Personal loan questions
What drives personal loan pricing, which documents lenders ask for, and how to avoid costly add-ons.
Why do personal loan rates vary so widely?
Pricing is risk-based: bureau score, employer category, income stability and existing obligations. The advertised starting rate applies to a narrow best-case profile.
What documents are needed?
PAN and Aadhaar for KYC, three months of salary slips or two years of ITR for the self-employed, and six months of bank statements showing salary credit.
Does applying to several lenders hurt my score?
Yes, each formal application creates a hard enquiry. Compare offers on rate and fee first, then apply to one or two lenders.
How is a flat rate different from a reducing-balance rate?
A flat rate charges interest on the original principal for the whole tenure, so a 12% flat quote is roughly 21% to 22% on reducing balance. Always compare reducing-balance rates or APR.
Can I prepay a personal loan early?
Most lenders allow foreclosure after 6 to 12 EMIs and charge 2% to 5% of the outstanding principal plus GST.
Is loan insurance mandatory?
No. Credit-life premium is often bundled into the disbursal amount and can be declined; ask for the loan agreement to be reissued without it if you do not want the cover.