You wish to avail a personal loan, but there are certain questions in your mind regarding the same. And it is relevant to ask questions before applying for a loan. This will help you take an informed decision and you will end up with the right loan to meet your requirements.

In this article, we will try to find out the basic factors concerning personal loans and the relevant answers to them.

A personal loan is one of the most common types of loans availed by us to meet a sudden financial requirement or to finance a goal, which can be pertaining to family or individual requirements.

Let us examine 5 factors we should consider before applying for a personal loan:

Credit score – Your credit score also known as CIBIL score, is a three digit number that describes your credit repayment history. It ranges from 300 to 900 points. A good credit score is something like 700 or above, and will help you land a personal loan without any hassle. It also helps you negotiate the loan interest rate.

Loan tenure – Tenure is the number of months it would take you to repay the loan amount and is selected by the borrower. Usually, it ranges from 1 to 5 years. Check your financial condition and the loan interest rate to select the ideal loan tenure for you.

Loan amount – The bank will decide the loan amount based on your monthly income. The minimum loan amount typically starts from Rs.20000.

Interest rate – The interest rate is dependent on a number of factors such as monthly income, nature of employment, credit score, age of the applicant, etc. Usually, personal loan interest rates range from 8.30% to 24%. The interest rate can be fixed or floating. Fixed interest rates remain constant and are not dependent on market fluctuations. Whereas floating rates will change if there is a fluctuation in the market.

Loan repayment – Personal loans are repaid in the form of monthly EMIs. While availing the loan, the borrower and the lender will sign the loan agreement specifying the loan tenure, and the borrower will have to pay back the loan amount on a monthly basis till the due date. You can also decide to prepay the lone amount; in such cases, the bank will charge a foreclosure fee and GST on the remaining loan amount.


Take a note of your requirements and financial situation and then apply for a personal loan. Avoid asking for more than what you need. This will help you repay the loan amount on time and build a good credit score for your future loan requirements.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.