Best Personal Loans for Low Salary 2021

Personal loans can be a great way to finance large or unexpected expenses, such as weddings or medical bills. However, it can be difficult to obtain a loan with a modest income. To help you compare the best offerings available, our financial analysts highlighted the best personal loans in India available to individuals that earn Rs. 10,000 or less per month to make it easy to compare rates and features and ultimately choose a loan that works for you.

Table of Contents

Our Top Picks for the Best Personal Loans for Low-Income Individuals in India

This guide highlights the best loan offerings to individuals in India that earn relatively low salaries. In order to compare and analyse these best personal loans, we conducted a comprehensive review of all of the personal loans available in India. We then focused our comparison on the interest rates, processing fees and features of loans available to individuals that earn Rs. 10,000 or less each month. As you review these loans, we recommend that you consider the total cost of borrowing as well as the monthly payment requirement for each loan before you apply.

ValueChampion's picks of best loans for low salary and low income earners.
ValueChampion's picks of best loans for low salary and low income earners.

Best Personal Loan for Low-Income Earners: IOB Personal Loan

Consider this if you earn less than Rs. 10,000

Required Monthly Income Rs. 5,000, Rs. 75,000
Min. Loan Amount Unknown
Max. Loan Amount Rs. 5 lakh, Rs. 15 lakh
Processing Fee 1.01% - 1.1%
Interest Rate Type Floating
Loan Tenure 12 to 60/84 months

The Indian Overseas Bank's (IOB) personal loan is one of the cheapest personal loans available to individuals that earn relatively low incomes. This is due to the bank charging a lower than average floating interest rate of 11.80% and processing fee of 0.50%. IOB also has one of the lowest minimum income requirements of just Rs. 5,000 per month.

It is worth noting that the bank charges even lower interest rates to women (0.5% lower) and borrowers that are able to provide 100% collateral security (1% lower). However, IOB is not the best option for individuals that seek large loan amounts, as it only offers loans as large as Rs. 5 lakh. Still, prospective borrowers with relatively low salaries are likely to find very affordable rates for smaller loans through IOB.

Read our full review

Duration (Years)Processing FeeEffective Interest RateEMITotal Cost
10.50%10.80%₹ 10,821₹ 1,54,857
20.50%10.80%₹ 10,821₹ 2,84,714
30.50%10.80%₹ 10,821₹ 4,14,571
40.50%10.80%₹ 10,821₹ 5,44,428
50.50%10.80%₹ 10,821₹ 6,74,285
Based on an Rs. 5 lakh personal loan over a 5 year tenure. Total cost includes processing fee, interest payable, and principal loan amount. Processing fee does not include GST or state tax.

Best Large Personal Loan for Low-Income Individuals: Citibank Personal Loan

Consider this if are self-employed and seek large personal loan

Min. Loan Amount Rs. 10,000
Max. Loan Amount Rs. 30 lakh
Processing Fee Up to 3.00%
Interest Rate Type Fixed
Loan Tenure 3 to 60 months

Citibank's personal loans are great options for low-income individuals that seek large amounts of financing. The bank offers the largest personal loans to individuals that earn Rs. 10,000 or less in India, providing financing ranging from Rs. 25,000 to Rs. 30 lakh. This can be particularly helpful for borrowers that face large expenses. While Citibank offers the largest loan amounts, the bank's rates are not always the most competitive for lower income borrowers. For example, the bank charges borrowers 9.99% to 16.49% depending on the size of the loan.

Read our full review

Duration (Months)Processing FeeEffective Interest RateEMITotal Cost
13.00%9.99%₹3,38,899₹ 3,68,899
23.00%9.99%₹3,38,899₹ 7,07,798
33.00%9.99%₹3,38,899₹ 10,46,697
Based on an Rs. 10 lakh personal loan over a 3 month tenure. Total cost includes processing fee, interest payable, and principal loan amount. Processing fee does not include GST or state tax.

Honorable Mention: UCO & Union Bank

While we believe the loans above represent the best loans available to most prospective, low-income borrowers in India, it is important to note that there are other options that are worth considering. In particular, some banks offer even lower rates to their existing customers. For this reason, individuals that have a banking history with the lenders below should also consider taking a personal loan from their current bank.

Best Small Personal Loan: UCO Bank Shopper Loan

Consider this if need a small loan and are a current UCO Bank customer

Required Monthly Income Rs. 30000 p.m.
Min. Loan Amount Unknown
Max. Loan Amount Up to Rs. 2 lakh
Processing Fee 1.00%, minimum Rs. 750
Interest Rate Type Floating
Loan Tenure Up to 60 months

Prospective borrowers that are current customers of UCO bank should consider the UCO Bank Shopper Loan. This loan has the lowest advertised interest rate of any of the loans in India at 8.45% to 10.55%, as well as a processing fee of just 1.00%. For these reasons, the UCO Bank loan can be the cheapest for those individuals that qualify.

One limitation of the UCO Shopper Loan is that it only offers loan principals of up to Rs. 2 lakh. Additionally, individuals that are interested in the Bank Shopper Loan but are not UCO customers will have to wait at least 6 months in order to become eligible, which deter potential borrowers that require financing more quickly.

Read our full review

Duration (Years)Processing FeeEffective Interest RateMonthly PaymentTotal Cost
11.00%9.45%₹4,195₹ 52,346
21.00%9.45%₹4,195₹ 1,02,092
31.00%9.45%₹4,195₹ 1,53,038
41.00%9.45%₹4,195₹ 2,03,384
51.00%9.45%₹4,195₹ 2,53,730
Based on an Rs. 2 lakh personal loan over a 5 year tenure. Total cost includes processing fee, interest payable, and principal loan amount. Processing fee does not include GST or state tax.

Best Personal Loan for Self-Employed Individuals: Tata Capital

Consider this if you are self-employed and a current Union Bank customer

Required Monthly Income Rs. 15,000
Min. Loan Amount Rs 75,000
Max. Loan Amount Rs. 25 lakh
Processing Fee 2.75%
Interest Rate Type Fixed
Loan Tenure 12 to 72 months

With Tata Capital's monthly income requirement of Rs. 15,000, low income earners who are also self employed can avail a personal loan as easily as a salaried borrower. Even more, you do not need to hold a salary account with Tata Capital to be eligible for a Tata personal loan.

The Tata Capital Personal Loan offers competitive interest rates starting at 10.99% p.a., as well as a long loan term maximum of 6 years. Self employed borrowers are eligible for a loan amount up to Rs. 25 lakhs, which is in the upper limits of personal loan amounts offered by most other banks. Therefore, if you are a self-employed borrower seeking the benefits of a personal loan that are generally saved for salaried employees, Tata Capital is a lender you should consider.

Read our full review

Duration (Years)Processing FeeEffective Interest RateMonthly PaymentTotal Cost

1

2.75%10.99%₹47,572₹ 6,39,619
22.75%10.99%₹47,572₹ 12,10,488
32.75%10.99%₹47,572₹ 17,81,357
42.75%10.99%₹47,572₹ 23,52,226
52.75%10.99%₹47,572₹ 29,23,095
62.75%10.99%₹47,572₹ 34,93,964

Based on an Rs. 25 lakh personal loan over a 6 year tenure. Total cost includes processing fee, interest payable, and principal loan amount. Processing fee does not include GST or state tax.

How to Choose a Personal Loan

Personal loans can be helpful for individuals that need a significant amount of financing for a purpose that is not covered by specific-use loans, such as home or car loans. Additionally, many personal loans provide borrowers with funds within a few days, which can help those that need cash quickly.

Before you choose to research and apply for a personal loan, it is important to compare all of your borrowing options. For example, while personal loans typically much cheaper than credit cards in terms of annual interest rates, they are generally more expensive compared to other types of loans such as home, student or car loans. If your purpose falls under one of these categories, a personal loan is likely not the best fit for your needs.

However, if a personal loan is the best option for you, it is important for you to compare loans before applying. Factors that you should consider include your eligibility, the loan amount, loan duration, interest rates and processing fees. For example, you will need to make sure that you apply for a loan that is willing to lend to you based on your financial and employment circumstances. You should also look for a lender that offers loans with tenures and amounts that fit your needs. Finally, you will want to compare the cost of borrowing for each loan that you are considering. It is important to consider both the monthly repayment amount as well as the total cost of borrowing when determining the financial burden of a loan.`

Am I Eligible for a Personal Loan?

You may be wondering if you are even eligible for a personal loan given your income level. As you begin to compare loans you should make sure that you meet each bank's eligibility requirements. After income level, most banks will also consider your credit history and employment situation. Luckily, there are a number of loans available to individuals based on different financial circumstances. For example, some lenders offer loans and interest rates specifically for salaried or non-salaried employees. Others offer loans that are specifically tailored to the needs of high or low-income earners.

How to Apply for a Personal Loan

If you choose to apply for a personal loan, you will need to fill out an application form and submit several required documents. For example, banks typically require that applicants submit documents that prove their identity, address and income. It is also common for lenders to ask for a passport-sized photograph. It is also worth mentioning that some lenders are willing to negotiate from their advertised interest rate, which highlights the importance of comparing several lenders and rates before choosing to apply for your personal loan.

Examples Documents Typically Required for Personal Loan Application

Required DocumentSalaried ApplicantNon-Salaried Applicant
Proof of IdentityPassport, Drivers License, PAN
Proof of AddressPassport, utility bill
Proof of IncomeBank statement, Salary accountAudited financials, bank statement

FAQ

To find out what personal loan amount you are eligible for, you can use your bank or lender’s eligibility calculator. Your final personal loan amount will be determined by your salary, CIBIL score and EMI/NMI ratio.

The minimum salary required for a personal loan is Rs. 5,000 for select banks. However, many have an income requirement of at least Rs. 10,000 to Rs. 25,000, as well as other requirements like good CIBIL score and credit history.

Your personal loan eligibility is determined by your income, job status, EMI to NMI ratio, CIBIL score, and residence. Additionally, your desired loan amount and loan tenure will affect your final loan amount.

Yes. Many banks provide personal loans to borrowers with low salaries. Often, lenders will look at your credit history and CIBIL score to determine your repayment capacity.

Methodology

In order to determine the best personal loans for individuals with modest incomes, we initially conducted a comprehensive review of personal loans in India. We researched and analysed more than 80 loans from 35 lenders, which are listed in our table below.

Lenders Reviewed in ValueChampion's Study
Aditya Birla CapitalAxis BankBajaj FinservBank of Baroda
Bank of IndiaBank of MaharashtraCanara BankCentral Bank of India
CitibankCredyFederal BankFullerton India
HDB Financial ServicesHDFC BankHSBC BankICICI Bank
IDBI BankIDFC First BankInCredIndia Infoline
Indian BankIndian Overseas BankIndusInd BankKarur Vysya Bank
Kotak Mahindra BankLoanTap Financial TechnologiesRBL BankSBI
South Indian BankStandard CharteredTamilnad Mercantile BankTata Capital
UCO BankUnion Bank of IndiaVijaya BankYes Bank

We first gathered cost data from these lenders, including interest rates and processing fees. We then created an algorithm that compares the cost of borrowing for each loan. Our calculations include mandatory processing and administrative fees, interest costs and applicable promotions. We did not include fees for late or early payments, as we assumed that the borrower would make payments on time in order to minimise the total cost of borrowing. Because banks offer loans of various tenures and advertise ranges of interest rates, we calculated borrowing costs based on a variety scenarios in order to make our calculations and develop our list above.

William Hofmann

William is a Product Manager at ValueChampion Singapore, helping consumers and SMEs find the best banking products through comprehensive analysis of data. He previously was an Economic Consultant at Industrial Economics Inc, where he conducted a variety of research and economic analyses. He graduated from University of Vermont with degrees in Economics and Psychology. His work has been featured on a variety of major media such as the Straits Times, the Business Times, the Edge, DailySocial, the Entrepreneur and more.