What is a Personal Loan – Meaning, Types, and Benefits

Open a DBS Bank Account Now

Here is a detailed guide on a Personal Loan and how it can be used

Key Takeaways

• A personal loan is an unsecured loan, which means banks do not ask for collateral
• You can apply for this loan online, and it is usually disbursed within a few hours if you are eligible
• Loans are disbursed with minimal to no documentation
• You can use the loan for many reasons like funding a wedding or vacation, home renovation, buying latest high-ticket products
• You can repay the loan in pocket-friendly EMIs, over tenures of 1-5 years.

Introduction

Whether you're planning a major purchase, dealing with an emergency, or simply in need of financial flexibility, a personal loan can be a practical solution. It offers quick access to funds without the need for collateral. In this article, we explain what a personal loan is, how it works, and the various ways you can make it work for your needs.

What is a Personal Loan?

A Personal Loan is a loan offered by most banks to help individuals meet their personal needs. These are usually unsecured loan products that are sanctioned based on the financial credentials and creditworthiness of the applicant. Some of the factors that most banks and NBFCs take into account when evaluating your eligibility for a Personal Loan are your credit scores, monthly income, existing debt obligations and credit history, as well as your employment status. Basically, by evaluating these factors, the bank tries to assess your repayment capacity.

Personal Loan Example

Wedding costs are likely to exceed initial estimates due to last-minute alterations or additions. If your savings are not enough, a personal loan can cover the financial gap. It offers a structured means of financing excessive costs like venue, catering, and accommodation, thus enabling one to maintain emergency funds.

Types of Personal Loan

DBS Bank provides customised personal loan solutions to suit your financial needs. Whether it's planned spending or an urgent requirement, here are the different types of personal loans you can choose from:

Travel Loan

Execute your travel plans with ease. This loan can cover airfare, accommodation, sightseeing, and other trip-related costs.

Gadget Loan

Stay up to date with the latest gadgets. Finance your purchase of smartphones, laptops, gaming consoles, and other electronic devices.

Home Renovation Loan

Upgrade or repair your home without dipping into your savings. Use this loan for interior work, structural repairs, or full-scale renovations.

Emergency Personal Loan

Access funds quickly during emergencies such as medical treatments, urgent home repairs, or any unexpected financial burden.

Consumer Durable Loan

Purchase appliances and electronics with flexible repayment options. This loan is ideal for planned purchases of essential consumer goods.

Wedding Loan

Plan your wedding with confidence. Use this loan to manage expenses such as venue booking, outfits, catering, décor, and photography.

What Can You Use a Personal Loan for?

A personal loan gives you the freedom to manage both planned as well as unexpected expenses. Whether you're funding a major life event, making a big purchase, or covering emergency costs, it offers quick and flexible access to money.

You can apply for a personal loan online with minimal documentation. The funds can be used entirely at your discretion, making it one of the most adaptable financing options available.

How Does a Personal Loan Work?

A personal loan is an unsecured loan that you can borrow from a bank or financial institution based on your income, credit score, and repayment capacity. Once approved, the loan amount is disbursed directly to your account.

You repay the loan through fixed monthly instalments over a chosen tenure. Interest is charged on the principal amount, and the rate depends on your creditworthiness. There’s no restriction on how you use the funds, making it a flexible financing option.

What are the Benefits of Availing a Personal Loan?

The key benefits of personal loan options lie in their simplicity and flexibility, making them ideal for a range of financial needs.

• No collateral required
• Quick disbursal with minimal paperwork
• Flexible repayment tenure to suit your budget
• Funds can be used for various personal expenses
• Timely repayment can help improve your credit score

Common Features of Personal Loans

Most personal loans share standard features that make them easy to access and manage.

• Fixed or flexible loan tenure options
• Attractive interest rates based on eligibility
• Loan amounts tailored to your income profile
• Hassle-free documentation process
• Convenient online application and approval

How to avail of a personal loan?

With DBS Bank, applying for a personal loan is simple, fast, and entirely digital. Here’ s how to get a personal loan with DBS Bank:

Step 1: Log in to the DBS digibank app

Open the DBS digibank app on your smartphone and log in with your credentials.

Step 2: Check Your Eligibility

If you're eligible for a pre-approved personal loan, the offer will be displayed right on your dashboard.

Step 3: Choose Loan Amount and Tenure

Select the loan amount and repayment tenure based on your financial needs and comfort.

Step 4: Confirm and Submit

Review the details, accept the terms and conditions, and submit your application directly through the app.

Step 5: Get Instant Disbursal

Once approved, the loan amount is credited instantly to your DBS Bank account without any paperwork.

Also Read: How to Apply for Personal Loans?

Open a DBS Bank Account Now

Maximum Personal Loan Amount that You Can Borrow

Personal loan amounts can go up to INR 15 lakh, depending on your financial profile. Factors like your income, credit score, and repayment history play a key role in determining the final loan amount. You can use a Personal Loan Eligibility Calculator to get an instant estimate of how much you may qualify for before starting your application.

What is the Maximum Loan Duration for the Personal Loan

Personal loans typically come with flexible repayment tenures, and you can opt for a loan duration of up to 60 months. This gives you the freedom to spread your EMIs comfortably over time. To choose a repayment plan that suits your budget, you can use the Personal Loan EMI Calculator for better clarity before applying.

What Is the Interest Rate on a Personal Loan

Personal loans may come with either fixed or floating interest rates. Fixed rates offer stable EMIs throughout the tenure, while floating rates can change based on market conditions. DBS Bank offers personal loans at fixed interest rates starting from 10.99% p.a., helping borrowers plan their repayments with confidence.

Documents required for a personal loan

Knowing the documents required for personal loan applications can help you speed up the process. If you're applying online with DBS Bank, keep the following ready:

Eligibility Criteria for a Personal Loan

Your personal loan eligibility is based on a few key criteria that determine your ability to apply. To qualify, you must:

• Be an Indian citizen
• Be between 21 and 60 years of age
• Be salaried or self-employed
• Have a minimum monthly income of INR 25,000

How Do You Choose the Right Personal Loan?

Choosing the right personal loan involves comparing key features to find the most cost-effective and convenient option for your needs. Here’s what to keep in mind:

• Loan Amount – Ensure the bank offers enough funds to cover your expenses.
• Interest Rate – Compare EMI plan to get a personal loan with lowest interest rates to reduce your overall repayment burden.
• Tenure Flexibility – Select a repayment tenure that aligns with your monthly budget.
• Eligibility Criteria – Check if you meet the income, age, and credit score requirements.
• Processing Time – Quick approvals and fast disbursal are essential, especially for urgent needs.
• Fees and Charges – Review hidden charges such as processing fees, prepayment penalties, and late payment fees.
• Balance Transfer Option – If you're already repaying a loan, consider a personal loan balance transfer to switch to a bank with better rates or terms.

Conclusion

Now that you know what a personal loan is and how it works, why wait? Login to your DBS Bank Savings Account and apply for a Personal Loan right away. If you do not already have one, apply here to open a Savings Account with DBS Bank and start your banking journey with us.

Get low-interest, instant personal loans in seconds with DBS digibank app.

Open a DBS Bank Account Now