Personal loans are a great way to manage large expenses without dipping into your savings. Whether it’s a medical emergency, wedding, travel, or home renovation, a personal loan offers instant funds with no collateral. But before you hit “apply,” there’s one tool you must use – an EMI calculator for personal loans.
This simple online tool gives you a quick estimate of your monthly repayments based on the loan amount, interest rate, and tenure. It helps you stay in control of your finances and avoid unpleasant surprises later.
What is an EMI Calculator for Personal Loans?
An EMI calculator for personal loans is a free online tool that lets you calculate your Equated Monthly Instalment (EMI) within seconds. Just enter:
Your desired loan amount (e.g. Rs. 3 lakh)
The interest rate (e.g. 11.5%)
The loan tenure (e.g. 3 years)
And voilà — the calculator shows your estimated EMI, total interest payable, and total repayment amount.
It’s that simple — no spreadsheets, no formulas, no stress.
Why Every Borrower Should Use One
Here’s why using an EMI calculator should be the first step for anyone applying for a personal loan:
✅ It helps you plan your budget
By knowing your EMI in advance, you can ensure that your monthly instalments won’t strain your regular expenses.
✅ It prevents over-borrowing
Sometimes, the loan amount you want and the EMI you can actually afford don’t match. The calculator helps you strike the right balance.
✅ It helps compare loan offers
Different lenders offer different rates. When you use the calculator with multiple interest rates, you’ll know who offers the lowest interest on personal loans.
✅ It supports smarter decisions
Want to reduce your EMI? Try increasing the tenure. Want to pay off faster? Reduce the tenure. The calculator shows you how these changes affect your monthly outgo.
Let’s See an Example
Suppose you’re looking at a personal loan of Rs. 4 lakh for 3 years at 11% p.a.Your EMI will be approximately Rs. 13,065.
Now, if you stretch the tenure to 5 years, the EMI drops to around Rs. 8,705 — but your total interest paid increases.
With an EMI calculator for personal loans, you can test various combinations like this and pick what works best for your needs.
Planning for the Lowest Interest on Personal Loan
Everyone wants the best deal — and that usually means getting the lowest interest on personal loans. Here’s how the EMI calculator helps:
Try different lenders’ rates to compare total interest costs
Combine it with eligibility criteria to find offers you can actually qualify for
Use it to plan for shorter tenures, which often attract better interest rates
Avoid loans with hidden charges by calculating total repayment
💡 Pro Tip: Use the calculator before and after you negotiate with lenders. It helps you see how even a small difference in rate affects your EMI.
Use It When You…
Are planning to apply for a personal loan
Want to check if a lender’s offer fits your budget
Need to decide between 3-year vs. 5-year tenure
Are choosing between top-up or new loan options
Want to prepay and calculate the impact on interest saved
How to Apply After Using the EMI Calculator
Once you’ve figured out your comfort zone using the EMI calculator, applying for a personal loan becomes much easier:
Check pre-approved offers online – With just your mobile number and OTP
Choose your amount and tenure – Based on your calculated EMI
Submit your documents – PAN, Aadhaar, salary slips, and bank statements
Get funds quickly – Some lenders disburse the loan within 24 hours
You can also use tools like DigiLocker and Account Aggregator to speed up documentation digitally.
Extra Benefits of Using an EMI Calculator for Personal Loans
Time-saving – No complex calculations needed
Accessible – Use it on your phone, anytime
Transparent – Know the full cost of borrowing upfront
Compare offers – Find the lowest interest on personal loan easily
Customisable – Adjust amount, tenure, and rate as per your needs
Final Thoughts: Borrow Wisely with the Right Tools
Taking a personal loan is a big decision — one that impacts your finances for months or even years. But with the help of an EMI calculator for personal loans, you can make that decision with clarity and confidence.
It’s free, simple, and incredibly helpful. Use it before applying, compare multiple offers, plan your tenure smartly — and most importantly, borrow within your comfort zone.
Company Profile is an initiative by StartupTalky to publish verified information on different startups and organizations. The content in this post has been approved by ZestMoney.
Many times in our lives, we just need a small financial push to realize our dreams or fulfill our needs. In today’s organized money market, we turn to banks and other financial institutions for credit for various purposes. However, it’s not always easy to get a loan. From documentation to your current income and credit history, there are lots of parameters that you need to fulfill to get credit.
Thankfully, the scenario is changing now, and many financial and fintech startups are coming up with innovative ways to make borrowing easy and quick for customers.
Bangalore-based ZestMoney is one such fintech startup that is making borrowing possible for people who have an insufficient credit history. People can get quick and easy loans and pay for products with ZestMoney Easy EMI.
Let’s know more about this BNPL startup that is making life easy for millions of Indians by providing easy access to credit.
ZestMoney is a platform that uses mobile technology, digital banking, and Artificial Intelligence to make getting loans easy. While many lending organizations hesitate to lend money in the absence of proper credit history, ZestMoney is the platform that does not see the absence of credit history as a barrier to getting a loan. ZestMoney through its AI-based machine learning decision engine creates a risk profile for every borrower. The ones who do not have sufficient credit history just need to provide some additional information based on which ZestMoney’s Decision Engine analyzes the credibility of the borrower and lends him money.
The products of ZestMoney include ‘credit limit’, also called ZestMoney EMI, and personal loans. To be able to access the ZestMoney Credit Limit, one just has to sign up with ZestMoney and complete the KYC process. Once approved, a user is assigned a credit limit based on his eligibility, and the user can use this credit limit to make payments to ZestMoney’s 3000+ merchant partners. ZestMoney has partnered with leading brands from different categories like Amazon, Flipkart, Myntra, SleepyCat, Xiaomi, NestAway, UpGrad, and many more.
The company’s lending partners include DMI Finance, Fox Capital, PACE Finance, Northern Arc, SMC Finance, Nahar Credits, InCred, Muthoot Finance, CSB Bank, Ghalla Bhansali, IIFL, and Hedge Finance.
ZestMoney offers personal loans only to customers who are using ZestMoney’s ‘Credit Limit’ service. As such one who wants to take a personal loan from ZestMoney needs to apply for ZestMoney ‘Credit Limit’ first.
ZestMoney’s founder trio, Lizzie Chapman from London, Priya Sharma from Delhi, and Ashish Anantharaman from Mumbai, were associated with a UK-based finance company called Wonga.
Lizzie Chapman
Lizzie Chapman served as the co-founder and CEO of ZestMoney. Lizzie was a student at the University of Edinburgh, where she obtained her BSc. degree in Microbiology. She started her career with Goldman Sachs, where she worked as a Business Analyst and an Associate. She then served as an Investment Manager at the Wellcome Trust. Wonga.com was the next company that she joined, and she served as the Country Head of India there. She then founded Abode Bombay. She also served as an Executive Director at DBS Bank and a Non-Executive Board Member at IndiaMart.
Lizzie is an advisor at India Quotient, a member of the Innovation Council of the National Payments Corporation of India (NPCI), and a member of the National Startup Advisory Council (NSAC).
Priya Sharma
Priya Sharma served as the co-founder, CFO, and COO of ZestMoney. Priya did a B.Tech. in Metallurgical Engineering from IIT Varanasi before obtaining an MBA in Finance from London Business School. Priya Sharma served as a Senior Associate at Sapient, a Consultant at Delloite, and an associate at Bank of America Merrill Lynch, and then she joined Wonga.com, where Priya was the head of corporate development before joining hands with the other co-founders and building ZestMoney.
Ashish Anantharaman
Ashish Anantharaman served as the co-founder and CTO of ZestMoney. He has a Bachelor’s degree in science, software engineering from the University of Mumbai. Ashish previously served as an Application Developer at Veritas Technologies LLC, a senior developer at Betfair, an engineering team lead at Sportingbet, and then the head of engineering at Wonga.com.
In a recent development, co-founders Lizzie Chapman, Priya Sharma, and Ashish Anantharaman have stepped down from their positions at ZestMoney. This decision comes in the wake of the collapse of the anticipated acquisition deal with PhonePe.
ZestMoney has announced that Abhishek Sharma, currently serving as the senior vice president of growth, Mandar Satpute, the chief banking officer, and Mohit Chhajer, the vice president of finance and financial operations (FinOps), will assume leadership positions within the company. This decision reflects ZestMoney’s commitment to maintaining a strong and experienced leadership team.
ZestMoney – Startup Story
Lizzie, Priya, and Ashish observed that the Online Credit Transaction facility was not up to the mark in India. Also getting credit was not easy for those who do not have proper credit history. With their knowledge and experience, they wanted to create a solution to resolve these uses, which led them to start ZestMoney in 2015.
ZestMoney – Mission and Vision
“We are on a mission to make life more affordable for India using technology-led solutions,” says the mission statement of ZestMoney. Making life affordable is the vision of ZestMoney.
ZestMoney – Name, Tagline & Logo
ZestMoney Logo
The word ‘Zest’ stands for positive feelings like enthusiasm, zeal, and passion, and thus the word ‘Zest’ in ‘ZestMoney’ represents the quick lending of money by ZestMoney thus making borrowing money a happy process rather than a matter of concern. The tagline of the company is ‘Adjust Nahi, Zest Karo.’
ZestMoney – Business and Revenue Model
ZestMoney acts as a virtual EMI platform, which integrates with merchants across online and offline channels. The company serves as a payment partner and an affiliate partner to these merchants and helps bring them new transactions and customers.
The company generates the major chunk of its revenues from the Direct Selling Agency Fees, which is the money that the company collects from its lending partners (NBFCs) as a result of the various services like lead generation, KYC, customer care and branding, which it provides. ZestMoney also charges a merchant commission on a fixed rate on products and services purchased by the borrowers from the merchants. Arranger fees are another vertical of revenue that ZestMoney has along with the other verticals, which consists of income from any other revenue wing.
ZestMoney has raised funding from leading investors like Goldman Sachs, Quona Capital, Alteria Capital, and Primrose. The funding details of ZestMoney are listed below:
Date
Funding Round
Amount
Lead Investors
June 29, 2022
Debt Financing
$2.54 million
Alteria Capital
September 22, 2021
Series C
$50 million
Zip Co Limited
March 13, 2020
Venture
$11.3 million
Primrose Hills Ventures
December 19, 2019
Series B
$15 million
Goldman Sachs
April 22, 2019
Series B
$20 million
Quona Capital
January 18, 2019
Debt Financing
–
Alteria Capital
August 27, 2018
Series A
$13.4 million
Xiaomi
December 7, 2016
Series A
$6.5 million
PayU
September 1, 2015
Seed
$2 million
Nelson Holzner, Omidyar Network
ZestMoney – Growth and Revenue
ZestMoney earns commissions from merchant partners, lending partners, and also from borrowers. The company has reported that it has 17+ million registered users and expects the numbers to rise further.
In 2019, the company also had an NPS rating of 75, which is higher than that of Amazon and Uber.
In March 2021, ZestMoney stood second in a ranking of the 50 fastest-growing technology companies in India by Deloitte Technology. The rankings were based on percentage revenue growth over three years and ZestMoney grew 2,706 percent in these years.
The leading player in the Indian fintech industry, ZestMoney’s total revenue grew 1.6x to INR 145 crore in FY22 from INR 89.3 crore in FY21. Operating revenue also witnessed substantial growth, soaring by 68.6% to INR 138.4 crore in FY22 from INR 82 crore in FY21.
However, alongside its revenue growth, ZestMoney also faced widening losses, with losses expanding 3x to INR 398.8 crore in FY22 compared to INR 125.8 crore in FY21.
ZestMoney – Partnerships
Though ZestMoney is known for partnering with lenders like ICICI Bank, TATA Capital, DCB Bank, and more, the company also saw some partnerships outside of it.
ZestMoney partnered with Pickyourtrail on February 2020. The fintech company collaborated with the Chennai-based travel startup to provide consumers with flexible payment options for booking itineraries. This tie-up comes as a part of Pickyourtrail’s strategic plan to reach more customers.
The new partnership aims to facilitate travelers a more seamless travel booking experience by offering No Cost EMIs, along with options to ‘Travel now, pay later in 3 easy installments’. Providing the highest approval rates and zero pre-closure charges, travelers now don’t require credit history and are assured hassle-free online loan approval to experience their dream destination.
ZestMoney is the largest consumer lending fintech company in India. Its unique platform uses mobile technology, digital banking, and Artificial Intelligence to make life more affordable to people who currently don’t have access to credit cards or formal financing options due to insufficient credit history. Pickyourtrail is the latest brand to get Zestmoney onboard as a payment partner. The company has previously partnered with notable brands like Amazon, Myntra, Raymond, Uber, Big Bazaar, and Titan.
ZestMoney – Competitors
Some of the major competitors of ZestMoney are:
Finzy
LazyPay
Snapmint
KredXIndia
ZestMoney – Future Plans
The company plans to expand its product development and partnerships with an increased run rate in the future. While several ZestMoney Merchant Partners like Xiaomi, Titan, and Croma, accept ZestMoney EMI at offline stores, the company is partnering with more such merchants which will allow customers to pay using ZestMoney EMI in more offline outlets.
FAQs
What is ZestMoney?
ZestMoney is a Bangalore-based Fintech startup that is making borrowing possible for people who have an insufficient credit history.
Who is the Founder of ZestMoney?
Lizzie Chapman, Priya Sharma, and Ashish Anantharaman are founders of ZestMoney.
Who are the competitors of ZestMoney?
Finzy, LazyPay, Snapmint, and KredXIndia are some of the major competitors of ZestMoney.
Who are the partners of ZestMoney?
ZestMoney has partnered with leading brands like Amazon, Flipkart, Myntra, Xiaomi, Udacity, upGrad, and many more.
Who are the lending partners of ZestMoney?
The lending partners of ZestMoney include DMI Finance, Northern Arc, SMC Finance, Nahar Credits, InCred, Muthoot Finance, CSB Bank, Ghalla Bhansali, IIFL, and Hedge Finance.
How do I pay with ZestMoney?
To pay with ZestMoney, select the EMI option at checkout and choose ZestMoney EMI as your payment method.
The definition of credit is the practice of borrowing money, either as a loan or for purchase with the promise of paying off the debt within a stipulated period of time. A credit score is defined as a statistical method to ascertain the likelihood of an individual paying back the money that is owed to them.
A credit score is essentially used by lenders, physical or online, to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt. It is used to determine who qualifies for a loan, the interest rate, and up to what credit limit. Organizations like mobile phone companies, landlords, and government departments also use the credit scores of individuals to ascertain their creditworthiness.
Credit score is important to measure the risk assessment of an individual by the credit issuer. This is especially employed when an individual applies for credit like a loan, mortgage, or credit card. It allows the financial institution, which is extending the credit, to check the individual’s reliability in repaying the debt in a timely manner. A lower credit score can result in a loan rejection or even a higher interest rate compared to someone with a higher credit score. The credit score is valuable only when the data collected is over a long period of time.
Components of Credit Score
Components of Credit Score
There are various factors taken into consideration when evaluating the credit scores of an individual. These factors all add up to either a high or low credit score.
Credit payment history of the individual (35%)
Current debts of the individual (30%)
Duration of time of credit history (15%)
Credit Mix (10%)
Frequency of applications for new credits (10%)
Credit Scores Calculation
Credit Information Bureau (India) Limited (CIBIL), established in August 2000, is the first credit information company in India. It is CIBIL that allows credit ratings to individuals and sends them to banks for a loan applicants, based on which a loan is either sanctioned or not sanctioned.
It is a two-way information exchange where initially all credit information of an individual is sent to CIBIL by the banks. This information essentially pertains to the repayment of loans and credit cards. Information is then computed by CIBIL into a number range between 300 and 900. Scores lower than 600 and closer to 300 are considered low credit scores and may lead to applications for loans and credit cards being rejected. A credit score rating of higher than 600 ensures a higher possibility of getting a loan or credit card. CIBIL maintains a historical record of an individual’s payment behavior pattern which is sent to banks on request.
This service was launched with a view to reduce bad credits as well as to instil habits leading to high credit scores and teach financial planning to individuals.
How to Maintain a Good Credit Score?
How to increase a credit score
A loan or credit card application may be rejected even if all other criteria like age and monthly income are met, due to a low credit score. A credit score of 750 or above is usually considered a good credit score. There are certain steps that an individual can take to ensure that he or she maintains a good credit score.
1. Payment on Time
Payments that are made on time indicate a responsible and healthy attitude towards credit, which helps in maintaining a good credit score. The opposite, in fact, may reflect a negligent attitude with poor financial planning and can have a negative impact on credit scores.
2. Apply for Only One Loan at a Time
Every time an individual applies for a loan, the banks check the applicant’s CIBIL score that lowers for every check that is triggered. This effectively lowers the overall credit score. The more loans an individual applies for, the lower the credit score.
3. Updated Credit Card Payments
Credit card bills can be paid either in full every month or can be kept active by paying the minimum amount that is indicated by the bank. However, CIBIL considers the unpaid amount as overdue which indicates poor personal financial management. This reflects in the individual’s history every time a check is triggered. It is always better to pay the credit card bill in full to maintain a healthy credit score.
4. Don’t Close Credit Cards
Simply put, if all credit cards are closed, there is no avenue to build a credit history to lean on when a loan is required. It is ideal to maintain at least one credit card and maintain a healthy repayment history with the card to build up a good credit score.
5. Refrain from Payment Defaults
If there is an existing loan on any credit cards, ensure that all payments are made on time. Any misses or default gets recorded in the credit history can negatively affect the credit score and may also result in a loan being rejected.
6. Manage Expenses within the Earnings
When the spending exceeds the earning, it gives rise to credit which can lead to more spending and thus a collection of debt. It is wise to spend within a limit that can be supported by the earning which also adds to the overall credit score.
7. Balance the Loan Types
It is a healthy habit to keep a mix of loans. The idea is to balance secured and unsecured loans. If the loans are heavier on the unsecured credit side, personal loans or credit card loans, it acts as a red flag and makes lenders cautious about granting further loans.
Conclusion
The importance of maintaining a healthy credit score cannot be ignored. It is a gateway to getting a home loan or a personal loan as and when required. A high credit score also helps an individual in getting credit cards that is also another way to build a healthy credit history, eventually making a positive impact on the overall credit score of an individual.
FAQs
What is a good credit score in India?
A credit score of 750 and above is considered a good credit score in India.
Can I get a loan or credit card with a credit score of 500?
A credit score of 500 is considered to be a poor score, hence it is difficult to get approval for a loan or card with this score.
What is a CIBIL credit score?
CIBIL score is a three-digit numeric summary of your credit history.
What is the toughest credit score?
850 is considered to toughest credit score to achieve.
Freedom of Choice – something that was once considered a privilege bestowed only on a select few earlier, is now a reality for all irrespective of their background. Unlike in old times, when choices were limited, we should certainly consider ourselves lucky in the present times.
This can be further witnessed in the advancement of easy access to financial products that help fulfil our dreams – one such being availing a Personal Loan. Let’s learn what it is, how it can be used, and what you should consider before choosing a lender.
What is a Personal Loan?
A Personal Loan is a type of unsecured loan, which means you don’t need to put up any assets as collateral. It is an excellent financial choice for those who wish to fulfil their goals or ambitions using that capital. It can also be used for necessary financial assistance during emergencies or unforeseen circumstances.
A Personal Loan can be used for:
Funding Higher Education – With a Personal Loan, you won’t have to compromise on getting the best in education for yourself or your family.
Financial Assistance During Medical Emergencies – It is important to stay prepared and know where to find the right financial assistance during a medical emergency. You can avail of a Personal Loan instantly and pay off your medical expenses.
Paying for Travel or a Vacation Abroad – Now you can explore your favourite destinations without worrying about the cost of travel. A Personal Loan can fulfil all your travel and vacation goals while you get to focus on the fun part.
Arranging your Dream Wedding – With a Personal Loan, you can arrange your dream wedding and cover its expenses in a stress-free manner.
Renovating/Repairing your Home – Home renovations or repairs are required to keep your house in a good condition. A Personal Loan can help you fund your home renovation requirements without burning a hole in your pocket.
To get a Personal Loan, you need to make sure you find the right lender. This ensures that you get the offer that best suits your needs. Let’s find out how.
The Top 7 Factors to Consider Before Choosing a Personal Loan Lender in India
Here are the major factors you should know about before choosing the right Personal Loan Lender:
Loan Processing Time – First, find out how quick is the loan processing from application to disbursal. A swift disbursal process ensures that you receive the required funds on time to fulfil your specific purpose.
Loan Amount – Next, find out how much you can avail of from a Personal Loan. You can get up to ₹30 Lakh, depending on the lender and the end purpose for which you require funds.
Tenure – The repayment tenure for a Personal Loan is important as it determines your EMIs. Some NBFCs offer flexible repayment tenure that ranges from 12 to 60 months. This will give you enough time to repay your loan within the specified period.
Interest Rate – You should choose a lender that offers Personal Loans at affordable interest rates. With a low-interest Personal Loan, you can also reduce your EMIs and plan your budget appropriately.
Fees & Charges – Choose a lender that charges only nominal loan processing fees over those that charge higher fees. Also keep an eye on the foreclosure and part payment charges lenders might be taking. It is best to take loan from a lender who don’t charges anything for the same. The standard fees & charges for a Personal Loan offered by some NBFCs is up to 2% of sanction amount plus applicable taxes.
Personal Loan Eligibility Criteria – Check the eligibility criteria of the lender before applying for the loan. Easy eligibility criteria of the lender will help to get the loan processing done quickly. The Personal Loan eligibility criteria usually include: – Applicant’s age – Applicant’s citizenship. – Applicant’s job status. – Applicant’s job experience and stability. – Applicant’s monthly net take-home salary and obligations.
Documentation/Paperwork – Check the list of documents required by lenders to verify the borrower’s details before approving a loan. Any lender who is asking for many documents will delay the process of loan approval. The basic documents needed from borrowers include: – KYC documents like Aadhaar/PAN Card. – Current address proof (Passport/Utility bills/Rent Agreement). – Latest salary slips and salary credit bank statement from the last 3 months. – Proof of employment, such as official mail ID confirmation /Emp ID Card.
Conclusion
Now that you are aware of what to look for before choosing a Personal Loan Lender in India, choose wisely. Go ahead and kickstart your journey towards fulfilling your dreams.
This pandemic was hard for everyone one of us and we all struggled to oversee discretionary spending due to unanticipated expenditures. Many people also saw a dip in their savings to fulfill the family’s requirements. So to mitigate the increased financial stress some people turned towards personal loans but how do you know if you are eligible for a personal loan or not and what variables affect her personal loan eligibility.
Here’s what you need to learn about the 5 most important factors that may influence your personal loan eligibility.
Before that let me give you the specifics of the personal loan. So, let’s dive right in!
A personal loan is a form of installment loan that provides you with a set chunk of money, typically ranging from $1,000 to $50,000, in one single payment. They are typically unsecured, which means you need not provide assets to protect funds. The repayment period can differ considerably from one year to a decade. They are used for just about anything, though some financiers may limit their use.
Making an application for a personal loan is akin to making an application for a credit card. You will be asked to input your info, financial data, and loan info. The creditor will conduct a solid credit analysis before authorizing you, which may momentarily lessen your credit rating.
If the creditor is satisfied with your fiscal predicament and creditworthiness — typically, a rating in the mid-600s is required — the creditor will ascertain your interest rate, loan balance, and provisions.
However, these days there are platforms like Zest Money that have simplified getting personal loans much easier. With Zest Money you can get a personal loan even if you do not have a credit score. Simply download the Zest app, complete the KYC, and get a credit limit that you can use to shop in over 100,000 offline and 15,000 online stores. The best part is that the Credit Limit is available at 0% interestwhen paid on time. Once you sign up for a Zest Money Credit Limit, you also become eligible for Zest Money Personal Loans that too without uploading any additional documents. Besides, you can choose your EMI plan, and repayment term, and even foreclose the loan without paying any foreclosure charges.
The most vital eligibility criterion when applying is that you are within the bank’s age cohort. Age is an important factor as it tells lending institutions about your capital adequacy and earning power. If you’ve graduated college and are in your 20s, you may lack basic monetary stability. Likewise, if you’re over the age of 60 or are retiring early, your earning power will be reduced during this time.
Candidates between the ages of 25 and 55 are usually considered by banking firms. The age thing varies from bank to bank.
Monthly earnings
Monthly Earnings
Your potential to repay debt is directly proportional to your earnings. Your revenue is a critical component of your fiscal portfolio. The baseline salary requisite, on the other hand, varies by lender. Your lending institution takes into account the city you reside in as well as the corporation you work for when assessing your earnings.
Although the main income stream is taken into account by the lending institution, having extra revenue from passive channels such as subletting out your home or rental estate can be advantageous. Having a supplementary stream of revenue can help lending institutions feel more confident that you will compensate your EMIs on time.
Credit record
Personal loans are types of unsecured debt. They don’t have any assets or security backing them up. As a result, lending institutions use credit metrics to evaluate your ability to repay.
Your credit record reveals your EMI transaction regularities in the past. As a result, you must pay your EMIs on time to avoid falling behind on your loan payments. This will have a massive influence on the elements that influence personal loan acceptance.
Debt to income ratio
Assume you work for a reputable firm and are paid well, but the majority of your earnings are going toward EMI payouts. This factor influences your personal loan qualifications. The lending institution calculates your debt-to-income ratio by splitting your total earnings by the total amount of your current debt.
If your debt-to-income rate has risen, your lending institution may deny your loan request or cost you a higher rate of interest on your personal loan. Generally, it is best to keep the debt-to-income ratio below 50%. A higher proportion of this component increases the danger of nonpayment.
Stable employment
Employment
When approving a personal loan, your lending institution considers your total professional experience as well as your present employment status. If you work for a well-known company and have a consistent stream of revenue, your lending institution deems you a lienholder with stable employment.
If your manager has a background of late compensation or is not economically solvent, the lending institution may deny your request. This is attributed to the reason that these variables influence the potential to reimburse your personal loan.
Pros and Cons of Personal Loans
Pros of Personal Loans:
Personal loans can be used for a variety of purposes. They are used for a bunch of uses, including travel costs, medical bills, buying new accessories, gadgets, and even home/car upgrades.
Personal loans are available very quickly. In certain instances, the loan can be obtained within 24hrs. So, if you need emergency money, personal loans are your safest choice.
When contrasted to a mortgage payment or a car loan, personal loans usually do not necessitate as much paperwork. As a result, the handling time is reduced.
No need for security to acquire this loan, and the credit period is much smaller than that of a home loan or a car loan. In comparison to other loans, this carries less peril for the applicant because if you seem unable to pay back, your security is voided. Your assets are secure because personal loans do not require any security. This helps make this type of loan appealing to anyone who does not own any assets such as a car, a home, or stocks.
Cons of Personal Loans:
Lenders consider these to be risky since they do not require any security. These loans have extremely high-interest rates to compensate for their dangers.
Most financiers do not accept loan payments in installments. This implies you will have to repay the lender for the period of the loan. Because your first installments are used to pay interest, it can be very costly.
Because these loans are very risky, most bank requires their borrowers to have a good credit score. As a result, if your credit score is low as a result of past loan defaults, your request will be denied. As a result, the accessibility of this loan is subject to rigorous qualifying criteria based on creditworthiness.
Even banks that provide loans to debtors with poor credit end up providing reduced principal amounts and rising interest rates than those provided to debtors with good credit. These debtors are also subjected to stricter repayments.
Is Personal Loan the Right Choice for You?
If you need money quickly, personal loans are an appealing choice. Here’s how to tell if a personal loan fits one’s scenario:
You require the finances as soon as possible. Many lending institutions, particularly those that function online, can make capital available in a couple of times.
You have an excellent credit rating. Borrowers with stellar credit are eligible for the lowest rate.
You want to get rid of your massive debt. Personal loans are an excellent tool to manage and pay off high-interest credit card debt.
You will put the money toward important purchases. Personal loans can also be used to pay for large costs or to renovate your home.
Personal loans, on the other hand, are not suitable for all. They are, after all, still a debt obligation. Here are a few explanations why it may not always be the safest alternative for you:
You have a bad habit of spending too much money. Paying off your debt with a personal loan may not seem like a sensible approach if you intend to simply start accruing fresh credit card debts.
You are unable to make substantial repayments. Consider a personal loan’s repayment schedule and monthly bills. Use a personal loan calc to discern whether you can finance the monthly payments over the financing tenure.
You don’t need the cash immediately. Saving for a big settlement may make better sense than taking out a personal loan and making interest-only reimbursements for many decades.
These are the variables that portray your creditworthiness when applying for a personal loan. Lending institutions mostly take this into account when determining your qualifications for a personal loan and the rate of interest. As a result, it is advisable to confirm the prerequisites of your ideal lending institution beforehand to obtain a reasonably priced personal loan interest rate. Also, do check the pros and cons before you decide to apply for a personal loan.
FAQs
What are the eligibility criteria for a personal loan?
Sufficient monthly earnings, good credit records, and stable employment are some of the eligibility criteria for a personal loan.
What is the minimum salary required for a personal loan?
Most banks set a minimum salary limit of Rs. 15,000 – Rs. 20,000 per month for a personal loan.
Banks play an important role in the economic development of the financial sector of India. They are running a business that involves all the transactions done by every person. As banks are running a business, sometimes they earn and sometimes they lose. The very common cause of banks losing money is the inability to collect the money-back which was distributed as and if they have a concentration of loans in a particular business segment that falls in hard times, those losses are even more severe.
In 2018, Punjab National Bank, one of India’s largest public-sector banks experienced a fraud of INR 11,400 crores at its Brady House branch located in Mumbai. The accused person was Mr Nirav Modi, a well-renowned diamond maker of India. Here’s the complete story of how the PNB scam was unfolded.
Nirav Modi is an Indian fugitive businessman; he is the founder of Firestar Diamond International and his uncle Mehul Choksi is the chairman of Gitanjali Group. These two companies were involved in the Diamond business and had a retail chain of 4000+ stores in India.
Nirav was brought up in Belgium and did his early schooling at the Wharton School at the University of Pennsylvania. He came back to Mumbai and started with his family business of jewellery manufacturing.
Nirav Modi’s Business of Luxury Diamond
In 1999, he founded Firestar. After working for years and getting experience in the business Nirav in 2008 launched a diamond store bearing his name in New Delhi. Seeing and attracting a huge crowd he thought of opening more stores and started the 2nd store in Mumbai followed by 17 more stores. Nirav launched his stores globally with stores in New York and Hong Kong city.
Nirav Modi Store
According to news, his company had a presence in 12 countries with 30 boutiques in 2018. Firestar is the only diamond manufacturing company in India to source the coveted Argyle pink diamonds, found only in Western Australia.
At this time Nirav was also looking to expand its product line with more affordable pieces. He became a lot popular after designing his “Golconda Lotus Necklace” with an old, 12-carat, pear-shaped diamond as a centerpiece in the year 2010. The diamond had previously been sold in the 1960s and had to be repolished.
Golconda Lotus Necklace
Stores were running very well and were recognized as a theme of pure luxury, many Indian celebrities were doing the advertisement for Nirav Modi’s jewellery. Nirav Modi was also featured in the Forbes list of Indian Billionaires in 2013. To run such a vast and huge business globally he was always in the need of funds which he took from small public sector banks.
How did Nirav Modi Avail Loans from Banks?
At first, he started with a small number of loans which he was able to repay the bank within the time limit. The first fraud started in 2010 when Nirav took the loan with the help of a fake letter of undertaking issued by PNB bank at its Brady House branch. Letter of Undertaking is said to be a sort of guarantee that is issued by a banking entity to the concerned party for attaining short-term credit from the overseas branch of an Indian bank.
How Nirav Modi Operated the PNB Scam?
Nirav thought of this as an easy way to obtain short-term credit. He then started giving fake Lou’s to the bank and used to obtain a lump sum amount of money. Nirav managed to get 1,212 more such guarantees in the next 6-7 years.
The Letters of Understanding were signed in favour of Indian bank branches for the one-year import of pearls, with the Reserve Bank of India’s guidelines allowing for a total of 90 days from the date of shipping. The guideline mentioned in the letters were ignored by overseas branches of Indian banks. They disregarded providing any documents or information with PNB that had been made accessible to them by the companies when they applied for loans.
When PNB approached banks to provide a 100% cash margin, the bank argued they had availed this facility in the past as well. The transactions were never registered in the bank’s main system, leaving PNB management in the dark for years. This suspected there could be a fraud that led to them digging further into the transaction history.
Later it was found out that PNB employees were also involved in this process of providing fraud loans. They got the commission from Nirav and used to do the job for him. PNB employees used the SWIFT network to send messages to Allahabad Bank and Axis Bank regarding financial requirements.
At that time they found that these letters were on a fraud basis and the money was transferred to Dummy accounts of firms that were inactive in business and were acting according to the command of Nirav Modi. A total of INR 6,400 crore acquired through PNB Lou’s was transferred abroad to buy real estate and personal property through “dummy corporations.”
Nirav Modi New York House
All these methods were used by him to transfer the money received by these banks for business purposes and were spent on his personal use and luxury. He escaped India in January 2018 after which a warrant was issued by the CBI and Enforcement Directorate to arrest him.
The PNB scam is said to be one of the biggest fraud cases in India’s banking history to date. Till now the Government authorities of India have sealed and auctioned several thousand crores worth of properties and assets of Modi. Yet the government has not been able to get money recovered in full.
There is a need for improvement in our Indian Banking Sector and mainly a focus on providing the loans and credit facilities to the people who need them the most and who can repay without making defaults.
FAQ
How did Nirav Modi get loans?
Nirav took the loan with the help of a fake letter of understanding issued by PNB bank.
How much money did Nirav Modi borrow from the bank?
Nirav Modi and his uncle Mehul Choksi defrauded the bank of over Rs 14,000 crore.
In which year did Nirav Modi take the loan?
Nirav Modi took the first loan from PNB on March 10, 2011, and later managed to get 1,212 more such guarantees over the next 74 months.
