Personal loans in India: Can an 18-year old get a personal loan easily?

Securing a personal loan could be a major financial step for young adults. Whether it’s to cover urgent expenses or fund some important payments like education fees, understanding the process is essential for 18-year-olds looking to navigate the financial landscape.

Managing money and credit instruments is critical for a financially secure future. Experts often advise to start learning about money matters like loans, credits, savings and investments early. It could be a good start for young adults to start as early as at the age of 18 to learn how to manage their money alongside their studies.

Personal loans are easily available these days with the emergence of digital lending platforms and the 18-year-olds can access borrowing when they need money.

Moneycontrol has partnered with five lenders to provide loans of up to Rs 15 lakhs, with interest rates starting from 12% per annum. You can easily check your eligibility using a 100% digital process.

However, availability of easy loans for the youth also requires careful handling of credit facilities. The young adults need to understand the intricacies of personal loans to avoid any financial stress in future.

Documents required for personal loan application

To qualify for a personal loan, applicants must submit documents proving their identity, income and employment status. Commonly required documents include:

1. Loan application form: Completed with accurate personal and professional details. In case you are using online loan platforms, the information can be entered directly using a mobile app or website.


2. KYC documents: Proof of identity (Aadhar card, passport) and proof of address (utility bills, rental agreement).


3. Income proof: Recent salary slips, bank statements, or a letter from the employer.


4. Employment verification: Documents showing continuous employment, usually for at least 6 months to 1 year.

How 18-year-olds can apply for a personal loan in India

General steps to apply for a personal loan are as follows:

1. Evaluate your loan amount: Assess your needs to determine the loan amount that suits your financial situation.


2. Check EMI capacity: Use a personal loan eligibility calculator to estimate your monthly instalment (EMI) based on current obligations.


3. Review eligibility criteria: Ensure you meet the lender's requirements, including income and employment status.


4. Compare interest rates: Different lenders offer varying rates, so comparison is crucial for the best deal.


5. Submit an application: Complete the online form through your bank’s website or app, or visit a branch in person.


6. Document submission: Provide necessary documents such as KYC and proof of income.

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Eligibility criteria for personal loans

Several factors influence the approval process for 18-year-olds seeking a personal loan in India:

• Credit score: A strong credit score —750 or higher — signals to lenders that an applicant is financially responsible. While some lenders may offer loans to individuals with lower scores, the interest rate might be higher. Young borrowers should monitor and maintain their credit scores to secure better loan terms.


• Age: Most lenders in India offer personal loans to applicants aged 18 to 65. But, the minimum age requirement for some lenders could be 21 years. For those under this age, having a co-borrower with a higher credit score or steady income can improve loan approval chances.


• Income: While salaried individuals are more likely to qualify, a steady income of Rs 15,000 per month is usually the baseline. The income criteria may vary based on your location. For self-employed applicants, an annual income of at least Rs 2 lakhs is usually required.

Factors to consider before borrowing

Before applying for a personal loan, 18-year-olds and other young adults should consider the following:

• Loan amount and usage: Borrow only the amount needed. Overspending can lead to repayment difficulties and financial strain in the future.


• Loan tenure: Personal loan tenures in India typically range from 12 to 60 months. A longer tenure can reduce the EMI amount, making repayments more manageable, but it may result in a higher total interest paid over time.


• Interest rates and processing fees: Interest rates can vary depending on the lender, credit score and income. Young borrowers may face higher interest rates due to limited credit history. Comparing rates and negotiating with lenders can help secure the most favourable terms. Processing fees are also an important consideration as they can impact the overall cost of the loan.

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Challenges in securing a personal loan for 18-year-olds

• Requirement for a guarantor: Given that many 18-year-olds may not have a credit history, some lenders might require a guarantor to strengthen the application. A guarantor with a strong credit score can improve the likelihood of approval and may even help negotiate better terms.


• Higher interest rates: Personal loans for younger applicants may come with higher interest rates due to the perceived risk. But showing a steady income and responsible financial behaviour can help mitigate these rates over time.


• Loan rejection or lower amount approval: Applicants with low income or credit scores may face rejection or receive a reduced loan amount. To increase approval chances, applicants should provide valid identity proof, ensure all documentation is accurate and maintain a healthy credit score.

Overall, for 18-year-olds in India, a personal loan can be an effective financial tool when used wisely. By understanding the types of personal loans, eligibility requirements and key considerations, young borrowers can make informed decisions that support their immediate and long-term financial goals.

You can access an instant, fully digital personal loan through the Moneycontrol app. With no paperwork and low processing fees, your funds will be transferred to your bank account quickly and efficiently. Just fill out your details, complete the KYC process and select your EMI repayment terms. In collaboration with five lenders, Moneycontrol provides access to loans up to Rs 15 lakhs in a 100% paperless process.