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calenderOct 30, 2023

The process of disbursing a Personal Loan

Personal Loans are a popular way to finance various expenses, such as home renovations, weddings or medical bills. However, before you can access the funds, you must go through a process that involves loan approval, disbursal and repayment.

Beginning the process

To apply for a Personal Loan, you need to fill out an application form and provide some documents to the lender. The lender will then evaluate your creditworthiness based on your credit score, income and debt. If you meet the eligibility criteria, you will receive loan approval.

Loan approval

After your loan application is approved, the lender will provide a loan offer that includes the loan amount, interest rate and other terms and conditions. Read the offer document carefully and understand all the terms before accepting the loan.

You can negotiate the interest rate with the lender if you have a good credit score and a stable income.

Loan disbursement

Once you accept the loan offer, the lender will disburse the loan amount to your bank account. Depending on the lender's policies and procedures, the disbursement process can take a few days. Some lenders may also charge a processing fee for the loan disbursement.

Understanding what happens after Personal Loan disbursement

After the Personal Loan is disbursed, you should take a few steps to ensure that you stay on top of your loan repayments and become an informed borrower. Here are the three important steps you should follow:

  • Loan confirmation: Once you receive the loan amount in your bank account, you should confirm the loan disbursal with your lender. You can check your bank account statement or contact the lender's customer service team. Confirming the loan disbursal will help you keep track of your loan balance and ensure there are no discrepancies in the loan amount or interest rate.
  • Loan repayment: Personal Loans are typically repaid through EMIs (equated monthly instalments) that consist of principal and interest components. You must ensure you pay your EMIs on time to avoid penalties or late fees. You can set up automatic payments or reminders to ensure you don't miss any payments. You can make prepayments or part payments to reduce your loan balance and save on interest costs if you have extra cash.
  • Track your credit report: You should keep track of your credit score and credit report regularly. Your credit score is a three-digit number that reflects your creditworthiness, while your credit report contains details of your credit history and loan accounts.
    By monitoring your credit score and credit report, you can detect any errors or discrepancies that can affect your loan eligibility. You can also improve your credit score by paying your bills on time, maintaining a low credit utilisation ratio, and keeping your credit accounts active.

Key takeaways from the Personal Loan disbursal process

  • Personal Loans can be a convenient way to finance your expenses, but you must understand the terms and conditions before accepting the loan.
  • You can negotiate the interest rate for a Personal Loan with the lender if you have a good credit score and a stable income.
  • Use a Personal Loan EMI Calculator to estimate your monthly repayments and choose a repayment option that suits your budget.
  • Be an informed borrower by setting up automatic payments or reminders, monitoring your credit score, and avoiding late payments or defaults.

Axis Bank offers Personal Loans for a maximum loan amount of ₹40 lakhs with a maximum loan tenure of up to 60 months. The interest rate starts at 10.49% p.a.

Please note, however, you will be required to pay a processing fee of up to 2% of the loan amount, plus GST.


Disbursing a Personal Loan involves loan approval, disbursement and repayment. By understanding the loan terms and conditions, negotiating the interest rate, and staying informed about the loan repayment process, you can make the most of your loan and achieve your financial goals.

[Also Read: How to get a Rs. 5 Lakh Personal Loan?]

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision