Unsecured Loans 2025 - Details & Overview

Collateral-free: No collateral is required, making it easier to access the loan.

Flexible loan amounts: You can opt for smaller loan amounts based on your needs.

Flexible tenure: Unsecured loans offer adjustable loan tenures, allowing you to choose a repayment schedule that suits your financial situation.

Easy repayment options: Flexible Equated Monthly Instalments (EMIs) make repayment more manageable.

Types of Unsecured Loans Available in India

The below listed are some of the types of unsecured loans offered in India:

Revolving Loans

Revolving loans offer a flexible credit limit that you can borrow, repay, and re-borrow as needed without reapplying. As you repay, your available credit replenishes, making it ideal for ongoing financial management.

Credit Cards 

One of the most common examples of unsecured loans is credit cards. They allow you to spend, repay, and borrow again within a set limit. The interest is charged on outstanding balances if not paid in full by the due date.

Consumer Loans 

Certain consumer loans, like store credit, personal lines of credit, or buy-now-pay-later options, function as unsecured loans. They let you buy items like electronics or furniture and repay in instalments; once repaid, the credit limit resets for future purchases.

Term Loans

Term loans provide a lump sum amount that the borrower agrees to repay in fixed installments over a set period. They feature a fixed or floating interest rate and a clear repayment schedule, requiring borrowers to repay the entire loan plus interest within the agreed timeframe. 

Personal Loans: Personal loans are often unsecured loans and are approved without collateral. In this category, borrower receives a lump sum amount and repays it within a fixed period in Equal Monthly Installments (EMIs)

Education Loans: Unsecured education loans are usually offered as term loans disbursed as a lump sum. Borrowers usually begin repayment after a grace period (often post-graduation), covering tuition, living, and other educational costs over a fixed, multi-year period.

Home Renovation Loans: This is a type of unsecured loan usually offered for home improvements and repairs. These are generally offered as term loans, and the borrower repays the lump sum in fixed installments over a set period, using funds for various renovations like kitchen remodels or roof repairs.

Payday Loans:  These are short-term, unsecured term loans for urgent, small expenses. Borrowers receive a lump sum and repay it in full on their next payday. These loans typically carry high interest rates due to their brief repayment period. 

Instant Loans: Consolidation loans combine multiple debts into one, simplifying repayment and potentially offering lower interest rates or better terms. They are especially useful for managing several high-interest loans or credit card debts.

Signature Loans: The simplest form of unsecured loan where the borrower's signature acts as the sole security. The loan is repaid in instalments, and it can be obtained from banks or NBFCs.

Consolidation Loans

A consolidation loan allows you to combine multiple existing debts into a single loan. The main advantage of this type of loan is that it simplifies the repayment process by reducing the number of payments you need to make each month, and it may also offer a lower interest rate or better terms. Consolidation loans are especially helpful when you have multiple high-interest loans or credit card debts.

P2P Loans Peer-to-peer (P2P) lending platforms connect borrowers directly with individual investors, bypassing banks. They can offer consolidation loans, allowing borrowers to combine debts into a single, potentially lower-interest loan, with a simplified repayment process. 

Business Loans: Unsecured business loans can help small businesses consolidate multiple debts, streamlining repayments, potentially lowering interest rates, and improving cash flow. These loans are offered based on the business's financial health and creditworthiness.

How to Apply for Unsecured Loans?

You can apply for an unsecured loan in the following ways:

Apply Through Company Website

Step 1: Go to the official website of your chosen lender (e.g., a bank or NBFC).

Step 2: Find the section for loan applications (usually under 'Loans' or 'Apply Now').

Step 3: Fill Out the Application Form. Enter your personal, financial, and employment details as required.

Step 4: Upload necessary documents like identity proof, address proof, income proof, and credit score details.

Step 5: The lender will review your application and may contact you for additional information.

Step 6: If approved, you will receive a loan offer with the terms, interest rate, and repayment schedule.

Step 7: If satisfied, accept the loan offer, sign the agreement digitally, and wait for the disbursement.

Apply Through Loan Aggregators

Step 1: Go to a third-party aggregator website like Bankbazaar.

Step 2: Enter your loan requirements (amount, tenure, etc.), and compare different loan options available from various lenders.

Step 3: Select the loan product that suits your needs based on interest rates, processing fees, and other terms.

Step 4: Complete the application form on the aggregator’s website, providing necessary personal and financial details.

Step 5: Upload your documents (identity proof, income proof, etc.) as requested.

Step 6: The aggregator will forward your application to the selected lender, who will process it.

Step 7: If approved, you will receive an offer from the lender directly. Accept the terms and sign the agreement.

Step 8: Once the agreement is signed, the loan amount is disbursed to your account.

Apply at Branch Office

Step 1: Go to the nearest branch office of the lender (bank or NBFC) where you want to apply for the loan.

Step 2: Ask for the loan application form from the bank officer.

Step 3: Complete the form with the required details (personal information, employment, income, etc.).

Step 4: Submit photocopies of documents like ID proof, address proof, salary slips, and bank statements.

Step 5: The bank will assess your application and may verify your documents and credit history.

Step 6: If the application meets the bank’s criteria, you will receive an approval or rejection notification.

Step 7: Upon approval, you will be asked to sign the loan agreement.

Step 8: After signing the agreement, the loan amount will be disbursed to your account.

Factors Influencing Approval of Unsecured Loans

The below listed are some of the factors that influence approval of unsecured loans -

1. Credit history: Credit history is one of the most crucial factors considered by lenders when approving a loan. A good credit history projects you financially responsible individual and boosts your chances of loan approval 

1. Income: Income shows your loan repayment capacity. That is why lenders check when approving a loan. 

1. Credit score: A good credit score indicates that you repay loans or debts on time. The higher the credit score, the greater your chances of getting a loan approved. 

1. Credit utilisation ratio: A high credit utilisation ratio indicates that you depend too much on credit. It is advisable to maintain it below 30% for easy loan access. 

Features of Unsecured Loans

1. Easy Application: Most of the banks and lending institutions offer online application processes for unsecured loans. This makes the loan application easy. 

1. Quick Turnaround: These loan applications are usually processed quickly, sometimes within 24 hours. This makes them useful for urgent financial needs. 

1. Higher Interest Rates: The unsecured loans are approved without collateral. That is why these loans attract a higher rate of interest.  

1. No Collateral Required: These loans are approved without any collateral. This makes it a popular choice during emergencies. 

1. Minimal Documentation: The documentation process for this category of loan is typically minimal, often paperless, with many lenders allowing online submission. 

Eligibility Criteria for Unsecured Loans

The eligibility criteria for unsecured loans are as follows: 

1. The applicant should have a stable job to be eligible for unsecured loans.
   

1. Salaried individuals with a minimum of 2 years of professional service or a self-employed person with a minimum of 5 years of earning tenure. 

1.  The age Age of the applicant should be above 21 years and below 60 years for salaried borrowers and between 25 and 65 years for self-employed individuals. 

1. Current financial statements play a crucial role in determining loan eligibility and therefore should be provided during the loan application process. 

1. The credit history of customers is also taken into account and is instrumental in determining eligibility, rate of interest, and loan amount. 

1. Pending EMIs from other loans are also taken into consideration by the lending bank for determining your loan amount eligibility. 

Documents Required to Apply for Unsecured Loans

Documents required for salaried applicants are:

1. Duly filled loan application form
2. Couple of passport-size photographs of loan borrower
3. Identity proof - passport, driving license, voters ID, Aadhaar Card, PAN card (any one proof)
4. Proof of residence - utility bill, passport, etc.
5. Salary slips for last 3 or last 6 months

Documents required for self-employed applicants are:

1. Office address proof for self-employed individuals
2. Proof of continuity of business
3. Processing fee cheque
4. Duly filled loan application form
5. Couple of passport-size photographs of loan borrower
6. Identity proof - passport, driving license, voters ID, PAN card (any one proof)
7. Proof of residence - utility bill, passport, etc.
8. Salary slips for last 3 or last 6 months

Unsecured Personal Loans from Top Banks

1. HDFC Bank Unsecured Personal Loan Details

HDFC is one of the biggest private lenders in the country. The transparent process in offering loans helps customers with easy access to personal loans.

Benefits

1. Loan disbursal within just 10 seconds for pre-approved customers.
2. Loan disbursal within 4 hours for other customers.
3. Optional insurance coverage for customers.
4. Hassle-free application process.

2. Yes Bank Unsecured Loan Features

Yes Bank has a diverse range of loans in its line-up. The personal loan offered by the bank comes with flexible terms for the benefit of customers.

Benefits

1. Repayment tenure ranging from 12 months to 60 months.
2. Speed and hassle-free application process.
3. Option for transferring existing loans (with high interest) from other banks to Yes Bank.

3. IDFC First Bank Unsecured Loan Options

Capital First is one of the major financial institutions that offers loans to small and medium enterprises in India. The personal loan offered by the company comes with the following terms:

Benefits

1. Flexible repayment tenure of up to 60 months.
2. Online approval in just 2 minutes.
3. Hassle-free loan application process.

Unsecured Instant Loans / Advance Salary Loans

1. Fibe Instant Unsecured Loan Details

Fibe is a financial service provider that offers instant loans with 100% paperless approval. The mobile application of the company can be used to get loans and keep track of the repayments.

Benefits

1. Hassle-free application process.
2. Special loans for children's school fees and shopping needs.
3. Loan approval and disbursal within a few hours of application.
4. Flexible repayment process.

2. LoanTap Unsecured Loan Review

The instant loans offered by Loan Tap comes with flexible benefits. Customers can get a maximum loan amount up to 2.5 times their monthly salary with minimal processing time.

Benefits

1. Repayment tenure up to 60 months
2. Hassle-free online application process.
3. Instant loan disbursal within just 24 to 36 hours of application.

3. Flexsalary Unsecured Loan Features

Flexsalary is one of the digital finance service providers in the country. Customers can get easy access to instant loans for various needs including emergency medical expenses, marriage, home renovation, etc.

Benefits

1. Reasonable interest rate.
2. Open-ended loan tenure.
3. Easy documentation.

Difference between Secured and Unsecured Personal Loans

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