The Pros and Cons of Taking an Aadhar Card Loan

Financial emergencies always come unannounced. But taking a personal loan could help bridge the financial gap. Technological advancements have made things easier when taking out loans. Nowadays, you can get a loan on an Aadhar card. The best part is that you can use this amount on anything you want, from paying medical expenses to paying bills and funding your long-awaited vacation; you have nothing to worry about.

With that said, let’s look at the pros and cons of an Aadhar card loan.

What is an Aadhar card?

This is a special card given to Indian citizens for identification purposes. It contains demographic data, iris scans, and fingerprints of a person. The cards can be used to take personal loans. However, it cannot be used as a substitute for other identification documents. But it can be used as one since it has the personal details of an individual. Applying for a loan with an Aadhar card is simple.

Pros of Taking an Aadhar Card Loan

Here are the benefits of getting personal loan on Aadhar Card

1. Simpler documentation

When taking out a loan on Aadhar, you will only provide one document, which will show proof of your identity and address. This simplifies the documents needed to get the loan. You easily get a loan with just an Aadhar card, which is your valid identity and address. Apart from that, you also have to provide other relevant documents that the lender needs, such as income proofs showing how you are earning your salary and the amount you get.

2. Quick loan Approval and funds disbursal

Since loans on Aadhar card involves minimal paperwork, less time will be needed to approve the loan, and after that, you can get your funds in your account. The approval time can happen in hours, granting you quick access to funds.

3. Flexible Tenure

Loan tenure is the period you have to repay the loan in full. The repayment period for Aadhar card loans will depend on the lender. But mostly, you can get a loan tenure of up to 3 years.

4. You don’t have to provide security

You can apply for an Aadhar card loan without providing collateral because lenders provide small cash loans on Aadhar card without requesting you to provide your car or house as a form of security. These loans are unsecured; anyone can easily avail of them if they qualify and are eligible.

But, remember you should repay the loan at an agreed period, and failure to do that you might be subjected to financial penalties. Although the penalties can be severe, you shouldn’t be worried about losing your only asset.

5. Favorable interest rate

Normally, whenever you borrow a loan, it is accompanied by an interest rate. These rates can be higher or low depending on various factors. Indeed, we don’t like paying higher rates because they are expensive and the final amount you will have to pay will be too much.

Luckily, with an Aadhar card, you can avail of a loan at favorable rates. Specifically, those with good scores can get a loan at interest rates ranging from 6 to 8 percent. You can get a higher loan than a credit card.

6. Your credit score will improve

Paying your EMIs on time will significantly increase your credit score. Loans with shorter tenures are less costly than those with longer tenures because the interest amount you pay is reduced. Besides, it is simpler to pay short-term loans, which could improve your score.

Cons of Taking an Aadhar Card Loan

1. Higher rates with bad credit scores

If your credit score isn’t good or not 750 or more, you are more likely to get a loan at a higher interest rate. Therefore, if you have a lower score, work on raising it first before you apply for a loan.

2. High processing cost

Banks, as well as NBFCs, impose processing costs on a borrowed amount which can be a percentage of the amount of the loan. This cost is higher than that charged on secured loans, meaning that the borrower will get a low amount.

What you need to consider when taking an Aadhar card Loan

Just like other loans, there are some requirements you need to meet before you take an Aadhar card loan. Here are some of these requirements:

  • You should be 21 years or more to avail of a loan with an Aadhar card. However, you shouldn’t be more than 60 years old.
  • Your monthly salary should be Rs. 20,000, and you have a working experience of at least 2 years.
  • Your credit score should be 750 or more to get an Aadhar card loan.


Aadhar card loans have pros and cons that every borrower must understand. These loans are unsecured, meaning you will not provide your only asset to act as security. If you want faster access to cash, getting an Aadhar card loan is the best option. Despite that, these loans have downsides as well. You can get a high-interest loan if you don’t have a stellar credit score.

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