Personal Loans
A personal loan is unsecured — no collateral, generally no end-use restriction — making it the most flexible and most expensive loan category covered in this series, with pricing driven almost entirely by the borrower’s credit profile (CIBIL/bureau score, FOIR, employment stability) and lender category (banks vs NBFCs vs digital lenders). This guide explains why most personal loans, being fixed-rate, fall outside the 2026 RBI prepayment-charge reforms that benefit floating-rate LAP and home loans — making it essential to check prepayment terms explicitly. We cover the RBI’s digital lending framework in detail: direct disbursal to the borrower’s account (no pass-through via Lending Service Providers), the Key Fact Statement and APR disclosure, the cooling-off period allowing penalty-free exit shortly after disbursal, consent requirements for credit limit increases, and data-privacy restrictions on app access to phone data. We close with end-use-dependent tax treatment, balance transfer economics, and the debt-stacking risk that’s structurally easier with unsecured, minimally-documented personal loans than with any secured loan type in this series.