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Most of the Loan Applications are rejected by Lenders without any appropriate cause thereby lowering your Credit Score. To avoid unnecessary rejection of your Loan Application, we do a Credit Assessment of your Loan Application & Check your Eligilbility. In this section we will help you to know your Eligibility, Rate of Interest, Processing Fee, Documents Required and will help you to compare & finalise the most suitable cost-effective loan.
All loans are not created equal, personal loan has become a great option for people to use.
As the name suggests, Personal loan is taken by borrower to meet his personal needs. Of all the types of loan, Personal Loans are the easiest to get. For all the valid & short-term needs, Personal Loan is the most suitable ad quickest loan with minimum documentation. Personal loan is, usually, an unsecured loan i.e. no collateral is required to avail this loan facility.
Personal Loan does not require a down payment. All the banks, NBFCs, Small Banks & MFIs offer this type of loan. It is available in almost all the major cities of India. Personal Loan is an expensive loan, hence, you should take only such amount which is essential and repay it on time.
The rate of interest, in case of a Personal Loan, is higher than that of other loans. The rates range from 14% to 21% per annum.
There are 10 types of Loans offered by banks, NBFCs, Various Co-Operative Banks, Regional Rural Banks & other lending institutions:
1. Unsecured Business Loan
Business loans are generally backed either by collateral or primary security of stock and debtors. Collateral backed loans usually take a month or so to get disbursed as the process required to value assets, check legal title and understand the business is time-consuming.
Unsecured Business loan is easy to take and requires minimum documentation which ostensibly shortens the time-cycle to disburse the loan. The lender considers the credit profile of the promoters, proprietor, partners, members or the directors of the company. The credit score, which reflects the credit history & profile of the borrower, plays an important role. The lender checks the credit score by pulling credit score of the borrower from credit rating agencies like CIBIL. Based on the credit score of the borrower & strength of the cash flow from business, the lender sanctions loan to the borrower. The interest paid by the borrower in tax deductible against the business income of the borrower. UBL does not require any collateral.
2. Consumer Durable Loan
The electrical appliances which were a luxury in the past have become a necessity today. A borrower can apply for a loan for the purchase of consumer durables like television, microwave, phone & accessories, washing machine, music system, air-conditioner etc. This type of loan requires borrower to sign few documents and is sanctioned within a day or two. Banks & NBFCs extends this type of loan for 3 months to 36 months. The rate of interest on such loans vary from banks to banks. The broad range of CD loan is 12.5%-17% per annum. Consumer durable loan does not require any collateral.
3. Home Renovation Loan
You can avail personal loan to renovate your house. Any type of renovation in your house will qualify for the home renovation loan. If you have to conduct any repair, redesign or minor reconstruction in the house, then apply for the loan. Banks or NBFCs will check the credit profile of the borrower and will sanction the loan accordingly. This type of loan is eligible for an exemption under Income Tax. This type of loan does not require any collateral.
4. Personal Computer Loan Computer has moved up the chain of necessity and it is no more a luxury. Gone are the days of submitting school or college assignment in a bulky paper folder. Whether you are an employee- govt or private, employer, professional, industrialist, businessmen, student & homemaker, computer has become an essential electronic equipment in your daily life. For any borrower, with a decent credit profile, personal loan to buy the computer is available. All the leading banks, NBFCs & Small Banks offer a personal loan. The duration of the loan varies from 6 months to 3 years. The interest rate ranges from 12%-17% per annum, depending on the lender and the credit strength of the borrower.
This type of loan does not require any collateral.
5. Wedding Loan
Wedding, an auspicious ceremony of matrimony, sometime becomes under-funded on account of several seen/unforeseen factors. You required money quickly with the least documentation involved. Thankfully, wedding is one of the acceptable reasons for taking the loan. Banks & other lending institutions provide for wedding loans based on the credit profile of the borrower or joint borrowers. Wedding loan can be taken individually or jointly by the borrower(s). The tenure and rate of interest varies from the bank to bank. This type of loan does not require any collateral.
6. Holiday Loan
The circle of a working year is full with a well-deserved holiday. At times the joy of holiday is marred by the shortage of funds. Personal loan for Holiday is customized for borrowers who have a regular source of income and a good credit profile. The documentation is minimum and tenure of the loan along with the rate of interest is flexible. Holiday loan is collateral-free loan i.e. it does not require any kind of security or collateral.
7. Festival Loan
Indian culture is defined by unbridled joy, unbound energy and unlimited celebrations. The festivals come with lots of social obligations, which may become difficult to meet, for many reasons. This problem can be well addressed by taking a festival loan, which is given quickly and documentation is hassle free. Since, it is a high risk unsecured loan disbursed in a short span of time, the rate of interest is higher than that of any other secured loan. Rate of interest ranges from 16.5%-21% per annum. No collateral required. 8. Pension Loan As the name suggests, Pension Loan, is given to the borrowers again thein regular pension income. The Pension Loan is calculated on the amount of pension received every month and the amount of loan decided on the basis of such amount. For example, if your disposable annual pension is say Rs 500,000, then you will be eligible to a loan of 50%-60% of disposable annual pension income i.e. Rs 250,000-Rs 300,000. The rate of interest for this customized loan is around 14%-21% per annum. No collateral required.
9. Fresher Loan
Fresher loan is available to the borrowers who join their first job and has relatively light or no credit history. Fresher Loan is generally granted to the salaried individuals who, after finishing their studies or training, gain employment. Such individuals are in need to funds to set up their home in a new city or want personal loan for any other reason(s). The borrower should have a minimum salary of Rs 30,000 (it may be lower in case of some borrowers). The interest is in the range of 14%-21% per annum.
10. NRI Personal Loan For those citizens of India who have gone overseas but have remained connected with their country, lenders have customized personal loans. NRI personal loan is given to the NRIs who required funds in India for any reason. For this type of loan, the applicant has to be a resident of India and the NRi should be a co-applicant. Both the applicants should be close relatives. The tenure of such loan is up to 36 months and the rate of interest vary from bank to bank.
Sometime, in life, there is a gap between the place you are (currently) and the place you deserve (to be). Such gaps are filled by a teacher, education, blessings, encouragement and money. The thing about the money is that everybody is ready to give you when you do not need it. When you really need the money, the well-wishers do not step-up for real or imaginary reasons. Traditional loan against collateral is a tedious & time-consuming process. Sometimes, needs do not have the luxury of time. This is where personal loan proves its value. Personal loan, though expensive, is convenient as it is disbursed quickly to fix the problem or satisfy the need. Personal loans are always used for relatively small tenure.
Any individual who has a regular source of income can apply and avail the personal loan from banks of lending institutions. The lender will assess the proposal and will let applicant know whether or not he/she meets the standards of the assessment and accordingly, sanction the amount of loan to be disbursed. In case of joint application to the personal loan, the lender will assess the creditworthiness of both the applicants and sanction the amount as per their joint credit eligibility. In personal loan, your credit score plays a very important role as it the report card of your credit performance of your credit life so far. In addition to the credit score, there are several factors considered by the lender while assessing your loan proposal. Remember, the lender is in the business of lending the money and, unless the lender has a reason to believe that the borrower will not repay the loan on time, the lender has a business interest in extending you a home loan.
The amount of loan is decided on the basis your monthly disposable income-either from salary, business or any other source of income. Generally, the lender considers 50% of your income as a disposable income provided you do not have any other running loan. Let’s say your income is Rs 100,000 and you do not have any other obligation, then, lender will consider Rs 50,000 as your net disposable income. Based on this disposable income along with the tenure, interest & principal amount of the loan, your EMI will be decided. Your EMI will be less than or equal to Rs 50,000. Please note that there are several other factors that are considered while sanctioning the amount of loan.
The tenure of loan is decided both by applicant and the lender as per their respective convenience. An applicant with a surplus cash may want a shorter tenure so that he would not have to pay extra interest for additional years. Similarly, an applicant with a tight cash flow situation may prefer a longer tenure for the loan as he would want a small EMI.
A lender would generally prefer a long tenure so that he would enjoy a nice interest income over the loan disbursed. He would prefer a long tenure on good creditworthiness and short tenure on relatively poor creditworthiness.
Typically, the loan tenure ranges from 12 months to 36 months.
Banks charge a processing fee at the time of disbursement of the loan. Processing fee varies from bank to bank and client to client. If a client has a good credit score, then banks at he time lowers processing fee as a low risk reward. Processing fee ranges from 0.5% to 2.0%. At the time of sanctioning of home loan, banks execute lots of documents, spends many man-hours and spends time & money in processing your loan request. To cover these costs, banks charge processing fees.
EMI, which means Equal Monthly Instalments, is decided by the bank at the time of sanction of loan proposal. The EMI is fixed after taking several factors into consideration viz. Type of personal loan, quantum of loan, tenure, credit profile of the applicant & rate of interest.
EMI consists of both- Principal & Interest amount. In the early years of loan tenure, interest component is higher than principal component in an EMI. As the loan repayment progresses, interest component starts reducing and principal amount starts increasing.
If you decide to repay the loan, then do so in early years of loan tenure as the EMI comprises mainly of interest. It would be unwise to prepay the loan in the later years of the loan tenure as the majority of interest component has already been recovered by the bank in early years of the loan. In the later years, mainly the principal amount remains unpaid.