Which banks give personal loans with bad credit in India?

A personal loan is taken when you have an immediate need for funds, and the money existing with you doesn’t cover the financial emergencies you are facing. People often opt for personal loans when they have exhausted all other options. But today, it seems India runs on personal loans. Take a look at the excerpt from the Times of India, the leading English newspaper in the country. Do you want to know which banks give personal loans with bad credit in India?

Looking at the credit industry in India and at the pace at which it is growing, I feel not all loans will be good loans. Meaning there will be people having bad credit. And if you are one of them, there is no need to worry because I am writing this post to help people like you who have bad credit. I am also discussing the places from where you can borrow.

First, you need to ascertain your financial situation and assess whether you need a personal loan. Having done all that, if you feel you still need a loan, I have discussed some steps you need to consider before applying for the said loan.

Things to consider so that banks can give personal loans with bad credit in India.

You must keep in mind the following points so that banks give personal loans with bad credit in India.

01. Explore the options for bad credit loans well.

A bad credit loan will come at a higher interest rate along with processing fees and other charges, including tax. Hence you need to compare the terms of different lenders, evaluate the benefits, and go through the loan offer carefully before finalizing.

02. You need to be eligible to apply for loans with bad credit.

The eligibility terms vary from lender to lender. Apply for loans with eligibility requirements you fulfill; otherwise, your application will be rejected, damaging your credit scores further. Please keep in mind every hard inquiry by the lender drops your credit score further.

03. Understand the terms and conditions of the lender.

Loans with bad credit will come with many clauses and financial implications. Don’t hurry to sign the loan and go through all the minute details thoroughly, and only after you are satisfied to proceed with the process of getting the loan.

04. And finally, consider your repayment capacity.

All your due diligence will come to a naught if you haven’t analyzed your repayment capacity. If you cannot pay off this loan, you will sink further into the quicksand of bad debts and hurt your credit scores further. Only if you feel you can repay the EMIs comfortably, then go ahead and opt for a bad credit loan.

It may not be impossible to get a loan with bad credit, but it will still take time and be wrought with hassles. That is why I have suggested some tips you can consider before opting for a loan with bad credit.

How to avail bad credit loans in India?

To avail of bad credit loans in loans so that banks can give personal loans to you, read out the following points:

01. Knowing your credit score is very important.

A score above 750 is considered very good, and you will get lenders to provide you loans at favorable terms and conditions quickly. But low credit scores are anything below 625. Before you avail of a personal loan, you can check your credit scores online for free.

02. Assess your financial position and ensure no defaults with the new loan.

You should consider taking a new loan only if your current income can support the EMIs.

03. Compare the various bad credit loans available in the market.

Review the terms and conditions of the loans and read through the fine print carefully.

04. Opt for secured loans.

Though personal loans are collateral-free, some lenders provide personal loans with collateral. This helps negotiate the terms in your favor, and the approval will be quicker. A secured personal loan is easy to get, especially if you have bad credit.

A guarantor with a good credit score can help you avail of a loan despite having bad credit scores. 

05. Provide income proofs to support that you have enough income to remain regular with your EMIs.

This helps in getting a personal loan with bad credit. Provide employment information, business details, income tax returns to the lender to convince him of your repayment capacity. 

Now that you have done your due diligence and have assessed your financial position, I have listed some banks that will provide you loans even with bad credit.

Which banks give personal loans with bad credit in India?

You can get loans with bad credit from scheduled banks and non-banking financial companies, though the terms won’t be favourable to you. But before approaching them, you can try approaching your existing banker. Yes, you heard that right, I suggest going to your primary bank for a loan.

Let me elaborate: If your credit score is low because you have no credit history to back you up, you can approach your primary banker. Your bank will know about your financial track record as you bank with them, and they won’t mind approving a personal loan for you without bothering too much with your credit scores.

banks with their respective rate of interests.
banks with their respective rate of interests.

You can also apply for an overdraft facility on your current account. This is possible if you are a self-employed individual and have opened an existing account with your bank. You can utilize this facility to overcome a short-term shortage of funds instead of going for a personal loan.

Now, with that out of the way, let me discuss schedule banks. Schedule banks have strict eligibility conditions, and they will approve your loan application only if you meet all their requirements. Some banks might ask you to pledge collateral or provide income proofs or both to support your repayment capacity. 

Banks have stringent terms and conditions for loan applicants whose credit scores range between 500 and 750. The excerpt from My money Mantra a financial website, lists prominent scheduled banks providing personal loans to applicants with bad credit scores. 

The rates shown here are as of September 2021. It is best to approach these banks yourself to confirm the interest rates as interest rates are prone to changes.

Compared to scheduled banks, non-banking financial companies offer better terms and conditions on personal loans with bad credit. They are more flexible and lenient, and the chances of getting a low value, shorter tenure loan are high even if you have a low credit score. The below excerpt from My money Mantra a financial website compiles the leading NBFCs into a list.

non-banking financials with their respective rate of interests.
non-banking financials with their respective rate of interests.

You can approach these NBFCs and enquire about their terms and conditions and confirm their interest rates before proceeding to apply.


There is no such thing as a free lunch. This saying is apt for this situation. When you have bad credit then your negotiating capacity reduces and you will have to do a lot of research before settling on a lender. It is always advisable to increase your credit scores and maintain them.

Credit scores are important because they present a picture of your repayment capacity to the lender. That is why bad credit scores have such a drastic impact on your borrowing capacity. I hope this article is able to help you in deciding suitable lenders who will provide you with a personal loan with favorable terms and conditions.

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  4. How to get an Instant cash loan in 1 hour without documents?
  5. How to get a loan with bad credit scores in India
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