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A credit score or CIBIL history check has become a vital part of the lending process. Lenders will request your credit report from CIBIL before proceeding with your Personal loan application. If your score does not meet the necessary benchmark, your request can be declined.
A numeric score is issued by CIBIL, ranging from 300 to 900 points, based on an individual’s credit usage. A credit score of 720 points and above is considered a healthy score by banks for issuing credit. Depending on the repayment history and credit usage, you are issued a score by major bureaus recording credit transactions, which can be interpreted as follows;
600 to 650 points: if your credit score hovers between the 600 and 650 mark, this means:
A score of 600 to 650 points is considered below average by lenders, and obtaining further credit may be difficult.
650-700 points. Any score above 650 points is a fair score, though the lender will look into the details of the credit history for the reason for the dip in score, which could be any of the following:
700-750 points: Although a 720 CIBIL score is the required benchmark by Banks, any score above 700 points will make you eligible for a personal loan.
750 points and above: A CIBIL score of 750 points and above is the mark of successful credit management.
If you need additional funds as a personal loan and are currently facing rejections due to a low credit score, you can avail of the following options:
Apply to a Bank with an account or a credit relationship: If you have an account with a Bank and maintain a good balance, or have previously repaid credit successfully, apply for a personal loan online; the chances are that the credit team might approve a personal loan.
Apply for a smaller amount or choose an NBFC that charges higher interest rates: If you know your credit score is lower than needed, there is no point in applying to other lenders, as this can further damage your credit score. Seek an NBFC that provides unsecured loans with lower credit score requirements, even if the interest rate is higher, as this will help you overcome your cash flow issues.
Apply with a co-applicant: A guarantor or a co-applicant with a good credit rating and income can strengthen your Personal loan application. As a personal loan is unsecured funding, having a co-applicant with a healthy financial track record can reassure the lender that the repayment will be made on time.
Apply for a Personal loan against securities or fixed deposits: If you hold funds in fixed deposits with a Bank, it will strengthen your personal loan request. Banks offer up to 80% as a loan against the amount held as a deposit or security. Banks are reassured that they have funds in safekeeping to recover the loan if required. Therefore, the clause of a downgraded CIBIL score will be overlooked.
Check your credit score regularly: Do not let it come as a surprise; a free credit score check is readily available at www.CIBIL.com. It is helpful to check your credit score before applying for further credit to understand your current standing. In case there is an error, you can take steps to rectify it.
Circumstances may have led to a fall in your credit score, but all is not lost. Take the following steps to get your credit score back on track.
Repay pending dues: Clear outstanding accounts by paying outstanding amounts and closing them.
Transfer credit card dues: Apply for a balance transfer of credit card dues via an AXIS Bank personal loan to avoid paying an inflated interest rate. The loan amount can be repaid easily with a reasonable EMI.
Timely EMI payments: Ensure there are sufficient funds in your account to clear the EMI for existing loans.
Rebuild your CIBIL score: Take steps to rebuild your credit score by applying for a secured loan and making timely repayments.
Usage of unsecured credit: Work on increasing your score by using your credit card judiciously and paying off the balance on the due date. Regular usage of a credit card with timely payments can help to increase your score quickly.
Keep your debt-to-income ratio intact: Avoid excessive credit use, live within your means, and create a budget to ensure you have the funds on hand to repay the credit you use.
Getting over a bad credit phase and improving your credit score are not easy. To give individuals an opportunity to improve their current credit rating, the RBI (Reserve Bank of India) has instructed credit rating agencies to remove details of accounts that are more than 7 years old.
The availability of credit in the form of unsecured finance and mortgages from banks and NBFCs is changing the lifestyles of salaried individuals.
Individuals earning a high income no longer have to wait to own their own home or furnish it with the latest accessories; a home loan or a personal loan can easily provide the funding needed to repay it conveniently via monthly instalments. Credit cards enable instant payments for retail goods and fine dining.
Lenders have, over the years, identified segments and behaviour patterns of individuals who use credit responsibly and repay dues on time. Primary factors include employment with organisations on the Bank’s approved company list and the individual’s previous credit usage. These factors will further influence eligibility for additional credit.
You may have recently experienced a credit default. Will your company category help override this, or will a healthy credit history enable you to receive the funds you need? A detailed comparison of both these factors will help create a better understanding:
To classify companies for lending purposes, banks have published their own approved lists of companies for loan and credit card sourcing. Companies on the list are stable, profitable, with high turnover and substantial assets. Banks issue their own company category list, such as:
A credit score is a three-digit number that indicates an individual’s creditworthiness. Credit bureaus operating in India include:
The Credit Bureau of India Ltd (CIBIL) score is used by most Banks to assess an individual’s credit usage. The score ranges from 300 points at the start to a maximum of 900 points. A score of 720 or above indicates a good repayment record and eligibility for credit.
Employment with an approved company signifies that the applicant has job stability and a regular income.
Your credit history is the record of the loans and credit cards allotted to you and the repayment details. Credit bureaus like CIBIL will assimilate and reflect the following in your credit history:
Based on your credit history, CIBIL will allot you a credit score. Most banks require a credit score of 720 or higher to qualify for a personal loan. Your credit score and history will determine your eligibility for an unsecured personal loan, a credit card, or a mortgage.
If there are any delinquencies or delays in your CIBIL history, or your CIBIL score is
Leading Banks such as HDFC Bank, ICICI Bank, and AXIS Bank will process a personal loan request if your company is included on the Bank’s approved company category list.
Before applying, it is advisable to check whether your company is on the approved list of banks to avoid delays. Applicants can check the company category online on the Bank website before submitting documents, or forward your query to us at www.yourloanadvisors.com.
Apply for a personal loan after using the Personal loan eligibility calculator to check the amount you are eligible to get.
The HDFC Bank company category list, the ICICI Bank company category list and the Axis Bank Approved List of Companies are exhaustive lists of companies approved to source unsecured loans and credit cards.
You should check if your company is approved before applying for a personal loan. If your company appears on the approved list, the Bank has confidence that you have stable employment and can pay your dues on time. Loan applicants benefit as follows:
Your CIBIL score reflects your credit management and plays a crucial role in the processing of a loan request. CIBIL assigns scores from 300 to 900 based on your credit usage. When you apply for credit, the lender will first review your credit score and history.
Cashless spending has become the norm; payments are made digitally or via credit or debit cards. Building a CIBIL score is now mandatory. With a bank-issued credit or debit card, purchases can be made on EMI, helping to develop a CIBIL score.
It takes 12 months of regular credit usage for CIBIL to issue a credit score. If you are new to credit or do not have the required length of credit history, you are eligible for a personal loan from;
If you are employed with a company that does not feature in the personal loan company category list of any Bank, you have the following options:
In conclusion, your company profile and CIBIL score are the two primary variables lenders consider when issuing a personal loan. Although all salaried employees look forward to working with a listed company, changing employers may not be easy if a non-listed company employs you.
Whereas regular credit usage and timely repayments are achievable. Make sure to build a strong credit profile so you meet the personal loan eligibility criteria for an instant personal loan.
Going back a decade, when Private Banks opened up to providing unsecured credit, the concept of credit cards and personal loans was new. Customers used credit freely, with little knowledge or discipline regarding repayment terms, taking for granted that the payments could be cleared at their convenience. They could shift from one lender to another as the data was not shared.
With the introduction of CIBIL (Credit Bureau of India Ltd), banks now report all credit and repayment transactions of borrowers to CIBIL. CIBIL maintains individuals’ and companies’ credit histories and repayment records and issues a CIBIL score. This information is shared with lenders, who assess a borrower’s current and past credit history before sanctioning credit.
The past defaults and delays may have been due to the simple shortage of funds or any other reason, which includes:
A return of the EMI due to a change of account: If your salary account changes, the Bank should be informed in advance of the shift to the ECS mandate. If the Bank is not notified in time and there are insufficient funds, the EMI will remain unpaid and will be reflected in your credit history.
Loss of Employment: If you have lost your job, the EMI will still be presented to your account on the due date. It is advisable to arrange funds from other sources and maintain a sufficient balance in your account to clear the EMI. If you have outstanding credit card debt, pay the minimum balance by the due date to avoid default.
Delay in salary credited: The EMI will be credited to the salary account on the due date. It is advisable to keep one month’s instalment as an advance in case the employer does not credit your salary on the assigned date, the EMI will be marked as unpaid.
Unable to manage finances properly: If the expenses have increased due to unplanned expenditures, and you have made extensive usage of your credit card, individuals who are unable to manage their finances in such situations are liable for default.
Clerical and recording errors: Unaware that there is an error in your CIBIL report? This may only come to light when you apply for a loan, the default error could be due to a wrong match or faulty reporting by the lender. Whatever the reason may be, this could affect your CIBIL score unless it is resolved.
Credit score drops: CIBIL updates your credit transactions and revises your score every 30 to 45 days. Lenders notify CIBIL when EMIs are credited, and credit bills are cleared. Delays, defaults, and unpaid dues are also reported. The score is revised, upgraded, or reduced based on these factors. If your CIBIL score drops below the acceptable mark, lenders may not grant you credit, or funds may be given at a higher interest rate.
The credit history cannot be changed: regardless of the reason for the EMI return or delayed payment on your credit card, it will be reported to CIBIL. The return of EMI on your home loan or personal loan will always be reflected in your track record and cannot be mitigated. It will remain in your history.
Excessive bounces will result in a denial of further credit. When you apply for a Personal loan or a home loan, your credit history will reflect the repayment history of your existing and used loans. If your EMI has been returned unpaid and/or delayed, an infrequent bounce can be overlooked, but a continuous string of defaults or delays is cause for concern.
Credit cards overdue: Your credit card balance must be repaid on the due date; any outstanding balance will incur interest of 36% to 42% annually. The balance owing on your credit cards will reflect in your CIBIL history. If it is above the permitted limit, you will be denied further credit due to overleveraging.
Collection and legal action: Continuous non-payment of your EMI or credit card bills will invite reminders by the lender. If they remain unpaid, collection agents will contact you to resolve your overdue unsecured credit, such as credit cards and personal loans. At the same time, legal action can be initiated for mortgages that include home loans and auto loans.
Other effects: The CIBIL score is now recognised as an essential benchmark not just for issuing financial products, but also as a personal assessment of an upright and responsible individual. If you have a good CIBIL score, it will not only make it easier to get credit when required but also open many doors at the professional level.
Reset of your Credit records: You cannot change your past credit history as recorded by CIBIL, but you can always work at making a fresh start. If you have defaulted, settled, or have a record of delayed payments, the CIBIL now removes the details of the negative records from your history after 7 years. This does not mean that your debt has been cleared, but it gives you a chance to rebuild your score.
Try to clear the previous debt: If your financial situation improves, it is the best solution to repay the amount due and clear your debts. Repaying the amount owing with interest will close the account and have a positive effect on your CIBIL score, while not paying the interest due will mark the status as settled. A settled account will deny you further credit from the lender and hamper your CIBIL score.
Restart your history with commodities: Landed with a poor CIBIL score, do not wait until your need for a loan gives you stress. Start rebuilding your score by purchasing commodities with your Credit or Debit card, convert the spend into EMI, and make sure you repay the instalments on time.
Apply for a secured credit: a Gold Loan or a Loan Against Property, which requires a lower CIBIL score due to the security provided, can help you get the finance you need and improve your CIBIL score. A personal loan against a fixed deposit amount with a Bank is also issued for emergency needs.
Look for a successful relationship: A lender with which you have a salary account, with a good average bank balance, or have an existing or closed credit card or loan with an on-time repayment track, can issue you further funds based on the same. Your CIBIL score may be overlooked as you have maintained a good repayment record with the lender.
In conclusion, it is not just your CIBIL score that the Bank considers when issuing you credit; your credit history is also taken into account. If you miss a payment, try to clear the amount as soon as possible, as the repayment period is also mentioned in the credit records. Managing your finances well and making arrangements in advance to cover shortfalls and pay your credit dues on time is the roadmap to maintaining a sound credit history.
A Personal loan is characterised as quick funding for personal and emergency needs. Individuals apply for a personal loan, assuming the loan amount they apply for will be available as required. This is not always the case, as Banks have their norms and guidelines to follow and will process the request accordingly.
Choose your lender wisely and apply for a personal loan to the most suitable lender who will fulfil your requirements. Although primary Banks issuing personal loans, such as HDFC Bank, ICICI Bank, YES Bank and AXIS Bank, have their own policies, the basic criteria remain similar. Taking note of the following will help you expedite the processing of your personal loan and avoid undue delays or a decline.
Banks value the relationship and will process a personal loan as a priority. Applicants with an existing personal loan can apply for additional amounts, known as a Top Up. A pre-approved personal loan is also offered to eligible applicants. An association can be in the form of:
HDFC Bank processes personal loan applications from employees of companies included in the Approved Company Category List. Applicants employed by a non-listed company can apply for a personal loan with YES Bank or an NBFC such as Fullerton India and INCRED finance. Check the following employer details before applying:
Documents form the basis for processing a personal loan issued without collateral. Applicants can submit documents online from their official email ID or provide self-attested hard copies.
The CIBIL score is a rating issued by CIBIL (Credit Bureau of India Ltd.) based on an individual’s credit history and usage. Lenders view the CIBIL score and history before issuing further credit.
Further credit is issued in proportion to your regular income, expenditures, and the monthly EMI being paid. The loan amount is calculated based on the applicant’s income and company category.
Companies listed under the approved category of top Banks are well-performing organizations with increasing turnover. Over the years, leading banks that issue personal loans, such as HDFC Bank and ICICI Bank, have recognised that borrowers employed by stable, profitable companies are less likely to default on their credit payments.
Therefore, to facilitate sourcing banks that process personal loans, they have published an approved list of companies, categorised by their value and performance. Banks vet these companies before they are included in the approved company list for processing personal loans.
The HDFC Bank company category list is extensive, including over 53,000 companies classified as Cat A, Cat B, Cat C, and Cat D. Your company must be on the approved list to qualify for a personal loan from HDFC Bank.
Stability of the job and the Income: Employees of the listed companies approved by the Bank are assured of timely remuneration and secure employment. The salary is credited regularly on the assigned date, reassuring the lender that the EMI due will be repaid smoothly. The listed companies are growing and profitable ventures that offer employees a secure future.
Highly educated and well-qualified staff; top companies attract the best talent from leading educational institutions. Professionals graduating from renowned universities and colleges seek employment at reputable organizations. Banks prefer to extend credit to professionals such as graduates from the Indian Institute of Technology or the Indian Institute of Management, as they earn high incomes and have a promising future.
High income and expenditure: Premier companies listed as Cat A and CAT B, or the Super prime or prime companies of ICICI Bank, offer higher yearly packages to their employees, enabling them to enjoy a better lifestyle. Banks readily extend personal loans to these employees, who have the funds to repay them conveniently, thereby meeting their aspirational needs, such as home renovations and holiday expenses.
Smooth processing and documentation: Employees of top-tier companies can easily provide the KYC and income documentation required to process a personal loan. Salary slips are issued online, and salaries are transferred to the salary account monthly. The applicant can verify employment via an email from the official email ID. These checks help to expedite the process and prove the authenticity of the applicants.
Lower default and risk: Funds as a personal loan are issued by Banks without collateral; therefore, timely repayment of the EMI is of primary concern. Employees of the listed companies have a better on-time payment record for credit dues than employees of open-market companies. The steady credit profile makes them the preferred sourcing segment for personal loans. They are offered speedy processing and favourable terms for their personal loan request.
A lower interest rate: Applicants employed in Categories A and B of the HDFC Bank company category, and as a Super prime company in the company category list of ICICI Bank, are offered the lowest interest rate, starting at 9.99%, on a reducing balance.
Extended tenure: The repayment tenure for a personal loan is from 12 to 60 months. An extended tenure of up to 84 months is offered to employees of listed companies, subject to the approved loan amount.
Increased loan amounts: Employees of the top-tier companies of HDFC Bank and ICICI Bank are issued higher loan amounts. With the increased tenure and a higher eligibility calculation, clients can receive the required loan amounts.
Documentation: The income documentation requirements are more convenient for applicants of the listed companies. A one-month salary slip can suffice if the applicant has recently joined employment with the company.
Preferred processing: With the advent of digitalisation and online processing, applicants from listed companies can apply for a personal loan online. The KYC video verification allows the Bank to disburse funds quickly.
A personal loan has become a popular way for seafarers in India to finance individual and emergency expenses, such as travel, wedding costs, home improvements, and extra funds during emergencies. Merchant navy officers earn a high income and can maintain a good repayment track record.
However, the unusual terms of their employment can create some roadblocks to the smooth processing of a personal loan request. Being aware of these issues may make the personal loan journey easier and help avoid delays.
Seafarers and officers of the merchant navy work on contracts lasting 6 to 8 months. After completing their contracts, which involve sailing for extended periods and infrequent shore visits, they are entitled to a well-deserved break of 3 to 4 months. This break may be misunderstood by lenders, who might assume the applicant will be unemployed during this time and may doubt their ability to meet financial commitments.
The salaries of merchant navy applicants working with a foreign company are credited to the NRI account, allowing funds to be deposited in a foreign currency. The applicant receives remuneration for the duration of the contract. Banks will average the total funds received over a year to determine the monthly income.
Merchant Navy employees receive their salary from the employer in accordance with the terms of the contract. The company can credit the salary monthly or quarterly. Some organisations allow applicants to draw funds as required against the salary credits and settle accounts after the contract ends, and they leave the ship. Systematic salary transfers and receipts may vary according to the terms of the contract.
Unconventional salary credits can leave the bank uncertain, as regular salary transfers to the account are required under personal loan rules.
As part of the personal loan process, banks verify employment and document validity by contacting the company’s HR or administrative officers. If a foreign company employs the applicant without a local office in India, communication may be challenging.
Policy requirements for HDFC Bank include that the applicant has a self-owned residence, as a merchant navy member is away on the high seas for most of the year, and self-owned residence ownership is mandatory.
Documentary proof of self-owned residence is mandatory. The acceptable documents for residence proof are as follows:
To apply for a personal loan from ICICI Bank for employees of the merchant navy, applicants must submit the required documentation. The documentation required is more extensive due to the unusual job profile of a merchant navy applicant.
The extra documents besides the KYC and income documents are:
Personal loans are unsecured; not all Banks and NBFCs will process personal loans for seafarers. HDFC Bank and ICICI Bank are the primary lenders that issue personal loans up to ₹ 40 lakhs to merchant navy officers who meet the salary criteria.
The best time for an applicant to apply for a personal loan is soon after the contract is completed. This is when all required documents are readily available to the applicant, allowing them to complete the formalities before rejoining a ship for the next contract and returning to employment.
A “Top Up” or an extra amount added to an existing loan has become a convenient option for customers needing additional funds: A Top Up can be applied to an existing Personal Loan, Home Loan, or a Loan against property.
A Top Up loan is advantageous to both the lender and the applicant, as the lender can verify the repayment track and is confident of timely repayment. The borrower is satisfied with the services of the finance provider and would like to avail of the services repeatedly.
Customers requiring funds in an emergency can apply for a personal loan Top Up online from the parent Bank, such as the HDFC Bank Top Up personal loan, the ICICI Bank Top Up personal loan, and the AXIS Bank Top Up personal loan.
They can request the funds needed, but the facilities of a Top-up loan cannot be taken for granted, and the existing loan does not ensure eligibility for a Top-up. The applicant’s eligibility for a top-up personal loan will be reassessed during processing.
The net salary: The minimum salary needed to apply for a personal loan top-up is 35k. The applicant’s current salary must remain the same or increase since the existing loan was issued. If income decreases, financials will be re-evaluated to determine if the applicant can afford the additional instalment with the lower income and other expenses. However, if the salary has increased, the extra amount will likely be approved with ease.
Employment status: The applicant’s company must be listed among the HDFC Bank-approved companies. If the applicant has changed jobs when applying for a Top-Up, the current employer should be included in the Bank’s approved companies. If the current employer is in category A or B, the eligibility calculation will increase; if the company is in category C, it will decrease. If the company is not approved or has been delisted, your Top-up request may be denied.
Repayment track of the existing loan: A primary requirement to avail of a Top Up facility is to pay instalments on the existing loan on time. A customer making timely payments on the existing personal loan with HDFC Bank will have a better chance of approval for an additional amount; however, if there is a consistent delay or default in repayment, a top-up request is denied.
CIBIL Score: As per the norms for a new loan, when you apply for a top-up loan, a request will be made to CIBIL for an updated record.
The applicant’s CIBIL score should be above the required benchmark. The repayment record of credit taken in the form of loans or credit cards from other lenders is reviewed to confirm that the applicant is paying all dues on time.
Suppose there are delays or defaults in repaying credit owed to other banks, if credit card dues are unpaid, or if the applicant has recently borrowed from different lenders; it will influence the bank’s decision to approve a top-up loan.
Vintage of Loans: Most leading Banks, such as ICICI Bank and HDFC Bank, will issue funds as a Top-up to a personal loan three to six months after the primary loan. This interval is used to assess the applicant’s repayment discipline and ensure that the EMI are paid on time.
In exceptional circumstances, a Top Up Loan is awarded soon after the parent loan if the applicant’s income exceeds the debt ratio by an excess margin or the value of the property and the applicant’s income is more than the loan amount granted initially.
Suppose an alternate lender has recently granted the applicant an additional personal loan or has applied to other Banks for a personal loan. In that case, the lender will check the applicant’s eligibility criteria and the CIBIL record for the enquiry count before issuing a top-up loan. ICICI Bank will not process a request for a top-up loan if more than four enquiries are reflected in the CIBIL record.
Financial eligibility: When calculating the loan amount that can be issued as a top-up, the Bank will consider the following:
In conclusion, the process for a Top Up is similar to that for a new account; complete documentation must be submitted to process the application, and all designated steps will be followed. A Top Up loan’s eligibility depends on the applicant’s current circumstances and creditworthiness. Check your eligibility criteria with us to ensure a seamless process for your Top-Up loan.
A personal loan and a loan against property are popular financial options provided by banks and NBFCs. Applicants seeking financial help can choose either option based on the purpose of the funds and eligibility requirements.
To help our customers choose the best loan for their circumstances, we aim to provide essential details and comparisons. Significant features include the following:
A personal loan is unsecured and does not require collateral. Applicants receive loan amounts based on their profile points, which include net salary, CIBIL score, and the employer’s category as per the approved company category list of HDFC Bank.
A Loan Against Property, as the name suggests, is a loan secured by a mortgage over the customer’s property. Loan amounts are determined by the property’s value and the required ownership documents.
The loan amounts issued as personal loans range from ₹ 1 Lakh to ₹ 40 Lakh, depending on the Bank’s policy. An applicant is issued a personal loan based on the lender’s eligibility criteria.
Banks such as HDFC and ICICI Bank issue Loan Against Property (LAP) loans for amounts based on the property’s value. The applicant’s income must also be sufficient to afford EMI repayments.
The repayment tenure allotted for a personal loan is from 12 to 72 months, depending on the EMI payable by the customer. Factors influencing the tenure allotted include the applicant’s income, current obligations, and the approved loan amount.
Loan Against Property can be repaid over a tenure of up to 15 years, depending on the loan amount and the applicant’s income. The longer tenure makes for an easier EMI but an increased cost.
The interest rate for a Personal Loan range from 9.99% at a monthly reducing balance to 15%. Banks and NBFCs pay interest in accordance with their individual policies and the cost of funds. Higher loan amounts are disbursed at a lower interest rate and vice versa.
Banks offer a Loan Against Property at lower interest rates because it is a secured loan, starting at 8.5% with a floating interest rate. The interest rates offered by Banks and NBFCs will vary based on property details and loan amount.
The interest rate for a personal loan is determined at the time of disbursement, and the EMI remains the same throughout the tenure. The terms of the personal loan remain fixed as per the agreement signed.
A LAP is issued at a floating interest rate that fluctuates in line with the RBI (Reserve Bank of India) Repo Rate. The terms of a LAP thus vary as per the policy of the lender, a Government Bank, Private Bank or NBFC.
For a Personal Loan, the CIBIL score and the applicant’s history are essential due to the unsecured nature of the funding. Lenders check the CIBIL score and history before processing. A score of 720 points and above is the acceptable benchmark.
A mortgage secures funds granted under a Loan against property, so applicants with a lower CIBIL score can obtain the funds they need. However, applicants with a CIBIL issue may be charged a higher interest rate.
A personal loan provides quick funding; most Banks offer an online process with funds transferred to the Bank account within 72 hours. An existing relationship, such as a Top Up or parallel personal loan, will accelerate the process.
The processing time for a Loan against Property increases due to the legal assessment, property verification, and documentation. Banks will take 10 to 15 days to process a loan against property.
A personal loan is processed under the primary applicant’s details; a co-applicant is not mandatory. A co-applicant, such as a blood relative or spouse, can be added to increase eligibility for the loan amount.
A Loan Against Property involves all the owners of the property being part of the loan; if the property is in the name of a single owner, a co-applicant is mandatory. The primary applicant is the financial applicant who will pay the EMI.
The similarities between a Personal loan and a Loan against property include the flexibility in how the funds can be used. Customers are free to utilise the amount received for personal and professional purposes.
Both a Personal loan and a Loan against Property can be repaid conveniently through EMI (equated monthly instalments) at a lower monthly interest rate. Given the individual differences and benefits, let us consider the inputs that are deciding factors for both products.
A personal loan offers quick funding: A personal loan from HDFC Bank or ICICI Bank is processed online, and the amount approved is transferred to the account electronically. The documents required are simple and can be downloaded digitally. Thus, if funds are needed in a hurry or for an emergency, a personal loan is the quickest solution to fulfil the requirement.
If you need a smaller loan amount, a personal loan is available without any collateral, based solely on the customer’s net income, CIBIL score, credit history, and the employer’s category in the bank’s approved company list. Banks and NBFCs offer personal loans starting from ₹1 lakh. Therefore, if the required loan amount is not too high, a personal loan that is easily accessible and can be repaid within a limited tenure will be suitable.
Convenient Documentation: Valid KYC documents, such as your Aadhaar card, and Income documents, including a salary slip and Bank statement, are required to apply for a personal loan of up to ₹ 40 lakhs. Suppose the property held by the customer is unregistered or the appropriate documents are unavailable. In that case, loan seekers prefer to apply for a personal loan that the available documents can readily support.
For Significant Loan Amounts: Banks and NBFCs offer LAPs at reasonable interest rates of 8.45% or higher for extended tenures of up to 15 years. Thus, if increased loan amounts are required, Banks will approve up to 60% of the property value as a LAP. With an extended tenure, the applicant is eligible to obtain a loan amount up to six figures, depending on the property’s value and the customer’s income.
For an affordable EMI, the tenure for a loan against property is determined by the applicant’s age and the approved loan amount. Applicants looking for an EMI that suits their budget can apply for a longer tenure, enabling the loan to be comfortably repaid without delay or default. In case of excess funds, customers can make a partial payment towards the principal and foreclose the loan without any charges.
For Debt Consolidation: If you cannot pay your credit card bills on time, the accumulating dues will accrue a higher interest rate of 36% to 40% per year. If you cannot settle your credit dues, have multiple loans, or are making numerous instalment payments, you are likely using revolving credit, which can lead to a debt trap.
Take a reality check on your debt levels and assess whether you can comfortably repay them without defaults. Notice these signs early and consider applying for a Loan Against your property, which offers funds at a reduced interest rate. This can help consolidate your outstanding debts into a single payment. With a Loan Against your property, you can pay off your debts with manageable EMIs and improve your CIBIL score.
With Diwali celebrations coming to an end, it is time to get back to work and responsibilities. The holiday period is one of relaxation and enjoyment, which encourages spending, and it is easy to go over your budget.
Post Diwali, it’s time to review your finances to ensure you have enough funds to cover mandatory expenses and repay credit obligations on time. This includes checking your bank account and credit standing. Listed below are the major checks that will help you consolidate your finances.
Check your account for the balance. Is it sufficient for your needs till you receive your salary credit? Are there any EMI payments due, and are there enough funds to clear them? If not, make arrangements in advance by transferring funds from savings accounts. An instant HDFC Bank personal loan will help meet immediate needs.
Credit cards are handy, especially during Diwali, when the temptation to spend is high. Using your credit card to cover shortfalls and impulsive expenses can lead to overspending. After Diwali, it is essential to review your credit dues. Check each credit card individually for any outstanding dues. Give priority to the credit card used most frequently and with the highest outstanding balance.
Keeping track of your EMI and bill deadlines will help you stay ahead. A late EMI payment for your ICICI Bank personal loan can incur late payment charges and may negatively impact your loan record and CIBIL score. If you cannot pay your credit card bill in full, paying the minimum due amount by the deadline will help maintain your credit score. Not paying the minimum due amount will lead to late payment charges, and the delay will be reflected in your credit score and history.
If you have secured and unsecured credit, such as a home loan, unsecured personal loans, and credit card debts, you need to work out a way to repay them on their due dates. In case of a shortage of funds, a personal loan top-up or a balance transfer can be availed if needed. Planning for your shortfall and applying for a top-up or balance transfer in advance will help ensure you have enough funds in your account to clear the credit bill and pay the EMI.
The interest rate on credit card debt is 36% to 40% per annum, far higher than that on secured or unsecured loans. Building up credit card debt can easily lead to a debt trap, so consider the following ways to consolidate your credit card debt.
A CIBIL update occurs whenever you make a payment or apply for new credit. Monitoring your credit score is crucial. Have you missed any EMI or credit card payments? What is your current credit score, and are you financially prepared to apply for additional credit if needed? If, for some reason, your credit score has fallen below the required benchmark do not apply for further credit, as each inquiry will further lower your credit score.
Timely repayment of credit dues and effective financial management will help you stay above board; better still is planning so that expenses are covered and Diwali celebrations are enjoyed stress-free. Steps you can take include the following:
Setting aside a monthly amount for Diwali expenses will help build stability and avoid an additional burden during the holiday season.
Planning your spending will help you keep it affordable.
Points you have earned on your ICICI Bank Coral Credit Card will help you incur savings by redeeming them for gifts.
Ensure a memorable Diwali by planning your finances. After the break, review your spending and organise a repayment schedule for the credit taken to keep your CIBIL score intact for future requirements.
While shopping at the mall with his family, Sudhir and his wife saw a 55-inch television on display and couldn’t resist asking for the price and details. They really needed a new television for their home, and what better occasion than Diwali to make this much-desired purchase. What made it more attractive was a discounted price and a no-cost EMI offer. Sudhir was holding an ICICI Bank Rubyx credit card and could not resist making an instant purchase. He decided that there could be no better time than now to buy it and fulfil his family’s wishes.
The convenience of a credit card in India is unmatched for spending on personal and household items, as well as emergencies. A personal loan is also available as unsecured funding for personal use and Diwali expenses, which is a better choice than a credit card. Let us explore the functionalities and benefits.
Avail the limit of multiple cards: You can hold various credit cards issued by different lenders. Each card has a designated credit limit, and banks typically permit cash withdrawals of 20% to 30% of the approved limit. You can plan your spending according to the credit card limit and the offers available on each card.
Easy to carry: Credit cards enable instant spending and are an excellent option to carrying cash. They can be used at most merchant outlets for shopping, dining, and purchasing movie tickets. Activate your credit card for online use and ensure it is used safely for your transactions.
Reward points: Reward points from all-year-round credit card spending can be redeemed at this time for festive essentials. Banks have tie-ups with member outlets where customers can redeem credit card points for various goods, including household items, clothing, and electronics. Enjoy online shopping festival offers with the HDFC credit card smart EMI feature.
Discounts, Sales, and No Cost EMI Credit Card Offers: Vendors expecting peak sales during this time go all out to offer discounts on goods and partner with banks to provide easy repayment options, such as no-cost EMI credit card offers. Banks offer discounts and cash back on credit card usage.
As you prepare to celebrate the upcoming festivities, plan your budget and ensure you have the necessary funds to make the occasion truly memorable. The Diwali bonus is expected, and your savings should ideally cover your expenses; however, if you’re short, consider applying for a personal loan to cover any additional costs.
Secure the necessary funds: You can apply for the amount you need in advance to start painting and redoing the upholstery, giving your home a fresh look for the upcoming season. Loan amounts are approved based on personal loan eligibility criteria and transferred to your account, making them easily accessible for paying your expenses.
Suitable terms: A personal loan is available at a reasonable interest rate. ICICI Bank personal loan offers starting from 9.99% onwards for loan amounts of ₹ 15 lakhs and above. If you have an existing HDFC Bank personal loan, you can avail a top-up on the existing loan within 72 hours with minimum documents.
Easy repayment options: Funds as a personal loan can be repaid easily via monthly EMI. Check for a suitable EMI using an EMI calculator to ensure the EMI is affordable; otherwise, request an extended tenure. Let not the worry for repayment affect your Diwali celebrations, as the EMI will be deducted after your next salary credit.
A Credit Card and a personal loan are both unsecured, issued without collateral, and provide funds available for short-term individual usage. Situations that can help decide the better option include the following:
Personal Loans:
Diwali is the time we’ve been waiting for all year to celebrate and give the gifts our family has been eagerly anticipating. It is an occasion to fulfil aspirations and shop to your heart’s content. Buying a new vehicle, the latest mobile phone, or jewellery for your spouse – all plans are postponed until Diwali, when promises are to be kept.