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Personal Loan Guide

A simple guide on how personal loans work, including the benefits and features a personal loan may offer and the mistakes to avoid; KarloCompare personal loan guidelines have everything you need to know about getting a personal loan.

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Personal loans are unsecured loans that you can borrow from a bank or lending agency. Some common uses for it include paying for your child's education, starting a business, or paying off your existing debt. Since a personal loan is an unsecured loan no collateral is required to take out this loan.

Unsecured loans do not require a collateral. Lending decisions are made based on your monthly income, credit history, employment profile and the amount of credit you already have. Loan providers have a maximum limit that they can disburse as personal loans, usually the maximum amount permitted by state bank of Pakistan is PKR 5,000,000.

Since the bank is not taking any collateral the loan will have a higher interest rate than secured loans. Interest rates on personal loans are usually charged on fixed rate basis. However, there might be instances where you get a floating rate.

Fixed rate loans means that the interest rate does not change over the life of the loan; whereas in floating rate loans the rate will change at predefined periods over the course of the life of the loan. In Pakistan floating rate loans are linked to the Karachi Inter Bank Offered Rate (KIBOR), usually banks will link the rate they charge you to the KIBOR. For example if the 1 year KIBOR is 7% the bank will charge you KIBOR + 4.0% (i.e. a rate of 11.00%).

Keep in mind KIBOR changes and in instances where you have taken a loan on floating terms, your monthly installments will also change. However, the bank will usually change the rate on a per annum basis. 

Loans are available from banks and leasing companies. However the requirements tend to vary across the institutions. In general, below are the eligibility requirements you will find when applying for a personal loan.




Eligibility Criteria:


  • At least 21 years of age, but not over 60
  • Monthly gross salary of at least Rs 30,000/-
  • Must be a Pakistani citizen or have Pakistan Resident status


Documentation Requirements:

  • Copy of CNIC
  • Copy of latest 1-3 month payslip
  • Copy of latest 6 months Bank Statement showing salary
  • If you are self-employed, a copy of your NTN, Tax Return, Form 29 might be required.

Properly managing your loan involves knowing the terms of your loan so you can plan your payments accordingly. Some things you need to watch out for are the monthly interest rates and the annual percentage rate (APR) which are added to your principal amount. You also need to take note of your minimum monthly repayment, so you can plan your budget.

When choosing your personal loan, look for lowest APR and monthly repayment amounts, as well as your total repayment amount. With Karlocompare.com.pk's loan comparison tool, you will be able to find personal loan offers that fit your needs as well as your budget in a matter of minutes. You can apply for the loan from the comfort of your home, you don't need to run after sales agents, wait for endless amounts of time with the loan providers call center. Simply log, enter your requirements, and find a loan that matches your needs. Smart Bano, Compare Karo!

There are two types of loans offered to Pakistani consumers: secured and unsecured loans.

Secured loans require a collateral/security to be submitted to the bank or lending company against  the money that is borrowed. Types of collateral generally accepted by banks in Pakistan range from cash, liquid assets such as mutual fund units, government bonds,  property or machinery.

Secured loans are relatively low-risk loans, since the bank holds the collateral as security. In event of nonpayment the bank reserves the right to liquidate the asset that they are holding as collateral to recover the loan amount.  The loan amount  in the event of secured loans is usually a percentage value of the collateral submitted to the bank. The bank determines the value  of the asset being pledged and then disburses a loan accordingly.

For example you use your property with a market value of PKR 5,000,000 as collateral. The bank will mark a lien on the property and extend you a credit of PKR 3,500,000 approximately 70% of the market value of the property.

We hope the above information was of use to you. We are here to serve you and make life simpler since we know that time is of utmost importance. 

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