What Is An Unsecured Loan: Features, Eligibility & Interest Rate Overview

An unsecured loan is a type of borrowing where the lender does not ask for any assets or security in exchange for funds. Instead, the lender decides whether to approve the loan and what terms to offer based on your income, credit score, repayment track record, and employment history.

Suppose Shruti works for a reputed IT company and earns ₹55,000 every month. She needs ₹6,00,000 for his sister’s wedding. She does not have any property or a personal vehicle. So, she opted for an unsecured personal loan. 

Based on her credit score of 740 and job stability, a lender approves her application with 10.50% annual interest for 3 years. Her monthly EMI comes to around ₹ ₹19,501. The bank did not ask for any collateral, and she received the money within 2 working days.

Such loans are useful when you need funds quickly but do not want to risk your assets. In this blog, we will explore the features, eligibility, types, and other key details of unsecured loans in the sections below.

Key Features Of An Unsecured Loan

You need to make sure you understand the loan features before moving forward with it. The following table shows you the key features of an unsecured loan:
 

The above-mentioned features may vary slightly depending on the lender, but the core terms remain similar.

Eligibility Criteria For Unsecured Loans

Eligibility may vary slightly across lenders. However, the following criteria are commonly applied:
 

The above-mentioned table outlines the general eligibility requirements for salaried and self-employed individuals. However, this eligibility may vary from lender to lender. Sometimes, lenders also offer customised terms based on the borrower’s profile and city tier.

Types Of Unsecured Loans

There are many types of unsecured loans to suit your different needs. The following table shows you some common types of unsecured loans:
 

The above-mentioned loan types offer you flexibility without tying up your assets.

Interest Rate Overview Of Unsecured Loans

Interest rates for unsecured loans vary depending on the lender, your income, employer profile, and credit score. Some banks might offer lower rates for salaried professionals in reputed companies.

On the other hand, others may offer higher rates to self-employed individuals. The following table shows the interest rates of unsecured loans of popular lenders in August 2025:
 

According to the table mentioned above, the Bank of Maharashtra offers the lowest rate. However, it is not the final rate for you. Your interest rate will be determined after your lender has reviewed your eligibility and credit profile.

Points To Consider Before Applying

At first, an unsecured loan might look attractive to you. However, you must make an informed decision. You need to compare offers and check charges before signing up. The following table lists the key points that you should consider:
 

You must keep in mind that a loan should never strain your monthly finances beyond a healthy level.

Final Thoughts

An unsecured loan is one of the most convenient ways to access funds when you do not have collateral. It helps you meet personal or professional needs without any asset-based stress.

However, the ease of approval comes with a cost, in the form of higher interest rates and strict eligibility checks.

You must always compare loan offers from different banks and NBFCs. You can use EMI calculators to plan your repayment. Most importantly, you must borrow only what you can comfortably repay.

FAQs

1. Do digital lending apps offer unsecured loans safely?

You must use only RBI-registered platforms to avoid fraud or hidden charges.

2. Can a pensioner apply for an unsecured loan?

Some banks allow it if pension income meets eligibility.

3. Can I increase my loan amount after sanction?

Usually not. You will need to apply for a top-up or a fresh loan.

4. What happens if I delay EMI by a week?

You may be charged a penalty, and your credit score may drop.

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About the Author

LoansJagat Team

We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?