Best Personal Loans for Self-Employed Individuals: India 2020

Personal loans are a great way to finance unexpected or large expenses. However, not all lenders offer personal loans to self-employed individuals. In order to help these individuals compare the best offerings, we've highlighted the best personal loans in India for self-employed individuals to make it easy to compare rates and features.

Table of Contents

Our Top Picks for the Best Personal Loans for Self Employed

The following list represents the best personal loans for self-employed individuals based on our comprehensive review of dozens of banks and lenders in India. In order to assess the best deals, we considered the interest rates, processing fees and personal loan eligibility criteria of each lender.

BankMinimum Interest RateProcessing Fee
UCO Bank9.45%1.00% + GST
Citibank9.99%Up to 3.00%
Bank of Baroda10.50%2.00% + GST
TATA Capital10.99%2.75% + GST
Yes Bank10.99%Unknown
IndsuInd Bank11.00%2.50% + GST
ICICI Bank11.25%2.25% + GST
Axis Finance11.25%Unknown
Standard Chartered11.49%Up to 2.25%
Fullerton India11.99%6.00% + GST
Karur Vysya Bank12.00%1.50% + GST
IDFC First12.00%Up to 3.00%
South Indian Bank12.65%2.00% + GST
Union Bank of India12.90%0.50% + GST
IDBI Bank13.00%1.00% + GST
Canara Bank13.45%0.10% + GST
HDB Financial Services17.50%Up to 3.00%

When comparing loans, we recommend that you aim to minimise the total cost of borrowing while ensuring that you can comfortably afford your equated monthly instalments (EMIs).

Best Small Personal Loans

Consider this if are self-employed and seek a small personal loan

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
Loan Tenure Up to 60 months

The UCO Shopper Cash Loan is best for self-employed individuals who are seeking a small personal loan to purchase consumer products like: a television, refrigerator, computer, air conditioner, or electronic gadgets. With loan amounts up to Rs. 2 lakhs, self-employed and non-salaried employees do not need to worry about high interest rates and other charges that usually come attached to large personal loans.

Under this personal loan scheme, interest rates for self-employed individuals start from 9.45% p.a, which is one of the lowest personal loan rates you will find on the market. However, your final interest rate is determined by your income, CIBIL score, and age, amongst other factors. It's important to note that self-employed borrowers should be between 21 and 65 years old to avail a UCO Shopper Cash Loan.

This personal loan is open to self-employed individuals, professionals and business people with a minimum income of Rs. 4 lakhs p.a, which is relatively low compared to the income requirements from other major banks. Additionally, UCO personal loan processing fees are only 1.00% of the total loan amount, with a minimum of Rs. 1000. Compared to popular lenders who charge up to 3.00% in processing fees, the UCO Shopper Cash Loan minimises costs across the board.

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.

Note: a self-employed borrower must hold a salary account with UCO for at least 6 months before applying for this loan.

Best Personal Loans Without Salary Account

Many major banks require you to hold a salary account with them for a few months before applying for a personal loan. Similarly, banks who allow consumers without a salary account to apply for a loan will give preferential interest rates to their existing customers and charge higher rates to those without salary accounts.

Therefore, if you're seeking an instant personal loan with competitive rates, you should consider IndusInd Bank or Tata Capital — two of the best lenders that provide personal loans to borrowers with or without a salary account, regardless of self-employed eligibility.

IndusInd Bank Personal Loan

Consider this if you are without a salary account and seek a personal loan from a bank

Required Monthly Income Rs. 4.8 Lakh p.a.
Min. Loan Amount Rs. 50,000
Max. Loan Amount Rs. 15 lakh
Processing Fee 2.50%
Loan Tenure 1 to 5 years

While some banks are unclear about personal loan eligibility without a salary account, IndusInd Bank emphasizes on their website that you do not need to be an existing customer to avail a personal loan.

Self employed individuals without a salary account are eligible for up to Rs. 15 lakhs and a 5 year loan tenure under the IndusInd Personal Loan scheme. Additionally, interest rates start as low as 11.00% p.a., which is relatively cheaper than the market average of 11.67% p.a.

IndusInd Bank determines the eligibility of self employed professionals and non-professionals through the same criteria, which is not usually done by most other banks. For both types of self employed borrowers, the minimum age of personal loan eligibility is 25 years old, and the maximum is 65 years old. Additionally, the income requirement for an IndusInd personal loan is Rs. 4.8 lakhs per annum.

The IndusInd Personal Loan does carry relatively high charges, like a 2.50% processing fee. IndusInd interest rates can reach 31.50% p.a., with an average rate of 14.72% p.a. While it is possible to avail lower interest rates on your personal loan by maintaining a high CIBIL score, for instance, these higher than average interest rates are expected for borrowers without a salary account.

Duration (Years)Processing FeeEffective Interest RateMonthly PaymentTotal Cost
12.50%11.00%₹32,614₹ 4,28,864
22.50%11.00%₹32,614₹ 8,20,228
32.50%11.00%₹32,614₹ 12,11,592
42.50%11.00%₹32,614₹ 16,02,956
52.50%11.00%₹32,614₹ 19,94,320
Based on an Rs. 15 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.

Tata Capital Personal Loan

Consider this if you are self-employed without a salary account

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

Tata Capital is a non-banking financial company, so you can avail a Tata Capital personal loan without a salary account. The Tata Capital Personal Loan offers relatively low 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, whether you're seeking a large personal loan for a big purchase or long loan term for lower EMIs, Tata Capital can provide you with both options.

Tata Capital determines self employed eligibility through the same criteria as salaried individuals. For instance, an eligible applicant must be at least 22 years old and no older than 58 years old to avail a Tata Capital personal loan. Additionally, borrowers must have a monthly income of at least Rs. 15,000 and one year of work experience.

Read our full review

If you are a self employed borrower seeking the best personal loan without a salary account, Tata Capital has many personal loan features to minimise your total cost of borrowing, as seen in the table below.

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.

Best Personal Loan for Self Employed Without ITR

Consider this if seek a personal loan without income proof

Required Monthly Income RS. 25,000
Min. Loan Amount Rs. 1 lakh
Max. Loan Amount Rs. 40 lakh
Processing Fee Up to 2.50%
Loan Tenure 12 to 60 months

Generally, 2 to 3 years of your latest income tax returns (ITRs) are required by personal loan lenders to confirm your financial position. Since self employed individuals are not usually required to file ITRs or Form 16s, proof of income is harder to show. In this way, Yes Bank is unique as it provides personal loans to self employed people without ITRs, and instead asks for the last 3 months of bank statements to confirm your financial ability.

In addition to the minimal documentation requirement, Yes Bank also has competitive interest rates starting at 10.99% p.a. Both their loan amount eligibility and maximum loan tenure are generous compared to the market average, as well. Self-employed borrowers can avail a total of Rs. 40 lakhs with the option to repay EMIs over a 5 year loan term, placing Yes Bank in the top 5 largest personal loan amounts in the self employed market.

While Yes Bank's processing charges are high at 2.50% of the total loan amount, the benefit for borrowing from Yes Bank is the minimal documentation requirement and income proof flexibility. Therefore, if you're a self employed borrower without ITR, you should consider Yes Bank for your personal loan.

Read our full review

Duration (Years)Processing FeeEffective Interest RateMonthly PaymentTotal Cost
12.50%10.99%₹86,950₹ 11,43,397
22.50%10.99%₹86,950₹ 21,86,794
32.50%10.99%₹86,950₹ 32,30,191
42.50%10.99%₹86,950₹ 42,73,588
52.50%10.99%₹86,950₹ 53,16,985
Based on an Rs. 40 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 Short Term Personal Loan

Consider this if you are seeking a short term personal loan

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

With a short loan term minimum of 3 months, CitiBank is the best personal loan for borrowers that are seeking to pay off their loan amount in a matter of months. Compared to other lenders where the loan tenure minimum is one year, Citibank stands out with the shortest loan term in the market.

Generally, long loan terms are preferred as they allow you more time to pay smaller EMI amounts. While this is good for most borrowers, banks generally charge a pricey prepayment penalty fee — up to 7.00% in some cases — to borrowers who choose to pay down their loan in advance. Therefore, a short term personal loan is beneficial to borrowers who want to pay off their EMIs quicker than most banks allow.

With a CitiBank Personal Loan, self employed borrowers can avail as little as Rs. 10,000, and as much as Rs. 30 lakhs. Additionally, CitiBank interest rates are amongst the top-3 cheapest in the market for self-employed individuals, with rates starting as low as 9.99% p.a. and rising as high as the advertised maximum rate of 16.49% p.a.

Read our full review

While CitiBank's interest rates are lower than the market average, its processing fee maximum is relatively high at 3.00% of the total loan amount. Nonetheless, a CitiBank personal loan has great features to minimise your total cost of borrowing, as seen in the table below.

Duration (Months)Processing FeeEffective Interest RateMonthly PaymentTotal 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.

How to Choose a Personal Loan

There are many factors to consider when choosing a personal loan. In order to minimise your total cost of borrowing, charges like your personal loan interest rate and processing fee should be as low as possible. Additionally, you should consider factors like loan amount, loan tenure, and loan schemes in order to avail the best home loan option for your financing needs.

Read More: How to Find the Best Loan

Am I Eligible for a Personal Loan?

Before you apply for a personal loan, you first have to make sure that you are eligible for one. Your personal loan eligibility is determined by your credit history, job profile, and age, amongst other factors. Your bank or personal loan lender will consider all of these factors before deciding if, and how much, loan amount you are eligible for.

Many banks offer personal loans to salaried employees only. For self-employed eligibility, you will have to find specific personal loans tailored to your financial situation. Similarly, banks will offer personal loan schemes to low-income earners, pensioners, NRIs, and other types of applicants.

Read more: Personal Loan Basics

How to Apply for a Personal Loan

When you apply for a personal loan, you will have to fill out an application online or in person. You may find that your loan lender is willing to negotiate from the advertised interest rate, which highlights the importance of comparing several rates before choosing a lender.

Below, you will find examples of required documents needed to complete your 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

Yes, you can avail a personal loan with a low CIBIL score. However, you should expect higher personal loan interest rates, as your CIBIL score is one of the most important factors in determining your total cost of borrowing.

Regardless of self employed eligibility, you should aim for a CIBIL score of more than 700 to avail the best personal loan possible.

Yes, you can avail a personal loan without an income tax return (ITR). However, most banks require borrowers to show at least 2 years of ITRs, which highlights the importance of finding a personal loan lender who has minimal documentation requirements.

No, because unsecured personal loans do not require any collateral. Most personal loans are unsecured, but you will find that some banks offer loans against property (LAP) which are secured and do require collateral.

Yes, you can avail a personal loan without income proof. However, your options will be limited as most banks ask for many required documents for proof of income. If you are seeking a personal loan without income proof, you should consider Yes Bank who requires only 3 months of bank statements to determine your financial position.

Methodology

In order to identify the best personal loans for self-employed individuals, we initially conducted a comprehensive review of personal loans in India. Our review consisted of researching and analysing 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

After gathering cost data, including interest rates and fees, from these banks, we created an algorithm that compares the cost of borrowing of 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, instead, we assumed that the borrower would make payments on time. Because banks offer loans of various tenures and advertise ranges of interest rates, we calculated borrowing costs based on all possible scenarios in order to develop our list above.

Natalia Sanchez-Kumar

Natalia Sanchez-Kumar is a Junior Research Analyst at ValueChampion, specialising in home loans in India. She is a History graduate of New York University and has worked in the area of social impact, Future of Work and socio-technological research in the US and India. She has co-authored policy proposals alongside the International Labour Organisation in Sri Lanka and the Maldives, as well as hosted a data privacy conference with Facebook in New Delhi.