Personal loan guide India: the life of a loan, from need to NOC

Take the other routes first. Spending a deposit you already hold: ₹2 lakh in an FD at an illustrative 7 percent earns ₹14,000 in a year, ₹9,800 after tax at a 30 percent slab. The 12-month loan costs ₹20,204, which is 2.06 times what the deposit would have earned. Borrowing to keep a deposit intact that earns less than the loan costs is paying ₹10,404 for the feeling of still having savings. The exception is an emergency fund: that money has a job, and a holiday is not it.

Converting a card spend to EMI at an illustrative 15 percent with a 1 percent fee costs ₹21,976 over 12 months once 18 percent GST on the interest is counted, ₹1,772 more than the loan, and it needs a limit the trip fits inside. On a ₹1,50,000 limit the card is ₹50,000 short, and a card run close to its limit shows as high utilisation on your credit report while the balance is carried.

A salary advance is two different things under one name. An advance from your employer, recovered from the next few salaries, is often interest-free and costs only a thinner payslip. A salary advance product from a lender is a short loan: an illustrative ₹1,200 fee on ₹40,000 for 30 days is ₹1,416 with GST, 3.54 percent for the month and 43.1 percent annualised. One month's interest on the same ₹40,000 at 14 percent is ₹467. It suits a gap of days before payday, not a trip.

The trip costs ₹2 lakh. The loan is at an illustrative 14 percent with a 2 percent processing fee plus GST, ₹4,720, deducted at disbursal. Saving first means ₹25,000 a month for eight months; parked in a recurring deposit or sweep account at an illustrative 6.5 percent, the balance reaches ₹2,03,833, so ₹24,530 a month would do.

The 12-month EMI is ₹7,043 a month lighter than the saving plan, which is why the loan feels easier. It runs four months longer and ends ₹24,037 behind.

For the borrower here, an illustrative 50 percent cap on ₹95,000 is ₹47,500 of EMIs. The car loan uses ₹12,000, leaving the lender ₹35,500 of room. The household's own arithmetic runs differently: ₹67,000 goes on rent, the car EMI and living, leaving ₹28,000; ₹8,000 of that keeps flowing into the emergency fund and a SIP, so the EMI budget is ₹20,000, 21.1 percent of take-home.

How lenders compute the ratio, and why a card you clear in full still counts against it, is worked on the eligibility check page.

Most lenders run the same sequence, whether the front end is an app or a branch. The step you cannot redo cheaply is the second. A declined application leaves its hard enquiry behind, and several in a few weeks read to the next lender as someone being turned down. Checking the other five yourself first costs nothing.

RBI's circular of April 15, 2024 on the Key Facts Statement, at https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12663&Mode=0, applies to retail and MSME term loans sanctioned on or after October 1, 2024. It requires the KFS to carry an annual percentage rate computation and the repayment schedule, to list every charge including those recovered for third parties, and to remain valid for at least three working days for loans of seven days or more. It also says a fee or charge not mentioned in the KFS cannot be levied at any stage of the loan without your explicit consent.

Broken-period interest arises when the loan is disbursed some days before the EMI cycle starts. Twenty days at 14 percent on ₹2 lakh is ₹1,534, either deducted at disbursal or added to the first EMI. Here is what reaches the account on the 24-month trip loan when all three apply.

On the 24-month loan, the first EMI of ₹9,603 carries ₹2,333 of interest; the last carries ₹111. After 12 EMIs, half the tenure, ₹22,179 of the ₹30,472 total interest is paid, 72.8 percent of it, but only ₹93,052 of principal, 46.5 percent. That shape decides whether prepaying is worth it, in the next section. The EMI calculator on the personal loan page runs the same formula for other amounts and tenures.

The rules first. RBI's Pre-payment Charges on Loans Directions of July 2, 2025, at https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12878, bar pre-payment charges on floating-rate loans to individuals for purposes other than business, sanctioned or renewed on or after January 1, 2026, with no minimum lock-in. Many personal loans carry a fixed rate, and for those the charge follows the lender's own policy. The same directions require that charge to be disclosed in the sanction letter, the loan agreement and the KFS, and bar any pre-payment charge not disclosed that way.

On the trip loan, with an illustrative 3 percent charge plus GST on the amount prepaid:

Two figures on this page are usually estimated from memory: what you already pay every month, which sets the EMI you can carry, and what your credit report says, which sets whether a lender says yes and at what price. Unyfy supplies both before any lender sees an application.

The first is a live FOIR and blended rate, computed from the bank and card transaction emails it reads and, on Android, transactional SMS. You see each EMI and card obligation it has found, named from the lender on the debit, their total as a share of your salary credit, and the blended rate across them. The second is the loan eligibility check, which pulls your Equifax credit report as a soft enquiry that does not affect your score. It shows the score and the accounts behind it, including any overdue, settled or written-off account, then compares offers from 15+ banks and NBFCs. Only the one lender you choose to apply with runs a hard enquiry.

Approval and pricing are the lender's decision. It never asks for your bank password or UPI PIN, and every payment is one you authorise.

Install Unyfy on Android, or use the web app at app.unyfy.co.in on an iPhone.