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The KYC (Know Your Customer) process is mandatory when opening a new bank account, Applying for a Credit Card, or taking out a Personal Loan. The RBI (Reserve Bank of India) has regulated that the service provider must verify the identities of all customers seeking to use financial products to reduce the risk of money laundering and financial fraud.
For Banks and NBFCs, the KYC Process is crucial in confirming customer details and residence. This diligence not only helps prevent terrorist funding and fake interactions but also significantly reduces the risk of financial losses to the Bank when the customer defaults, ensuring the security of the financial system. The maintained KYC records enable effective recovery of the outstanding amount.
The onset of COVID-19 brought unprecedented challenges, with movement restrictions in place to curb the spread of the virus. However, the widespread use of mobile and internet communication technologies played a crucial role in overcoming these challenges, ensuring that essential services could continue.
Overnight delivery apps and online platforms mushroomed, offices were shut down, and employees were asked to work from home. Official meetings were conducted online, and social functions took to Zoom and YouTube, allowing friends and family to participate in the proceedings.
During the pandemic, the RBI allowed banks to open savings and salary-based accounts through online verification. This helps mitigate the challenges of the physical verification process. Customers can upload their documents online, and the bank can verify them through a secure interface.
The success of online verification has led the RBI to extend the jurisdiction for Banks to conduct Video KYC for Processing Personal Loans and Credit Cards. Prominent Banks such as ICICI Bank, YES Bank, and HDFC Bank have a secure system to perform video KYC for customers applying for financial products.
When applying for banking services, the customer must fill out a request form with personal and professional details and submit corresponding documents to support the application.
The RBI has approved standard documentation to initiate a Customer KYC Verification. These include:
Clear and valid copies of KYC Documents will be submitted to enable a successful verification. The KYC Process was initially conducted manually, with the customer going to the Bank to show the original documents or a Bank officer visiting the residence or office to meet the customer to check that the documents submitted are true copies.
Please keep in mind the following requirements for the Video KYC Process:
– The performing bank or organization must be registered with the RBI (Reserve Bank of India) and authorized to conduct the process.
– A secure Wi-Fi connection must be established between the user and the bank officer without any noise or disturbances and with good visibility.
– The applicant’s formal consent is necessary to proceed with the Video KYC.
– Clear copies of KYC documents should be readily available before initiating the process.
– The applicant’s mobile number must be linked to PAN and Aadhaar cards.
– The KYC can be conducted from the documented residence or office address as mentioned in the form details.
KYC Verification is a mandatory process for approving any financial transaction. Credit can be denied if the Lender is not satisfied that the documents submitted are true copies. The Financer can conduct the KYC Process at the primary stage after checking the CIBIL Score and the company category list. Or after all the stages are completed and the request is approved.
Banks use online systems to improve their processes as they prepare for the digital era. People looking for credit are also eager to engage in digital transactions. The Video KYC process eliminates the need for lengthy physical verification and reporting. Customers from any part of the country can now apply for and verify their personal loans entirely online. Leading banks like HDFC Bank, ICICI Bank, and YES Bank have introduced Video KYC, a secure process to prevent fraud and illegal activities.
Though the Video KYC Process is successfully conducted, the industry may not be ready for a complete transformation. Not all customers may have the facility to make online contact and execute the Video KYC Process. Applicants may not have the time and capacity to make contact if the Video KYC Fails on the first attempt.
Although the technology has not yet been adopted by all financial organisations, applicants with vintage documents can face clarity issues while conducting a Video KYC. Therefore, physical verification will remain an alternative for some time to come.
Starting your first job is not just a new phase in your life but a significant step towards financial independence. It’s when you begin to earn and take charge of your finances, transitioning from a student with limited financial responsibilities to a professional needing to manage expenses and savings. This shift, the culmination of years of education and training, is the perfect opportunity to start shaping your financial future.
With financial independence, you can create your living environment, furnish your living premises, and design a comfortable home that reflects your unique style and preferences. This is not just about financial freedom; it’s about the sense of achievement and empowerment that inspires you to take control of your financial journey.
As a fresh candidate, your employer’s decision to hire you and open a bank account for your monthly remunerations with leading banks like HDFC Bank, ICICI Bank, Axis Bank, and YES Bank is a significant sign of trust and stability. This regularity of salary transfers provides a strong sense of security and lays a solid foundation for your financial future, giving you the confidence to plan and invest.
As a new job holder, you may consider getting a Credit Card. It’s a common aspiration, as credit has become the norm, and banks offer Debit Cards for ATM Transactions and cashless payments. A Credit Card can provide unparalleled convenience for spending on necessities and daily usage. However, it’s important to note that banks typically require a year of work experience to extend credit on behalf of the account.
A Credit Card offers a credit-free period of 30 days and can be used conveniently without the hassles of carrying cash. Primary usages include the following:
The ICICI Bank Coral Credit Card provides the best benefits for first-time credit seekers, considering the usages and advantages needed. The benefits of the ICICI Coral Credit Card are best suited which include:
The ICICI Bank Coral Credit Card is particularly beneficial for new job holders. With its low annual fee, cashback offers, and easy application process, it’s designed to meet the needs of those just starting their professional journey.
Setting a ‘conservative limit’ is essential when you get your first Credit Card. This refers to a credit limit lower than the maximum amount the bank is willing to offer, usually based on your monthly income. Accepting a conservative limit is wise, as it helps you manage your spending and avoid accumulating too much debt.
Your Credit Card is a powerful tool for cashless transactions, but it’s crucial to keep the details of your card, such as the PIN and CVV Number mentioned in reverse, private. Sharing these details can lead to unauthorised card use and potential financial loss. Using your Credit Card responsibly can avoid unnecessary debt and maintain a healthy financial status.
With the freedom of cashless spending on your Credit Card, you tend to spend without knowing that the money will be paid later. Maintain a record of the expenditure and treat the card as a debit card, knowing there are enough funds in your account.
The credit-free period of a credit card is 30 days. After the 30-day cycle is completed, a statement of account is generated. A grace period of 10 to 15 days is further extended to pay the dues. Mark the payment date on your calendar to ensure you do not forget, as a delay can cost you penalties and will be noted in your CIBIL history. Creating an auto-debit payment system from your Bank account is an option.
Upon receipt of your credit card, the literature with the terms and conditions is provided.
Take note of these details for optimal Credit Card Usage. Using your Credit Card regularly and making timely payments will help improve your CIBIL Score, strengthen your credit standing, and prepare you for future financial endeavours.
In today’s consumer-driven society, the availability of easy credit from banks and financial institutions has fuelled the desire for a better lifestyle and progress. Whether you’re in the market for a new home or a mobile phone, the option to make a minimum payment and convert the remaining balance into installments payable over a suitable period is a common practice. This is what we refer to as an EMI (Equated Monthly Installment), a financial tool that plays a significant role in managing your financial commitments.
When Applying for a Loan, it’s common for customers to focus on the interest rate and other charges. However, it’s equally important to consider the monthly installment. A manageable Equated Monthly Installment (EMI) is not just a financial obligation but a tool that allows you to repay the amount without straining your monthly budget, providing a sense of financial security and peace of mind.
Understanding how the EMI works is critical to effective loan planning. The interest rate applied to the loan amount issued to the customer is divided over the tenure for which the loan is sanctioned. Each EMI (Equated Monthly Installment) includes a part of the principal and the interest charged. For both mortgage and unsecured loans, the interest is charged on a monthly reducing basis. This means that with the payment of each installment, the amount of principal owed reduces, and the interest is applied to the reduced balance. Despite the changing ratio of principal and interest, the EMI remains constant for the entire tenure, making it easier to plan your monthly budget.
Before taking out a loan, using an EMI Calculator can be a game-changer. It allows you to determine the monthly installment in a flexible and adaptable way. You can adjust various parameters, such as the loan amount, interest rate, and repayment tenure, to find the most suitable installment. If the Calculated EMI seems too high, you have the power to consider extending the repayment term, applying for a lower loan amount, finding a lender with a lower interest rate, or opting for a shorter repayment term with higher EMIs. This tool provides a sense of reassurance and confidence in your loan planning, putting you in the driver’s seat of your financial decisions.
Using an EMI Calculator can help prospective borrowers determine a suitable EMI that fits their monthly budget, thus saving valuable time and effort during the loan application process. This efficiency in financial planning allows the borrower to focus on other essential aspects of their life, making them feel more productive and in control of their time.
The EMI has become part of daily existence, a tool that has helped millennia better manage life and emergencies. Salaried persons can dream of owning their home and going on a vacation by appending a home or Personal Loan and making the repayment via EMI. Financial shortfalls during emergencies can be met with a Personal loan. Banks such as HDFC Bank, ICICI Bank, and Axis Bank now disburse Personal Loans Online, and repayment is done with easy EMI over 12 to 72 months.
Self-employed individuals can Apply for a Business Loan to extend their existing work and upgrade their machinery. Financial shortfalls during weddings and family functions are conveniently met, and funds are repaid over monthly instalments or EMI.
Loans from Banks and NBFC fuel the Auto industry, and most individuals find it convenient to have their transport. With a minimal down payment, the cost of the vehicle is paid in monthly instalments for personal or commercial usage. Vehicles are movable commodities, so banks can recover them if the EMI is not paid.
Banks and financial institutions are prepared to provide funds and generate income from repayable loans, benefiting both the borrower and the lender.
“When borrowing, it’s essential to clarify and understand the terms of the repayment schedule. Make sure that the payment of the EMI or the monthly installment comfortably fits your budget, as any delay or non-payment will negatively impact your credit ratings.
Keeping track of the EMI Payment dates and maintaining a sufficient balance is obligatory, as a bounce will negatively impact your record.
Accumulating many EMIs without proper budgeting can lead to a debt trap. Borrowing excessively for extravagant spending without considering your budget may also lead to financial difficulties. It’s essential to be mindful of this because banks and financial institutions are unlikely to lend to individuals who are overleveraged and paying too much towards their EMIs.
Repaying credit via instalments makes fulfilling obligations and comfortable living affordable, but this should not be taken for granted. The commodity is not yours until you have paid the amount due as an EMI or through a downpayment.
After the loan request is approved, an agreement is initiated between the borrower and the lending organisation, which mentions the terms and conditions of the loan. These include:
A loan repayment schedule is issued, giving details of each instalment and the component of the interest and principal deducted over the tenure of the loan.
The EMI amount for a Personal Loan is fixed at the time of disbursal and is deducted from the applicant’s account monthly. A floating interest rate is applicable for a mortgage loan, adjusted according to the PLR (Prime lending rate) declared by the RBI (Reserve Bank of India).
The customer’s prerogative is to maintain sufficient funds in the account to clear the EMI for all credit taken. A bounce or return will negate the Credit Score and the track record, whereas an on-time payment record for your EMI will go a long way in getting you additional credit when required with the best terms!
Whether you face daily shortfalls or unexpected emergencies, funds are constantly needed. The good news is that banks and NBFCs offer various credit options, allowing you to choose what suits you best.
There’s a solution for every need, from secured credit options like mortgages, auto loans, or gold loans to unsecured possibilities like Credit Cards or Personal Loans for smaller amounts. This flexibility empowers salaried individuals with a regular income, allowing them to tailor their borrowing to their specific circumstances.
A Credit Card is a handy credit tool that allows for easy spending. Most lenders sanction a credit-free period of 30 to 50 days to pay the monthly bill amount. If you cannot pay the total amount due, a minimum of 5% must be paid.
To facilitate the payment, the customer has a choice of converting the balance into a consolidated amount or as a Loan, which is payable in monthly instalments. Alternatively, a loan on behalf of a Credit Card is also offered to cardholders seeking funds for other personal usage and emergency needs.
When you take out a Credit Card Loan, the issuer provides the funds to be repaid with interest in equated instalments that form part of the monthly statement to be cleared on the due date for the tenure applied.
A loan against a Credit Card is available to a holder because there are no defaults in the payment history and enough balance on the card to support the loan. For example, an ICICI Bank coral credit card holder with a limit of ₹ 200000/—can borrow ₹160000/—if ₹ 20k has already been spent on the card, then the amount is ₹140000/—The card can only be used for the limit balance until the monthly EMI gets paid.
The monthly instalment for the loan appended forms part of the monthly statement presented to the customer and must be paid on time.
Benefits: Credit card payments are made immediately upon purchase of the item, and the holder can simultaneously request that the amount be converted into a loan. Funds can also be received in the account on request as a Personal Loan for shortfalls or emergency needs.
Thus, the customer has immediate access to funds with no paperwork, and since the credentials have been verified previously, the Lender can request funds on the go.
The interest rate applicable to a Credit Card Loan is reasonable, and the loan amount can be repaid anytime.
Precautions: Although the Loan Against a Credit Card seems like a perfect deal, there are underlying precautions and restrictions to be noted.
A Personal Loan has become the most popular credit tool today when funds are required for individual needs. Banks are keen to lend funds for a short term, which can be used as needed and repaid with fixed monthly Installments.
HDFC Bank, ICICI Bank, AXIS Bank and YES Bank Service Personal Loans to account and non-account holders for loan amounts of up to ₹ 30 lakhs for 12 to 72 months. The personal loan policy for most Banks is similar, with each lender having specialised norms and target segments.
To initiate the process, the applicant must submit the requisite income and KYC Documents with online processing, applications are expedited, and funds are disbursed within 48 to 72 hours.
A loan on behalf of a credit card is credited to the account directly without any questions, which works well in emergencies. However, the amount cannot exceed the card’s prescribed limit.
Timely repayment of the instalment is paramount, as delays can lead to further costs. With the excessive interest charged, there is the danger of getting into a debt cycle. Factually, with a credit card, the lender is giving you funds to return the original amount and will charge you interest on the same!
The terms and conditions of a Personal Loan are structured, and the interest charged is reasonable. To be Eligible for a Personal Loan, the applicant must have a good repayment track record of credit taken. If excess dues are to be paid as a balance on your card, taking a Personal Loan to repay the same is a good idea!
Apply Online to Top Up their existing Personal Loan or reduce costs by transferring their balance to an alternate lender.
Options are restricted in the case of an App Loan. Axis Finance Ltd, a wholly owned subsidiary of Axis Bank, is the only financer that accepts the Balance Transfer of an App Loan.
App loans give instant cash and work when small A Personal Loan from a mobile App or to apply online? The better option.
In today’s fast-paced life, individuals prioritise instant gratification for fulfilling their needs. Gone are the days of extensive paperwork banks and NBFCs offer quick credit in the form of personal loans to eligible customers for individual and emergency needs.
Mobile phones are now our constant companions, with multipurpose reach for various utilities and daily needs. A mobile App can be easily accessed on the go and allows users to receive timely financial assistance through a smartphone or tablet’s mobile browser.
Mobile banking apps offer unsecured loans such as cash, early pay advance salary, and personal loans. The app can be downloaded from the Google Play Store or App Store and must be registered with the RBI (The Reserve Bank of India Ltd).
App loans are short-term credit and are most popular with Salaried persons and offer conservative loan amounts from ₹ 15k to ₹ 5lakhs for emergency costs or shortfalls in personal expenses.
A Personal Loan App interface emphasises the speed and convenience of appending funds. Instant Personal Loan offers are displayed directly on the screen.
The applicant must provide basic information, personal and professional details, and the required loan amount to initiate the process.
The Aadhaar and PAN cards are the primary documents to process the request. The applicant’s mobile number must be linked to the Aadhaar card and bank account: the customer’s details are verified online, and the loan is decided upon.
As the customer permissions have been solicited previously, the amount is transferred to the account directly.
With an app downloaded on a mobile phone, funds are available with a click when needed most. The USP is the ease and convenience of getting instant funding when required you only need a browser and Wi-fi connectivity.
Applicants no longer need to access a computer facility or make extensive copies of documents minimum documents and details are required to process the loan, which is transferred almost simultaneously after the formalities are completed.
Previous credit history and a CIBIL Score are not mandatory to receive funds from an app loan, though each financer has their policy and can require a credit score to give increased loan amounts.
Considering the easy customer reach and promise of ready credit, Personal Loan Apps have quickly gained popularity. As a result, a surfeit of Loan Apps has been created. The RBI has notified over 700 fake apps that have been banned because they are not registered and do not have the requisite permissions for operations.
Before downloading the App, it is vital to check its authenticity, as persistent offers of prompt funding can easily mislead. If the App asks for undue permissions, such as access to your camera or other data, it can put your personal information at risk and should be avoided at all costs.
Be sure to verify the app’s original sponsor. There should be a customer care number that is reachable when required. An alternate financer may fund the Personal Loan, and the app’s advertiser could be a third party. In such a situation, the advertiser is just the face and may not be responsible for solving any queries or problems that may occur.
Check the terms of the funding beforehand to avoid any surprises or misunderstandings at a later date. The interest rate and EMI payable must be easily affordable to avoid pressures for payment.
We no longer stand in queues to update our passbooks, check our account balances, or rush to the Bank to withdraw funds all of the above is possible from the comfort of our residence or office. Operating procedures have been transformed to keep up with the digitalisation of the banking industry.
The online platforms are uploaded on leading Banks HDFC Bank, ICICI Bank, and YES Bank websites. Applying for secured and unsecured products is now possible by filling in the required information and uploading the documents.
On receiving the request for a Personal Loan, a loan account number is created, and the applicant is informed that the request has been registered. If there is a pendency in the documents, the applicant is notified.
If the lender requires a CIBIL, the applicant’s CIBIL Score is generated to check whether it is above the necessary benchmark and if there are no aberrations in the CIBIL history.
The lender will then conduct a verification for the KYC and Income documents,
The ICICI Bank provides a link for Video KYC, which can be obtained from the applicant’s residence or office to expedite the personal loan process.
The bank’s underwriter will then assimilate the inputs and calculate the customer’s eligibility. A Personal Loan EMI Calculator can confirm the EMI before applying.
The customer signs an agreement acknowledging the loan terms before transferring the loan amount to the Bank account.
Unsecured funds issued once as an Online Personal Loan can be used as the applicant requires. Customers needing excess loan amounts can apply online for loans of ₹ 1 Lakh to ₹ 40 Lahks.
The interest rate offered for a Personal Loan is 10.75% onwards and is calculated at a reduced balance, giving the applicant funds without any security at the lowest interest rate. The repayment tenure of a Personal Loan can be extended up to 72 months, depending on the EMI the applicant can afford.
The process for an Online Personal Loan is transparent, and the customer is clearly informed of all the terms before disbursing the loan.
With an Instant Online Personal Loan, the processing is expedited so that the customer can receive the loan amount required within 72 hours.
Funds received as a Personal Loan from an App or by applying online both serve the purpose of funds for individual or emergency usage. Though an App disburses funds immediately, the sequence moves quickly, and the customer may not understand the implications of the loan.
Financial payment apps advertising pre-approved Personal loans have access to customer KYC information linked to the Bank account and offer loan amounts on behalf of banking transactions. The Loan financer is usually a third party who will ultimately be responsible for any further dealings. Without transparency, reaching out to the financer can be tedious.
On the other hand, Applying For a Personal Loan Online follows a streamlined procedure. The customer is informed of the progress of the request, and finally, the loan amount is disbursed only after the applicant has accepted the terms and conditions.
Costs of the Loan
Having taken a Personal Loan through an App in an emergency, the applicant later realises the high-interest rate when the EMI is deducted from the Bank account. A delay in the payment of the EMI will result in a high penalty and aggressive follow-up from the financer.
Apps provide limited loan amounts with higher costs, whereas an Online Personal Loan has funding available per the customer’s requirements. The interest rate for an Online Personal Loan is among the lowest in the unsecured loan category.
A customer can choose a suitable EMI with a choice of repayment term. In contrast, an App loan EMI is inflated and strains the budget with a restricted repayment tenure and high interest.
Checking an app’s authenticity may be challenging, as there is a surfeit of offers available on mobile. If you need funds urgently, you can choose the wrong lender involuntarily.
Apps are vulnerable to the leakage of personal information that can be misused if permissions are granted without reading the fine print.
When an applicant applies for a Personal Loan Online, it is in the protected domain of the lender. Information relevant to the process is asked with the borrower’s acknowledgement.
If surplus funds are required, customers can appums are needed that can be repaid quickly within a targeted time frame. Customers already in debt and borrow money from Apps to relieve their current debt are in danger of getting into a debt cycle.
Online Personal Loans are structured loans issued to applicants fulfilling the bank’s eligibility criteria. They have clearly defined terms and reasonable costs.
Owning a Credit Card has become a lifestyle necessity. When an individual earns a regular income, Applying for a Credit Card becomes the next objective. Even if there is no urge to use it, offers stream in from various Banks and are hard to resist.
A Credit Card is handy because it allows spending to be repaid later. While enjoying the benefits, one usually acquires additional cards from other issuers.
The statement or bill for the payment of Credit Card spending is generated after a month. A user is granted a grace period of up to 15 days to pay for the due date. If an individual cannot pay a minimum amount due, 5% of the total bill must be deposited. The balance is carried over to the following statement.
The relief of not having to pay immediately comes at a cost, as 36% interest is charged on the pending amount. Any further card usage, if not paid on time, also attracts interest.
Therefore, without adding expenses, the amount due will double in two months, and if an applicant has numerous cards, the dues can mount considerably. Before realising it, an individual can fall into a debt trap.
An individual can use a Credit Card to pay for expenses and credit transactions up to the assigned limit. The card issuer will prescribe a limit according to the applicant’s income. If the limit has been used, further transactions are declined until the dues are cleared.60% to 70% of the card limit is assigned for credit transactions and 30% to 40% for cash withdrawal.
The cash withdrawal facility is meant for emergency use. The cash must be repaid shortly, as interest is charged daily on the money drawn.
Suppose the usage of a Credit Card or multiple Credit Cards has exceeded 70% of the limit, and the holder has withdrawn cash on behalf of the card and does not have the resources to pay after the billing cycle is complete. In that case, the dues must be cleared as per the statement’s due date, or other options, including a Balance transfer, must be considered immediately.
The expenses made using a Credit Card should be accounted for in the monthly budget. Ideally, when swiping a credit card, the payment amount should be available in the account or expected before the billing cycle is complete. Indiscriminate spending on a card can cause budgetary problems when the payment due date is near.
If you have made excessive expenditures due to an emergency, occasional leisure expenditures, or the temptation to buy an item that is currently unaffordable, swiping your card will help.
Suppose funds are unavailable for the total amount due. In that case, the following options will help tide over the situation: Contact the card issuer and request that the due amount be converted to equated monthly instalments, which will be charged a fixed interest, or transfer the balance to an alternate card.
If multiple cards have been used and repayment is unaffordable, Apply for a Balance Transfer of the Credit Card dues to a Personal Loan.
Leading Banks such as HDFC Bank, Axis Bank and Kotak Bank offer to take over pending Credit Cards dues for eligible applicants. Taking timely action to Apply For a Balance Transfer of Credit Card dues will serve well, as the transfer can be denied if the transfer criteria are unmet. Although each lender has exclusive criteria, the basics are similar.
The minimum, 5% of the total due, must be paid on time by the payment date. The card statement must not reflect negative remarks such as over-limit usage fees, delayed payment charges, or overdue charges. The total unpaid dues of all the credit cards must not exceed five times the monthly salary drawn.
Axis Finance is a wholly owned subsidiary of Axis Bank that takes over the balance payment of Credit Cards if the EMI is up to 6o% % of the applicant’s salary.
The applicant’s CIBIL Score must be above the required benchmark, and the profile must meet the bank’s policy requirements.
Transferring credit card dues to a Personal Loan with an external financer is quick and convenient. The process takes 5 to 7 working days.
The applicant applies for a new loan with the required documents and requests a balance transfer of credit card dues. Copies of the Credit Cards with the statements for the last three months are to be submitted.
The initial stages of processing are similar to those of a fresh loan. Most banks permit the transfer of dues for a maximum of three credit cards. After checking for CIBIL and verification, eligibility calculations for the loan amount are done.
Banker instruments favouring Credit Card accounts are made and despatched to the applicant. The applicant must deposit the same in the relevant Banks and obtain deposit receipts.
The EMI for the amount issued is presented to the customer’s Bank account on a designated date for the assigned tenure.
Thus, the cardholder is relieved of debts and excessive interest that Credit Card companies charge. In comparison, the interest charged for a Personal Loan is 15% to 18%, half the rate for unpaid credit card dues.
The applicant can choose a suitable tenure with an affordable EMI to repay the Personal Loan, and they can also use credit cards as the dues have now been cleared.
The CIBIL Score will also increase immediately as the unsecured debt merges and the payment is made.
The key is to make a timely decision, as Credit Card debt multiplies and quickly becomes out of hand. If delays or returns of payment are noted, the Balance Transfer will have to wait until the applicant maintains a clean record for a minimum of three months.
A Credit Card has many advantages, but prudent usage and timely payment are paramount.
What do you do when you urgently need funds during a financial crisis and don’t need restrictions on using the money, like in a home or car loan? The answer is you go for a Personal Loan. Personal Loans are unsecured loans that are much more convenient than conventional ones because you can pay them back over time in affordable instalments and receive swift disbursement with minimal documentation.
Although Personal Loans are an excellent way to get money quickly, banks impose specific fees on this loan because it’s unsecured- meaning you aren’t obliged to put up any assets as security for the loan. Besides, Personal Loan Charges are also different based on the bank and the interest rate. So, without further ado, let’s find out the common Personal Loan Fees associated with the amount you borrow so you can have a precise estimate.
The primary cost of funds is the Personal Loan Interest Rates starting from 10.65% p.a. For ICICI bank, you can avail of an unsecured loan at EMI as low as Rs 1878/ Lakh. For HDFC Bank, the bank offers personal loans with interest rates ranging from 10.65% to 20% per annum, with fixed rates. The Interest Rate for a Personal Loan is applied at a monthly reduced balance and is fixed for the entire term.
This is the amount the bank charges when your loan is processed, and the bank charges a small amount of the overall loan as an administrative expense. The processing fee or the personal loan origination fee amount is minimal, and the charge is around 0.5% to 2.5% of the overall loan amount. Note that the processing charges for personal loans vary from bank to bank, and an individual Applying For a Personal Loan can have the cost deducted from the actual loan amount during the disbursement.
For the two leading banks, the loan processing charges or the non-refundable origination charges for ICICI Bank are up to 2.5% of the loan amount plus the applicable taxes. Meanwhile, for HDFC Bank, the processing fee is about 0.5 to 2.5% of the total loan amount, which is nearly the same amount.
When you Apply for a Personal Loan from a bank, the bank has to ensure that you can repay the loan in a timely and according to the conditions of the loan after the Personal Loan Eligibility Check. To ensure this and verify your identity and overall information, banks appoint a third party that verifies your credit history and checks your repayment history. Banks incur expenses for ascertaining the overall lead there is no separate verification charge, and it is part of the processing fees paid by the applicant.
When you secure a loan, the bank structures your repayment into monthly instalments based on the loan amount, duration, and interest rates. However, the key determinant for these instalments is your ability to repay. If you opt to pay off the loan faster but fail to meet these monthly payments, the bank will impose penalties for defaulting on your instalment payments. Selecting instalment amounts that align with your financial capacity is crucial to avoid such penalties.
For ICICI Bank. The penalties for late payment is 24% per annum, the repayment mode swap charges include ₹ 500/- per transaction plus applicable taxes, the loan cancellation charges are ₹ 3000+ taxes, and the EMI bounce charges are ₹ 500 and the applicable taxes. In addition, there is a non-maintenance of Mode of Payment or NNMP charges that sum up to ₹ 800/- and the applicable taxes or statutory levies.
Prepayment Charges
Most of the time, people think about what would happen if they had the funds to pay the loan early and could do it. If you have the funds to settle a Personal Loan early, you can repay or close the loan beforehand. However, banks typically discourage this practice since they lose out on anticipated interest income. Consequently, they impose a prepayment fee, typically ranging from 2% to 4% of the loan amount, which may vary depending on when you decide to clear the loan.
Goods and Services Tax (GST)
Banks extend various services to borrowers throughout the loan term, including loan processing and ongoing support. These services attract taxation, leading banks to levy goods and services tax (GST) on the customer based on the services used. HDFC Bank charges 18% GST on Personal Loans, and so does ICICI Bank.
Duplicate Statement Charges
If you require details regarding your payment schedule or lose track of repayment progress, the bank offers assistance by providing duplicate statements and other pertinent information. However, availing these services incurs a fee known as the duplicate statement fee. These statements not only aid in tracking outstanding loan amounts but also complement the paperwork associated with the loan. In addition, the Amortization Schedule charges for HDFC Bank Personal Loans are Rs.50/- per schedule of physical copy. However, customers can also download this from the website free of cost.
Believe it or not, Personal Loans are one of the best financial tools individuals can use to meet their expenses. However, getting a Personal Loan isn’t just about the interest charged on the loan amount there are a few other charges and personal loan fees that should be considered. Need financial advice concerning Personal Loan Charges, or have any queries about which financial institution is the best option for personal loans? You can always depend on Your Loan Advisors for financial assistance.
The economy has taken a turn with corporate culture and investment growth. Increasing turnovers and profits allow the management and staff to be compensated well, and the salary benchmark has increased. Fresh graduates from prestigious institutes are offered generous remunerations as a start.
Leading Banks and financers have designed a unique Personal Loan product to cater to this segment’s financial requirements, such as the Golden Edge Loan from HDFC Bank and the Elite personal loan from ICICI Bank.
Banks are eager to lend to high-income profile customers working for Top listed companies who have a secure future and provide lucrative business opportunities. These candidates can afford to pay higher EMI for enhanced loan amounts and are offered Personal Loans with the best terms.
Banks offer this premium product to customers with a monthly salary of ₹ 75k and above. The applicant’s employer must feature in the HDFC Bank Company Category List, and the customer must fulfil the essential eligibility criteria the Bank requires.
Credit usage with a regular payment record, which ensures an optimum credit score, is a primary eligibility criterion for Applying for a Golden Edge Personal Loan. A customer doesn’t need an account with the concerned Bank to apply for the Elite or Golden Edge Personal Loan.
With a Golden Edge Personal Loan from HDFC Bank, an applicant can get an unsecured loan of ₹10 to ₹ 40 lakhs without giving any security. The Bank transfers the amount one-time, which can be used at the customer’s discretion.
With the freedom to use the funds as desired, an applicant has the funds at hand for vacations, renovating and upgrading the residence premises, or purchasing the latest electrical gadgets.
The interest rate offered is the best in the industry for elite applicants for an extended tenure of 84 months. With an adjustable repayment tenure, the applicant can choose an EMI that is payable conveniently. An extended term is the answer if the customer uses other credit presently and can pay lower instalments.
The interest rate is applied to the monthly reduced balance of the principal loan amount, which compares to the interest rate of any secure loan or mortgage.
The applicant can repay the HDFC Golden Edge Personal Loan after paying 12 instalments without penalty or foreclosure charges. A part payment of 25% of the loan amount is also permitted twice in the tenure, free of charge.
The HDFC Golden Edge Personal Loan is processed within 72 hours therefore, it is the answer when funds are needed for a medical requirement or in an emergency. The numerous advantages of Golden Edge products make it the most attractive proposal for acquiring funds for personal needs.
Banks have created a seamless processing system for the high-income category of personal loans. A unique application form is filled out for the HDFC Golden Edge Personal Loan, and the request is processed with minimum documents. The application is processed on a priority basis
A dedicated relationship manager will visit the applicant to verify the applicant’s details and understand the loan requirements. The HDFC Golden Edge Personal Loan can also be processed and disbursed online at the customer’s convenience.
A customer with a high salary package can pay a higher ratio of the salary as an instalment. The Bank is, therefore, liable to sanction the loan amount applied for by the customer.
The Bank will go the extra mile to get business from high-salaried or Elite applicants as they provide high value and large volumes. Therefore, with the vast bouquet of advantages and facilities offered to an Elite customer, the HDFC Golden Edge Personal Loan is the best choice to fulfil personal needs.
The EMI or Equated Monthly Instalment is a fixed sum repaid on a predetermined date for a loan or mortgage. The Calculation of the EMI considers the sum borrowed, the term for repayment and the interest factored.
In previous years, lenders conducted all banking transactions via cheques or drafts.
A customer had to give advance cheques for each instalment for example, for a Home loan approved for 20 years, the customer submitted 240 post-dated cheques, which was extremely tedious and time-consuming. The introduction of CTS (cheque truncation system) by the RBI (Reserve Bank of India) provided much relief and considerably reduced the number of cheques required.
These methods are now redundant with the development of NACH (National Automated Clearing House), which allows the automated transfer of funds within Banks for recurring payments and ECS (Electronic Clearing services), which authorises electronic transactions of funds.
A customer has to sign the ECS or NACH Mandate form, which specifies the applicant’s bank details and permits the Lender to debit the account the Bank subsequently presents the EMI for clearing to the customer’s Bank account on a fixed date.
The Bank presents an EMI for Repayment of a loan, mortgage or consumer product on a fixed date every month. The primary reason for which an EMI Returns unpaid is due to insufficient funds in the customer’s account. The borrower should maintain enough balance in the salary account before the EMI Due date in case the salary is not credited in time to pay for the EMI. If insufficient funds are in the Bank account, the EMI will return unpaid, and the Bank records this transaction as a bounce.
There are other causes, too, such as incorrect customer details captured in the mandate or the customer shifting the account to another Bank. In that case, the customer’s prerogative is to inform the Bank or make the required changes in advance. The EMI, if returned unpaid, is recorded as a bounce.
Your Bank statement details portray your financial health and management skills. The bounce of an EMI shows in your Bank statement for times to come, which hurts your credit prospects. No Financer will issue a credit to an individual with a cheque return or an EMI Bounce in the past three months. Further, it is a good idea not to apply for a Loan or a Credit Card with a discrepancy in the Bank statement, as a CIBIL inquiry will negate your score. As a precaution, always keep an EMI amount in your account in advance to maintain an on-time repayment record.
The return of an EMI is undesirable, but if it does happen, there are consequences the immediate effect is an ECS bounce charge, applicable as per the policy of the Bank. Listed below are the ECS return charges of Leading Banks.
Charges Per Return.
HDFC BANK ₹ 350/- to ₹750/-
ICICI BANK ₹ 350/- to ₹750/-
AXIS BANK ₹ 500/-
SBI ₹ 295/-
The charges are applicable each time the EMI returns unpaid: A Bank may try to deduct the EMI multiple times or as specified in the Loan agreement. Though there are instances when customers have had to pay inflated charges due to the Financers attempting the EMI many times, the rule states that if the EMI does not clear on the first or second attempt, the Financer will have to take permission from the customer to represent. The customer may deactivate the ECS or NACH mandate as a last resort.
In addition, the Financer levies a Penalty interest of 2 to 3 % on the overdue amount for the number of days the EMI remains unpaid.
If the Emi remains unpaid for 90 days, the Lender classifies the loan as a non-performing asset.
Hail or storm, the Financer presents the EMI through the ECS mandate on the designated date: respect the date and ensure sufficient funds are in the account for payment. Once done, the Bank cannot reverse the transaction even if there has been an oversight and the customer pays the instalment on the same day.
It’s not a good idea to take the payment of your EMI lightly, as the delayed payment will figure constantly in the CIBIL record. The answer is to make the payment immediately as the Bank reports the delayed Emi payment to the CIBIL.
The CIBIL account reflects the existing status of all credit taken and the payment tracks. A random EMI bounce can occur due to unavoidable circumstances, but a continuous delay or non-payment downgrades the CIBIL Score.
The Lender will send reminders and try to reach the customer to get the payments. If the applicant fails to pay the instalment within 90 days of the due date, the next step is to report the account as a write-off to the Credit rating agencies. With a loan written off or excess bounces of EMI showing in the CIBIL, the score will sink, making it difficult for the applicant to get additional credit when required.
The Bank will refer the case to recovery agents who will further contact the customer to recover the loan paying back the complete loan amount with interest will serve well, as a settled loan remark will permanently mar the CIBIL history of the client.
A Personal Loan and a Credit Card are unsecured credit; therefore, delays in payment of the EMI will affect the Credit score. With a mortgage or a secure loan, the Financer has a guarantee and can recover the amount if the client cannot pay. Therefore, the credit ratings show a little flexibility and a delayed EMI or two does not impact the credit score if the customer pays future EMI on time. However, excess EMI returns cannot be overridden even if the applicant is employed with a Top A or B Category Company.
Sometimes, an oversight can cost a lot for example, Rohit Kumar changed his job but should have paid more attention to transferring his EMI mandate to his changed bank account. When he remembered to transfer funds, his EMI had already bounced; this happened a few times in a row. Though he transferred funds and paid the amount due, noting the delay, the Bank sanctioned him a higher interest rate the next time he Applied for a Personal Loan.
Credit is readily available for individuals who manage their finances well, and Lenders look to fund customers with a good repayment record. Before taking credit, calculate your outgoings and take as much credit as you can afford to repay use our EMI Calculator to check your instalment amount.
Being vigilant about the EMI and consuming as much credit as one can manage is the answer to a timely repayment record.
Life can be unpredictable; unexpected expenses can throw off even the most careful budgeting. Sudden expenses can leave you needing extra cash, whether it’s a surprise medical bill, a home repair, or education costs. And if you are already paying off a loan, the hefty EMIs can strain your finances. In both situations, finding ways to reduce the burden of your current EMI becomes a top priority. Whether you already have a loan or are considering taking one out, finding ways to lower your EMI can bring much-needed relief and financial flexibility.
This guide will explore effective tactics and alternatives to Reduce Your Bank Loan EMI, whether you’re repaying a loan or considering a new one. Implementing these tactics can improve financial management. Techniques to Reduce EMI:
Let us start by looking at Ravi’s case. Having taken a Personal Loan from Axis Bank, he now feels burdened by the EMI payments. Thus, he seeks to reduce the EMI amount and explores the following methods to achieve this goal.
If you have an existing Personal Loan and are struggling with the EMIs, you may want to consider the option of part prepayment. Many lenders offer this facility once a certain number of EMIs, usually 12, have been paid. Prepayment involves paying a substantial sum from the outstanding principal amount. For instance, leading banks such as HDFC Bank allow borrowers to prepay up to 25% of the loan amount in a calendar year.
By doing so, the outstanding principal amount gets reduced, along with the accrued interest, resulting in lower EMIs. You can use funds from your annual bonuses or variable pay to significantly dent your loan balances. Opting for part prepayment lowers your EMIs and reduces the loan tenure, helping you become debt-free faster. This is a strategic approach to managing your loan and lightening your financial burden.
Opting for a Balance Transfer of your loan entails transferring the outstanding amount of your current Personal Loan from one bank to another. The primary motive for this transition is to take advantage of a lower interest rate offered by the new Bank on the remaining loan amount. By leveraging this facility, you can reduce your debt burden and save on interest payments. HDFC Bank offers to take the principal balance of multiple loans under a single umbrella the customer can pay a single EMI at a reduced interest rate.
Take into consideration the variance in interest rates and any extra fees linked to the transfer to confirm that this alternative aligns with your financial aims and objectives.
If you are already repaying a personal loan and have been diligent with your EMIs, you may qualify for a beneficial option a Top-Up Loan. This is one of the best ways to reduce your loan EMI. This additional loan allows you to access more funds while potentially benefiting from lower interest rates. Furthermore, opting for a Top-Up Loan may also offer the advantage of extended repayment tenure. This extension could lead to lower EMIs, sometimes providing increased financial flexibility.
Now, let’s consider the situation of Ramesh, who requires a Personal Loan, but his priority is low EMI. Consequently, he approached his bank to discuss this requirement. The bank presented him with several options to consider. Here are a few of them:
If you are hassled with numerous EMI and credit card bills but require additional funds, applying for a mortgage is a good option. With a Loan Against Property or a Home Loan, the interest rate applied is the most reasonable and large loan amounts can be appended to settle other dues. If you already have a mortgage, apply for a top-up to repay minor loans.
The interest rate for a secure loan is lower than unsecured credit, and the EMI can easily fit the budget with an extended tenure of 240 months. Pre-closure and partial payment are allowed without any restrictions and charges. The downside is that the interest is charged at an annual rate, so the total costs of a mortgage over the years are more than an unsecured Personal Loan.
Opting for a longer repayment tenure for a loan can significantly impact your monthly instalments. With a longer loan term, the total amount due is spread out over a more extended period, resulting in lower monthly payments. You can analyse and understand this by using an Online Loan EMI Calculator. This facility can benefit borrowers who require more flexibility in their budget.
An EMI is a mandatory part of the monthly budget, and enough funds should be maintained in the account to clear the same. Delayed payment of the EMI is not an option it will lead to further debt issues and downgrade your CIBIL Score.
Getting credit is easy, but do not overextend yourself the repayment is a responsibility and should not strain finances.
If you need further advice, Contact www.yourloanadvisors.com to help you confidently work towards your financial goals.