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Things To Know Before You Take A Personal Loan For Medical Bills in India

Written by:

Utkarsh Bagri

Medical emergencies can strike at any time, and they often come unannounced. For the middle-class population in India, managing the unexpected expenses associated with medical emergencies can be challenging. While health insurance is essential, it may not cover all expenses. In such situations, personal loans can bridge this gap, offering a quick and flexible solution.


To qualify for these loans, individuals typically need to meet certain eligibility criteria, including a stable income and a good credit score. Prerequisites may involve submitting income documents, identity proofs, and address verification. The processing time for these loans is often swift, providing immediate relief during urgent medical situations.


This article will explore personal loans for medical emergencies in India, covering eligibility criteria, prerequisites, processing time, cost, loan quantum, tenor, and a comprehensive analysis of their pros and cons.

Eligibility criteria

Understanding these criteria is crucial for potential borrowers, as they provide insights into the factors lenders consider when evaluating eligibility for personal loans. Meeting these requirements enhances the likelihood of a successful loan application.

Applicants should typically be between 18 and 60 years old to be eligible for a personal loan as a salaried individual. Some banks offer loans to applicants aged more than 60 as well.

A minimum monthly income, often around INR 15,000 – INR 25,000, is required. However, this figure may vary depending on the lending institution.

Typically, a minimum work experience of 1 year is preferred, though some lenders may require a longer tenure of employment.

Salaried applicants are generally expected to have a credit score of preferably 700 and above for a higher chance of loan approval.

Self-employed individuals should usually fall within the age range of 21 to 65 years to meet eligibility criteria.

A minimum annual income, commonly around INR 15 lakh, is required for self-employed applicants. This figure may vary across different lenders.

Typically, a business continuity of at least 3 years is preferred, though some lenders may stipulate a longer period.

Similar to salaried applicants, self-employed individuals are generally expected to have a credit score of preferably 700 and above for favourable loan terms.

The table below compares the loan eligibility criteria of various top banks and NBFCs
Eligible Loan Amount
Minimum Eligible Income


Income proof is essential documentation verifying an individual’s financial stability and repayment capability for a personal loan. 

Salary slips, offering a snapshot of regular income.

Bank account statements of the last 3 months for transcation history.

Income tax returns for a comprehensive overview of earnings and tax liabilities.

Identity proof is a fundamental requirement in the personal loan application process, establishing the applicant’s true identity.

Accepted documents, such as Aadhar Card and Passport, provide official confirmation of the individual’s name, photograph, and essential details, ensuring a secure and legitimate transaction.

Address proof validates an applicant’s residential address for a personal loan application. 

Documents like utility bills, passport, and voter ID serve this purpose, offering tangible evidence of the individual’s place of residence.

An employment certificate is a formal document from the employer, confirming an individual’s employment status, tenure, and salary details. It strengthens the loan application by providing official validation of the applicant’s income and employment stability, instilling confidence in the lender.

Processing time:

Personal loans are known for their quick processing. 


The cost of personal loans can vary depending on the lender, but here are the key components to consider:

Personal loan interest rates in India can fluctuate widely, ranging from 10% to 30% or higher. The actual rate is contingent on the lender’s policies and the borrower’s creditworthiness.

The table below shows the interest rate of various popular loan providers:


Interest Rates (p.a.)

Lenders typically impose a processing fee, typically 1-2% of the loan amount. This fee is charged for the administrative tasks involved in handling and approving the loan application.

The table below shows the processing fees of various popular loan providers:


Processing Charges (% of loan amount)

Personal loan prepayment helps borrowers to save on the interest costs that they would have incurred had the loan continued for the entire term. 


For example, if a loan applicant wants a personal loan of INR 10 lakh at 13% p.a. interest rate for a 5-year loan tenure, the EMI will be INR 22,753 and the total interest cost will be about INR 3.65 lakhs. If they decide to repay the entire outstanding loan amount after 1 year, they will be able to save around INR 2.44 lakhs in interest costs.

However, Some Non-Banking Financial Companies (NBFCs) may enforce prepayment penalties if borrowers choose to settle the loan before the agreed-upon tenor, impacting the overall cost.

Failing to adhere to the repayment schedule can result in late payment charges, adding an extra financial burden. It is essential for borrowers to stay vigilant about timely repayments.

Availing a personal loan based on the type of treatment

When contemplating a personal loan for medical expenses, it’s essential to first distinguish between non-elective and elective treatments.

Non-elective treatment

Non-elective treatments are medically necessary interventions for acute conditions, accidents, or serious illnesses that demand immediate attention to prevent significant health risks. Personal loans are often justified for these treatments as they provide a swift source of funds.

Elective treatment

Elective procedures are planned medical interventions that are not immediately life-threatening, like cosmetic surgery, fertility treatments, or non-urgent joint replacements. While personal loans can still be used for elective treatments, careful consideration is necessary, as opting to postpone or save for these expenses may be a more financially prudent choice.

Additionally, when considering a personal loan for medical expenses, it’s important to define the relationship between the patient and the borrower. This distinction can significantly impact the decision.

Patient as borrower:

In one scenario, the patient takes on the role of the borrower, applying for a personal loan to cover their own medical expenses. This arrangement is straightforward and allows the patient to independently manage their finances.

Patient as borrower:

Alternatively, family members, such as parents or spouses, may choose to apply for a personal loan to finance the patient’s treatment in certain situations. In such cases, the lender will evaluate the borrower’s eligibility and creditworthiness. This approach may be suitable when the patient lacks the necessary financial standing to secure a loan.

Availing a personal loan based on patient-borrower relationship:

Health insurance coverage

Suppose a cancer patient has health insurance that covers medical expenses related to hospitalization, surgery, and chemotherapy. However, there are certain aspects that insurance may not fully cover, such as:

Non-medical expenses

Personal loans can cover non-medical expenses like travel and accommodation during treatment, which are typically not included in health insurance policies.

Advanced treatments

In some cases, insurance may not cover advanced or experimental treatments, but the patient may choose to explore these options. Personal loans can bridge the financial gap for such treatments.

Loss of income

During prolonged treatment, the patient or their caregiver may experience a loss of income due to reduced working hours or job loss. Personal loans can provide financial support to cover living expenses during this period.

Pros of using personal loans during medical emergencies

Personal loans provide rapid access to funds, an invaluable advantage during urgent medical situations where immediate financial support is crucial.

Being unsecured, personal loans eliminate the need for collateral or security, allowing individuals to secure funds without risking their assets

The versatility of personal loans extends to their usage, offering borrowers the freedom to allocate funds as needed, whether for hospital bills, surgeries, medications, or post-treatment expenses.

Personal loans often offer a variety of repayment tenors, allowing borrowers to choose a timeframe that aligns with their financial capacity, thereby easing the burden of repayment.

Despite their convenience, personal loans tend to carry higher interest rates, potentially increasing the overall cost of the borrowed amount over time.

Accumulating additional debt through personal loans poses a financial risk, particularly if the borrower already manages existing financial commitments, potentially leading to a debt cycle.

Defaulting on personal loan payments can have a lasting negative impact on your credit score, affecting your ability to secure favorable terms for future credit.

Personal loans may come with processing fees, adding an upfront cost to the borrower that should be considered when assessing the overall affordability of the loan.

The loan amount available through personal loans may be limited, and it may not cover extensive or ongoing medical expenses, necessitating careful consideration of the adequacy of the loan amount for the specific emergency.

Cons of using personal loans during medical emergencies

What to remember before taking a personal loan

By carefully considering these factors, you can make a more informed decision about whether a personal loan is the right choice for your financial situation:

Assess your financial situation

Understand your current financial situation, including your income, expenses, and existing debts. Ensure that you can afford the monthly loan payments without compromising your financial stability.

Total cost of the loan

Calculate the total cost of the loan over its entire duration. This includes interest, fees, and any other costs. This will give you a clearer picture of the financial commitment you are making.

Check your credit score:

A higher credit score often results in lower interest rates. Check your credit score and take steps to improve it if necessary before applying for a loan.

Interest rates and fees

Understand your current financial situation, including your income, expenses, and existing debts. Ensure that you can afford the monthly loan payments without compromising your financial stability.

Purpose of the loan:

Clearly define the purpose of the loan. Whether it’s for debt consolidation, home improvement, education, or other needs, having a specific purpose can help you determine the loan amount and terms.

Loan terms

Carefully review the loan terms, including the repayment period and any associated penalties for early repayment. Longer loan terms may result in lower monthly payments but could cost more in interest over the life of the loan.

Secured vs unsecured loan

Personal loans can be either secured (backed by collateral) or unsecured. Secured loans may have lower interest rates, but they carry the risk of losing the collateral if you default on the loan.

Read the fine print

Carefully read and understand the terms and conditions of the loan agreement. Pay attention to any clauses related to prepayment penalties, late fees, or other terms that may impact the cost of the loan.

Repayment plan

Have a clear plan for repaying the loan. Ensure that the monthly payments fit comfortably within your budget. Consider creating an emergency fund to cover unexpected expenses and prevent financial strain.

Consider alternatives

Before committing to a personal loan, explore other financing options such as credit cards, home equity loans, or lines of credit. Each option has its advantages and disadvantages. 

Lender reputation

Choose a reputable lender with a history of fair and transparent lending practices. Read reviews, check the lender’s ratings, and gather feedback from other borrowers.

Future financial goals

Consider how taking a personal loan aligns with your long-term financial goals. Will it help you achieve your objectives, or could it hinder your financial progress?

Please note:  This information is for general purposes only and is not financial or legal advice.  


The details and costs presented are subject to change due to various factors, such as regulatory updates, economic conditions, and individual circumstances. Relying on this information is at the reader’s own risk, and it is advisable to consult with financial experts for accurate and up-to-date information tailored to individual circumstances.

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