Best Personal Loans for Individuals with Low Salaries 2019

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, we've 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.

Estimated Cost of 3-Year, Rs. 2 Lakh Personal Loan by Bank: Chart ranks banks by estimated total cost of borrowing, based on the lowest interest rates advertised to loan applicants with net monthly incomes of Rs. 10,000 or less. Estimates include processing fees.

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 11.95% and processing fee of 1.01% to 1.1%. 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 RateMonthly PaymentTotal Cost
11.01%11.95%Rs. 4,441Rs. 3,845
21.01%11.95%Rs. 2,353Rs. 7,010
31.01%11.95%Rs. 1,660Rs. 10,293
41.01%11.95%Rs. 1,316Rs. 13,692
51.01%11.95%Rs. 1,111Rs. 17,208
*Assuming monthly income of Rs. 5,000, loan of Rs. 50,000 lakh, total cost includes processing fee
Duration (Years)Processing FeeEffective Interest RateMonthly PaymentTotal Cost
11.01%11.95%Rs. 4,441Rs. 3,845
21.01%11.95%Rs. 2,353Rs. 7,010
31.01%11.95%Rs. 1,660Rs. 10,293
41.01%11.95%Rs. 1,316Rs. 13,692
51.01%11.95%Rs. 1,111Rs. 17,208
*Assuming monthly income of Rs. 5,000, loan of Rs. 50,000 lakh, total cost includes processing fee

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

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

Required Monthly Income Unknown
Min. Loan Amount Rs. 25,000
Max. Loan Amount Rs. 30 lakh
Processing Fee 2% - 3%
Interest Rate Type Fixed
Loan Tenure 12 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 self-employed borrowers 17% to 18.99%. It's rates for salaried borrowers are much more competitive, ranging from 11.75% to 14.5% depending on the size of the loan.

Read our full review

Duration (Years)Processing FeeEffective Interest RateMonthly PaymentTotal Cost
10.5%12.75%Rs. 89,200Rs. 75,400
20.5%12.75%Rs. 47,425Rs. 1,43,188
30.5%12.75%Rs. 26,704Rs. 2,13,652
40.5%12.75%Rs. 28,340Rs. 2,86,772
50.5%12.75%Rs. 22,625Rs. 3,62,518
*Assuming salaried employee, loan of Rs. 10 lakh, total cost includes processing fee
Duration (Years)Processing FeeEffective Interest RateMonthly PaymentTotal Cost
10.5%12.75%Rs. 89,200Rs. 75,400
20.5%12.75%Rs. 47,425Rs. 1,43,188
30.5%12.75%Rs. 26,704Rs. 2,13,652
40.5%12.75%Rs. 28,340Rs. 2,86,772
50.5%12.75%Rs. 22,625Rs. 3,62,518
*Assuming salaried employee, loan of Rs. 10 lakh, total cost includes processing fee

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. 10,000
Min. Loan Amount Unknown
Max. Loan Amount Up to Rs. 2 lakh
Processing Fee 1% (minimum Rs. 1,000)
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 9.8% to 10.8%, as well as a processing fee of just 1%. 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.

Duration (Years)Processing FeeEffective Interest RateMonthly PaymentTotal Cost
11%9.8%Rs. 17,565Rs. 12,775
21%9.8%Rs. 9,211Rs. 23,053
31%9.8%Rs. 6,435Rs. 33,648
41%9.8%Rs. 5,053Rs. 44,560
51%9.8%Rs. 4,230Rs. 55,785
*Assuming loan of Rs. 2 lakh, total cost includes processing fee
Duration (Years)Processing FeeEffective Interest RateMonthly PaymentTotal Cost
11%9.8%Rs. 17,565Rs. 12,775
21%9.8%Rs. 9,211Rs. 23,053
31%9.8%Rs. 6,435Rs. 33,648
41%9.8%Rs. 5,053Rs. 44,560
51%9.8%Rs. 4,230Rs. 55,785
*Assuming loan of Rs. 2 lakh, total cost includes processing fee

Best Personal Loan for Self-Employed Individuals: Union Personal Loan

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

Required Monthly Income N/A
Min. Loan Amount Unknown
Max. Loan Amount Up to Rs. 10 lakh
Processing Fee 0.50%, minimum Rs. 500 + GST
Interest Rate Type Floating
Loan Tenure Up to 60 months

Union Bank's Union Personal Loan is a good financing option for individuals that have modest incomes, particularly those that are not salaried employees. This is because Union Bank does not have a specific income requirement for non-salaried borrowers. Instead, the bank requires that applicants are customers of Union Bank and have a banking history of 2 years with the bank and an average quarterly balance of at least Rs. 25,000. For this reason, Union Bank's personal loans are not a great fit for those that do not already conducting their banking with Union Bank.

Duration (Years)Processing FeeEffective Interest RateMonthly PaymentTotal Cost
10.5%14.5%Rs. 17,565Rs. 12,775
20.5%14.5%Rs. 9,211Rs. 23,053
30.5%14.5%Rs. 6,435Rs. 33,648
40.5%14.5%Rs. 5,053Rs. 44,560
50.5%14.5%Rs. 4,230Rs. 55,785
*Assuming loan of Rs. 2 lakh, total cost includes processing fee
Duration (Years)Processing FeeEffective Interest RateMonthly PaymentTotal Cost
10.5%14.5%Rs. 17,565Rs. 12,775
20.5%14.5%Rs. 9,211Rs. 23,053
30.5%14.5%Rs. 6,435Rs. 33,648
40.5%14.5%Rs. 5,053Rs. 44,560
50.5%14.5%Rs. 4,230Rs. 55,785
*Assuming loan of Rs. 2 lakh, total cost includes processing fee

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

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 60 loans from 35 lenders, which are listed in our table below.

Lenders Reviewed in ValueChampion's Study
Aditya Birla CapitalAllahabad BankAxis BankBajaj FinservBank of Baroda
Bank of IndiaBank of MaharashtraCanara BankCapital FirstCentral Bank of India
CitibankDena BankFullerton IndiaHDB Financial ServicesHDFC Bank
ICICI BankIDBI BankIDFCInCredIndia Infoline Finance LTD
Indian BankIndian Overseas BankIndsuInd BankKarur Vysya BankKotak Mahindra Bank
SBISouth 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 Senior Research Analyst at ValueChampion Singapore, focusing on banking and SMEs. He previously was an Economic Consultant at Industrial Economics Inc.