Small personal loans are often used to cover short-term financial needs, such as unexpected expenses, medical bills, or home repairs. These, usually, unsecured loans are offered by banks, NBFCs, and digital non-banks and can range anywhere between ₹5K to ₹10L, depending on the lender’s policies and your eligibility. If you’re considering applying for a small personal loan online, then here’s what you need to know.

Where can you use a small personal loan?

By definition, a small personal loan doesn’t have a fixed function or a specified realm of usage, unlike, say, a home loan or a car loan. This diversity and flexibility of use allow you to pay for a host of activities or situations such as:

• Medical bills
• Home renovation and/or repairs
• Education/tuition fees
• Domestic or international vacation
• Wedding related expenses

The benefits of using a small personal loan?

• No need for upfront collateral/security – Being an unsecured loan, you do not need to provide any security to avail of it.
• Minimal documentation – The application process for small personal loans online requires minimal documentation. The entire process is digitally conducted without the need for any in-person contact.
• Quick approval and disbursal – An instant small personal loan is exactly what the name suggests. Since the application and verification processes are managed online, you can expect (typically) same-day approval and a fast disbursal, getting you the funds when you most need them.
• Attractive interest rates – When compared to credit cards (the alternate option to a small personal loan), personal loans have more competitive interest rates that can be rapid over your chosen repayment term. This is subject to your eligibility and credit score.
• The flexibility of usage – As mentioned in the previous section, a personal loan can be used for a multitude of purposes giving you the flexibility and freedom to use it the way you want.

Things to keep in mind while applying for a small personal loan

Eligibility Criteria

There are no fixed eligibility criteria for applying for an instant small personal loan. Lenders have the freedom to set their requisites. Having said that, here are the typical eligibility requirements that most banks, NBFCs and non-banks set forth.

• Healthy credit score – usually 650 and above
• Age of the applicant – minimum 21 years, maximum 60 years
• Monthly income – ₹ 20K per month
• Nature of employment – employed as a regular full-time employee (for at least 1 year with the same company)

To know the specific requirements, it is better to approach the lender directly.

Documents Required

These vary as per the policies of the lender. However, they are far less complicated than other, secured, forms of loans. Typically, a PAN card, an Aadhaar card, and a salary account bank statement are sufficient to apply for a small personal loan online. Being a largely paperless process, even these documents need to be uploaded to the lender’s web portal or mobile app.

Wrapping it up

There are several avenues you can consider to apply for a small personal loan apart from the traditional options like banks and NBFCs. For example, Fi Money provides instant loans that arrive directly in your account. These are pre-approved personal loans made available to select users with good credit scores. This process is 100% paperless, and the loans are provided at competitive interest rates — where each user remains in control with complete visibility of all details. Plus, you can avoid EMI late fees by setting up automatic in-app payments. Our RBI-licensed partner bank assigns an eligible loan amount to each user (up to ₹5 lakh).

Frequently asked questions

What is the eligibility criteria for a small personal loan?

The eligibility criteria vary as per the lender’s policies. Your age, monthly/annual income, credit score, the amount being borrowed, and nature of employment all have a bearing on your loan eligibility. These factors also determine the amount you can get and the interest rate offered. You can check the criteria by contacting the lender you intend to take the loan from.

What is the minimum salary for a small personal loan?

There is no set rule for this. Often lenders require applicants to have a monthly salary of at least ₹ 20K to apply for a small personal loan. This gives them assurance regarding your repaying capability. Having said that, it does not mean that people earning less than ₹20K cannot get a loan. The best approach here would be to contact the lender to understand their specific requirements regarding a minimum salary for the applicants.