct from the loan disbursal amount. Use Minemi’s loan calculator to estimate your monthly payments based on the loan amount, interest rate, and loan tenure.
Sample APR Estimates Based on Credit Score
| Borrower Credit Rating | Score Range | Estimated APR |
|---|---|---|
| Excellent | 750-900 | 10.5% |
| Good | 700-749 | 12.5% |
| Fair | 650-699 | 15.5% |
| Poor | 550-649 | 18.5% |
| Very Poor | 300-549 | 22.0% |
Disclaimer: The APRs provided are estimates based on industry averages and are not specific to any lender. Actual rates may vary based on lender policies and individual credit profiles.
Your loan estimate
Monthly payment
Total Principal
Total interest payments
Total loan payments
Payoff date
Processing Fee
Cost Of Loan
APR
%
Loan Tenure Tip:
Consider how long you’ll need to pay off the loan. Longer loan tenures mean smaller monthly payments, but you’ll pay more in interest over time. Choosing a shorter tenure can save you interest if it comfortably fits within your budget.
3. Research and Compare Lenders
You can get a personal loan from banks, NBFCs, and digital lenders, each offering unique benefits for various customer profiles. When comparing lenders, look at:
- Credit Score Requirements: Banks may require high credit scores, while NBFCs and digital lenders may accept lower scores.
- Loan Amounts and Terms: Loan amounts typically range from ₹50,000 to ₹50 lakh with tenures from 12 to 60 months. Select lenders with loan terms suited to your needs.
- Funding Speed Digital lenders often disburse funds faster, with some offering same-day funding upon approval.
- Co-signed or Secured Loans: Some lenders allow co-signers or collateral, which may improve approval chances and rates.
MinEmi Expert Take:
Expert take: Why research lenders?
"Doing thorough research helps ensure you find the lender that sees you as an ideal customer, which can result in better rates and terms. Choosing the right lender can save you money in the long term."
Ayush Gupta, Assistant Assigning Editor, Personal Loans
4. Get Principal Approval for Loan Offers
In India, many banks offer pre-approved or principal-approved loan options based on your banking history. This step gives you a head start by helping you understand the terms you might receive, without impacting your credit score.
- Pre-Approval with Your Bank: If you have a savings account or credit card with a bank, check to see if they offer pre-approved loan options based on your existing relationship.
- Principal Approval on Bank Websites: Some banks allow you to get principal approval by applying through their website, giving you a preliminary assessment of loan eligibility and terms.
MinEmi Tip
Checking with your primary bank for pre-approval options can save time and give you access to preferential rates based on your banking relationship.
5. Select a Lender and Complete Your Application
After narrowing down your options, choose the lender that offers the best terms and proceed with the application. Lenders generally require:
- Identification: Aadhaar, PAN, or Passport.
- Proof of Address: Utility bills, lease agreements, or Passport.
- Proof of Income: Salary slips, bank statements, or income tax returns.
The lender will conduct a hard credit check, which may temporarily impact your credit score. Some lenders provide an immediate decision, while others may take a few days.
MinEmi Tip
Review your monthly budget to confirm that the EMI fits comfortably. If needed, choose a repayment term that aligns with your monthly income to avoid late payments.
6. Review the Fine Print
Before signing the agreement, carefully examine the terms. Be mindful of:
Fees. Prepayment penalties — fees for paying off a loan early — are rare, but lenders may charge other fees, including origination and late payment fees.
APR surprises. The total cost of your loan, including interest and any origination fees, should be clearly disclosed and figured into the APR.
Automatic withdrawals. If a lender automatically withdraws loan payments from your checking account, consider setting up a low-balance alert with your bank to avoid overdraft fees.
MinEmi Tip
Set up automatic payments for your loan to ensure timely EMIs. This supports good repayment history and protects your credit score.
7. Sign the Loan Agreement and Receive Funds
After signing, the funds are typically disbursed within a few days. Many digital lenders offer same-day or next-day disbursal to your account, enabling you to use the funds promptly.
MinEmi Tip
Create a repayment plan to stay on top of EMIs, as your first payment is usually due 30 days after disbursal.
Minemi Tips for Success
- If Denied, Improve for Next Time: If Denied, Improve for Next Time: If your application is denied, request feedback from the lender. This can guide you in strengthening your credit score or lowering your debt-to-income ratio to improve future approval chances.
- Automate Payments: Setting up auto-pay can help ensure on-time payments, avoiding late fees and supporting a positive credit history.
Frequently Asked Questions
What credit score is needed for a personal loan?
Can I get a loan with a low credit score?
How does a personal loan affect my credit?
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