A personal loan is a loan that a person takes to finance any personal expenses such as a wedding, home renovations, or even a vacation. Unlike many other types of loans, there are no restrictions on how the borrowed amount is ultimately used: the borrower is free to use the funds for whatever purpose they wish.
There are two attractive features of a personal loan:
If you need money quickly and for a relatively short period of time, a personal loan is a good option. Loan disbursement can be relatively faster than most other loans, as you do not need to provide documentation in order to use the loan amount. For a home loan, for example, you must obtain legal documents regarding ownership of the property, all required government approvals, and other supporting documents. Since you can use a personal loan for any purpose, these end-use documents are not necessary.
If you do not have any assets to pledge for a loan, a personal loan may be a good option. To protect your money, lenders will study your credit and payment history to judge whether you are a low-risk customer and decide whether to approve your request.
There is no typical loan amount and loans can range from Rs 10,000 to 30 lakhs. When applying for a personal loan, the amount you are requesting must be in proportion to your ability to repay. Of course, the final loan amount that is approved depends on the loan criteria used by the bank / NBFC and how your ability to repay the loan is evaluated.
In terms of term, personal loans are relatively short-term loans and can range from 1 to 5 years in length. This is in contrast to housing loans, for example, which can have a repayment period of up to decades.
The most important factors that determine whether or not your personal loan is approved is your credit score and your credit report. What does this mean?
The Reserve Bank of India authorizes three credit rating agencies, or credit bureaus, to issue credit reports and credit scores. They collect and keep records of all your credit related activities with banks, credit card companies, and other official lenders. Agencies receive monthly reports from these lenders on all their credit transactions. This includes information about monthly equal payments (EMI) and credit card payments (including late or late payments), outstanding balance, any changes to your total credit limit, and all other details related to the construction of your credit profile.
Based on all this data, a complex mathematical formula is used to calculate your credit score. The score is a reflection of your current and past credit behavior and gives potential lenders a quick overview of your creditworthiness. If you have a good track record of making all of your payments on time and in full, your score will tend to be high. If you have a history of default or excessive credit use, this will have a negative impact on your credit score.
Since you are not providing any bank / NBFC guarantees for a personal loan, the lender risks losing money if you do not make your payments. That's why lenders will look at your credit report (CIR) or credit report to assess your credit history and track your loan repayment behavior over the years. This gives them an idea of your credit discipline and allows them to assess whether you are a high-risk or low-risk customer.A credit report that shows a consistent history of on-time payments and responsible credit behavior is generally an important factor for lenders when approving a personal loan application.
In general, it is recommended that you have a credit score of 750 or higher to qualify for a personal loan. The higher your score, the higher your chances of getting approved.
As a first step, lenders often look for a credit score of at least 750 before deciding whether to proceed with processing your application. Since personal loans are not secured by any insurance deposit, lenders look at your credit history to judge whether you can be trusted to meet your debt obligations. A credit score of 750 indicates that the customer has demonstrated a consistent history of making timely payments over a long period of time. Lenders are confident that this client is not at risk of default and are more willing to accept a personal loan.
There is no guarantee that you will be granted a loan of a certain degree. However, your chances of getting approved are significantly higher if you score above 750. Meanwhile, a score just below 750 does not necessarily mean that your application will be rejected. Here are some of the potential outcomes of your personal loan application:
If your result is between:
Your business is also an important factor in the loan approval process. Since personal loan clients do not offer any collateral, lenders must ensure that you have a steady monthly income during the life of the loan allowing you to make regular payments. That is why they pay special attention to their career status. They will analyze whether you have a stable job and you have been in the same job for a certain period of time. A person with a history of frequently changing jobs may not be approved easily for a personal loan, as this means that they may not have a steady or predictable salary during the term of the loan and may not be able to make regular payments. . It is probably a good idea to have a job for at least a year before applying for a personal loan.
Your annual income is another important factor. Again, since there are no guarantees, banks want to make sure you have enough income (from salary and other sources) to allow you to make your monthly payments. The higher your income, the higher your chances of getting a personal loan.
EMI payment record is also important. Lenders will review your credit report to see if you have consistently demonstrated financial discipline and EMI payments style in a timely manner. If they see that you have made regular payments and fulfilled your debt obligations, they will tend to view your loan application better.
It is important to note that personal loans are the most expensive in the formal banking system for individuals. They bear the highest interest rates because they are unsecured and the Bank / NBFC has no protection against default. The interest rate on a personal loan is affected by several factors, including:
The advantages of a personal loan are that it is relatively fast (because it does not require much documentation like a home or car loan); There are no restrictions on how the money will be spent; Personal loans do not require any collateral. So if you do not have assets like a house, stocks, or gold to offer as collateral, and you are desperate for the money, this may be the most suitable option.
The main disadvantage of a personal loan is the high rate of interest compared to other loans. Since the lenders do not have collateral against default, they charge high interest rates to cover the credit risk. Personal loans can be some of the most expensive paying interest loans.
If you have a desperate need of money and do not have any assets to use as collateral, a personal loan may be the best option. However, it is important to note that you will pay high interest rates on this type of loan, so you need to have a plan ready so that you can make all your payments on time. Also, make sure you have a good credit rating before applying for a personal loan. If your application is denied due to a low credit score, your score will drop further with each rejection, making it more difficult to access credit in the future.
The only way to determine which loan offer you want to apply for is to thoroughly research your various options. Once you have a good idea of the offers and plans available, you can select the one that best suits your financial situation and requirements.
A business loan is a type of loan provided by people who aim to create, expand or purchase equipment for their business. Entrepreneurs looking for capital to start their business also apply for business loans. There are two types of business loans:
A secured business loan is when an individual provides collateral in the form of land, machinery, a house, etc., as security for the amount of the loan. This has the added benefit of a lower rate of interest.
An unsecured business loan is when the loan amount is presented without any collateral. The interest rates on unsecured loans are generally higher as there is a risk factor for the lender.
Business loan amounts can be up to 5 million rupees or more depending on the needs and requirements of the client. The loan amount is generally made based on the amount of work and the amount required for operations like expansion, inventory, working capital, etc.
Business loans have an extended term of up to 7 years, depending on the client's requirements.
Most business loans have a very simple loan process that requires minimal documentation from the client. Some lenders offer door-to-door services to collect the few documents required to make the process more convenient for the client.
Most business loan lenders make sure that the loan amount is in your bank account within 3 business days or less. In some cases, it may take longer due to verification of documents and other procedures followed.
Business loan interest rates generally start at just 12%. Most interest rates are set at the sole discretion of the lender and may vary based on credit scores, current business performance, and other factors.
A credit score is a three-digit number ranging from 300 to 900. It indicates your creditworthiness to your lender. Lenders use your credit score to assess your credibility. If you have a good credit score, the interest rates on your business loan will be much lower. Most lenders consider a credit score of 750 or higher to be good. Therefore, if you have a low credit score, the lender will consider you a risky customer and will increase the interest rate on the loan or refuse your loan application. Always make sure to check your credit score before applying for a business loan.
If you have a long credit history that is good, the interest rates you will receive from your lender on your business loan will be low. This is because your lender will look at your past transactions with your past credit products to verify your creditworthiness. If you have a long and positive credit history, banks will deem you trustworthy and will give you loans at low interest rates. If you have a bad credit history, the interest rates will be higher because it will consider you a risky customer.
A large business loan amount carries a lower interest rate than a small business loan amount. Therefore, it is better to take a large loan for your business rather than a small one, as the interest rates will vary depending on the amount of the loan the customer takes. Make sure you account for all of your business needs and requirements, including the cost of labor, equipment, inventory, and other costs.
If you have a good and healthy relationship with the lender you borrow from and are a current customer with, then interest rates can be negotiated and receive a lower interest rate. This can help you lower the interest rates on your business loan. Most of the lenders aim to please their customers, and thus they can lower interest rates if you have a long-term positive relationship with them.
There are two types of business loans: secured and unsecured. A secured business loan is when a person provides collateral as security for the loan amount. An unsecured business loan is when the loan amount is presented without any collateral.
Business loans have periods that can extend to 7 years.
Business loans are requested by people who aim to create, expand or purchase equipment for their business. Entrepreneurs looking for capital to start their business also apply for business loans.
The applicant must be at least 21 years old and no more than 65 years old.
When a customer promises gold (including jewelry, jewelery, and coins issued by the bank) as security for a loan, this is known as a gold loan. The lender uses the gold as security against a default. A customer can take out a loan amount that represents a certain percentage of the pledged value of gold.
A gold loan is often considered a good option as it is a simple application process with penalties and fast disbursement if approved
A gold loan is a good option if you need funds to cover immediate personal expenses and want to pay them off in a short period of time. These expenses can include having a wedding, paying for the child's education, covering emergency medical expenses, making a home renovation, or even going on vacation; In short, there are no restrictions on how the loan money is used and what is spent on it.
It is also important to have a good repayment history when applying for a gold loan. You must be prepared and able to pay off the loan in full before the due date; Otherwise, you risk losing your family's jewelry and lowering your credit score. This will make it difficult to approve future loans.
You must be senior (21 years or older) to apply for a gold loan. The jewelry you give as warranty must be at least 18K or higher. Jewelry weighing less than 18 carats is not generally acceptable. There are no other requirements to apply for a gold loan.
It's a quick process: In India, gold loans are some of the fastest loans to sanction, with banks holding gold as collateral in case of default. In many cases, you can exit the lenders office with the loan amount. The loan can be approved, without a prescription, in minutes or a few hours. Loan amounts can range from only Rs 1,000 (depending on whether you live in a rural area) to Rs. 1 crore. The minimum and maximum amount borrowed varies by lender.
Quick Pay - Many lenders can assess your gold quickly and approve the loan immediately, after verifying the gold's purity and value. Unlike home or auto loans, applying for a gold loan does not require going through multiple levels of approval.
Minimum Documentation Required - Since you are submitting your gold as collateral, banks do not need extended documentation or a lengthy decision-making process unlike in the case of a home loan or personal loan. With many lenders, all you need is a photo ID, proof of address, photos and proof of signature. Identity documents and proof of residency include the ration card, voter ID, driver's license, passport, Aadhaar card, etc.
Another advantage of a gold loan is that you do not need to present a salary certificate, as your gold is used as collateral. Therefore, even if you are currently unemployed or do not have a good credit score, you will still qualify for this type of loan. However, for loans in excess of a certain amount, some lenders may require a salary certificate.
A safe way to use an inert asset: Instead of storing your gold in a safe or at home, you can use it to raise money. Gold is a valuable asset that stays in storage without doing anything most of the time. At the same time, when you use your gold for a loan, you will be financially secure with the lender during the life of the loan. You are not subjected to any additional security risks when using gold as collateral.
Lower interest rates: In general, the interest rates on these loans are lower than those on personal loans, because the lenders have your gold as collateral. Also, with some lenders, you may not have to pay a prepayment penalty for the loan.
Emotional problem: Gold as an asset has emotional value in India, where it is found mainly in the form of family jewelry. Offering gold as collateral means that you risk losing your family's jewelry if you are unable to repay the loan. This can cause undue psychological and emotional stress not only on the borrower but on the entire family.
Lender Quality: There are many non-bank financial companies in the country that offer attractive terms for these loans. However, some of them may be poorly executed and may be closed without warning. It is very important to study various lenders and select lenders with good repute. In addition to these non-bank banks, many private and nationalized banks offer these loans.
Interest rates on a gold loan can vary depending on how much you borrowed. Generally speaking, they are relatively less than other types of loans (such as personal loans) because they are secured by the gold that you deposited for them.
The interest rate also varies depending on the amount of the loan amount as a percentage of the total value of the gold attached to it. Interest rates decrease when the loan amount does not exceed 50-60% of the total value of committed gold. However, if the amount borrowed is high compared to the value of gold, then the interest rate will be correspondingly higher. For example, if you promised Rs 100,000 jewelry and borrowed Rs 50,000, you would get a better (lower) interest rate than if you promised the same value of gold but wanted to borrow Rs 70,000.
Overall, your gold is safe with the bank / NBFC you stick with. Of course, this depends on the quality and reputation of the lender. It is very important to ensure that you only borrow from reputable lenders. Many lenders will keep your gold in fire and burglary safes with electronic monitoring. Your gold may also be insured by the lender. Again, all of these guarantees are left to the lender, and each lender has their own ways of keeping the gold safe. You can learn about their security measures when applying for a loan so that you can feel comfortable with the precautions being taken to keep your gold safe.
No, there are no restrictions on how the loan money will be spent. You are free to use it in any way you want and for any purpose. In this way, it is similar to a personal loan.
Gold loans are short term loans and the repayment period can vary from a month to a few years. Each lender has its own set of loan periods. Gold loans are suitable for people who need money to cover immediate expenses and expect to be able to pay them off in the short term. This differs from a home loan that can have a repayment period of decades.
Again, that depends on the lender. Some will charge processing fees, while others will not. These fees are usually a percentage of the loan amount. A fee is also charged for gold valuation. Other fees can include foreclosure fees if the loan is closed before the term expires; Or delay fee which is in the form of an additional criminal interest rate that is charged in addition to the current interest rate; A renewal fee may be charged if the loan is renewed after the original period; In addition to other statutory government fees and taxes that must be paid.
Some banks may require you to be a current customer to take advantage of some of the benefits of the Gold Loan. However, there are many other banks that do not require you to be a customer to apply for a gold loan. Reputable NBFCs are another option in the event that you are looking for a loan that went gold outside of your regular bank.
No, you do not need a guarantor to obtain a gold loan. Your gold is used as collateral in the event of a default.
The disbursement method varies depending on the location (rural or urban), the amount of the loan, and other factors. The exchange can be cash, a demand draft, a money transfer (if you have a bank account with the lender), or NEFT or RTGS (if you have an account with another bank).
Different lenders will have different policies regarding the prepayment of the loan. Some lenders may charge interest if the loan is paid off a few days before the due date. Some may give you the option to recover part of the amount and get the equivalent value of the promised gold. You may only have to pay interest on the principal amount of the balance. Other lenders can only release the gold with full repayment of the loan.
Bad customer policy varies from lender to lender. Generally, you will be charged interest for the expired time; This interest rate may be higher than the rate you pay for the loan. If you continue to default on your loan, a notice will be sent to you to let you know how long you have to pay your obligations before the lender sells the gold / auctions to recover your payments.
You have to be wary of approaching for a loan. It is safer to borrow from a nationalized bank, or any of the major private banks or well-known non-bank financial firms. Many of them offer gold loans and you can be sure of the integrity of your jewelry when you are in your custody. Some reputable nonprofits are known for their specialization in gold loans and may consider them to be an equally good option.
However, there may be other non-governmental financial firms that can offer good gold loan terms, but which may not be well managed or financially sound. Some of them can be closed without warning, taking your jewelry with them. You risk losing all of your jewelry with no immediate hope of recovery. Gold has an emotional and social angle in India because it is associated with family jewelery, so it is best to do your research and stick to well-known banks and reputable non-bank financial companies.
If you need money and think a Gold Loan might be the best option, FinanceSetu can put you in touch with banks and other reputable finance companies that best suit your needs.
Everyone should have dreamed of owning a car since childhood. Movies and games sparked this interest in cars for many of us. The car can be used for many purposes: going on a family trip, taking a long trip with friends, saving you from the rain or scorching sun when traveling to the office, or for car lovers who want to take the car for a while. Driving as a stress reliever. One car can mean different things to different people. India is also a growing auto market and the passenger car market has shown double growth over the years. The growth is observed in all car categories including compact cars, sedans and SUVs, which has led to the collapse of the widespread belief that India is a market for small and inexpensive cars. International automakers have made their presence felt also by creating cars for Indian lands.
Since a time when owning the car itself was difficult, we moved on to the type of car and brand we chose. No one can choose the car they want and pay with a single check. This is where a bank car loan can help you.
Knowing that many people are interested in buying a car, whether it is for comfort, safety, or any other reason, they will not be able to purchase their dream car on their own. They either have to go buy a car they don't want because it is cheaper or wait and save to buy the car, which will take time and the car model may change.
Banks provide financing for the purchase of all types of cars. The borrower can repay the lender in monthly or equivalent monthly payments. Banks and non-bank financial companies believe in providing car loans to the right applicants thus helping them buy a profitable car as well.
The borrower must meet the following eligibility criteria to obtain loans for the purchase of new and used cars.
The interest rate is determined at the discretion of the banks alone. Generally, it starts from 8.99% onwards and can go up to 14%.
Processing fees can vary from bank to bank and some lenders don't charge anything as a processing fee.
Many banks offer used car loans up to 85% of the car's value or, in some cases, the value of the insurance. The value of the insurance is no more than the value of your car insurance. There are some banks that offer 100% financing for used cars, but the ratio is 70% to 85%.
The interest rate will be the same as those offered for new cars or slightly higher, ranging from 0.05% to 2%. Processing fees also vary from bank to bank and depend on the policy of the bank.
The term of the used car loan will be less than the term of the new car loan. The base for new car loans is 7 years, with a maximum limit of 5 years for used car loans.
All other fees that come with the loan are the same as a new car loan.
Below are the documents required to apply for a car loan
The following documents are also required in the case of used car loans
The auto loan approval and verification process is simple and much faster when you apply at a bank where you have an account. You can also apply online and get pre-approved offers on auto loans at attractive interest rates. The loan amount is added directly to your account immediately.
The application process differs if you apply at a bank where you do not have an account. You need to apply online, download the application form directly from the official website, or visit the nearest branch. You can also contact the bank's auto loan customer service to follow the application process.
Generally, a representative from the bank will come to your place of business or home to collect the completed application form and all necessary documents for verification on time. A background check will help the lender find out the applicant's personal and professional situation. If there is any conflict with the information provided, the car loan application will likely be rejected. After passing the document verification and eligibility criteria, the approval process moves to the final level. In the final stage and after negotiations, the interest rate and the term of the car loan are determined and presented for recognition.
If your auto loan application is rejected, you will receive a loan rejection letter that will receive an update on the auto loan rejection status. Now let's see what the eligibility or eligibility criteria are, as they are called in the banking jargon for a car loan.
Before a person applies for a car loan, it is best to do an eligibility check which will be available on the lender's website and at FinanceSetu.com. It is compared with other internal criteria to ensure that you are eligible.
You can pay off your auto loan in three ways.
It is recommended that you choose the SI or ECS payment method to be faster and less error prone than using a PDC.
The maximum loan amount varies from bank to bank. Some lenders offer up to 100% financing for a car.
Maximum loan tenor is 84 months.
Banks provide auto loans for most of the passenger cars, MPVs and SUVs available in India that are purchased for personal use.
A car loan is a form of secured loan where your car acts as collateral.
You cannot do business with any seller without a "no objection certificate" (NOC) from the lender. The NOC can only be obtained after a foreclosure or after your loan has been paid.
Everyone dreams of having their own place in the world, a home to which they can return from work, a home where they can raise their families, but for many the "home" remains a dream due to lack of capital. This is where banks and other financial institutions come to the rescue with home loans, which will help make your dreams come true.
Your housing needs are no different from the needs of the person next to you, it could be a mortgage for a new apartment, to renovate your ancestors' properties or even to build that extra room that you wanted so often. Read on to find out more about the different loans that meet your requirements.
There are several types of home loans available based on your specific housing needs:
To be eligible for a home loan, you must be
You must meet age and income requirements and be able to demonstrate steady income.
If your spouse has a salary, you can add it as a co-applicant and this income will be taken into account when determining your eligibility for the loan.
Lenders consider several factors when determining the status of your home loan application. They include the following indicators:
The loan amount can be up to 85% of the property's value, but this is a variable number depending on your credit history. The amount the bank / financial institution decides to lend to you depends, among other factors, on your current credit obligations and your ability to take on and pay off more debt in the long term of the loan.
Likewise, the term of the loan depends on how the lender views your current and future ability to meet all of your debt obligations. They will look at your current loans, your age, your salary at the time the loan was taken, and the expected earnings on the loan. The term of the mortgage can range from 5 to 30 years.
There are two basic types of home loan interest rates, and you should study all interest rate options carefully before deciding which one to choose:
There is also the option of partly fixed and partially floating. You need to know all kinds of home loan interest rate options or consult a professional to find which one is best for you.
To get the lowest interest on home loans, you must have a flawless credit history.
EMI stands for equivalent monthly fee. It is the amount you must pay monthly to pay off your loan in full. If the loan period is 20 years, you will have to pay equal monthly installments of 20 years.
The paid monthly installment consists of the principal plus the interest accrued, distributed throughout the life of the loan. If the EMI fee is too high, you can reduce it by extending the life of the loan. However, if you extend the term of the loan, you will pay more interest because your repayment obligation is for a longer period.
You can use the Home Loan EMI Calculator to find out what your monthly charge is.
The documents required for a home loan can include (but are not limited to): all legal documents related to the house to be purchased such as title deed, all necessary legal approvals, etc .; Proof of identity, proof of residency, proof of age and proof of last months' salary; Previous income tax returns; And bank statements. The documents required vary depending on the requirements of the lender.
Buying a home can generate significant output in addition to the actual cost of ownership. There are two types of expenses associated with a home loan:
It is very difficult to get loans for real estate purchase. Lenders are not willing to take the risk of providing loans to clients who do not have a good credit history to repay. However, every lender has a different set of requirements and criteria for making loans. Therefore, even if you are rejected by many lenders, you may have little chance of qualifying with another lender who has different requirements.
Usually, if you have a credit score of less than 750, it is difficult for a loan to be approved. The borrower should consider credit boosting plans if their credit score is low and wants to apply for a home loan soon.
If your loan application is rejected by multiple lenders due to a bad credit history, then each refusal will gradually affect your current poor credit score. Even if your application is approved, despite your poor credit history, you may be given a higher home loan interest rate, a shorter repayment period, or a smaller loan amount that may not be sufficient to pay. The house you are thinking of. You should focus on improving your credit score to at least 750 before applying for the best home loan for you.
The best real estate loan is easily the loan that fits in your budget and does not restrict your cash flow. The best way to choose a home loan provider is to research the different offers available in the market and determine the best home loan in terms of interest rates, fees, features, and other benefits. You can consult legal or technical experts for advice or advice on specific areas that you may or may not understand. Above all, don't be too quick to decide on a home loan, as your choice can have consequences spanning decades.