Consideration while buying a Home

Buying a property is a crucial decision in an individual’s life as the purchasing cost of the house/property is very high. It takes multiple years to collect money altogether to buy a property. Also, many people have to avail home loans for buying a property. Many people are forced to stay in a leased apartment due to un-affordability to buy a house. Thus the PMAY scheme[Pradhan Mantri Awas Yojana] aims to help people buy their own homes under the scheme who do not own any property anywhere across the country. The scheme has benefitted many people across the country to buy the house under the “Housing for all PMAY” scheme. The residential market is increasing rapidly due to large-scale urban migration, growing population. Thus the demand for home loans is also increasing year-on-year basis. The homes in the prime localities fetch higher demand while the properties at a remote location or in the outskirts fetch lower demand. The prices of the property vary according to the ready reckoner rates and also depending on the demand. The banks are always ready to provide loans to customers. Also, the flat buyer can claim tax benefits under income tax act 80C.

The demand for luxury homes is also growing in the markets. The premium luxury apartments are the ones that cost above Rs.1.50 crores. Such projects in the urban region may have amenities like a swimming pool, garden, clubhouse, gymnasium.ETC. The banks provide pre-approved loans for the projects, which the banks already verify. The pre-approved home loans help flat buyers avail loans at concessional rates or pay later option is also available for the disbursement of loans. The pre-approved loans are sanctioned by the bank only after checking the property documents with clear titles. Thus there is a surety that the project is genuine, and the property documents are available with clear titles. The property is expected to have a regular water supply, electric supply, toilets, and an underground drainage system. The housing project should also have nearby basic infrastructures like good quality road connectivity, street lights, footpaths, and preferably a public transport facility. The banks provide up to 80% of the property value as a loan to the flat buyer, while the remaining 20% should be paid upfront as a down payment. The interest rates being charged are in the range of 6-9% per annum. Thus the sanction of a home loan is also a major deciding factor for purchasing the house.

Thus following are the factors to be taken into consideration while buying a home:

  • Un-interrupted water supply and electric supply:

There should be a consistent supply of water & electric supply in the locality where the house needs to be purchased. The locality should be thoroughly surveyed whether it has a consistent supply of water & electricity or not.

  • Good road connectivity:

There should be good roads, and the house that needs to be purchased should have proper access to the main road and be properly connected to major roads.

  • Approval of bank for loans:

The bank only approves the loans for the properties with clear titles and also proper land records. Thus the approval of loans for the particular project is an important factor while purchasing the property. Where-ever bank approves the loans, it is said to be a project with clear titles and is also suitable for buying the house.

  • Public transport nearby:

There should be good connectivity of buses, metro rail, or shared services auto-rickshaw as every time traveling at distant places, especially in metro cities, may not be possible with the private vehicle. Thus having good connectivity of public transport is necessary.

  • Prospects of the property:

The resale value of the property should be taken into consideration. The property should have good growth value and also better prospects for sale while in the near future. The development of commercial markets, malls, recreational activities, gardens add value to the property. Also, the connectivity of metro rail adds value to the property.

  • Child centric home:

It is better for the people who have kids to buy the property in areas with ample spaces to play or the availability of gardens, swimming pool, tennis court, or other sports activities. There should also be schools nearby and also health care centers nearby for medical treatment.

All the above factors are necessary while considered while buying the house. Basic civic amenities are required. Also, the quality of construction and the structure should be good. The approval of the bank loan is also a necessary factor while buying a new property. And the connectivity through roads and also good road connectivity is necessary.  

 

Subsidies under PMAY scheme

The PMAY scheme is the Scheme launched, which is known as Pradhan Mantri Awas Yojana, which means housing for all Scheme. The PMAY scheme helps an individual to avail housing loan subsidy of Rs. 2.67 lakh while purchasing the flat. The Scheme is eligible only to those who do not own any of the property anywhere across India. The Scheme is also popularly known as the “Housing for all scheme.” The Scheme aims at providing houses for all by the year 2022. The Scheme was launched in the year 2015. The Scheme has helped many individuals buy their properties. And also, this Scheme targets the ownership of women. The property market in India is mostly male-dominated. Thus to increase the ownership of women in the properties, the Scheme makes it mandatory to have one co-owner as female for availing the subsidy. The Scheme has also given a boost for the real estate market, reeling under the stress with lakhs of beneficiaries availing the loans. The Scheme typically focuses on the urban areas for the purchase of the houses.

There is a large-scale migration in urban areas due to which the people without homes are many in numbers and are forced to stay on rental accommodation. Thus this Scheme helps people become owners from the tenants. The borrowers also get income tax exemption under the income tax act 80C. The loans can be availed from any of the banks to become eligible for the interest subsidy. The banks usually charge interest rates of 6-9% per annum on a compounded annual basis. The banks also get higher business through the Scheme as people become more optimistic about buying homes due to the subsidy provided by the government. There are multiple cities in India; thus, out of that top 500 cities under municipal jurisdiction are given preference for the benefit of the Scheme. The Metros are the major markets that are given preference for the Scheme. The Scheme for rural India is different to build the house, which is a separate scheme from PMAY. The applicant has to avail of PMAY while applying for a loan from the bank and has to give a separate application for the subsidy scheme. Then the authorities verify the documents and then approve the subsidy scheme. Thus availing of the subsidy is an easy process. Under the Scheme, the documents are verified, and then the sanction is approved by the government.

Eligibility criteria for the Scheme:

  • The applicant or the co-owner should not own a permanent shelter anywhere across India.
  • The applicant or the co-applicants income should not be up to Rs.18 lakh altogether. The income should not exceed that.
  • The beneficiaries cannot avail of dual benefits if the applicant has already taken any benefit under the Central/State government scheme.
  • All the towns under the municipal jurisdiction are eligible for the loans under the Scheme.
  • The house should be constructed within 36 months from the date of the first installment.
  • Having at least one woman as co-owner is necessary for availing subsidy under the PMAY scheme.
  • The carpet area for the house should be 160 sq. meters for MIG-I and 200 sq. meters for MIG-II.
  • The subsidy scheme is eligible for 20 years only as against the home loan tenure of 30 years.
  • All the accounts should be linked to aadhar for availing subsidy.
  • The Scheme majorly focuses on the EWS-Economically weaker sections, LIG-lower income groups, and the people belonging to the MIG- middle-income groups.

The loans can be availed under the subsidized Scheme under which the benefit of Rs.2.67 lakh can be availed, and the individual can buy their own house. The Scheme majorly targets urban households with middle or lower-income groups. The Scheme has helped lakhs of people benefit under the Scheme and thus has helped many households avail permanent & owned houses instead of staying on rent. The focus on major cities & metros is amongst the first preference from the government to avail the Scheme. The individual can avail of only one subsidy at a time while availing the benefit.

 

Credit card- Visa, MasterCard, or Rupay?

There are majorly three-card service providers in India. These companies Visa, MasterCard & Rupay, are the medium through which transactions can be made. Credit cards are beneficial to use as it helps the customer avail goods or spend money on credit and repay the amount in a later stage to the bank. Banks are the ones who have tie-ups with these companies to provide cards to the customers. In return, the card companies charge some royalty on every transaction to the bank, which the bank charges to the merchant. The bank also charges the annual maintenance fee to the customer as a service fee, out of which the bank has to pay part of the amount to the card companies as a service fee. These cards come with a chip on the front side of the card and a magnetic strip behind it for the use of transactions. The credit card can be used for the offline mode by swiping the card and through the online mode through payment gateway solutions provided by the website or a mobile application. The bank decides whichever card is to be issued to the customer, while very rarely any option is given to the customer for the choice of card.

In general, whichever card is provided to the customer does not matter much. Also, card providers like Diners club & American express are not much popular in India. The cards are beneficial to the customers as there are various discount offers available to the customers like offers on redemption of points, discount offers on dining & alliances program, discount on online shopping & discount on merchandise in select stores. The banks usually charge 2% of the transaction value as commission from the merchants. In return, the bank gives reward points to the customers on the amount spent. On every Rs.100 spent by the customer, the bank provides one point to the customer, and one point is equal to 25 paise or else 50 paise to the customer. The customer can redeem the points by either adjusting the amount on the credit card bill or else by taking vouchers of the same amount redemption or else converting the credit card points into air miles. Thus many attractive offers are being made available to the customer to opt for credit cards.

Following are the description of various types of cards:

  • Rupay credit card:

The Rupay credit card is an Indian brand founded in 2014 and is useful only for transactions within India. Rupay has a lower processing fee and faster transaction processing as compared to any other service provider. The Rupay has a classic credit card, platinum credit card & Rupay select card. This card has free accident insurance of Rs.10 lakh.

  • Visa:

Visa is an American multinational organization headquartered in the USA. Visa is the most popular service provider in India. Also, through Visa, credit card payments can be made across the globe due to its worldwide presence. The payment or transactions can be made to any part of the world through a Visa credit card. Visa companies have more advanced payment gateway solutions like contactless transactions in offline mode through swiping machines. The cards can also be used for online transactions anywhere across the world and are widely accepted all over the world. There could be hardly or almost nil merchants anywhere across the world where Visa cards are not accepted. A visa card has got global recognition and is widely being distributed as a credit card by banks.

  • MasterCard:

MasterCard is also a company incorporated in the USA and is a popular company with a presence in India. MasterCard can be said as the second most popular credit card service provider in India, next only to Visa. MasterCard is accepted across 200 countries across the globe and has got global recognition. MasterCard was founded in the year 1966 in the USA and is having a presence in India as well for decades.

All three service providers are best in class and have more or less similar benefits to the customers. The customers who do not move anywhere outside India are recommended for the Rupay credit card as it has faster processing and a lower merchant deduction rate. While as for the people who frequently travel internationally can utilize Visa or else MasterCard credit cards which have global acceptance.

 

 

 

How to keep a clean credit history while applying for a personal loan?

Personal loans are the loans obtained for the personal needs of an individual, which may vary according to the borrower to borrower. Personal loans are charged higher interest rates of around 9-24% per annum, which may even go as high as 30% per annum from some lenders. The personal loans funds can be utilized for any purpose according to the choice of the borrower. Bank does not ask for any proof regarding the expenditure of the funds being wherever utilized. The personal loans are not even exempted under any income tax act; thus, the tax rebate cannot be availed by the borrower. Personal loans help boost the economy as people get the purchasing power in their hands even while not having sufficient bank balance. Banks approve the loans with minimum documentation, and thus, availing of the personal loans is easy. The minimum salary criteria for the approval of personal loans can vary according to the lender, but sometimes Rs.15,000 –Rs.25,000. Personal loans have various applications like home renovation, purchase of electronic goods, travel purpose, medical purpose, purchase of furniture, starting a new business, or expanding the business.ETC.

Banks expect a good CIBIL score while approving the loans of the lender. Bank expects a minimum credit score of 700 points or more. Thus keeping a clean track record of the credit history and maintaining a good credit score is very important. Banks may even approve personal loans in case of lower credit scores but at higher interest rates. The maintenance of a sufficient bank balance is also necessary for the borrower. Maintaining a lower bank balance may put a bad image that the borrower has too much spending tendency and thus may not repay the personal loans. Personal loans are mostly taken amongst the people from middle or else lower-income groups to satisfy their needs. The bank charges a heavy penalty in case of delay or default of the personal loans. Thus repayment of the loans on time is very much necessary. The banks also charge processing fees to the borrower in the range of 1-3%. There are also offers like pre-approved loans for the borrower, wherein even loans are available at 0% interest rates, especially on the purchase of white goods. Only processing fees are being charged to the borrower; in that case, no interest rates are applicable.

Following are the strategies to keep the credit history clean while applying for personal loans:

  • Repay the loans or credit card bills on time if availed from the bank. Do not delay the payment of the credit card bill or else installments of the bank’s loans. This will help improve the credit score of the borrower.
  • Avail lower amount of credit from the bank even in case of higher eligibility of the bank. It can help the customer easily repay the loans and help create better credit history due to minimum credit utilization.
  • Maintain sufficient bank balance in the bank account. This helps the bank ensure that the borrower is stable and thus makes a clear way to approve loans.
  • Ensure stable and consistent income to avail the personal loans easily. Having the running income is a major criterion for the banks to approve the personal loans.
  • Do not avail excessive credit like multiple loans at a time or availing multiple credit cards at a time and utilizing the higher amount of credit as approved by the bank. This puts a bad impression, and the bank may doubt the borrower’s repayment capacity, thus rejecting the personal loans of the borrower.

So, not maintaining a good credit score is the major reason for the rejection of personal loans. Thus the borrower should maintain a good credit score. Also, the borrower should maintain sufficient bank balance and consistent income to avail of personal loans. Banks may clear the personal loans easily for the applicants having clean credit history and good credit history.

 

The easiest way to acquire a business loan

Banks can provide business loans easily to borrowers who have an excellent track record of credit history. Banks are in genuine need of customers who want to opt for loans, but the major hurdle in loans is the recovery of the loans. If the bank does not have confidence in the borrower’s repayment capacity, banks may straight away reject the loans of the borrower. , the customers, thus having a good credit score and running a profitable business, are amongst the preferred customers of the bank. Banks have maximum bad debts of loans in case of business loans. Even the loans extended to large organizations having a profitable business have turned into bad debts. Thus the banks are very cautious about extending the loans to the borrowers for business purposes. Thus the balance sheet of the business should be clear while applying for the loans. The running businesses should also have copies of profit & loss statements, GST filing, and income tax returns. The government of India has taken a major initiative in case of the disbursement of the loans to help the MSME grow their business & increase the employment opportunities for the people.

Also, startup companies play a major role in the development of the country. There have been multiple numbers of startups that have come up in India, which provide plenty of opportunities to the youths. And mostly many of the startups are started by the youths & for the youths. Startups are the major potential clients of the banks to whom banks can extend the loans. The startup loans can be extended to only those startups that have a concrete plan for the business. Also, the bank officials should have confidence in the business proposal; only then can the banks extend the loans to the applicants. Also, the entity should be a registered one and should be running into business. The recovery of the business loans is very difficult; thus, the banks are cautious about extending the loans. The typical interest rates charged for business loans are 11%- 24% per annum. Different lenders charge different interest rates to the borrowers. The startups can utilize the funds raised for buying the assets in the office, paying wages to the employees, buying a new office space, or else for the expansion of business. Thus for the startups to raise funds opting for business loans is a good idea as all startups cannot raise funds through investor funding.

Following are the steps to acquire business loans in India:

  • Fill up the required form for the approval of loans from the lender. Attach passport-size photographs along with the form.
  • Submit the Xerox copies of the documents along with self-attested ones.
  • Read the terms & conditions of the documents before proceeding with the loans.
  • After submitting the form & documents, the banks will verify the credentials of the borrower & also the credit score of the applicant and then process the applicant’s loans.

 Easy steps for getting the loans approved:

  • Have a concrete business plan:

The borrower should have a concrete plan for the business before applying for the loans. The applicant should be able to explain the plan of business through which the bank officials should be able to get convinced with the business plan.

  • Maintain proper credit score:

An individual’s credit score plays an important role in the approval of the applicant’s loans. The maximum bad debts of the bank get converted into business loans; thus, banks should be extra cautious about the extension of the loans to the applicants. Therefore having a good credit score is important.

  • Maintain a proper balance sheet of the business:

The profit & loss statement should be available with the applicant, GST filings, and the ITR returns statement. The borrower should also not be a defaulter of taxes and should disclose the business turnover’s proper income. The business should be run ethically & legally is the foremost important criteria for getting the loans approved.

The banks are extremely cautious in case of business loans that should not get converted into bad debt, as in that case, the recovery of the loans also becomes difficult. Thus acquiring a business loan without a mortgage is difficult. But individuals with a clear track record of credit history are given preference for the approval of loans. Thus the business persons with clear track records are given the highest preference for the approval of loans.   

 

Fixed rates Vs. Floating rates on Home loans

The fixed rates are when the rate of interest charged to the applicant remains fixed while securing loans. The applicant will have to continue to pay at the same interest rates despite any fluctuation in market interest rates. While in the case of floating interest rates, the applicant avails the interest rates as per the current market prevailing rates after the start process of the loan.

Explanation about the fixed rates:

A home loan at fixed interest rates ensures that the borrower has to pay the fixed installments irrespective of the fluctuation in the market during the loan tenure. Market fluctuations do not affect the fixed home loan rates, i.e., the interest rates remain the same no matter what the market conditions are. Most of the time, the monthly installments are made during the initial stage of the home loan, rates are used to pay out the interest, and when payments are made in a later stage of the loan’s monthly repayment, the principal is serviced.

Benefits of fixed rates:

[1] No change in the interest rates irrespective of the market fluctuations.

[2] A fixed-rate home loan assists in long-term planning and budgeting by enabling the fixed repayment schedule, which is easy to budget doesn’t fluctuate.

[3] It ensures financial security since customers need not expect future risks.

Floating rates of home loans:

The floating rates are the variable rates that are charged to the customer depending on the market rates. Even after the approval of the loan, the applicant’s interest rate chargeable gets varied as per the market trends. If the interest rates increase, the applicant has to pay higher prevailing rates, while if it decreases, the applicant can benefit from lower interest rates. The floating rates depend on the repo rate decided by the Reserve bank of India. When the repo rate increases, the bank’s interest rates get increased, while when the Repo rate decreases, the interest rates also decrease.

Benefits of floating rates:

[1] The rates fluctuate as per the market trends and changes in repo rates.

[2] As per the current market rates, the repo rate is continuously falling; hence the applicants can always positively benefit from the floating interest rates on loans.

[3] The floating interest rates during the fall down period are beneficial to the customer as the applicant can save money on interest.

Comparison between the floating rates and fixed rates:

Fixed-rate home loans have fixed interest rates during the tenure loan, and this is not privy to change no matter what happens—floating interest rates change with the market conditions as and when the repo rate decreases. Home loans that are offered on the floating interest rates are attached to the best rate. In the case of fixed interest rates, the interest rate is higher as compared to the floating interest rates.

Working of fixed and floating rates work:

In India, the floating interest rates are not varying consistently. The reserve bank of India has urged the banks to reduce the interest rates for customers. However, the banks lower the prevailing rates for new customers and change them later on with the financial market. Older customers may continue to pay fixed charges and do not enjoy the lower interest rates applicable to new customers. When the interest rates come down, the floating rate on EMI in a floating rate home loan is often, and only the floating rate of tenure of the loan is altered. The reset clause is subject to revision. Though the nature of the loan depends on the bank’s period or with a sharp hike in interest rates is revoked.

We can assume that as per the current scenario of continuous falling of interest rates of the bank interest on lending as well as falling repo rate, it is recommended that people should better opt for floating interest rates rather than fixed interest rates as the customer may most of the times benefit from falling rates of home loans as well as save on the interest repayment liability. Also, the interest on fixed rates is higher than floating interest rates; hence, it is also recommendable to opt for a floating rate.

How to Get the Best Housing Loan Deals Online?

Housing loans search is vital for your dream home, but it is challenging to find the best home loan offers as per your requirements, budget, plan, etc. However, with the digital revolution, everything is at our fingertips, and we can use this medium to get the best housing loan deals that suit the purpose.

Let’s go through steps to find the best housing loan in the following paragraphs.

Five steps to get the best housing loan deals online

Keep your CIBIL score strong

A strong CIBIL score ensures the best housing loan offers online and offline. It is the analysis of your financial transactions, history, loans, credit cards, etc. Through credit scores, banks and financial institutes decide whether you are eligible for a loan or not.

If you are searching online for housing loan deals, first check your credit score through third-party software available on the web. If it is 750 or more, you will get good deals from banks and financial institutes.

Tips for keeping CIBIL score strong

One of the tried and tested method for keeping the CIBIL score strong and stable is taking smaller loans and repaying them on scheduled time. This is effective if you plan a house loan after a couple of years.

Your financial history should not be inactive, show some transactions, regular payments, etc. Banks and financial institutes find such profiles financially active and honest.

Updated documents

During an online home loan application, you will need various financial and personal documents, including address proof, ID proof, financial statements, etc. You will get great deals and offers if your documents are in order, updated, and ready to upload.

Tip for keeping documents safe

To keep the documents safe, make soft copies and save them on your device.

Compare home loan schemes

If you have completed both steps, it is time to compare different house loan schemes from leading loan distributors and banks such as Apna Paisa home loan, HDFC home loan, etc.

To apply for a home loan, fill in all the details and read all the offers based on your credit score and profile. Then, compare the rate of interest, processing charges, fees, and any other relevant details.

Once you found the best deal out of the offers, proceed with the home loan application procedure.

Tips for comparing home loan schemes

Try renowned third-party companies with years of operation. They will give you reliable and updated information on loans, eligibility, and procedure.

Vigilant about deals and offers online

Banks and financial institutions offer exclusive deals from time to time. If you are internet savvy and active on social media, you can have great deals on house loans in your favorite cities.

Stay vigilant for such deals because house loans are generally long-term, and a minor discount can save a lot of your money.

Tips for stay updated with offers

If you are looking actively for a home loan, activate notifications, emailer, and SMS. Banks and financial institutions will send recent updates, new offers, etc., to your inbox and phone.

Transparent online transactions

Banks and loan distributor companies prefer a profile with a transparent and active online profile. Therefore, several companies have started online profiling to offer the best home loan schemes.

So, if you are searching for the best deals online for house loans, make maximum online transactions and keep it clean through legal means.

Tips for online transactions

Online transactions are fast, reliable but prone to cyber-attacks. So, use the internet wisely and with anti-virus protection.

Online searching and applying for home loans are becoming popular with smartphones and cheap data. You can avail of great deals on housing loans by making your profile strong with these steps and staying active on the web.

How to apply for a Personal Loan with SBI

State Bank of India is the largest public sector bank in India. And also, the bank has the highest loan disbursements amongst personal loans, car loans, home loans & corporate loans. The bank has very customer-friendly policies that suites the needs of the customers. The interest rates being charged by the state bank of India is the lowest amongst all the public sector banks, private banks, and the NBFC’s. Thus the SBI is amongst the most recommended bank for obtaining personal loans. The bank charges an interest rate of 9.60% per annum, which is the lowest amongst all the banks. The SBI in case of default of loans only follows legal action to be taken against the borrower. Bank does not follow malpractices like hiring recovery agents for the recovery of the loans. Also, SBI is the largest bank in India is rated amongst the most trusted bank in India. The bank never misleads the customers while obtaining the loans. Banks charge interest rates that are very affordable to the lender. And the personal experience if surveyed amongst the different lenders SBI is the best name in the banking sector for the customer experience.

The bank follows proper compliance policies for the disbursement of loans. SBI straight away rejects the application of the candidates without the appropriate documents. Also, the bank does not accept the application of applicants with a low CIBIL score. The bank is very rigid in the disbursement of the loans in case of a poor CIBIL score. The bank expects a minimum score of 700 points out of 1000 points to get the loans approved. Also, the borrower should have stable and consistent income only if the bank approves the applicant’s loan. The bank extends the tenure of a maximum of 6 years which is one year higher than other banks. However, to become early debt-free, the borrower can avail of the loan for a shorter duration as well to become early debt-free. The bank also charges late payment fees for those borrowers who pay their installments beyond the due date. The bank has clear & transparent policies in case of the terms & conditions of the loans. Bank does not take any hidden charges, and the processing fees are 1% + taxes as applicable which is very reasonable.

Process for applying for the Personal Loan with SBI:

· Fill the application form being obtained from the bank

· Fill the form, do a signature wherever required and attach the passport size photograph

· Attach the Xerox copies of all the necessary documents required, which should be self-attested

· The application would then be processed within 48 hours, and the amount would be credited into the borrower’s bank account

Eligibility criteria while applying for the loans

· The borrower’s age should be minimum of 21 years, and the maximum should be 58 years on the date of maturity

· The applicant should be a citizen of India

· The maximum loan tenure would be 72 months from the date of application

· The minimum salary criteria should be Rs.15,000 for applying for the personal loan

· The maximum amount of loan which can be obtained is Rs.20 lakh

· The borrower, along with all the necessary documents, should be able to provide income proof or salary slips to prove that consistent income is going on for the borrower

We can conclude that the State Bank of India has the most customer-friendly policies in case of availing the personal loans. The borrower is also charged the lowest interest rates of 9.60% per annum, which is the lowest amongst all the lenders. The bank has clear & transparent policies, and thus the chances of the applicant getting mislead due to any reason is very less. The borrower also enjoys the maximum tenure on repayment of loans, thus reducing the monthly liability of the borrower.

What are the interest rates on personal loans?

The interest is the returns gained by the banker on the principal amount being given on credit to the borrower. The loans can be availed from any of the lenders of the applicant’s choice according to the eligibility & suitability of the borrower. The borrower is charged higher interest rates on personal loans than the housing loan or else car loans. Also, personal loans are not exempted under any section of the income tax act. Banks also do charge processing fees in the range of 0.50%-2.50% depending on the lender to lender. The bank also imposes a penalty on the borrower in case of any delay or default of the installments by the borrower. A personal loan is a multi-purpose loan that can be used for multiple purposes. The bank does not ask for any proof on the expenditure of the loan being opted. As soon as the application is given instant amount is being credited to the bank account of the borrower. Personal loans can also be availed for the multi-purpose at a time. For example, if the borrower, once the loan is availed of a certain amount, can use the same amount to purchase electronic goods and utilize the same amount for the travel purpose.

Loans are disbursed by the bank within 48 hours in offline mode and within few minutes for the online mode. The personal loan approval is instant because the amount is smaller than the housing loan or corporate loan. The maximum amount up to which loans can be availed is Rs.25 lakh. The borrower should have all the necessary documents for the approval of loans. The documentation process is minimal in case of the personal loans to be availed. For the medical emergency, there is a special provision being available for the faster approval of loans. The borrower has to submit the medical details to the lender for the approval of loans. Some commercial establishments have tie-ups with the finance companies to approve the loans, which sometimes may be offered at lower interest rates to the borrower. In such cases, the borrower should take the benefit of that and avail loans at lower interest rates and save money on the interest repayment. The age criterion for availing of the personal loans is in the age group of 21-60 years till the date of maturity of the loan amount.

Following are the interest rates charged by the banks : 

Bank name – UCO bank
Interest rates – 8.45% onwards
Maximum loan liability – Up to 10 lakhs

Bank name – Bank of India
Interest rates – 9.35% onwards
Maximum loan liability – Up to 10 lakh

Bank name – SBI
Interest rates – 9.60% onwards
Maximum loan liability – Up to 20 lakh

Bank name – Kotak Mahindra bank
Interest rates – 10.25% onwards
Maximum loan liability – Up to 30 lakh

Bank name – Axis Bank
Interest rates – 11% onwards
Maximum loan liability – Up to 15 lakhs

Bank name – HDFC Bank
Interest rates – 12.50% onwards
Maximum loan liability – Up to 25 lakhs

Bank name – Indiabulls
Interest rates – 13.99% onwards
Maximum loan liability – Up to 15 lakhs

Bank name – RBL Bank
Interest rates – 14% onwards
Maximum loan liability – Up to 1.20 lakh

Bank name – Home Credit
Interest rates – 24%
Maximum loan liability – Up to 2.4 lakh

Following are the factors affecting the interest rates on Personal Loans

Credit history and credit score
The credit score of an individual should be a minimum of 700 points which is considered a good one to avail personal loans at the lowest interest rates. The applicant who has a lower than 700 points score can be charged higher interest rates as compared to the borrowers with a higher credit score—also, the bank checks with the default history of the borrower. If the borrower has defaulted any of the loans previously either due to non-availability of funds or else a willful defaulter, the loan application may either be rejected or else may be charged higher interest rates.

Income of the borrower

If the income of the applicant is very low or else if the applicant is not having a consistent income due to continuous changing of jobs, the borrower may be charged with higher interest rates.

The UCO bank is the lender charging the lowest interest rates while the home credit finance company charges the highest interest rates to the borrower. The bank terms & conditions should be thoroughly be checked by the borrower before the approval of the loans. Some banks have rigid policies in case of documentation & credit score, while some banks have liberal policies regarding the loans.

What are the interest rates on personal loans?

The interest is the returns gained by the banker on the principal amount being given on credit to the borrower. The loans can be availed from any of the lenders of the applicant’s choice according to the eligibility & suitability of the borrower. The borrower is charged higher interest rates on personal loans than the housing loan or else car loans. Also, personal loans are not exempted under any section of the income tax act. Banks also do charge processing fees in the range of 0.50%-2.50% depending on the lender to lender. The bank also imposes a penalty on the borrower in case of any delay or default of the installments by the borrower. A personal loan is a multi-purpose loan that can be used for multiple purposes. The bank does not ask for any proof on the expenditure of the loan being opted. As soon as the application is given instant amount is being credited to the bank account of the borrower. Personal loans can also be availed for the multi-purpose at a time. For example, if the borrower, once the loan is availed of a certain amount, can use the same amount to purchase electronic goods and utilize the same amount for the travel purpose.

Loans are disbursed by the bank within 48 hours in offline mode and within few minutes for the online mode. The personal loan approval is instant because the amount is smaller than the housing loan or corporate loan. The maximum amount up to which loans can be availed is Rs.25 lakh. The borrower should have all the necessary documents for the approval of loans. The documentation process is minimal in case of the personal loans to be availed. For the medical emergency, there is a special provision being available for the faster approval of loans. The borrower has to submit the medical details to the lender for the approval of loans. Some commercial establishments have tie-ups with the finance companies to approve the loans, which sometimes may be offered at lower interest rates to the borrower. In such cases, the borrower should take the benefit of that and avail loans at lower interest rates and save money on the interest repayment. The age criterion for availing of the personal loans is in the age group of 21-60 years till the date of maturity of the loan amount.

Following are the interest rates charged by the banks : 

Bank name – UCO bank
Interest rates – 8.45% onwards
Maximum loan liability – Up to 10 lakhs

Bank name – Bank of India
Interest rates – 9.35% onwards
Maximum loan liability – Up to 10 lakh

Bank name – SBI
Interest rates – 9.60% onwards
Maximum loan liability – Up to 20 lakh

Bank name – Kotak Mahindra bank
Interest rates – 10.25% onwards
Maximum loan liability – Up to 30 lakh

Bank name – Axis Bank
Interest rates – 11% onwards
Maximum loan liability – Up to 15 lakhs

Bank name – HDFC Bank
Interest rates – 12.50% onwards
Maximum loan liability – Up to 25 lakhs

Bank name – Indiabulls
Interest rates – 13.99% onwards
Maximum loan liability – Up to 15 lakhs

Bank name – RBL Bank
Interest rates – 14% onwards
Maximum loan liability – Up to 1.20 lakh

Bank name – Home Credit
Interest rates – 24%
Maximum loan liability – Up to 2.4 lakh

Following are the factors affecting the interest rates on Personal Loans

Credit history and credit score
The credit score of an individual should be a minimum of 700 points which is considered a good one to avail personal loans at the lowest interest rates. The applicant who has a lower than 700 points score can be charged higher interest rates as compared to the borrowers with a higher credit score—also, the bank checks with the default history of the borrower. If the borrower has defaulted any of the loans previously either due to non-availability of funds or else a willful defaulter, the loan application may either be rejected or else may be charged higher interest rates.

Income of the borrower

If the income of the applicant is very low or else if the applicant is not having a consistent income due to continuous changing of jobs, the borrower may be charged with higher interest rates.

To conclude, UCO bank is the lender charging the lowest interest rates while the home credit finance company charges the highest interest rates to the borrower. The borrower should thoroughly check the bank terms & conditions before the approval of the loans. Some banks have rigid policies in case of documentation & credit score, while some banks have liberal policies regarding the loans.