First time taking a personal loan in India? Here’s a simple step-by-step guide

For first-time borrowers, taking a decision can feel overwhelming because a personal loan is not just about quick access to funds but a commitment that requires careful planning and responsible repayment.

Taking a personal loan for the first time can feel confusing because different lenders follow different rules, such as eligibility criteria, interest rates, and documentation requirements. Whether you are borrowing for an emergency, a planned purchase, or debt consolidation, understanding how the process works can help you make safe and informed decisions.

This guide explains how first-time borrowers can compare options, check eligibility, calculate EMIs, and manage EMI responsibly. Plus, we will explore how digital applications and app-based processes make getting an instant personal loan easier.

How to compare loan options and evaluate key parameters
 

When applying for a personal loan for the first time, it is important to compare lenders. Here are 7 crucial points every first-time borrower must consider:

1)  Loan amount: Lenders determine the eligible loan amount based on income, existing obligations, credit score, and repayment capacity. For first-time borrowers, the approval amount may be lower because lenders do not see a loan repayment history profile.

2)  Interest rate: Different lenders offer varied interest rates. A small difference in interest rate can significantly change the total cost of the loan. It is recommended to compare rates across banks and digital lenders before submitting your first-time personal loan application.

You can get a FIRSTmoney personal loan by IDFC FIRST Bank starting at just 9.99% p.a.

3)  Processing fees: Fees vary from lender to lender and impact the upfront cost. First-time personal loan applicants must include this in their overall loan cost.

4)  Application process: Borrowers can apply for personal loans in 2 ways-  

• Online application for instant personal loan approvals.
• Traditional application by visiting the branch.

Digital and app-based platforms provide faster verification and quicker approvals.

5) Documentation requirement: Typically, lender-mandated documents include:

• Aadhaar Card
• PAN Details
• Address Proof
• Income Proof
• Bank Statements
• Recent Photographs

At times, lenders may ask for employment proof or additional financial documents, depending on the lenders’ policies.

Digital-first lenders like IDFC FIRST Bank require just your PAN and Aadhaar number for application and your original PAN card that needs to be displayed during the video KYC.

6)  Loan tenure: Shorter tenures reduce the total cost of interest but increase the EMI. Longer tenures have reduced EMI but increased the total loan cost. First-time borrowers must choose an option that aligns with their financial goals and flexibility.

7) Credit score expectations: Lenders prefer a credit score over 750 is a strong number.

You can apply for a FIRSTmoney personal loan with a CIBIL score starting at just 710.

Why FIRSTmoney is a great pick for first-time personal loan borrowers
 

FIRSTmoney from IDFC FIRST Bank provides a smooth digital borrowing experience with interest rates starting at 9.99% p.a., flexible repayment plans, and zero foreclosure charges for eligible customers. These benefits make it easier for first-time borrowers to apply with confidence, clearly understand their costs from the get-go, and handle repayments without any hidden fees or complications.

How to determine eligibility and calculate EMI
 

Before applying for a first-time personal loan, ensure you match the lender’s eligibility criteria and your financial ability to repay the loan. Listed below are some common eligibility criteria and ways to calculate your monthly EMI.

A. Eligibility criteria
 

• Age: Usually between 21 and 60 years.
• Nationality: Indian citizens or residents with verifiable documents.
• Income: Minimum 6 months' salary certificate for employed borrowers and tax documents for self-employed individuals.
• Credit profile: Credit Score over 750, mixed credit history and maintaining an average monthly balance in your bank account.

If you are applying for a personal loan through the FIRSTmoney platform by IDFC FIRST Bank, the eligibility criteria is simple:

• Open to salaried and self-employed individuals
• Age between 21–60 years
• CIBIL score of 710 or above

Plus, you don't have to upload any documents. You simply need to use your Aadhaar and PAN number during application and show your original PAN card to complete the video KYC process.

B. Income-based calculations
 

• Lenders evaluate monthly income to decide how much they can offer to a first-time personal loan applicant. For instance, a borrower earning eighteen thousand rupees per month may qualify for a smaller amount because repayment capacity is limited.
• Eligible loan amounts vary across lenders, so checking your loan eligibility in advance helps prevent rejection.

C. Debt-to-income ratio (DTI)
 

• Lenders evaluate your debt and compare them to your monthly income to understand repayment strength.
• Even borrowers who are applying for a personal loan for the first-time and have no previous loans should maintain healthy financial habits to present a strong and reliable profile.

D. EMI calculation
 

• Tools such as IDFC FIRST Bank’s personal loan EMI calculator help estimate EMI based on loan amount, tenure, and interest rate.
• These calculations help first-time personal loan borrowers plan their finances better.

E. Total cost of borrowing
 

• EMI amount
• Processing fees
• Total interest payable
• Additional charges such as service fees or transaction charges.

You can also check out FIRSTmoney personal loan fees and charges for complete clarity before applying.

F. Digital eligibility checks
 

• Digital and app-based platforms let borrowers check their loan eligibility instantly.
• This helps you understand how much you can borrow before completing the first-time personal loan application.

Post-loan experience: Repayment, foreclosure, and on-demand loans
 

Here are the key aspects of managing your personal loan after approval.

Apply for a first-time personal loan with IDFC FIRST Bank
 

If you are looking for a personal loan for the first time, consider FIRSTmoney smart personal loan by IDFC FIRST Bank to avail the following benefits:

• Fully digital application process
• Quick disbursal within 30 minutes
• Low interest rates starting at 9.99% p.a.
• Zero foreclosure charges
• Flexible repayment options
• Multiple on-demand loans

With access to tools such as the personal loan EMI calculator, you can easily get an estimate of your EMIs. Whether you prefer applying through the mobile app or website, IDFC FIRST Bank provides a smooth and reliable borrowing experience for first-time borrowers.