Professional Loan Vs Personal Loan: All you need to know

A professional loan and a personal loan are two of the most optimal ways to get an unsecured loan. If you want to start or expand your independent profession, then both options can help you arrange the funds. 

That said, both these options have unique features and requirements. Knowing them beforehand can help you make a well-informed decision. This way, you can choose one that simplifies access to funds without increasing your financial burden.  

Read on to know more about personal and professional loans, their features, how to choose between them and more. 

What is a Professional Loan? 

It is a loan that helps self-employed professionals meet the financial requirements of their occupation. This includes:

• Day-to-day expenses 
• Equipment purchase 
• Emergency funds
• Buying or renting a workspace 
• Firm expansion 
• Transport or delivery expenses 
• Hiring and training staff 

Here are some features of loans for professionals:

• It doesn’t require you to pledge any assets as collateral 
• You can choose any flexible repayment option
• You enjoy a tailored loan offer, suited to your profession 
• You can also use this loan to finance your education 

Also Read: Benefits of a Personal Loan

What is a Personal Loan?

This is also an unsecured loan offered by lenders and you can use it for your personal financial requirements. You can use this loan to:

• Cover the cost of emergency medical expenses
• Fund your travels
• Consolidate your debt
• Renovate your home 

The features of a personal loan are as follows:

• The amount depends on your creditworthiness, income and financial history
• It has a straightforward process, as you don’t need to pledge collateral
• You can apply with minimal documentation
• You can repay with a flexible tenure, which varies from lender to lender

How to Choose Between Them?

Following are some factors to consider when choosing between a professional and a personal loan. 

Eligibility

Eligibility criteria are one of the major factors to help you choose between these two loan types. Only doctors, lawyers, CAs, etc., are eligible to apply for a professional loan, but anyone can apply for a personal loan. Remember, all lenders have different eligibility criteria, which you must check before applying. 

Documents Required

While the majority of the documents are similar, there is one key difference. You must also provide additional proof of income and degree certificates for professional loans. Here are all the necessary documents to apply: 

For professional loans: 

• Aadhaar card, PAN card, voter ID, driving licence, or other KYC documents
• Address proof
• Proof of business, such as rent agreement and electricity Bill
• Bank account statement 
• Certificate of practice
• Highest professional degree or certificate 

For personal loans:

• Aadhaar card, passport, voter ID or other identity proof
• Address proof such as an Aadhaar card, rental agreement, or utility bills
• Last 3 months’ bank statement 

End-use Restrictions 

One way a personal loan wins over a professional loan is that you can use it for any purpose. However, if you apply for professional loans, you can’t use the funds for personal expenses. On the contrary, you can use personal loans for your private and career-related requirements.

Loan Amount

The maximum amount you can get depends on many factors. These include your chosen lender’s policy and eligibility. One way to decide which loan is better is to compare the maximum loan amount offered by the lender. 

Also Read: How to get a ₹5 lakh loan immediately?

Interest Rates

Often, interest rates for a professional loan are lower compared to a personal loan. However, this depends on the lender’s policies. You can compare all the available options and choose the loan with the lowest interest rate. 

This way, you can avoid paying higher interest and reduce your borrowing costs. At Fibe, you can easily avail of a loan at an affordable interest rate starting at 2% per month. 

By comparing the benefits of a professional loan against a personal loan, it is clear that the latter is a lot more flexible and easier to access. The Fibe Instant cash loan is a popular and reliable solution you can opt for. It allows you to get funds up to ₹5 lakhs seamlessly. We offer rapid disbursal, flexible tenure options of up to 36 months and an option for pre-closure without additional charges. 

Download our Personal Loan App or visit our website to apply for an affordable offer.

FAQs on Personal Loan Vs Professional Loan 

What is the difference between a personal loan and a professional loan?

Personal Loan	Professional Loan
No end-use restrictions	The funds can be used to meet business-related requirements
Anyone can opt for this form of credit	Only professionals with certification can opt for this loan

What is a professional loan?

It is a special type of loan designed to cater to the needs of self-employed professionals, such as:

• Doctors
• Lawyers
• Chartered accountants 
• Company secretaries, etc.