What Is an Unsecured Loan?
An Unsecured Loan is a loan provided without any collateral. Approval depends on the borrower’s creditworthiness, income, and repayment history. These loans are popular for personal, business, or emergency financial needs where collateral is unavailable or undesirable.
Key Features of Unsecured Loans
- No collateral required
- Faster approval compared to secured loans
- Loan amount typically lower than secured loans
- Interest rates slightly higher due to higher risk
- Available for personal, business, or emergency purposes
Types of Unsecured Loans 2026
| Loan Type |
Purpose |
Interest Rate (p.a.) |
Tenure |
| Personal Loan |
Medical, travel, marriage, personal expenses |
10% – 20% |
12–60 months |
| Business Unsecured Loan |
Working capital, expansion, small business needs |
12% – 22% |
12–60 months |
| Emergency Loan |
Sudden financial needs |
14% – 24% |
6–24 months |
| Salary Advance Loan |
Advance against salary |
12% – 18% |
1–12 months |
Eligibility Criteria
- Indian citizen with valid KYC documents
- Minimum age 21 years; maximum 60 years
- Stable income or business revenue
- Good credit score (700+ recommended)
- Proof of repayment capability
Documents Required
- Identity proof (Aadhaar, PAN, Passport)
- Address proof (Utility bills, Voter ID)
- Income proof (Salary slips, Bank statements, ITR)
- Loan application form
- Business documents for business loans (if applicable)
Unsecured Loan Example
If you take a ₹3 lakh personal unsecured loan at 15% interest for 36 months:
- Monthly EMI: ₹10,730 approx.
- Total interest payable: ₹84,280 approx.
- Total repayment: ₹3,84,280 approx.
Advantages and Disadvantages
Advantages
- No collateral required
- Quick approval process
- Convenient for emergency or personal needs
- Flexible use of funds
Disadvantages
- Higher interest rates than secured loans
- Lower maximum loan amount
- Approval depends heavily on credit score
Frequently Asked Questions (FAQs)
Can I get a loan without collateral?
Yes, unsecured loans are designed for borrowers without collateral.
Are interest rates higher?
Yes, unsecured loans generally have higher interest rates due to increased risk for lenders.
Can business owners apply?
Yes, business owners can apply for unsecured business loans if they meet eligibility criteria.
How fast is the approval?
Most unsecured loans are approved within 24–72 hours depending on documentation and lender verification.
Author: All Finance Store Unsecured Loan Team
Expertise: Personal & Business Loans Advisory
Last Updated: January 2026
Disclaimer: This page is for informational purposes only. Unsecured loan terms, interest rates, and eligibility vary by lender. Verify details with banks before applying.