Personal Loan by Banks

by admin | Oct 22, 2023 | loan

Personal Loan by Banks

The festive season is approaching, and you might be considering various ways to immerse yourself in the holiday spirit. Perhaps you find yourself in need of quick and hassle-free cash. Maybe you’re planning a family trip out of town during festive holidays like Dussehra or Deepavali. It’s possible that you’re preparing for your wedding and require funds to book your honeymoon. Alternatively, there may be a family wedding on the horizon, necessitating financial resources for the celebration. You could also be facing a financial crisis.

If you find yourself in any of these compelling situations and lack sufficient cash on hand, obtaining a personal loan from a bank presents an ideal solution to meet these one-time, fixed expenses.

Subas Tiwari

What is a Personal Loan?

Personal loans are loans granted for a limited period with a fixed amount and charged interest which are both repayable in monthly instalments. They are called ‘clean’ or ‘unsecured’ loans, i.e., loans without obtaining any tangible security (property, deposits, bonds, etc.). Only personal sureties are required to be furnished to confirm that you are a dependable person in society & will not default on repayment of the loan given. Personal loans are generally used to meet temporary cash requirements such as wedding, children’s education, home improvement/repairs, luxury holiday, buying a car or to buy an electronic appliance, etc.

There are several banks and financial institutions providing attractive deals on personal loan offers with lucrative interest rates. Each personal loan lending institution has different eligibility criteria, rate of interest, and repayment tenure, which should be reviewed and compared to make an informed and smart decision before applying.

Eligibility for Personal Loan:

For Salaried Class

-Should be having a running bank account where salary is being credited regularly. The bank account need not be with the bank where one is applying for a personal loan, but banks prefer to consider such loans to be given to their own clientele as a priority.

-One should have a job of permanent nature. Banks would not give a loan to a person whose job is temporary.

-The length of service or employment also plays a part in expediting the loan sanction.

-Place of residence should either be owned or rented with a lease agreement.

-Residence proof (voter ID card, Adhaar Card, etc.) & identity proof (employment ID card, PAN card, etc.) copies should be produced duly self-attested along with bank application form along with 2 photographs.

-Though the reason/purpose of the personal loan is not mandatory, the bank would like you to state some reason (any one of the above or other purposes, which can be vague like-for meeting unplanned personal domestic expenses.

-If you already enjoy any other loan like car loan or home loan, those deductions will also be considered to calculate total deductions out of the salary & arrive at eligible loan amount.

-Your CIBIL score (see box) will also play a significant part in the bank’s decision in granting a personal loan.

-There is no fixed criterion for arriving at eligible loan amount, as individual banks have different methods of calculation, but the generally accepted practice is to fix a ceiling of about 50% of deductions from salary including the repayment of the loan to be granted. If you are within this ceiling, then the eligible amount could be about 10/12 times the gross monthly salary or 6 times the total taxable income as declared in Form 16 or the Income Tax Return. This can vary amongst nationalized banks & can be different among private banks (private banks commute on the take-home pay).

For Self Employed

They are those who do either business or freelancing assignments and some work from home. They may do part-time or full-time assignments & so may be having more than one employer. The following additional conditions may apply when they seek a personal loan from a bank.

-Since he does not get a salary, the business income as reflected in the Income Tax Return would be the basis of ascertaining his total income.

-He may be required to submit details of his enterprise.

-The performance of the business can also be a factor in influencing his loan sanction. In the case of new enterprise, banks can insist on collateral securities like bank deposits, bonds, etc. in addition to providing one or more personal surety of adequate Net Worth.

For Professionals

They are those who either have their own business/service like Doctor, Lawyer, etc. or those who are technically qualified but are working in an organization. The following could be additional conditions to be fulfilled.

-The attested copy of their Qualification would be required to be submitted along with the application form.

-Since some of the banks have specialized personal loan schemes for such professionals offering lower rate of interest on such loan, the lending may ask some details of the profession as also copies of Receipts/Payments and/or Income/Expenditure account.

Advantages/ Benefits of a Personal Loan to a consumer-borrower

The first & foremost benefit is the quickness with which the loan application is either sanctioned or disposed of (rejected). The icing on the cake is in the timing.
Secondly, in most of the sanctioned personal loans, the banks do not insist on any collateral security or in some cases, even personal guarantee/surety. So, it is advantageous for the loan-seeker, as he need not be under any obligation to his office colleague/friend to request for providing a personal surety.
Most of the banks do not ask for margin component (borrower’s stake in the risk). Hence, there is absolutely no need for the consumer to run around to arrange to provide for depositing margin money.
The purpose of the loan is immaterial in most cases. Hence, the consumer need not take pains to explain the genuineness of the purpose & submit proof for such purpose.
Simple documentation is assured with no elaborate procedures.
Making monthly repayments is now made consumer-friendly with banks agreeing to take post-dated cheques (PDCs) for the amount of each instalment and presenting the same on due dates of loan. The consumer need not visit the bank at all for such work. Where the loan instalment payable is to be taken out of the savings account of the customer, the banks obtain written instructions & act on them.

Disadvantages/Limitations to the consumer-borrower

The first & foremost is that the rate of interest is the highest for this type of loan. It’s a costly cost to the consumer, as this is an ‘unsecured’ loan. In comparison, secured loans are comparatively cheaper.
Secondly, the period of the loan is normally limited to 60 months. Banks do not favour or take exposure for a longer tenure. This limits the consumers’ requirements, where, by getting a longer period of repayment, he could bring his work to completion.
According to bank sources, this type of loan has a higher risk and can end up as a Non-Performing Asset, if repayment stops midway either due to change of job/temporarily unemployed status/death of the borrower/change of address without trace, etc. Hence, many banks do not consider giving a loan for non-customers, i.e., those who have no previous bank dealings with the lender. So, this severely restricts the options available to the consumer-borrower to seek a loan from any bank in the vicinity of his residence or place of work.
Most of the banks are not willing to grant personal loans of more than Rs.15.00 lacs even though their website/brochure talks of maximum amount being much more than what they say they will give. So, the consumer-borrower will not get the benefit of more loan even if he is otherwise eligible!
Even though a couple of banks claim that they don’t need personal surety/guarantor for such loans, many of the banks insist on providing the same for the loan transaction to add trustworthiness to the loan contract.

Banks Personal Loan Interest Rates & Processing Fee

Bank	Interest Rate (p.a.)	Processing Fee
HDFC Bank	10.5% p.a. – 21.00% p.a.	Up to 2.50%
ICICI Bank	10.75% p.a. – 19.00% p.a.	Up to 2.50%
Yes Bank	10.99% p.a. – 20% p.a.	Up to 2%
Kotak Mahindra Bank	10.99% and above	Up to 3%
Axis Bank	10.49% p.a.- 22% p.a.	Up to 2% of the loan amount
IndusInd Bank	10.25% p.a. – 27% p.a.	3% onwards
HSBC Bank	9.99% p.a. – 16.00% p.a.	Up to 2%
IDFC First Bank	10.49% p.a. onwards	Up to 3.5%
State Bank of India	11% p.a. – 14% p.a.	Up to 1.50%
Karnataka Bank	14.23%	At the discretion of the bank
Bank of Baroda	10.90% p.a. – 18.25% p.a.	Up to 2%
Federal Bank	11.49% p.a. – 14.49% p.a.	At the discretion of the bank
Bank of India	10.25% onwards	Up to 2%
IDBI Bank	10.50% p.a. – 13.25% p.a.	Contact the bank
Karur Vysya Bank	10.50% p.a. – 13.50% p.a.	1.50% onwards
South Indian Bank	12.85% p.a. – 20.35% p.a.	Up to 2%
RBL Bank	14% p.a. – 23% p.a.	Up to 3.5%
Punjab National Bank	11.40% p.a. onwards	Up to 1.00%
Bank of Maharashtra	9.75% p.a. onwards	Up to 1%
Central Bank of India	12.35% p.a. – 12.55% p.a.	Up to 1%
City Union Bank	At the discretion of bank	1.00% subject to a minimum of Rs.250
J&K Bank	12.30% p.a. – 13.30% p.a.	Up to 1% subject to a maximum of Rs.10,000

Interest Rates & Processing Fee Sourced from: https://www.bankbazaar.com on 04.09.2023

Here are 20 tips to consider when applying for a Personal Loan from Banks

Assess Your Need: Determine why you need the loan and how much you need. Avoid borrowing more than necessary to prevent overburdening yourself with debt.

Check Your Credit Score: Before applying, check your credit score. A good credit score can help you qualify for better loan terms and lower interest rates.

Research Lenders: Compare personal loan offers from different banks and financial institutions to find the one with the most favourable terms and interest rates.

Interest Rates: Pay close attention to the interest rates offered. A lower interest rate can save you a significant amount of money over the loan tenure.

Loan Tenure: Choose a loan tenure that aligns with your repayment capacity. Shorter tenures typically have higher EMIs but lower overall interest costs.

Fees and Charges: Understand the processing fees, prepayment charges, late payment penalties, and any other fees associated with the loan. Factor these into your decision-making.

Loan Eligibility: Check the bank’s eligibility criteria to ensure you meet their requirements before applying. Eligibility criteria often include age, income, and credit score.

Documentation: Prepare all required documents, such as proof of identity, address, income, and employment, before applying to streamline the application process.

Co-applicant: If you have a lower credit score or income, consider adding a co-applicant with a better financial profile to improve your chances of approval and get better loan terms.

Loan Amount: Borrow only what you can comfortably repay. Your EMI should not exceed 40-50% of your monthly income.

EMI Calculation: Use online EMI calculators to estimate your monthly payments based on the loan amount, interest rate, and tenure.

Read the Fine Print: Carefully read the loan agreement and terms and conditions provided by the bank to understand all clauses and obligations.

Interest Calculation: Understand how the bank calculates interest (monthly reducing balance or flat rate) and how it affects your repayments.

Prepayment Option: Check if the bank allows partial or full prepayment of the loan without incurring excessive charges. This can help you save on interest.

EMI Date: Coordinate the EMI due date with your salary cycle to ensure timely payments and avoid late fees.

Emergency Fund: Maintain an emergency fund to cover unexpected expenses, reducing the need for personal loans in emergencies.

Budgeting: Create a budget to manage your finances efficiently and allocate funds for loan repayments.

Regular Payments: Make timely EMI payments to maintain a good credit history and avoid penalties.

Customer Support: Choose a bank known for excellent customer service to address any concerns or issues during the loan tenure.

Review and Refinance: Periodically review your loan terms and consider refinancing if you find a better deal with lower interest rates.

Remember that personal loans should be used responsibly and for genuine financial needs. Borrowing without a plan can lead to debt accumulation and financial stress. Careful consideration and responsible financial management are essential when dealing with personal loans.

Reasons For Rejection of Your Loan

One of the possible causes for the bank to deny your loan application is outlined below. Therefore, it is advisable to be aware of these potential issues and take steps to avoid them, rather than experiencing regret and frustration later on.

Poor Credit Score

It is possible that this could be the reason for loan rejection. Nowadays Banks/FIs have voluntarily joined the Credit Information Agency called CREDIT INFORMATION BUREAU OF INDIA LIMITED (CIBIL) by sharing one’s credit details which includes all your present/previous loan transactions (even though they are closed & no longer is outstanding with that Bank) & credit card operations. Banks/FIs forward their own internal credit report on one’s credit performance and CIBIL awards marks based on that assessment (anything between 300 to 900 marks). CIBIL then uploads it in their website. The information is required to be updated (additions/deletions) at regular intervals by the Banks/FIs, who are admitted as Members of CIBIL. Banks invariably call for CIBIL report as soon as you apply for a loan. If your past transactions with a particular bank/FI either in loan repayment or credit card repayment were not up to the mark (termed poor CIBIL score-marks less than 700), then there is every chance of your present request for personal loan getting rejected by any other bank, where you intended to get the loan sanctioned. Hence it is advised for one to act prudently always to keep a clean repayment record for becoming eligible for any future credit requirements. Anyone can also seek their CIBIL score online by visiting CIBIL site (www.cibil.com). It is to the credit of this institution that 80% of approved loans (and sanctioned by banks) are of individuals with a CIBIL score of more than 750.

Past Default

Banks draw up a list of their own defaulters & upload in their computer systems for any branch to look into & verify the past record of any loan-seeker. This is in addition to CIBIL report which contains credit information of the loan-seeker with other Banks. Let us say that there were delay(s) in repaying a fridge loan or a car loan (due to many genuine reasons). Or like, for example, you may have shifted to a new leased accommodation. That house address may be in Banks’ defaulters’ list, as the previous occupants would have been bank defaulters!

There are certain enterprises run by loan-seekers which do not guarantee any regular income, and which could become a no-no for banks to lend.

Loan Guarantor

You might have stood as a personal surety by guaranteeing the repayment to the Bank in case of default by your friend, who was the borrower for a bank loan. You might have forgotten it, but the CIBIL report will also show you as a defaulter for the loan, even though you were only a guarantor! You could be in for a shock, but that’s how the system works! The moral lesson to learn is-think twice before offering to stand as personal surety to anyone.

Many Loans

While calculating your eligibility for a loan, banks will normally add up all the existing outstanding loans from banks, private borrowings, etc before arriving at the eligible amount. The loan-to-income ratio is calculated (banks generally say that the total deductions –including the repayment of the present loan-should not exceed 50% to 70% of your take-home/gross salary) by the bank before extending a loan. So, too many loans/liabilities could throw off a bank from granting a loan because of this reason.

Job Stability

If you shift jobs very frequently or shift your location several times, it becomes public knowledge & could go against you, as the bank could be asking searching questions on this score. Good employment track record plays a favourable role in bank’s decision to give you a loan. Since this loan is not secured by any collateral security & is given based on good track record of employment (loyalty factor) & credit profile (good or acceptable CIBIL score), stability in one’s life is of prime importance in the eyes of the Bank.

Tax Record

Banks could make a thorough assessment of your tax profile by asking for the Income Tax Return (ITR) copies of previous assessment years or can ask details of tax deducted at source /professional tax paid against your salary in the past, Failure to give them or submit satisfactory answers could come in the way in your bank’s decision. So, the advice is-obtain Income Certificate/TDS Certificate/Form 16-16 (A) from your employer & keep it on record (for the rainy day!). Produce the same when necessary.

Past Loan Rejections

If you have applied for a loan or credit card in the past & got rejected (for whatever reason), applying now could get you a rejection. The lesson to be learnt here is-go for a loan only if it is a must! Enjoying too many credit cards is also not a smart idea!

RBI Defaulters’/Wilful Defaulters’ Lists

If your name is here, then worry! The Reserve Bank of India, who is the Regulator for Banks in India, also maintains the above lists, which is updated & uploaded in their website. These pertain to RBI Defaulters with Banks of more than Rs.10.00 lacs from the entire banking system. RBI Wilful Defaulters’ List is culled from the banks based on wilful default (deliberate attempt to hoodwink the lenders in spite of adequate Net Worth). Take the recent case of United bank of India, which has treated Kingfisher Airlines as a ‘Wilful Defaulter’.

Decoding Car Loans Offered by Banks in India: A Comprehensive Overview

by cv | Sep 9, 2023 | loan

Decoding Car Loans Offered by Banks in India: A Comprehensive Overview

The Indian automotive industry has witnessed remarkable growth in recent decades, fuelled by urbanization, rising incomes, and changing lifestyles. As the desire for car ownership becomes more widespread, financial institutions, particularly banks, play a significant role in fulfilling this aspiration through car loans. Car loans offered by banks in India have revolutionized the way individuals access vehicles, making them an essential financial tool. This comprehensive overview delves into the intricacies of car loans, including their mechanics, benefits, eligibility, application process, interest rates, tenure, challenges, and impact on the automotive industry.

Subas Tiwari

The Significance of Car Loans

Car ownership has evolved from being a luxury to becoming a necessity for many Indian households. However, the high upfront cost of purchasing a car often poses a financial challenge. Car loans bridge this affordability gap, enabling individuals to own a vehicle by distributing the cost over a defined period. These loans empower consumers to choose the car of their dreams without depleting their savings or disrupting their financial stability.

Eligibility Criteria

Banks institute specific eligibility criteria to ensure that borrowers are capable of repaying the loan. These criteria typically encompass age, income, employment stability, credit history, and existing financial obligations. Banks assess these factors to ascertain the borrower’s creditworthiness and repayment capacity. A strong credit profile increases the likelihood of loan approval and favourable terms.

Application Process

The process of applying for a car loan involves several stages. Borrowers are required to provide documentation supporting their identity, address, income, and employment details. These documents facilitate the bank’s assessment of the borrower’s financial stability. Additionally, details related to the selected vehicle, including its cost, specifications, and registration particulars, are essential for loan processing.

Who can take a Car Loan?

Before applying for a car loan, there are some conditions, which you need to take care of. This includes information about age, minimum salary, type of job and residence.

Documents Required for Car Loan

Proof of Identity (PAN Card, Passport, Driving License etc.)
Proof of Address like Voter I Card, Passport
Age Proof
Photograph
Car Documents
Proof of income like three months’ salary slips, six months bank statement, income tax return
Some companies do not finalize the loan without a copy of the car insurance and driving license.

Hypothecation

When you buy a car by taking a loan, it is mortgaged with the lending company. This gives them the right to confiscate your property in case they are unable to repay your loan. If you are not able to pay the monthly instalment on time, they can pick up the car and take it away. Hypothecation letter is also a part of the car registration process. Once you repay the loan, you can remove the hypothecation of the lending company from the registration papers. To remove the hypothecation, you will have to go to the respective RTO office with no objection certificate, car insurance papers and address proof. It is important to note here that it is necessary to take NOC from the company giving the loan. After this, give it to the insurance company and issue the insurance paper in the name of the new owner.

Interest Rates

Interest rates are a critical component of car loans, significantly impacting the overall cost of borrowing. Banks offer two types of interest rates: fixed and floating. Fixed rates remain constant throughout the loan tenure, providing borrowers with predictable monthly payments. Conversely, floating rates fluctuate based on market conditions, influencing the monthly instalment amount.

Car Loan Interest Rate Comparison of Top Banks

Banks Name	Interest Rates
Axis Bank	7.45% – 14.50%
Bank of Baroda	7% onwards
Bank of India	6.85% onwards
Bank of Maharashtra	6.40% onwards
Canara Bank	7.30% Onwards
Central Bank of India	7.25% – 7.70%
Federal Bank	7.65% Onwards
HDFC Bank	7.95% – 8.30%
ICICI Bank	7.90% Onwards
IDBI Bank	7.50% Onwards
Jammu & Kashmir Bank	7.85% Onwards
Karnataka Bank	7.50% Onwards
Karur Vysya Bank	7.80% Onwards
Lakshmi Vilas Bank	7.05% Onwards
Nainital Bank	9.20% Onwards
Punjab & Sind Bank	7.10% – 7.45%
Punjab National Bank	6.50% Onwards
RBL Bank	12.00% – 14.00%
SBI	7.20% – 7.90%
UCO Bank	7.25% Onwards
Yes Bank	9.25% Onwards
Union Bank	8.65% – 11%
Indian Bank	8.05% Onwards

Interest Rate Sourced from: https://www.wishfin.com on 09.08.2023.

Loan Tenure and Equated Monthly Instalments (EMIs)

The tenure of a car loan determines the duration within which the borrower will repay the loan. Longer tenures result in lower monthly EMIs but higher overall interest payments. Conversely, shorter tenures lead to higher EMIs but lower total interest expenses. The Equated Monthly Instalment (EMI) comprises both the principal loan amount and the interest, spread over the loan tenure.

Down Payment

A down payment is an initial amount paid by the borrower toward the car’s purchase price. The percentage of the down payment varies based on the bank’s policies and the borrower’s financial capacity. A higher down payment reduces the loan amount, influencing the EMI and total interest payments. Some banks offer flexible down payment options to accommodate diverse financial circumstances.

Car Loan Amount

The loan amount depends on your age and income. How much loan you get for the car depends on the lending company. Typically, you get a car loan up to four to six times your annual income. Up to 80-90 per cent of the cost of the car gets financed. Some banks, however, finance up to 100%. It can be ex showroom price or on road price. Ex-showroom price is the amount paid to a dealer for buying a car. When you bring the car for driving on the road after paying registration charges, insurance, road tax etc. then it is the on-road price. When you go to take a loan for a second-hand car, then the expenses incurred in re-registration are not covered.

What are the expenses in a car loan?

Banks levy many charges for giving loan or repaying the loan ahead of time.

The processing fee is charged when you apply.
This can be 0.4-1 percent of the loan amount.
Banks charge fees for premature repayment of the loan.
Some banks charge five to six percent on this.

However, some banks do not charge for this. Some banks offer part payment facility to repay the car loan. This means you can repay a part of the loan whenever you have the money. Some banks also charge a fee on payment. You cannot prepay the loan within six months of taking the loan.

Impact on Borrowers

Car loans have a significant impact on borrowers’ financial lives. On one hand, they empower individuals to acquire a car and enhance their mobility. On the other hand, borrowers must manage the monthly EMI payments within their budget. Failure to repay the loan on time can adversely affect the borrower’s credit score, potentially limiting their access to future credit facilities.

The Automotive Industry and Car Loans

The availability of car loans has transformed the Indian automotive industry. These loans have widened the consumer base, spurring increased car sales and driving economic growth. The industry’s response to changing consumer preferences has led to innovations in design, features, and technology. Car loans, in conjunction with attractive financing offers, have contributed to the evolution of the automotive landscape.

Challenges and Benefits

While car loans offer numerous advantages, they also present certain challenges. Borrowers must be vigilant about additional charges, processing fees, and prepayment penalties that may impact the overall cost of the loan. Fluctuations in interest rates can influence monthly payments, requiring borrowers to account for potential changes. However, the benefits of car loans, including affordable access to vehicles and improved mobility, often outweigh these challenges.

Future Outlook

The future of car loans in India holds promise as the financial landscape evolves. Banks are likely to introduce innovative solutions tailored to diverse customer needs. Technological advancements may streamline the application process, making it more convenient for borrowers. Additionally, the growth of electric vehicles (EVs) could lead to specialized loan offerings aimed at promoting sustainable mobility and reducing carbon emissions.

Getting the best deal on a car loan from banks in India involves careful research, comparison, negotiation, and understanding of the loan terms. Here’s a step-by-step guide to help you secure the most favourable car loan deal:

Research and Compare:Start by researching various banks and financial institutions that offer car loans. Look for reputable banks with competitive interest rates and favorable terms. Online comparison tools and financial websites can be helpful in comparing different loan offers side by side.
Check Eligibility:Before applying for a car loan, review the eligibility criteria of different banks. Ensure you meet the age, income, employment, and credit score requirements. This will increase your chances of getting approved for a loan.
Determine Loan Amount:Calculate the loan amount you need based on the car’s cost and the down payment you can afford. Consider including additional costs like insurance, registration, and taxes.
Check Interest Rates:Interest rates significantly impact the total cost of your car loan. Look for banks offering competitive interest rates. Fixed interest rates provide stability, while floating rates might offer flexibility based on market conditions.
Loan Tenure:Decide on a suitable loan tenure that aligns with your financial situation. While longer tenures result in lower monthly EMIs, they also lead to higher overall interest payments. Shorter tenures reduce interest costs but might result in higher EMIs.
Down Payment:A higher down payment reduces the loan amount and monthly EMIs. Aim for a substantial down payment to decrease the overall financial burden. Some banks might offer flexible down payment options.
Negotiation:Approach multiple banks with your requirements and negotiate the terms. If you have a good credit score and financial stability, you might be able to negotiate for better interest rates or loan terms.
Read the Fine Print: Carefully read and understand the loan agreement, including terms, conditions, fees, and charges. Be aware of any prepayment penalties, processing fees, and hidden costs.
Additional Benefits: Some banks offer additional benefits such as pre-approved loans, discounts on processing fees, or tie-ups with dealerships for better rates. Consider these perks when comparing loan offers.
Credit Score Improvement: A higher credit score often results in better loan terms. If your credit score is not optimal, consider improving it by paying off existing debts, clearing any errors from your credit report, and maintaining a good credit history.
Apply Online: Many banks offer the option to apply for a car loan online. Online applications are often more convenient and might come with exclusive offers.
Loan EMI Calculator: Use an online EMI calculator provided by banks to calculate your monthly EMIs based on the loan amount, interest rate, and tenure. This will help you plan your budget effectively.
Prepayment and Foreclosure: Check the terms for prepayment and foreclosure. Some banks might charge a penalty for repaying the loan before the tenure ends. Look for banks that offer flexibility in this regard.
Seek Professional Advice: If you’re unsure about any aspect of the car loan process, consider seeking advice from financial advisors or professionals who can guide you in making an informed decision.

Remember that the best deal on a car loan is not solely about the lowest interest rate. It’s about finding a loan that aligns with your financial situation and goals. Take your time, compare multiple offers, and ensure you fully understand the terms before committing to a car loan from any bank.

Points you should remember before buying a Car

Fix your budget-The first and foremost step while planning for a car purchase is determining how much you can spend. While you might have your eyes on a particular car, you cannot take it home unless your pocket allows it. According to a thumb rule, the total expenditure on all the cars including expenses on fuel, insurance premiums, maintenance costs, and more, within a household should be 25% of the total monthly income. Therefore, you will have to fix a budget that does not hamper your bills payment, savings, and other regular expenses.
Choose between new and pre-owned car-Once you have fixed your budget, it is important that you decide whether you want to buy a new car or a pre-owned one. You can weigh all the pros and cons of buying either of the types of cars and priorities based on your requirement. Then, you can assess if the chosen type of car fits your budget by calculating the ownership cost of the car.
Decide the kind of car you want-You should choose a car that best serves your requirement, circumstances, lifestyle, and taste. Make a list of the features and specifications of the car that you want such as seating, comfort, convenience, performance, and safety features. You will also have to decide whether you want to opt for a car with diesel or petrol engine. Based on your budget as well as your preference for an old or new car, you will have to narrow it down to a few car makes and models. Next, you can make a list of additional features that you would like to have in your car such as a sunroof, surround sound systems, heated seats, etc.
Check the resale value of the car-In terms of resale value, some cars might have the upper hand over others due to a powerful engine, better fuel efficiency, and popularity of the manufacturing brand. Furthermore, since car maintenance is one of biggest concerns for buyers, cars which have more service centers and better spare parts availability usually have greater resale values. When you are looking to buy a car, you should check its resale value in case you have to sell it during a financial crisis or just want an upgrade in subsequent time.
Secure your finances beforehand-One of the biggest mistakes that one can make is not looking into financing options before visiting a car dealership. While most of the dealerships provide financing options for their customers to help purchase the car they want or like, the interest rates offered during such circumstances are usually higher than the rates available in the market otherwise. You can check the current interest rates being offered by banks and other non-banking financing companies (NBFCs) in addition to any ongoing offers online.
Look for options-Checking the prices from several different dealers is a smart move. When you are planning to buy a car, walking out of at least one dealership will help you learn about the lowest cost of a particular car that they can offer. This information comes handy when you go to another dealership and try to negotiate the price. Additionally, it is also wise to check the prices at a few dealerships out of town since dealership prices vary depending on the location as well.
Learn about the car through a test drive-Even though you might have researched about the car and its features on the internet, you should take your time with the test drive. Ensure that you like the feel of the car while driving and otherwise. Even when the car is parked, you can experiment with the controls to check whether you and the passengers will be comfortable in it or not. Do not hesitate to ask for additional time to understand if you really like the car. In addition to comfort and features, you should also check the driving convenience, handling, brakes, etc. The car should also offer a quiet and smooth ride.
Negotiate the prices and terms-Cars are the second greatest assets of an individual, after his or her property holdings. Therefore, you should negotiate the terms and prices as much as possible to get the best deal before you make the investment. Negotiating the price of the car will help you bring the car loan down and can save you money in the long run. You can practice your negotiating skills beforehand and do not feel bad to walk away from any offer. Remember that confidence is the key during such a negotiation.
Focus on the total price instead of monthly payments-Trying to trick potential buyers into an expensive deal is second nature to salesmen. Do not be tempted to say yes to a low-cost deal with a long tenure since they might end up costing you more eventually. Also, make sure you learn about the total price of the car including all the hidden costs such as dealership costs, delivery charges, taxes, car preparation, and more. Dealerships often don’t often tell the customers about these additional charges unless the buyer enquires about them.
Factor the car insurance premiums in the total cost-Insurance costs have a huge impact on the total price of the car; therefore, it is important that you consider it along with the car’s price during a purchase. While sports cars usually have more expensive insurance premiums than other cars, there are several cars which have a high premium amount due to separate reasons. For example, Honda Civic, Toyota Camry, and Honda Accord have a high resale value and, hence, are more prone to theft. Therefore, they might have a higher insurance cost compared to the other cars in the same segment.
Avoid purchasing any add-on- Since salesmen earn commissions based on a percentage of the sales price, they might try to rope you into purchasing add-ons to increase the cost of the car. Try to keep the additional costs to a minimum by avoiding add-ons such as heated seats, rust proofing, rear camera, VIN etching, and dealership maintenance plan. You can also buy a GPS unit at a much cheaper price online, instead of buying the expensive built-in system.
Do not buy an extended warranty along with your car-The extended warranties offered by dealers are often expensive and provide minimum coverage. Be it a new or used car, such warranties also do not usually cover mechanical failures. If you are purchasing a new car, make sure that it has a manufacturer’s warranty to cover most of the damage costs. In case of a pre-owned car, you can check whether it still has an active manufacturer’s warranty. If not, you can save that money instead for potential repair and maintenance expenses.
Get the pre-owned car checked by a mechanic before purchase-In case you are planning to buy a used car, it is wise to get it thoroughly checked by an expert technician before the purchase is finalized. By doing this, you can not only become aware of the condition of the car but can also learn about any existing or potential concern as well. According to this report, you can decide whether you want to buy the car or the mechanical issues are too severe. This can also act as leverage while negotiating the price of the car.
Do not make an impulse buy-Being a huge investment, it is advisable that you do not buy a car just out of impulse. Purchase a car only after performing extensive research on the market so that you don’t regret your decision later. If you check all the financing options available as well as the car makes and models in the market, you will be able to buy a car that you can enjoy for many years, without becoming a burden on you.
Purchase a car while maintaining finances-Buying a car when you are repaying other debts can be a herculean task. If you are already paying off a car loan, the additional loan might impact your monthly income and savings. Therefore, purchasing a car only after the previous car loan is paid off is a better option than buying one while repaying an existing loan. By doing this, you will be able to avoid an upside-down car loan.

Since purchasing a car is a huge investment, you should perform thorough research to find the best interest rates as well as car make and model in the market to suit your needs and repayment capability. That way you can be well-prepared to negotiate and get the best deal possible on the new or used car of your choice. There are several aspects of a car that you should bear in mind to be able to choose the right one as per needs, such as fuel efficiency, type of fuel, availability of maintenance services and spare parts, etc.

Reverse Mortgage Loan

by admin | Apr 9, 2023 | loan

Reverse Mortgage Loan

You must be familiar with taking a home loan, but do you know that banks also offer reverse loans against your home. This is called mortgage. For example, on taking a home loan, the bank keeps all the documents with it and gives you a lump sum amount, then you repay this amount in instalments. Reverse mortgage is just the opposite. It is seen as the support of old age.

Subas Tiwari

In reverse mortgage loan, the bank gives you money every month by mortgaging your house. How much money will be received depends on the cost of the house. The bank gives reverse mortgage up to 60% on the cost of the house. When the person taking the reverse mortgage dies, the house becomes the property of the bank.

If you are a senior citizen (or of age above 55 years & nearing the twilight of your service/profession) and staying alone in a house/flat without family members and/or in need of a regular income to meet your expenses of living a decent life, then this is the best available banking product for you.

This product is very popular in the Western Countries where senior citizen couples almost always stay alone in their apartments with no one to look after them & they require regular money for meeting daily living/travel expenses (medical needs met by NHS).

This product is unique in the sense that the formalities of a loan against property are gone through the entire process of documentation, valuation, fixing rate of interest & tenure of a mortgage loan in addition to creating a mortgage (normally Un-Registered Equitable Mortgage-UREM) in lender’s favour. But the disbursements are made to the beneficiary by way of an Annuity which could be either a lump-sum amount and/or paid in regular monthly/quarterly intervals by charging the amount to the loan account.

So, in effect, it is a loan in reverse-the beneficiary gets an EMI for a fixed period in consideration of creating a mortgage in favour of the lender. As long as one lives, there is no repayment of principal amount and interest. A number of banks are sanctioning such loans in India.

Let’s go into the nitty-gritty of this loan cum annuity product to understand more of the salient features & the reasons for such loans not taking off in volume in our country.

SPARE A THOUGHT ON THESE FAQs

What is reverse mortgage loan?

The scheme of reverse mortgage has been introduced recently for the benefit of senior citizens owning a house but having inadequate income to meet their needs. Some important features of reverse mortgage are:

What is my eligibility?

A homeowner who is above 60 years of age is eligible for reverse mortgage loan. It allows him to turn the equity in his home into one lump sum or periodic payments mutually agreed by the borrower and the banker.

The property should be clear from encumbrances and should have clear title of the borrower.

What about repayment?

No repayment is required as long as the borrower lives. Borrower should pay all taxes relating to the house and maintain the property as his primary residence.

What about amount eligibility?

The amount of loan is based on several factors: borrower’s age, value of the property, current interest rates and the specific plan chosen. Generally speaking, the higher the age, higher the value of the home, the more money is available.

The valuation of the residential property is done at periodic intervals and it shall be clearly specified to the borrowers upfront. The banks shall have the option to revise the periodic / lump sum amount at such frequency or intervals based on revaluation of property.

Married couples will be eligible as joint borrowers for financial assistance. In such a case, the age criteria for the couple would be at the discretion of the lending institution, subject to at least one of them being above 60 years of age.

Repayment of annuity/loan on death

The loan shall become due and payable only when the last surviving borrower dies or would like to sell the home, or permanently moves out.

On death of the home owner, the legal heirs have the choice of keeping or selling the house. If they decide to sell the house, the proceeds of the sale would be used to repay the mortgage, with the remainder going to the heirs.

National Housing Bank Scheme

As per the scheme formulated by National Housing Bank (NHB), the maximum period of the loan period is 15 years. The residual life of the property should be at least 20 years.

From FY 2008-09, the lump sum amount or periodic payments received on reverse mortgage loan will not attract income tax or capital gains tax.

Note- Reverse mortgage is a fixed interest discounted product in reverse. It does not take into account the changes in interest rates as yet.

(Courtesy-RBI site)

Reverse Mortgage Loan Scheme in India

The Government of India (Ministry of Finance-CBDT) had by a Gazette Notification (No.93/2008 dated 30th September, 2008) formulated this Scheme to be implemented by National Housing Bank (through its Housing Finance Companies) and Scheduled Commercial Banks effective from 1st April, 2008 and has given the following definitions.

What is Reverse Mortgage?

Reverse Mortgage is a mortgage of Capital Asset by an eligible person against a loan obtained by him from an approved lending institution.

What is a Reverse Mortgage Transaction?

A transaction in which the loan may be disbursed to the Reverse Mortgagor but does not include transaction of sale, or disposal, of the property for settlement of the loan.

What is the cap (upper amount) on the Reverse Mortgage Loan?

Periodic payments to be decided mutually between the approved lending institution and the reverse mortgagor.
Lump-sum payment in one or more trenches, to the extent that the aggregate of the amount disbursed as lump-sum payments does not exceed 50% of the total loan amount sanctioned.

What is the maximum loan period?

The loan under the reverse mortgage shall not be granted for a period exceeding 20 years from the date of signing the agreement by the reverse mortgagor and the approved lending institution.

Why it could be attractive to Senior Citizens?

Senior citizens, who have a lack of regular income or financial support from children can opt under this scheme easily.

This loan will make them less dependent on their children for their amenities and medical needs.

Senior citizens could receive a regular stream of income from a lender (a bank or a financial institution) against the mortgage of his home. The borrower (i.e. the individual pledging the property), continues to reside in the property till the end of his life and receives a periodic payment on it. So this Scheme ensures regular income while permitting stay in their own house.

A reverse mortgage is an ideal option for senior citizens if the property is of illiquid nature for some reason.

Salient features

Reverse mortgage is the “opposite” of a conventional home loan in that you get paid instead of payment to be made.

It doesn’t require income or credit history of the borrower as repayment is based on the value of the house owned by the borrower.

Here, the borrower doesn’t have to pay principal or interest payments during the loan tenure.

The amount received from the lender with property as collateral is not taxable, as the same is considered as loan and not income with ownership fixed with the owner.

Prepayment of loan: Borrowers could prepay the loan at any time during the tenor of the loan, at no prepayment penalty or charges.

Outliving the tenure of the loan: If the borrower outlives the tenure of the loan, he could continue to stay in the house. The lending institution may however cease the monthly payments. Settlement of the loan is done only after the borrower’s death.

Death of one of the spouses: If one of the spouses dies, the other can still continue living in the house. Only on death of both, settlement of the loan takes place.

Foreclosure: The loan could be foreclosed by the lender if

The borrower has not stayed in the house for a continuous period of one year or
The borrower has not paid property taxes and fails to insure the home or
If the borrower declares himself as bankrupt or
If the mortgaged property is donated or abandoned by the borrower.

How the Reverse Mortgage Loan Works

When the owner’s home is mortgaged, its monetary value is arrived at by the bank, on the basis of the condition of the property, legal ownership by means of an advocate’s report as well as the valuation of the property through a report obtained from approved valuers in the lender’s panel as regards market value, circle rate value & distress sale value. The bank then disburses a loan amount to the borrower in the form of periodic payments, after relating to the Annuity Chart prepared by the bank for such loans. The periodic payments are also known as reverse EMI or Annuity Payments which are received by the borrower over fixed loan tenure.

Tax Benefits

The lump sum amount or periodic payments received on reverse mortgage loan will not attract income tax or capital gains tax.
Amount received through reverse mortgage is a loan and not income. Hence it will not attract any tax. However, a borrower is liable to capital gains tax, at the point of alienation of the mortgaged property by the mortgagee for the purposes of recovering the loan.

Limitations/Disadvantages

The reverse mortgage loans are not available for commercial property. Thus, this requirement limits bank lending.
Inherited property will also not be eligible under this scheme. Indians treat owned property as an important family asset to be inherited by the next generation. So this could be a dampener.
Seniors who own real estate are typically guaranteed care and support during their golden years. So, the younger generation dissuades their elders from obtaining such loans in their twilight years.
This loan is available only to house owners above the age of 60. If spouse is a co-applicant, then she should be above 58 years. This again restricts bank lending & many are deprived from availing such loans.
Property should be the permanent primary residence of the individuals. So this prevents senior citizens who do not possess property in their name.
If the borrower outlives the tenure of the loan, he could continue to stay in the house. The lending institution may however cease the monthly payments. Settlement of the loan is done only after the borrower’s death. So in effect, the loan is in a dormant state.
Another point to note is that in reverse mortgage, the loan amount is capped, so it is less lucrative for the borrower.
There is no lifetime income which most retirees search for in any fixed income avenue. Payment beyond 20 years cannot be made by the lender.
The liability of repaying the loan arises as the term gets over. So, if someone lives the term, one runs a risk of losing the house if one is not able to repay the loan.
If the borrower makes changes in the residential property, that could affect the security of the loan for the lender. This could be renting out part or entire house, addition of a new owner to the house’s title or creating further encumbrance on the property.
It is surprising that private commercial banks have not come forward to lend under this scheme. This could be perhaps due to long gestation period for recovery & is primarily linked to the death of the beneficiary for loan recovery.

Some of the Terminologies Explained

MARGIN- This is not the ‘margin’ you normally associate with a bank loan product, where you provide your stake capital or risk capital for the loan. Here, margin component is meant to convey that a certain portion of the value of the property arrived at would be deducted towards margin & the loan will be based on the value of the property thus arrived.

INTEREST RE-SET- In this system, the interest rate is initially offered for a limited number of years governing the loan. Thereafter, the interest rate is re-fixed or re-set (mostly, it would be a marginal rise in ROI) for another fixed period of the loan tenure. This would be decided by the bank after giving option for the borrower to agree to interest re-set or close the loan.

Reverse Mortgage Loan Interest Rates of Top Banks
Bank Name	Interest Rate (p.a.)
State Bank of India	8.05% onwards
Axis Bank	10.05% onwards
IDBI Bank	10.20% onwards
Punjab National Bank	9.50% onwards
HDFC Bank	8.75% onwards

Home Loan by NBFCs

by admin | Mar 12, 2023 | loan

Home Loan by NBFCs

In the current scenario, the category of Non-Banking Financial Companies (NBFCs) has registered good growth in the last few years. The credit goes to the various marketing tools being adopted by these companies, customer-oriented services, offering attractive offers and easy and transparent processes being followed by them for functioning.

These days, if you want to borrow money for a home but are having trouble getting a loan from a bank, you can turn to Non-Banking Finance Companies (NBFC).

Subas Tiwari

What NBFCs offer?

In India, there are a large number of Non-Banking Finance Companies (registered under the Companies Act) which are engaged in offering credit to the public like that of banks. They also lend for availing Home Loans to eligible borrowers which are not always uniform.

If you feel that the local nationalized bank where your salary is being credited or your neighborhood bank is delaying their decision in sanctioning you a Home Loan (eligibility/ less amount of sanction issues) or rejecting your loan application for availing housing finance (your Credit Score is inadequate- 750 preferred), NBFCs are the next best option.

How do they do it quicker?

They have less documentation
They are aggressive in their approach
Their loan process is quicker
Their Credit Policy is flexible
They sometimes provide doorstep services

Salient features of a NBFC Home Loan for individuals (salaried)

Rate Of Interest is fixed based on Prime Lending Rate of the NBFC
An inadequate Credit Score borrower would be sanctioned albeit with increased ROI
Online loan application & process is available
When they encash the advance cheque given for process fees, you know that your papers are in process

Are interest rates reasonable?

This is one area where the NBFCs are competitive, but this is also an area of concern for a consumer as his priority is to get the cheapest offer possible. Most of the NBFCs disclose their basic rate of lending, but also state applicability vaguely, maintaining that the rate of interest would depend upon individual requirements & consumer profile such as permanency in job, professional qualifications, etc. As & when interest rates change downwards, the NBFCs insist on payment of additional charges for each such interest downgrade/review.

Interest Rate-How are they fixed by NBFCs?

What is MCLR?

RBI governs the lending rates in India for financial transactions by financial institutions. Earlier, RBI used to follow a system known as BASE RATE in which RBI would decide the Base Rate & all FIs would follow that rate as the Minimum Lending Rate (MLR).

Since April 2016, RBI has changed the system to fix Base Rate to Marginal Cost (of funds based) Lending Rate (MCLR). There are set guidelines in RBI for revising this rate every month based on several factors including borrowing rates & the REPO rate.

FLOATING RATE OF INTEREST

This is the lending rate charged to a loan borrower that is based on MCLR. Any change in MCLR will automatically affect the floating rate (increase or decrease). But the borrower enjoying a floating rate will not usually feel because when MCLR goes up, the tenure also goes up & vice versa. So when there is no change in the floating rate, the EMI stays fixed as it was though there would be a change in the floating rate which will affect/benefit the borrower in the rate of interest charged on his loan account.

In case the borrower wants the benefit of reduced EMI consequent to a reduction in the floating ROI, he needs to approach his NBFC to avail the benefit in which case the tenure of the loan (remaining period of loan) goes up accordingly.

FIXED RATE

This is the lending rate which is charged to a borrower that stays fixed irrespective of change in MCLR. NBFCs do not usually encourage from Fixed Rate to Floating Rate but encourage vice versa.

PRIME LENDING RATE

While it is mandatory to pass on the benefits under the MLR system (followed by banks), the same is not true under the Prime Lending Rate system followed by NBFCs. Under the PLR system, when RBI effects changes in MCLR, the PLR rate is kept unaffected as the NBFCs absorb the marginal increase. When MCLR is reduced, the PLR is kept intact & the benefit, if any, is passed on to the borrower on payment of additional Process fees after a written request is made for the same. This is true of each decrease in PLR. So NBFCs are free to set their PLR of their choice.

It is left to the prospective borrower to negotiate the interest rate skillfully with the NBFC to obtain the best rate for himself.

Interest Rates of Top Housing Finance Companies in India

Name of Lender	Up to Rs. 30 Lakh	Above Rs. 30 Lakh & Up to Rs. 75 Lakh	Above Rs. 75 Lakh
LIC Housing Finance	8.65% – 10.10%	8.65% – 10.30%	8.65% – 10.50%
HDFC Ltd.	8.45% – 10.35%	8.45% – 10.60%	8.45% – 10.70%
Tata Capital Housing Finance	8.95% onwards	8.95% onwards	8.95% onwards
Bajaj Housing Finance	8.75% onwards	8.75% onwards	8.70% onwards
PNB Housing Finance	8.50% – 14.50%	8.50% – 13.00%	8.50% – 10.85%
Repco Home Finance	9.25% onwards	9.25% onwards	9.25% onwards
GIC Housing Finance	8.45% onwards	8.45% onwards	8.45% onwards
Indiabulls Housing Finance	9.30% onwards	9.30% onwards	9.30% onwards
Aditya Birla Capital	8.75% – 14.50%	8.75% – 14.50%	8.75% – 14.50%
ICICI Home Finance	9.20% onwards	9.20% onwards	9.20% onwards
Godrej Housing Finance	8.64% onwards	8.64% onwards	8.64% onwards
L&T Housing Finance	8.65% – 8.75%	8.65% – 8.75%	8.65% – 8.75%

Interest rates sourced from- https://www.paisabazaar.com as of 8th February 2023

Eligibility for a Home Loan

Eligibility for the home loan is based on the borrower’s profile such as

Age
Monthly income (Gross & Take Home)
Spouse income
Assets & Liabilities
Stability of occupation
No. of dependents
Savings history
Possibilities/opportunities for canvassing other institutional business income

What about Processing fees & Other Charges?

NBFCs ask for advance payment of Processing Charges while accepting loan proposal. The same is collected even when the loan process is incomplete.

Other Charges may include

Charges for obtaining Statement of Account
Document retrieval
Addition/deletion of co-borrowers
CERSAI (central Agency where documents are maintained) charges
Database Admin fees
External Legal opinion
Fees for Valuation of property

Margin component (your financial contribution in the loan)

Most of the NBFCs charge upto 20% of the loan amount as borrower’s stake in the loan, though it is not uniform. NBFCs sometimes increase the margin component (so as to reduce their exposure on the loan amount) in case of certain inadequacies in the borrower’s profile such as inadequate credit score, job profile issues, etc.

Insurance

To protect their risk on the loan in the event of unforeseen mishaps, almost all NBFCs want insurance coverage on the property mortgaged for a home loan against fire, earthquake, floods, etc.

It is also suggested that borrowers who avail a Home Loan against property mortgaged to NBFC, should also go in for life insurance (loan secured policy) on the borrower/co-borrowers, the Assured amount of which would be the outstanding in the loan account from time to time. This way, the huge loan burden would be met by the pre-maturity of the policy & spouse/legal heirs would be spared of the loan burden in case of the unfortunate death of the borrower. The premium on this policy can either be met directly by the borrower or request the NBFC to permit debiting of this premium amount to his loan account, if the NBFC so agrees.

Tax benefits

As per Income Tax Act, there are 2 sections under which exemptions can be claimed on NBFC-Home loan from your gross total income eligible to tax.

SECTION 80 C provides for income deduction on & upto Rs.1, 50,000 per assessment year for the principal amount of home loan repaid during the same assessment year.

SECTION 24(b) provides the applicable exemption from payment of tax on & upto Rs.2, 00,000 per assessment year on the interest component paid during the same year.

For ascertaining the interest component in the EMI (it includes interest & principal component) as well as the principal, you need to take Certificates from the NBFC every year for claiming the above exemptions (or ask for Amortization Schedule).

EXAMPLES OF HOME LOANS BY NBFCS

Example 1 Example 2

(Salaried) (Salaried)

LOAN AMOUNT Rs.50, 00,000 LOAN AMOUNT ** Rs.42, 50,000

REPAYMENT PERIOD 30 YEARS REPAYMENT PERIOD 20 YEARS

(360 MONTHS) (240 MONTHS)

EMI Rs.38, 446.00 EMI Rs.40, 033.00

(Criteria-Stability in job, regular promotion,fixed income, etc.)

(Criteria-frequent job changes, transferability/job relocation, etc.)

Disadvantages of obtaining a Home Loan from NBFC

NBFCs are fussy & secretive about internal loan process
NBFCs sometimes force the borrower to buy other financial products
In some NBFCs, process fees are at higher levels
A few NBFCs insist on stiff conditions (such as providing collaterals) in their loan sanction
Some NBFCs insist on higher margins (increase borrower stake)
NBFCs do not normally disclose the reason for loan rejection (some of the reasons are too flimsy & not based on facts)

Grievance Redressal

Every NBFC is having an in-house Grievance Redressal Management system in place for aggrieved borrowers under the following tier system.

I Tier (Customer Service Department of the NBFC)

–Call Toll free Number

-Send SMS

-Send email

-Send letter (hard copy)

-Visit website & register your complaint/grievance online, you will get a customer service number

II Tier- (if no response is received within 6 weeks of your complaint or you are dissatisfied with the reply received)

–Email/write to the Grievance Redressal Officer (of the NBFC) with the copy of your grievance & the reply if any received at Tier-1

III tier- (if you are unhappy with the reply received from the GRO)

Approach the below on the prescribed format at-

Complaint Redressal Cell
National Housing Bank

Online-https://grids.nhbonline.org.in/

By Post (offline mode)-write to

National Housing Bank

Department of Regulation & Supervision

(Complaint Redressal Cell)

4th Floor, Core-5A

India Habitat Centre

Lodhi Road, New Delhi-110003

(National Housing Bank is the Regulator for NBFCs)

Keep these things in mind before obtaining a Home Loan from a NBFC

Home loans offered by NBFCs are usually linked under the prime lending rate system. But all banks are now mandated to have all loans linked to MCLR (Marginal Cost of funds Based Lending Rate). This is more beneficial to a customer and also provides all customers a similar rate of interest on home loans. However, a prime lending rate system may have higher interest rates and the rates may fluctuate throughout the term of the loan.
Banks are also mandated to pass on the benefits of the RBI to customers, whereas NBFCs are not required to do so. NBFCs are free to set their own rates of interest while banks have to reduce their rate of interest in case the RBI does so. On the flipside, banks are not allowed to lend below their MCLR values, but Non-Banking Financial Services are more than welcome to do so. In some cases customers may benefit from lower interest rates as well.
Banks have the option of providing an overdraft facility on a loan. The overdraft facility is linked to the borrower’s account and can be used if he/she wishes to avail a surplus amount. NBFCs do not have this option.
NBFCs are less stringent when it comes to paperwork and other regulations. However, it must be understood that this also means that there is no regulation on the interest rate that a NBFC can offer. They can offer you a rate of interest that is considerably higher than that of a bank. Another point to take note of is the fact that you may still obtain a loan from a NBFC even if you have a low credit score as they are less stringent in the approval process. While banks are comparatively stricter when it comes to approving a loan. Usually customers looking for a home loan with low credit scores get their application rejected by banks.
As NBFCs have a smaller customer base, it is more likely that you will get your home loan approved. Non-Banking financial companies will sell you housing loans and other financial products simply to boost their business. However, you must evaluate your repayment capacity before jumping into obtaining a home loan with a NBFC. If you are incapable of repaying, your financial health can decline for quite some time.
Although obtaining a housing loan with a NBFC has its benefits, always do your research, evaluate you repayment capability, and understand the offer at hand before accepting the loan. It may be comparatively easier to attain a home loan from a NBFC, but can be a financial burden if the interest rates obstruct your repayment capacity.

The important handles of this story

Use your skills in getting a better rate of interest
Pay Processing Fees only if your loan is processed to your satisfaction
Insist on interest Rate Review as & when markets indicate rate reduction
Take life insurance policy to cover the loan burden

Home Loan Balance Transfer & Top-Up

by admin | Feb 4, 2023 | loan

Home Loan Balance Transfer & Top-Up

Whenever there is an increase in the repo rate of RBI, the loan of the bank also becomes expensive. In such a situation, the EMI burden increases which affects the budget of the common man’s house. Recently, RBI has increased the repo rate for the fifth time. According to economic analysts, this process has not stopped yet, that is, the repo rate may increase again in the coming times and due to that loans may become costlier. In such a situation, the biggest impact is on the home loan borrowers because it is a long term loan. If you have also taken a loan from the bank and the financial budget of the house has gone awry due to the increasing EMI of the home loan, then here are the measures that can prove helpful for you.

Subas Tiwari

Home Loan Balance Transfer allows you to transfer your outstanding loan from other loan institutions to another Banks/NBFCs at a lower interest rate, this helps in reducing your EMI. Home loan balance transfer or refinancing or simple balance transfer is a process by which you can take advantage of lower interest rate offered by other Banks/NBFCs on existing loans.

How to transfer your home loan?

Taking a home loan makes the process of buying your home easy, but you can also find a home loan that has low interest rates and other value added services. In such a situation, you can transfer your home loan to the lender providing better services. This process of switching or transferring your home loan from one lender to another is called home loan balance transfer.

When should you opt for home loan balance transfer?

Usually, you shift your home loan balance to another lender when you feel the rules of your current lender are unfavourable and are not ready to negotiate. However, you can have many reasons for transfer, but the main reason for balance transfer is high interest rate. This may be due to the presence of many other reasons such as stringent rules, a lot of extra charges and poor customer service.

It is best to transfer home loan balance in the initial years of your term. This is because initially the share of interest in each EMI is much higher than the principal. So, this is the time when you can get the most benefit by falling interest rates. Also, remember that for transferring the balance you may have to pay a fee to the new lender and pay the processing fee again. So, keep these numbers in mind, understand your total benefit and decide accordingly. This guarantees that your balance transfer will actually help you in saving.

How does home loan balance transfer benefit you?

It reduces the burden associated with your repayment, which allows you to pay the loan in a short time.
Your new lender can provide additional benefits such as easy pre-payment and foreclosure at no extra charge. This makes repayment easier.
It provides you better customer service.
Your new lender can provide you with many additional features like top-up loans, which you can use for many things. For example, to decorate your house.

Home Loan Balance Transfer – Eligibility Conditions

Any employed, self-employed professional or self-employed businessman can apply for home loan balance transfer. Although all the lenders have different eligibility conditions, some similar conditions are as follows:

Applicant should be Indian and age between 21 to 60 years. Whereas, self-employed persons are eligible for transfer till the age of 65 years.
Your credit rating is not only good during the loan application, but the rating should not be low till the time of transfer, otherwise banks can reject your application.
Applicant has been working in one company for some years or in case of self-employment, the applicant’s business has been going on for some years. This period is usually 2 years.
You must have the ability to pay every month or the minimum salary required.
Some banks may also require an applicant’s minimum family income.

Knowing the advantages of a house loan balance transfer, let’s now examine the bank or NBFC’s procedure for carrying it out.

Submit an application to your current lender

When you are ready for balance transfer, then it is important to inform your lender through the application. There will be a letter or form in this application. In both cases, prepare your application carefully and describe the reasons for the transfer. If it is a form, make sure that you fill it in correctly.

Take NOC or MoU

After completing the initial formalities, your lender will contact you to give you a Consent Letter or No-Objection Certificate (NOC). This document is very important, because when you give your application, then your new lender will ask you for this document.

Assign Your Document

When you have received the NOC, you can contact your new lender and hand over all your documents to him. Apart from submitting the required documents like NOC and KYC, you may also have to submit a copy of your property document, loan balance statement and interest statement and filled application form.

Get Confirmation from Old Lender

After submitting all your documents to the new lender, wait for the final confirmation from your old lender regarding the closure of your loan account. This proves that the loan contract has expired as per the terms of the loan contract.

Pay the applicable full fees and start afresh

Now, all you have to do is sign the contract with the new lender and pay the outstanding fees. Once this is complete, you can repay the EMI for the next month. This complete guide can help you easily transfer the balance of your home loan to the lender of your choice. After this, you will be able to take benefits like the affordability and flexibility offered by your new lender.

What is the step-by-step procedure for taking a home loan?

Approval of home loan involves several stages. However, these are completed quickly, after which the loan is disbursed in a few days.

To avail a home loan, the following steps are to be followed –

Step 1. Applications

The first step is to fill the application form with some details like name, phone number, PIN code, employment type, etc. The Bank / NBFC representative will contact you to further the application process.

Step 2. Assemble the document

Bank / NBFC representative will come to your house to take the necessary documents for home loan, these documents are

Documents of property to be mortgaged.
Identity proof – Aadhaar, PAN, Voter ID, Passport, Driving License, etc.
Address proof – latest utility bill, any identity proof with your permanent address, etc.
Latest salary slip or Form 16.
Bank account statement.
Evidence of business presence.

Step 3. Document Processing and Verification

The lender will process and authenticate your document. They can contact your office or related organization to confirm your employment or business.

In this phase, they will check your CIBIL score and credit report.

Your loan application will move to the next stage only when all the documents are in order, and your CIBIL score and credit report are satisfactory.

Step 4. Approval Letter

After completing the above steps, you will receive an acceptance letter. The acceptance letter usually includes the following information –

Loan amount
Interest rate
Interest Rate Type – Fixed or Variable
Repayment period

The acceptance letter may also include other terms, conditions and policies of your loan. To accept their offer, you have to sign a copy of this letter and give it to your lender.

Step 5. Payment of security fees

After signing the acceptance letter, you will have to pay a one-time security fee. The lender may ask you to pay this fee in advance.

Step 6. Checking legal and technical information

The lender will check the legal and technical information before disbursing the loan. They will also send their representative to inspect the house.

Step 7. Loan Agreement and Disbursal

You will receive the original agreement letter, after thorough investigation from the lender. Finally, the company will disburse your home loan as per the terms.

Interest rate-how are they fixed by Banks/NBFCs?

What is MCLR?

RBI governs the lending rates in India for financial transactions by financial institutions. Earlier, RBI used to follow a system known as BASE RATE in which RBI would decide the Base Rate & all FIs would follow that rate as the Minimum Lending Rate (MLR).

Since April 2016, RBI has changed the system to fix Base Rate to Marginal Cost (of funds based) Lending Rate (MCLR). There are set guidelines in RBI for revising this rate every month based on several factors including borrowing rates & the REPO rate.

FLOATING RATE OF INTEREST: This is the lending rate charged to a loan borrower that is based on MCLR. Any change in MCLR will automatically affect the floating rate (increase or decrease). But the borrower enjoying a floating rate will not usually feel because when MCLR goes up, the tenure also goes up & vice versa. So when there is no change in the floating rate, the EMI stays fixed as it was though there would be a change in the floating rate which will affect/benefit the borrower in the rate of interest charged on his loan account.

In case the borrower wants the benefit of reduced EMI consequent to a reduction in the floating ROI, he needs to approach his Bank/NBFC to avail the benefit in which case the tenure of the loan (remaining period of loan) goes up accordingly.

FIXED RATE: This is the lending rate which is charged to a borrower that stays fixed irrespective of change in MCLR. NBFCs do not usually encourage from Fixed Rate to Floating Rate but encourage vice versa.

PRIME LENDING RATE: While it is mandatory to pass on the benefits under the MLR system (followed by banks), the same is not true under the Prime Lending Rate system followed by NBFCs. Under the PLR system, when RBI effects changes in MCLR, the PLR rate is kept unaffected as the NBFCs absorb the marginal increase. When MCLR is reduced, the PLR is kept intact & the benefit, if any, is passed on to the borrower on payment of additional Process fees after a written request is made for the same. This is true of each decrease in PLR. So NBFCs are free to set their PLR of their choice.

It is left to the prospective borrower to negotiate the interest rate deftly with the Bank/ NBFC to obtain the best rate for himself.

Meet the need of money by taking Top-Up on Home Loan

When most of us suddenly need money, personal loan is the easiest route. The reason for this is because the banks give loans in a short time. But, there are many cheaper options available in the market as compared to personal loans. For taking a loan at a cheaper interest, you can approach a top-up or gold loan on a home loan. If you have taken a home loan, you can easily talk to the bank and top-up it on that loan. The interest rates of top up loans are slightly higher than home loans but much lower than personal loans.

What is the Top-Up Home Loan?

This mainly allows one to avail a loan amount on a home loan. Banks offer this loan to customers already taking home loans, given their financial standing. However, top-up facility can be availed only after 6 to 12 months of taking home loan.

So it’s better than a personal loan

Top-up loans can be used for any purpose. If you renovate the house, you will also get the benefit of income tax. Top-up loans can also be used for children’s education, daughter’s wedding or for purchasing additional properties. This loan is taken in addition to the existing home loan, so along with the payment of the home loan, the monthly instalments of the top up loan have to be paid.

Determination of loan amount

Banks generally offer 65 to 70 percent of the property’s current value (including home loans) as top-up loans. For this, the banks get the property appraised. The maximum amount of a top-up loan depends on the individual lenders. The more the home loan is paid, the more top-up loan you get.

Key features and benefits of top-up loans

It is available at a low rate of interest: This loan is available at a low rate of interest, due to which it is economical and easy to pay. You can avail a higher amount with a small adjustment in your EMI.

It has a longer tenure: On a top-up loan, you can enjoy the same long-term convenience as a home loan. This reduces the value of EMI, making it easier to repay further.

It provides quick money: The eligibility criteria for this loan is normal and its disbursal is also easy to process. This ensures that you can apply to get the money whenever you need it.

It does not require a separate application: When you take a top-up loan, you do not need a separate request. This application process is simple and fast.

It provides tax benefits: Interest paid on top-up loans is tax free under Section 24 of the Income Tax Act. To take advantage of this, you have to prove that the top up loan will be used to buy, build, improve or renovate the residential property. If you use the loan amount for the education of your children, you can still avail this rebate.

Here are some ways in which you can use top up loan:

Home renovation and expansion
Buying furniture for your home
Upgrading soft furnishing and home appliances
Structural changes and repairs
Fixing plumbing or wiring

How to quickly apply for a Home Loan Top-Up?

Complete loan eligibility: When you take this loan, you also get an offer for home loan balance transfer. Generally, lenders review your previous payment history and total home loan amount before accepting your previous payment history. The amount of top-up loan also depends case by case. If the value of your property is high, then Banks/NBFCs gives top-up loan which is more than the amount of your home loan.

Fill the application form: To apply for this loan, you can choose between online and offline medium. It is easy to apply online and you have to submit a basic form which you can fill in minutes. However, it is important to enter your details correctly for easy processing.

You may have to submit a copy of the original KYC document and your property paper. Before applying, you should get the information about the documents required for the home loan, which you will have to submit as soon as possible so that the approval for the loan can be obtained quickly. After this, Banks/NBFCs will review your application and will disburse the amount directly in your account. With this information, you can easily apply for a top-up loan and make full use of it.

Personal Loan by Banks

by admin | Nov 19, 2022 | loan

Personal Loan by Banks

The festival season is here! And to get into the festive mood, you will be wanting to do a lot of things. It’s possible that you require rapid cash without any difficulties or nonsense. Or perhaps you wish to take your family on a vacation during a festival like Deepavali or Dussehra. Perhaps you’re getting married and need money to plan your honeymoon? Or perhaps there will be a wedding in your family, necessitating financial support for the same?

If you find yourself in any of these difficult predicaments and lack the necessary funds, getting a personal loan from a bank is your best option for covering these fixed expenses of a one-time nature.

Subas Tiwari

What is a Personal Loan?

Personal loans are loans granted for a limited period with a fixed amount and charged interest which are both repayable in monthly instalments. They are called ‘clean’ or ‘unsecured’ loans, i.e., loans without obtaining any tangible security (property, deposits, bonds, etc.). Only the personal sureties are required to be furnished to confirm that you are a dependable person in the society & will not default repayment of the loan given. Personal loans are generally used to meet temporary cash requirements such as wedding, children’s education, home improvement/repairs, luxury holiday, buying a car or to buy an electronic appliance, etc.

Eligibility for Personal Loan:

For Salaried Class

Should have a running bank account where salary is being credited regularly. The bank account need not be with the bank where one is applying for a personal loan, but banks prefer to consider such loans to be given to their own clientele on priority.
One should have a job of permanent nature. Banks would not give a loan to a person whose job is temporary.
The length of service or employment also plays a part in expediting the loan sanction.
Place of residence should either be owned or rented with a lease agreement.
Residence proof (voter ID card, Aadhaar Card, etc.) & identity proof (employment ID card, PAN card, etc.) copies should be produced duly self-attested along with bank application form along with 2 photographs.
Though the reason/purpose of the personal loan is not mandatory, the bank would like you to state some reason (any one of the above or other purposes, which can be vague like-for meeting unplanned personal domestic expenses.)
If you already enjoy any other loan like car loan or home loan, those deductions will also be taken into account to calculate total deductions out of the salary & arrive at an eligible loan amount.
Your CIBIL score will also play a significant part in bank’s decision in granting a personal loan.
There is no fixed criterion for arriving at an eligible loan amount, as individual banks have different methods of calculation but the generally accepted practice is to fix a ceiling of about 50% of deductions from the salary including the repayment of the loan to be granted. If you are within this ceiling, then the eligible amount could be about 10/12 times the gross monthly salary or 6 times the total taxable income as declared in Form 16 or the Income Tax Return. This can vary amongst nationalized banks & can be different among private banks (private banks commute on the take-home pay).

For Self Employed

They are those who do either business or freelance assignments and some work from home too. They may do part-time or full-time assignments & so may be having more than one employer.

The following additional conditions may apply when they seek a personal loan from a bank.

Since he does not get salary, the business income as reflected in the Income Tax Return would be the basis of ascertaining his total income.
He may be required to submit details of his enterprise.
The performance of the business can also be a factor to influence his loan sanction. In case of new enterprise, banks can insist on collateral securities like bank deposits, bonds, etc. in addition to providing one or more personal surety of adequate net worth.

For Professionals

They are those who either have their own business/service like doctor, lawyer, etc. or those who are technically qualified but are working in an organization.

The following could be additional conditions to be fulfilled.

The attested copy of their qualification would be required to be submitted along with the application form.
Since some of the banks have specialized personal loan scheme for such professionals offering lower rate of interest on such loan, the lending may ask some details of the profession as also copies of receipts/payments and/or income/expenditure account.

Advantages/ Benefits of a Personal Loan to a consumer-borrower

The first & foremost benefit is the quickness with which the loan application is either sanctioned or disposed of (rejected). The icing on the cake is in the timing.
Secondly, in most of the sanctioned personal loans, the banks do not insist on any collateral security or in some cases, even personal guarantee/surety. So it is advantageous for the loan-seeker, as he need not be under any obligation to his office colleague/friend into requesting for providing a personal surety.
Most of the banks do not ask for margin component (borrower’s stake in the risk). Hence, there is absolutely no need for the consumer to run around to arrange to provide for depositing margin money.
The purpose of the loan is immaterial in most cases. Hence, the consumer need not take pains to explain the genuineness of the purpose & submit proof for such purpose.
Simple documentation is assured with no elaborate procedures.
Making monthly repayments is now made consumer-friendly with banks agreeing to take post-dated cheques (PDCs) for the amount of each instalment and presenting the same on due dates of loan. The consumer need not visit the bank at all for such work. Where the loan instalment payable is to be taken out of the savings account of the customer, the banks obtain written instructions & act on them.

Disadvantages/Limitations to the consumer-borrower

The first & foremost is that the rate of interest is the highest for this type of loan. It’s a costly cost to the consumer, as this is an ‘unsecured’ loan. In comparison, secured loans are comparatively cheaper.
Secondly, the period of the loan is normally limited to 60 months. Banks do not favour or take exposure for a longer tenure. This limits the consumers’ requirements, where, by getting a longer period of repayment, he could bring his work to completion.
According to bank sources, this type of loan is having higher risk and can end up as a Non-Performing Asset, if repayment stops midway either due to change of job/temporarily-unemployed status/death of the borrower/change of address without trace, etc. Hence, many banks do not consider giving a loan for non-customers, i.e., those who have no previous bank dealings with the lender. So, this severely restricts the options available to the consumer-borrower to seek a loan from any bank in the vicinity of his residence or place of work.
Most of the banks are not willing to grant personal loans of more than Rs.15.00 lacs even though their website/brochure talks of maximum amount being much more than what they say they will give. So, the consumer-borrower will not get the benefit of more loan even if he is otherwise eligible!
Even though a couple of banks claim that they don’t need personal surety/guarantor for such loans, many of the banks insist on providing the same for the loan transaction to add trustworthiness to the loan contract.

So, what are you waiting for? Just read this article carefully; fully understand the pros & cons of personal loan & head on to the nearest bank to apply for a Personal Loan!

Banks Personal Loan Interest Rates

Banks	ROI (Yearly)
Axis Bank	12% – 21%
Bank of Baroda	10.50% – 12.50%
Bank of India	10.35% – 12.35%
Central Bank of India	9.85%-10.05%
Citibank	9.99% – 16.49%
City Union Bank	12.75%
Federal Bank	10.49% – 17.99%
HDFC Bank	10.5% – 21.00%
HSBC Bank	9.50% – 15.25%
IDBI Bank	8.9%-14%
IDFC First Bank	10.49% onwards
Indian Bank	9.4%-9.9%
Indian Overseas Bank	9.30% – 10.80%
IndusInd Bank	10.49% – 31.50%
J&K Bank	10.80%
Karur Vysya Bank	9.40% – 19.00%
Kotak Mahindra Bank	10.25% and above
Punjab and Sind Bank	10.4%-12.4%
Punjab National Bank	7.90% onwards
RBL Bank	14% – 23%
SBI	9.8%-12.8%
South Indian Bank	10.60% – 18.10%
Union Bank of India	10.2%-11.45%
Yes Bank	10.99% – 16.99%

Reasons For Rejection of Your Loan

The following could be one of the reasons for the bank to reject your loan application without sanction. So, it is better to know the pitfalls & avoid them rather than feeling remorse & frustrated.

Poor Credit Score

It is possible that this could be the reason for loan rejection. Nowadays Banks/FIs have voluntarily joined the Credit Information Agency called CREDIT INFORMATION BUREAU OF INDIA LIMITED (CIBIL) by sharing one’s credit details which includes all your present/previous loan transactions (even though they are closed & no longer is outstanding with that Bank) & credit card operations. Banks/FIs forward their own internal credit report on one’s credit performance and CIBIL awards marks based on that assessment (anything between 300 to 900 marks). CIBIL then uploads it in their website. The information is required to be updated (additions/deletions) at regular intervals by the Banks/FIs, who are admitted as Members of CIBIL. Banks invariably call for CIBIL report as soon as you apply for a loan. If your past transactions with a particular bank/FI either in loan repayment or credit card repayment were not up to the mark (termed poor CIBIL score-marks less than 700), then there is every chance of your present request for personal loan getting rejected by any other bank, where you intended to get the loan sanctioned. Hence it is advised for one to act prudently always to keep a clean repayment record for becoming eligible for any future credit requirements. Anyone can also seek their CIBIL score online by visiting CIBIL site (www.cibil.com), fill in the form, pay Rs.470/- online for one report & obtain your CIBIL score in your email. It is to the credit of this institution that 80% of approved loans (and sanctioned by banks) are of individuals with a CIBIL score of more than 750.

Past Default

Banks draw up a list of their own defaulters & upload in their computer systems for any branch to look into & verify the past record of any loan-seeker. This is in addition to CIBIL report which contains credit information of the loan-seeker with other banks. Let us say that there were delay(s) in repaying a fridge loan or a car loan (due to many genuine reasons). Or like, for example, you may have shifted to a new leased accommodation. That house address may be in banks’ defaulters’ list, as the previous occupants would have been bank defaulters! There are certain enterprises run by loan-seekers which do not guarantee any regular income and which could become a no-no for banks to lend.

Loan Guarantor

You might have stood as a personal surety by guaranteeing the repayment to the bank in case of default by your friend, who was the borrower for a bank loan. You might have forgotten it but the CIBIL report will also show you as a defaulter for the loan, even though you were only a guarantor! You could be in for a shock, but that’s how the system works! The moral of the lesson is -think twice before offering to stand as personal surety to anyone.

Many Loans

While calculating your eligibility for a loan, banks will normally add up all the existing outstanding loans from banks, private borrowings, etc. before arriving at the eligible amount. The loan-to-income ratio is calculated (banks generally say that the total deductions –including the repayment of the present loan-should not exceed 50% to 70% of your take-home/gross salary) by the bank before extending a loan. So, too many loans/liabilities could throw off a bank from granting a loan because of this reason.

Job Stability

If you shift jobs very frequently or shift your location a number of times, it becomes public knowledge & could go against you, as the bank could be asking searching questions on this score. Good employment track record plays a favourable role in a bank’s decision to give you a loan. Since this loan is not secured by any collateral security & is given based on good track record of employment (loyalty factor) & credit profile (good or acceptable CIBIL score), stability in one’s life is of prime importance in the eyes of the Bank.

Tax Record

Banks could make a thorough assessment of your tax profile by asking for the Income Tax Return (ITR) copies of previous assessment years or can ask details of tax deducted at source /professional tax paid against your salary in the past. Failure to give them or submit satisfactory answers could come in the way in your bank’s decision. So the advice is-obtain Income Certificate/TDS Certificate/Form 16-16 (A) from your employer & keep it on record (for the rainy day!). Produce the same when necessary.

Past Loan Rejections

RBI Defaulters’/Wilful Defaulters’ Lists

If your name is here, then worry! The Reserve Bank of India, who is the Regulator for Banks in India, also maintains the above lists, which is updated & uploaded in their website. These pertain to RBI Defaulters with Banks of more than Rs.10.00 lacs from the entire banking system. RBI Wilful Defaulters’ List is culled from the banks on the basis of wilful default (deliberate attempt to hoodwink the lenders in spite of adequate Net Worth). Take the recent case of United bank of India, which has treated Kingfisher Airlines as a ‘Wilful Defaulter’.

« Older Entries

Example 1		Example 2
(Salaried)		(Salaried)
LOAN AMOUNT	Rs.50, 00,000	LOAN AMOUNT **	Rs.42, 50,000
REPAYMENT PERIOD	30 YEARS	REPAYMENT PERIOD	20 YEARS
	(360 MONTHS)		(240 MONTHS)
EMI	Rs.38, 446.00	EMI	Rs.40, 033.00
(Criteria-Stability in job, regular promotion,fixed income, etc.)		(Criteria-frequent job changes, transferability/job relocation, etc.)

Personal Loan by Banks

Personal Loan by Banks

What is a Personal Loan?

Eligibility for Personal Loan:

For Salaried Class

For Self Employed

For Professionals

Advantages/ Benefits of a Personal Loan to a consumer-borrower

Disadvantages/Limitations to the consumer-borrower

Banks Personal Loan Interest Rates & Processing Fee

Here are 20 tips to consider when applying for a Personal Loan from Banks

Reasons For Rejection of Your Loan

Poor Credit Score

Past Default

Loan Guarantor

Many Loans

Job Stability

Tax Record

Past Loan Rejections

RBI Defaulters’/Wilful Defaulters’ Lists

Decoding Car Loans Offered by Banks in India: A Comprehensive Overview

Decoding Car Loans Offered by Banks in India: A Comprehensive Overview

The Significance of Car Loans

Eligibility Criteria

Application Process

Who can take a Car Loan?

Documents Required for Car Loan

Hypothecation

Interest Rates

Car Loan Interest Rate Comparison of Top Banks

Loan Tenure and Equated Monthly Instalments (EMIs)

Down Payment

Car Loan Amount

What are the expenses in a car loan?

Impact on Borrowers

The Automotive Industry and Car Loans

Challenges and Benefits

Future Outlook

Points you should remember before buying a Car

Reverse Mortgage Loan

Reverse Mortgage Loan

SPARE A THOUGHT ON THESE FAQs

What is reverse mortgage loan?

What is my eligibility?

What about repayment?

What about amount eligibility?

Repayment of annuity/loan on death

National Housing Bank Scheme

Reverse Mortgage Loan Scheme in India

What is Reverse Mortgage?

What is a Reverse Mortgage Transaction?

What is the cap (upper amount) on the Reverse Mortgage Loan?

What is the maximum loan period?

Why it could be attractive to Senior Citizens?

Salient features

How the Reverse Mortgage Loan Works

Tax Benefits

Limitations/Disadvantages

Some of the Terminologies Explained

Reverse Mortgage Loan Interest Rates of Top Banks

Home Loan by NBFCs

Home Loan by NBFCs

What NBFCs offer?

How do they do it quicker?

Salient features of a NBFC Home Loan for individuals (salaried)

Are interest rates reasonable?

Interest Rate-How are they fixed by NBFCs?

Interest Rates of Top Housing Finance Companies in India

Eligibility for a Home Loan

What about Processing fees & Other Charges?

Margin component (your financial contribution in the loan)

Insurance

Tax benefits

Disadvantages of obtaining a Home Loan from NBFC

Grievance Redressal

The important handles of this story

Home Loan Balance Transfer & Top-Up

Home Loan Balance Transfer & Top-Up

How to transfer your home loan?

When should you opt for home loan balance transfer?