Is it Possible to Take a Personal Loan in Another State?

Updated on: 14 Dec 2021 // 20 min read // Personal Loans
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Theoretically speaking, it is possible for you to take out a Personal Loan in another state. Let us look at the circumstances that can make it possible.

Transferable Employees

The Government and PSU employees have transferable jobs that can take them to any part of India at short notice. Hence, it is not uncommon to find a person from Tamil Nadu serving in the state of Maharashtra. These transfers are routine affairs and entail the concerned staff to live in the transferred location during the official tenure. If the Government employee wants to take a Personal Loan in the state where they are living, it is entirely possible.

The banks processing the application cannot reject the loan stating that the borrower is a bonafide resident of another state. The banks should satisfy the KYC norms before sanctioning the Personal Loans. If the borrowers can provide sufficient evidence of their stay in the state where they are posted, the banks do not have any business in rejecting the loan, especially if the applicant satisfies all the other eligibility norms.

The same is the case with the armed personnel. The Army and other defence personnel have to serve the nation at odd locations. They have to endure postings at remote places. An army person belonging to Darjeeling can have an assignment in Kanyakumari. Does that make him ineligible to avail loans from banks in Kanyakumari?

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The Reverse Situation

We have discussed that a person posted in a different state can avail the Personal Loan in the state where they are living at present. At the same time, they can also Avail Personal Loans from their bonafide state (state to where they belong to). A Government official posted in Assam can belong to Kerala. The official can avail a Personal Loan in Kerala even though the official residence at the time of availing the loan is in Assam. The concerned official might have the family living in Kerala. They might also have properties in Kerala. Under such circumstances, the official can avail the Personal Loan in a state different from their place of posting.

People Living in Border Areas

All the states in India have porous borders. Hence, a person living in the border village of Maharashtra might have a bank account in the adjoining town in Karnataka. Under such circumstances, the person is eligible to take out a Personal Loan in a different state. The primary criterion is the KYC norm. If the applicant can satisfy the bank about the genuineness of their credentials, there is no reason why banks will reject loans on this premise.

For the profiles mentioned above, HDFC Personal Loan is the best credit facility due to its flexible norms for people who are looking for a Personal Loan from a different state.

When Can You Not Take Personal Loans in a Different State?

The borrower cannot take Personal Loans from states where they neither live nor belong to. For example, the Army Personnel belonging to Darjeeling and posted in Kanyakumari can take personal Loans both in Darjeeling and Kanyakumari. However, the same borrower cannot takea loan from Ahmedabad because Ahmedabad is in a completely unrelated state altogether.

The Criteria for Applying for a Personal Loan

The criteria for applying for a Personal Loan are unambiguous in this aspect. You have to satisfy the KYC norms as well as the income norms to be eligible for a Personal Loan. The banks are within their rights to reject the loan if you are not able to satisfy either of the above two conditions.

Treatment in Case of Other Loans

The logic that applies to Personal Loans does not apply to other loans involving the presence of collateral. Thus, a person living in Ahmednagar in Maharashtra can avail housing loan from any bank in Chennai for the purchase of property in Chennai. Therefore, you can deduce that either the borrower or the asset that the borrower proposes to acquire should be available in the state where they apply for a loan.

There are innumerable instances of people living in one state and setting up industries in other states because of the availability of specific facilities. They can avail Business Loans at either of the two places. The banks do not have any objection in such cases.

We can conclude that it is possible for a person to take a personal loan in another state under specific circumstances:

  • The borrower should be posted in the particular state and should be living there even though they originally belong to another state.
  • The borrower can avail a Personal Loan in their home state irrespective of the fact that their posting is in a different state.

Also Read: 4 Stages of Personal Loan Verification Process

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