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In today’s world, people have big dreams, but achieving them may be challenging due to their current financial situation. Here is where a Personal Loan comes into play, as it has emerged as a popular option to bridge the gap between dreams and reality.
Whether funding a dream vacation, renovating a home, or consolidating debts, a Personal Loan offers much-needed financial flexibility, however, like any financial tool, Personal Loans come with their share of pros and cons. So let’s discuss the two sides of the coin and answer the question: Are Personal Loans a Boon or a Bane?
When compared to other types of loans, Personal Loans offer numerous benefits. Here are a few advantages that make this financing option stand out.
One of the most significant advantages of Personal Loans is their financial flexibility. During emergencies or unexpected expenses, Personal Loans can be a lifesaver. They offer quick access to funds, ensuring that urgent needs are met without delay.
Personal loans can be an effective tool for debt consolidation. For individuals juggling multiple high-interest debts, combining them into a single Personal Loan with a lower interest rate can make repayments more manageable and streamlined.
Responsible borrowing and timely repayments on Personal Loans can positively impact one’s credit score. A good credit score opens doors to better loan products and improved financial opportunities in the future.
In contrast to secured loans that demand collateral, Personal Loans are unsecured. This means borrowers don’t have to pledge assets such as property or vehicles to get the Loan, making them accessible to more people.
While personal loans can be a viable choice for specific individuals, some may have better choices. It’s essential to weigh the drawbacks before Applying for a Personal Loan.
One of the primary concerns with Personal Loans is the relatively higher interest rates compared to other forms of credit, such as secured loans. Borrowers may pay a significant interest over the loan tenure, impacting their overall financial health.
Personal Loans easy availability can tempt individuals to borrow beyond their capacity to repay, leading to a vicious cycle of borrowing and debt, eventually causing severe financial distress.
Personal Loans easy availability can tempt individuals to borrow beyond their capacity to repay. This can lead to a vicious cycle of borrowing and debt, eventually causing severe financial distress.
A Personal Loan can be a boon for you if…
A flexible loan solution is what you are seeking.
The versatility of a Personal Loan allows it to serve multiple purposes. Whether you require funds for a significant expenditure or to address an urgent situation, a Personal Loan offers the ideal solution, allowing you to use the funds as needed.
Unlike credit cards, Personal Loans typically have lower interest rates. Moneylenders often provide flexible repayment plans extending up to 2 or 5 years, featuring a fixed interest rate. Opting for a Personal Loan can offer excellent financial stability, especially for those seeking substantial funds for personal purposes.
One advantage of a Personal Loan is its easy application process and speedy turnaround time. A Personal Loan is worth considering for individuals seeking a swift loan solution, particularly during emergencies. Many lenders prioritize rapid processing, with some offering approvals within 72 hours.”
Since most Personal Loans are unsecured, borrowers are not required to furnish collateral or security deposits which significantly reduces the risk for the borrower, as their assets remain safe. Also, making Personal Loans accessible to those who lack assets such as cars or homes
A personal loan can be a bane for you if…
You need help to adhere to a fixed payment schedule.
Despite the numerous merits, a Personal Loans can become a burden if mismanaged. For individuals who struggle to adhere to a fixed payment schedule and have a habit of making late payments, there may be better choices than a Personal Loan. Moreover, most lenders do not entertain partial payments, as the agreed instalment and payment terms are set during the application process.
Applying for a Personal Loan can become complex if your credit score is low. Most financial institutions and lenders often prioritize borrowers with favourable credit scores. Nonetheless, there are situations where loans are still accessible. In such cases, lenders might impose stricter repayment terms and eligibility procedures, taking into account the borrower’s credit rating.
While Personal Loans come with advantages and disadvantages, the key lies in how responsibly they are used. Here are some essential factors to consider when contemplating a Personal Loan.
Before proceeding with a Personal Loan application, your credit score is the first and most significant aspect to assess. This score reflects your credit history, and lenders typically review it before granting loans to their customers.
Your credit score indicates your creditworthiness; a score above 700 is considered good. A good credit score ensures a hassle-free loan application process. Thus, it is crucial to maintain a high score, as it directly correlates with more significant benefits. Individuals with higher credit scores enjoy a smooth and effortless process when obtaining a Personal Loan.
Before applying for a Personal Loan, carefully evaluate whether it is necessary or desirable. Avoid borrowing for frivolous expenses that can lead to unnecessary debt.
Create a realistic budget and repayment plan to comfortably manage the loan repayments without compromising your essential expenses.
Research and compare various lenders to find the best terms and interest rates. Responsible borrowing involves making informed choices.
Timely repayment is crucial to maintaining a positive credit history and avoiding penalties. Stay on track by setting up reminders or enabling automatic payments.
Considering the foreclosure option could be beneficial. If you expect to receive a substantial sum of money and intend to repay the Loan before its scheduled term, it’s essential to ask your lender whether they offer such a provision. His foreclosure option can play a crucial role in enhancing your financial stability.
Personal Loans can be a double-edged sword, offering both opportunities and risks. When used prudently and for genuine needs, they can serve as a financial boon, empowering individuals to achieve their goals and overcome financial hurdles.
However, if taken lightly and without careful consideration, Personal Loans can quickly become a bane, leading to a debt trap and jeopardizing financial stability. As borrowers, you must make informed decisions, borrow sensibly, and repay diligently.
Remember, the key to unlocking the true potential of Personal Loans lies in using them as a tool to build a brighter financial future rather than a burden to bear.
While checking her Bank statement, Sonia was delighted to read, “You have a Personal Loan offer for ₹ 2 Lakhs“. It was precisely the stroke of luck she needed, as she was planning an overseas vacation with her friends and required additional funds.
She contacted her Bank and requested the credit of the loan amount on account of the pre-approved offer surprisingly, the Bank asked for her documents and application to initiate the process.
In another instance, Mohit was offered a paperless, instant loan of ₹ 5 Lakhs on behalf of his payment App; on pursuing the offer, he was asked to submit documents before obtaining the Loan.
Are these offers for real? What does the fine print say about these funding techniques? Let’s find out.
In today’s sales world, Data is the key, and targeting the appropriate audience is crucial for achieving a successful sale.
Financial institutions such as Banks and NBFC have extensive data on customers using their services: as submitting KYC details for opening a Bank account or securing credit has become mandatory.
Therefore, financers can easily reach out to customers via SMS, send emails and messages, or display the details of a Pre-approval on a mobile app screen.
Banks and NBFC also employ Tele callers to call customers for a pre-approved loan or display the message on the online banking platform.
A pre-approval for a Personal Loan is not randomly forwarded it is a system-generated offer. Leading Banks such as HDFC Bank, ICICI Bank, YES Bank, and AXIS Bank deliver offers to candidates holding a Bank Account and having the following qualifications:
After receiving the pre-approval offer, you can decide whether to accept it. Remember that a pre-approval is not a guarantee of funding but rather an indication that you are likely to be approved for a loan based on the information available at the time. Listed below are considerations for making a decision:
Receiving the funds without an objective is of no use. The financer has forwarded you the offer but accepting funds without any active need serves no purpose.
How are you currently placed financially, will the repayment of the loan burden you? Use our EMI Calculator to determine your monthly instalment. Once the Bank disburses the amount, you must pay the EMI on time.
The financer extends a pre-approved loan offer based on preliminary checks and a customer’s creditworthiness. On applying for the Loan, the Bank processes the request per the regular norms. It only accepts the application that meets the Eligibility Criteria. Check the terms on our link before applying.
Suppose you have received credit recently from other financers. In that case, the Lender can deny the request even if it is pre-approved. The CIBIL Score and history review should not reflect any delays or settlements. Rejection will always show in your history, so be sure before applying.
Financial Apps are indirect sourcing platforms for some lenders the App redirects the loan offer to the financer advertising on the App. The financer further processes the request per individual norms, terms and conditions. So, applying through an App is not the best deal.
On the other hand, a Pre-approval the Bank issues is with a check on the essential criteria. Furthering the Personal Loan has its benefits.
Here are the stages involved in getting a pre-approved personal loan:
Unsecured credit, such as a Personal Loan, is a good investment that helps to build a credit score speedily and inculcates discipline for the management of credit.
Before accepting a Pre-Approved Personal Loan, review other Lenders’ offerings for their terms. Finally, if the offer is approved once you have received the Loan, remember to pay the EMI on time.
Throughout our journey in life, distinct phases call for varied strategies and responses. Often, these strategies revolve around financial matters. The necessity for funds can be divided into three categories long-term goals, short-term needs and unforeseen financial emergencies. Your long-term and short-term needs are based on your financial goals, but a financial emergency comes up unexpectedly.
Long-term financial planning includes objectives like purchasing a house or saving for retirement. On the other hand, short-term planning is necessary for things like vacations or funding a business. However, in unforeseen emergencies, such as sudden illness, we might need cash urgently. In these different scenarios, there might be a need to borrow money, leading us to apply for a loan.
Considering the numerous options available, the loan that aligns with your goals and requirements is the most suitable one. When it comes to meeting your financing needs, you can either opt for fresh loans or consider a Top-Up Loan. However, before making this significant decision, it’s imperative to be familiar with the various options and comprehend the distinctions.
When you borrow money from a lender for the first time to meet a specific financial need, it is considered a fresh loan. It can be either secured, like a home loan, or unsecured, like a personal loan. Let’s say you applied for a home loan from XYZ Bank, and you don’t have any previous association with the bank; in this case, it’s referred to as a fresh loan.
Similarly, even if the lender remains the same (XYZ Bank), but the loan type changes (for example, you already have an XYZ Bank car loan and now you need a home loan), it is still considered a new or fresh loan. Therefore, a new or fresh loan can be described as-
A Top-Up Loan is an additional loan taken on top of an existing loan, which could be a Home Loan, a Personal Loan, or any other type. Lenders offer the Top-Up Loan as an additional benefit to their current customers. However, it is not mandatory for lenders to offer this service to existing customers. The eligibility for a Top-Up Loan is usually determined based on your repayment history and track record.
Suppose, you already have a personal loan from XYZ Bank, and you find yourself in need of additional funds. In this situation, you can Apply For a Top-Up Loan on your existing personal loan. Alternatively, XYZ Bank might offer you additional financing based on your good repayment record
Fresh Loans – Fresh loans generally have relatively higher interest rates, which can vary between individual borrowers and lenders. Those with lower credit scores may secure loans at higher interest rates compared to individuals with good credit scores.
Top-up Loans – Top-Up Loans often come with a lower rate of interest compared to the existing loan since the applicant already has a relationship with the lender. Moreover, many lenders provide discounts on processing fees for top-up loans in comparison to new loans.
After the disbursement of a top-up loan, utilizing the funds for pre-defined purposes such as home renovations or house expansion may allow you to avail of tax benefits up to a certain limit. However, if you choose a Fresh Personal Loan for a house renovation, you might not be eligible for the same benefits. It’s essential to inquire with your bank about the tax benefits you qualify for before opting for any loan.
Top-up Loan tenures are typically flexible, often allowing for longer repayment periods compared to fresh loans. Numerous banks provide the remaining tenure on your existing loan as the tenure for your Top-up Loan, making it a fantastic alternative to fresh loans.
Fresh Loans – The processing of a Fresh Loan is time-consuming as the lender conducts a comprehensive background check, which includes verifying Loan documents, Credit Score, past loan repayment history, income source stability, age, and more. Lenders typically prefer borrowers with no history of defaults when approving a Fresh Loan.
Top-up Loans – The processing time for a Top-up Loan is shorter since the lender already possesses the borrower’s history and verified documents. Banks typically prefer borrowers who regularly pay EMIs when offering a top-up loan.
Fresh Loans – When applying for a fresh loan you need to fill out numerous forms and provide various documents such as:
Top-up Loans – When applying for a Top-up Loan, the bank would already possess all the necessary documents as you would have submitted them when availing of the initial fresh loan. As a result, the documentation process is straightforward and less time-consuming when opting for a Top-Up Loan.
Whether you are considering a Fresh Loan or a Loan Top-up, it’s crucial to conduct thorough research and negotiate for the best possible terms and conditions. To get a better understanding, let’s assume you require additional financing for a home loan.
The verification and disbursal process for a Top-Up Loan is relatively faster as you already have a primary home loan with the lender. Additionally, this process requires only minimal documentation.
Before making a decision, compare the interest rate of a new home loan from a different lender with your existing one. If your current lender offers a lower rate, consider applying for additional funding with them to secure the best Home Loan Interest Rate.
The tenure of a top-up loan aligns with the remaining tenure of the original loan. In contrast, a fresh loan will have a new tenure, which is typically twenty years for the best home loans. Choosing a longer or shorter tenure can directly impact your EMIs.
Top-ups are typically pre-approved offers extended by lenders to their existing customers and are based on their current loan and sanctioned limit. In contrast, for a fresh loan, the sanctioned amount would be determined solely by your credit profile and other eligibility criteria.
If you have a solid repayment track record and a good Credit Score, you have the option to negotiate with your current lender for a top-up loan at the best home loan rate possible, subject to their approval.
When opting for a loan top-up, it is mandatory to obtain it from the existing lender. On the other hand, for a new loan, you have the flexibility to explore various offers and terms based on your needs. You can compare factors like loan amount, interest rate, duration, and EMI burden before deciding on a new lender
It’s crucial to keep in mind that even with a Top-up Loan, additional charges like processing fees still apply. Nevertheless, you have the option to negotiate the terms with your existing lender.
Deciding between a Fresh Loan and a Top-Up Loan relies on your specific needs, current and future circumstances, repayment ability, and personal preferences. Gaining a clear understanding of the differences and advantages of each loan type is crucial for making an informed and prudent decision.
The growing figures prove that credit usage is increasing dependency on loans and credit cards for lifestyle needs and growth is now the norm.
Did you know that the value of loans in India rose by 16.20 % year-on-year in the fortnight ending 30th June 2023?
Individuals with a Personal or Home Loan can borrow additional funds as a Top Up. A Top Up is quick and convenient, but Applicants should not take approval for granted and must consider the policy criteria of the Lender.
Banks do their due diligence when awarding an extra amount as Top Up Loan Requirements. The process may vary slightly depending on the specific Lender and their policies, but generally, here are the policy and the steps for the processing of a Personal Loan Top-up.
Appropriate Gap: Banks offer a Top Up Loan within 3 to 6 months after issuing the primary loan. This interval allows the Bank to evaluate the customer’s behaviour.
Financial Eligibility: The customer’s earnings should support the mandatory expenses and obligations, such as Credit card bills and loan instalments. With surplus funds to afford an additional EMI for the Top Up. Customers can check the same with the Top Up Loan EMI Calculator.
Existing Personal Loan Track: The payments of the existing Personal Loan must be on time. Lenders are more than willing to give an additional loan to applicants repaying their EMI on the due date.
Credit Score and History: The applicant’s CIBIL Score must be above 720 points. The Bank will view the CIBIL of the applicant to ensure there are no recent defaults or excess credit appended recently.
Employment Status: The current employer should feature in the company category list of the Bank. The Bank evaluates the Top Personal Loan Top-up.
Up request according to the present job profile of the customer. Having a consistent employment history can be beneficial in obtaining a Personal Loan.
Need funds and ready to Apply for a Top Up Personal Loan? The process stages are listed below:
Before Applying for a Top Up to the Bank, determines your requirement and the financial bandwidth to pay the instalment. Remember, the total loan amount (original loan + top-up) cannot exceed the maximum loan amount allowed by the Lender.
Documentation: The Bank requires fresh documents to Process a Top Up Loan. The documentation is similar to a new loan, such as the proof of income, identification documents, bank statements, and any other documents the Lender specifies. The request for a Top-up is considered based on the latest records.
Application: To apply, a customer may complete the necessary information in the form online or manually and submit the same with copies of the documents required. The data filled in the application must match the documentation.
The Lender will acknowledge the request and issue a control number the processing of a Top Up Loan is similar to a new loan and includes the following steps:
The Top Up to the existing loan begins after the request for an additional loan amount is approved.
The Lender constructs a new Personal Loan with the principal balance of the existing loan and the Top Up amount approved and presents a fresh instalment. The new instalment will replace the previous EMI for the appointed tenure.
The Bank follows a formal process and only accepts a request if the application fulfils the eligibility for a Top Up Loan. Therefore, comparing the terms offered by other lenders before taking a Top Up is advisable.
A Top Up Personal Loan has its advantages if the customer has a successful Personal Loan existing with the Bank additional amounts are granted timely. Banks would like to retain good Customers by offering better terms for the loan.
All is not hunky dowry. A Top Up has its drawbacks. The nature of the existing loan changes and a new repayment schedule for the fresh loan is instated. The Bank disregards the interest paid previously for the principal balance. Work out the complete costs for the loan.
The foreclosure and part payments are allowed after 12 instalments; Banks renew this period with the new loan. Customers wanting to repay their loans should look at other options.
The applicant has a choice and must consider other options, such as a Parallel Loan from the same Bank or a new loan with another lender.
Apply For Top up Personal Loan
How To Check Your Eligibility For a Top up Loan
When Can a Personal Loan Top Up Cost More and What are The Options
In situations of unexpected financial emergencies, depending solely on your savings might not always be enough, thus leading you to consider a Personal Loan as a means to overcome the circumstances. In this scenario, the last thing you want to experience is having your loan application rejected. So, ensure your loan application is not rejected for the following reasons.
The applicant’s ability to manage credit efficiently is the primary requirement for acquiring credit A significant factor that could result in the rejection of a Personal Loan is having a low credit score. There are several factors that contribute to a low credit score, including delayed repayment of existing debts and neglecting mandatory dues. No lender will entertain requests from Customers who have overdue loans or settlements.
Building a strong credit history can help in improving a low or poor credit score. An individual must have a credit score of at least 750 to qualify for any type of loan. Also, by consistently paying credit card dues on time and ensuring timely repayment of existing loans, individuals can improve their credit scores.
The lender’s primary concern when approving a Personal Loan is to confirm that the borrower can repay the loan. As part of the eligibility assessment, the applicant’s income is thoroughly reviewed. Having a stable income indicates your ability to make timely EMI repayments.
This is why obtaining a Personal Loan is typically easier for salaried employees compared to self-employed individuals, as salaried employees have a stable income with fixed amounts and sources. Lenders usually have minimum income criteria for both salaried and self-employed individuals, and if you apply for a personal loan amount that exceeds your eligibility, your loan application is likely to be rejected.
If you feel that your application might be rejected based on this criterion, it is advised to have a conversation with the lender before proceeding with the application. However, before initiating the loan application process, it is better to thoroughly check the eligibility criteria to ensure they are eligible, thereby minimizing the risk of rejection. Thus, once the individual fulfills the minimum criteria, they should initiate the loan application process.
If any inaccurate information is found in the individual’s application, it will result in the loan approval being declined. For instance, inaccurate details such as your name, residence, phone number, and other account information make it challenging to gather the necessary information about you. Thus, inaccurate information leads to loan rejection.
Prior to applying for the loan, the applicant should conduct a comprehensive review and ensure that the required information is accurate and in accordance with the lender’s requirements. It’s important to note that each lender may have different information requirements for loan approval.
If you already have a significant amount of debt, the online approval process for your Personal Loan might be rejected. This is because the existence of multiple loans might lead the prospective lender to believe that you are carrying a significant credit burden. Consequently, you will appear to be a risky candidate, potentially leading to the rejection of your loan application. Therefore, it is crucial to only borrow within your repayment capacity and avoid going overboard.
By consolidating existing loans into a single loan, the applicant can pay them off more effectively. The lower interest rates associated with this option can be advantageous. However, the lender must approve the pending multiple loans. Therefore, the applicant should check their eligibility before applying for the loan.
When it comes to granting loans, financial stability is of utmost importance. Lenders need to verify that you possess a reliable source of income, that would enable you to make timely loan repayments. Therefore, job instability can pose a significant challenge during the loan approval process. So people who switch jobs too frequently may face issues with loan approval.
Before initiating the loan application, the applicant should ensure they provide the lender with income certificates and bank documents that verify the stability and continuity of their income based on their financial track record. For instance, if you have other sources of income like rental income or interest payout you can give the proof to lenders ensuring that it will help you to make EMI payments regularly.
While you have the option to Apply For a Personal Loan from multiple lenders, there is a catch. Each lender will assess your credit report before approving your loan. When the Credit Bureau report reveals multiple loan applications to different lenders, it can give the impression of financial strain, raise doubts about your financial credibility, and possibly result in the rejection of your application. Hence, it is wise to apply and inquire for a Personal Loan from only one lender at a time.
In case of an urgent requirement, it is advisable for individuals not to apply with multiple vendors. Instead, they should carefully review the requirements of a single lender and make an effort to meet those criteria. This approach helps portray the individual as creditworthy rather than appearing excessively eager for credit.
To be eligible for a loan, the applicant must meet the specific age requirement and be of legal age. Failure to meet the age requirements, either by being below the minimum age of 23 years or exceeding the maximum age limit, can lead to the rejection of the loan application. Typically, the maximum age limit is set around 60 since individuals tend to have lower risk-taking capacities beyond this age. Additionally, in certain areas, higher default rates can result in the rejection of loan applications for individuals.
Before applying for a loan, it is advisable for the person to verify the age limit. Additionally, if the individual is applying from an area with high default rates, providing additional evidence of income stability and other necessary information is recommended.
After receiving the documents, the lender takes a few days to analyze them before forwarding them to the verification department. Typically, lenders maintain their own verification team, which includes representatives. One of these team members is sent to the borrower’s residence to personally verify the provided address. Additionally, they conduct a visit to the borrower’s workplace to verify their employment status with the organization.
For instance, the documents you submit for KYC (Know Your Customer) serve the purpose of establishing your Residential Stability, providing the bank with evidence of your permanent address that confirms your residency in the city. In the case of renting, banks might require additional information. And if during the visit to your provided address, the representative is unable to verify your residential stability, your loan application may be rejected.
The verification of other essential documents such as PAN Card, Aadhaar, or Passport is carried out online through different portals.
At this stage, once the Personal Loan is declined due to a verification issue the lender will clearly communicate the reason for disapproval. So now if the verification is declined due to your residential address where your residing was not confirmed, you can connect with your neighbors to ensure that the next time when a lender’s representative visits the place they can confirm that you reside at this place.
After the thorough verification of documents, the Personal Loan Application is approved. Failure to submit the appropriate documents that validate your Eligibility For a Personal Loan can result in rejection. It is therefore important to thoroughly review the loan application guidelines and ensure that you submit the correct documents accordingly.
Follow the prescribed list of documents that you must submit and maintain a handy checklist to ensure that none are overlooked. This will help you to process the loan application smoothly.
It may come as a lesser-known fact that individuals typically Apply For Personal Loans to finance various expenses such as weddings, vacations, home renovations, or purchasing new gadgets. However, if you are seeking a Personal Loan with the intention of using the funds to establish a business, it may contradict the concept of income security. It is essential to bear in mind that lenders grant loans based on your current salary rather than the projected growth of your business. Well, there are numerous such scenarios where a Personal Loan is declined like if you are willing to take the loan for investment and so on.
The employment history and occupation of the applicant significantly influence the Approval of Personal Loans. Lenders prefer granting loans to individuals employed in recognized and stable organizations. Therefore, if your company is not listed or registered, there is a possibility of your loan application being rejected.
Apply to lenders who give loans to non-listed companies or if the lender is willing to list the company.
As you may be aware, banks, non-banking financial institutions, and credit information companies collect and consolidate your payment and credit-related information. This information includes personal details like your name, age, address, current employment, and other identifying information. If any of these details match those of a credit/loan defaulter, there is a possibility that your loan application could be rejected, even if you have a good CIBIL Score.
For instance, if any of your family members have defaulted on a loan previously and you share the same address, in such a situation your home address can become an obstacle as it is associated with a defaulter. In such cases, when the lender identifies a red flag like this, they may choose to reject the loan application to prevent approving a fraudulent loan request
If you can pay the balance of the previous loan and remove the flag of defaulter then the lenders can consider your loan application.
While a Personal Loan can provide financial security in times of need, being able to secure the loan is equally important. A rejected Personal Loan Application is documented in your credit report, making it harder to borrow funds in the future. Thus it’s essential to keep the mentioned factors in mind and apply only when you are confident about the approval of your loan application. If you identify any gaps in meeting the necessary requirements, it’s best to work on enhancing them before applying.
Research says In India, 67% of people have taken a Personal Loan at some stage to meet their financial needs. A Personal Loan can fulfil immediate needs by providing timely financial assistance, helping individuals satisfy their requirements without relying solely on their close circle.
Like many others, Satish took a Personal Loan to meet his financial needs. He first checked his Personal Loan Eligibility, applied for the loan and got the loan instantly, and used the money for what he needed. Every month, he started paying back the loan through fixed payments called EMIs.
But after a few months, he unexpectedly received a large sum of money from his family’s property division. Now he wants to know how he can use the funds to make a complete or partial payment of his loan that money to repay or even finish paying off the loan. Unaware of the procedures, he contacted Your Loan Advisors, Personal Loan Consultants in New Delhi.
After checking his details, our consultant gave him the good news: “Hey, Satish! You have two choices for loan repayment. You can pay partial to cover a portion of your loan or opt for foreclosure to pay off the loan completely.” Satish asked eagerly, “But how?”
If you have the same question, keep reading to learn about these two ways of repaying a Personal Loan when you have a large amount of money. Let’s get started!
When you have some extra money but not enough to pay off your entire loan, you can make a partial payment. It involves depositing that amount into your loan account, which reduces the remaining balance of the principal loan amount.
As a result, your monthly instalments (EMIs) decrease, and you pay less interest overall.
It is important to remember that part payment is most effective when you contribute a significant lump sum of money. By reducing the principal amount, part-payment lowers the total obligation. Though the personal loan interest rate and your EMI amount remain the same, the number of instalments reduces. Whenever you have surplus funds, consider making part-payments on your loan.
Terms and Conditions: Apply to a partial payment differ as per the individual lender’s policy. Leading Banks permit a part payment as per the following
Personal Loan part payment is made by transferring the amount electronically or via a banker’s instrument to the Loan account number, with specific instructions for adjustment towards the Loan Principal.
Follow up with instructions to the Bank for rescheduling the loan. It is important to note that even after making a part payment, you must continue repaying the remaining EMIs as per the schedule shared by the Bank.
Here are some essential points to consider when making a partial payment.
Personal Loan Foreclosure means repaying the remaining loan amount in one lump sum instead of multiple EMIs. You can choose foreclosure if you have extra funds and want to repay your ongoing Personal Loan.
A lock-in period is an essential aspect of Personal Loan Foreclosures. It is a duration during which borrowers cannot fully or partially prepay their loans. The lock-in period can range from six months to a year or more. You must complete this period before settling the loan account and repaying the outstanding amount in full.
There are charges associated with Personal Loan Foreclosure. Lenders impose these charges to compensate for the interest lost due to early repayment. The fees typically range from 3% to 7% of the outstanding principal loan amount and applicable taxes. Consider these charges before deciding on loan foreclosure to understand the impact on your financial situation.
Closing a loan earlier than expected can positively impact your credit score. It demonstrates that you are responsible with your repayments, which can improve your overall creditworthiness.
Follow these steps to Foreclose your Loan before completing the tenure:
An Instant Personal Loan to fulfil immediate needs is a good option, and it is prudent to check the terms for repayment when acquiring the loan knowledge of the rules for partial payment and foreclosure will help to make informed decisions.
Satish was happy to receive all the necessary information. We provided him with a clear understanding of the procedure and the additional charges he needs to consider, to help him decide.
Experience similar satisfaction as Satish by receiving the proper support and guidance. If you have any doubts or concerns regarding the partial payment Process or Foreclosure of a Personal Loan, don’t hesitate to get in touch with the team at Your Loan Advisors today!
A Personal Loan offers an incredible option for accessing immediate funds without collateral. Whether it’s medical emergencies, dream weddings, long-awaited vacations, or home renovation projects, a Personal Loan helps you fund any expense.
An applicant can Apply for a Personal Loan from any Bank or NBFC. Still, the lender will issue the loan if the applicant’s profile fulfils the Bank’s eligibility criteria. The main factors determining the eligibility criteria of the Bank include the following.
As the personal loan is issued for lifestyle needs, the HDFC Bank and ICICI Bank norms require that an applicant draw a salary of ₹ 30k or above, which is transferred monthly to the salary account. A net salary of ₹ 25k is the norm for NBFCs like Tata Capital or IDFC Bank. Individuals earning a salary of ₹ 75k or more are offered special discounts and benefits of HDFC Golden Edge Personal Loan.
It is mandatory to check if the employer is included in the Company Category List HDFC Bank, the leading personal loans lender, has a comprehensive list of categories A, B, C, and D. An applicant whose employer features in the A category has the eligibility to receive higher loan amounts with lower interest rate as compared to Cat C or D employees for whom the eligibility is calculated with restrictions.
An applicant’s Credit Score is viewed as a crucial factor in determining Eligibility for a Personal Loan. A credit score of 750 or more signifies that you are a responsible borrower who has timely repaid all past dues and will be granted a loan in the most suitable terms, such as a discount on the processing fees. At the same time, a delay in repayments or a settled loan track will negate Personal Loan Eligibility.
The calculation for the Loan amount granted to an applicant is broadly judged by the applicant’s ability to repay the loan. After budgeting for all other monthly expenses, the customer must be comfortable paying the monthly instalment. Thus, individuals earning a higher salary can pay an increased EMI and are issued enhanced loan amounts.
Another significant factor is the repayment term banks permit applicants to repay the loan via EMI (Equated Monthly Instalment) over 12 to 72 months.
Customers who require more significant sums can request a longer repayment term so that the EMI is affordable, as the interest on a Personal Loan is charged yearly. An applicant can use the Personal Loan EMI Calculator to arrive at a suitable EMI, which helps customers assess their eligibility by filling in the basic details:
The EMI Calculator will display the EMI if it is unsuitable, the applicant can change the inputs by entering a lesser loan amount or a longer tenure to arrive at a convenient instalment. An EMI Calculator is handy as it helps plan a monthly budget by estimating the EMI and determining the credit amount an applicant is eligible for.
Numerous factors are considered when determining your Eligibility for a Personal Loan, but it mainly assesses your past debt management and capacity to repay the new debt. To boost your Loan eligibility, consider working on the following areas.
Pay all credit card bills on time and keep enough balance in your account to clear your loan instalments. Having a credit score of 750 and above signifies that you are a responsible borrower who has timely repaid all past dues. As the lender’s risk is minimised, your approval chances are enhanced.
A credit score below 750 implies an unsatisfactory repayment track record. As a result, the lender classifies you as a high-risk candidate, potentially leading to higher interest rates or even outright rejection of your application.
Decrease your debt before Applying for a Personal Loan, enhancing your debt-to-income ratio. For example, you have a Car Loan, and an EMI of Rs 13000 monthly from your monthly income of Rs 25000 goes toward it.
In this case, your debt-to-income ratio would be calculated as (13,000)/25,000 = 0.52 = 52%, indicating that your liabilities surpass your income. In this scenario, to boost your Eligibility for a Personal Loan, consider either increasing your income to bridge the gap or paying off your current debts, thereby reducing your debt-to-income ratio to a desirable range of 20% to 35%.
Lenders need to understand your repayment intentions. A higher income significantly improves the chances of loan approval. You can show evidence of other income sources to boost your payment, such as performance incentives, bonuses, variable pay, passive income from investments, and more.
All these factors can significantly enhance your Eligibility for a Personal Loan. Presenting the lender with evidence of your multiple income sources and primary monthly income instils confidence regarding your capacity to repay the loan.
During the Personal Loan Application Process, the lender reviews your credit report to assess your creditworthiness. If you have applied for Personal Loans from various lenders, they will seek access to your credit report.
Such inquiries are considered hard inquiries and are documented in your credit report. Hence, submitting multiple loan applications simultaneously has a minor impact, as it may portray you as excessively credit-hungry.
Avoid Frequent Job Changes
Along with various other factors, an applicant’s employment history and stability play a significant role in lenders’ evaluation of their Personal Loan Eligibility. Frequent job changes can make lenders hesitant to provide personal loans since they indicate a lack of career stability, resulting in increased credit risk.
Thus, it is advisable for individuals planning to Apply for a Personal Loan shortly to minimise job hopping as much as possible.
In conclusion, the lender will judge your eligibility criteria before sanctioning the loan amount. Although the essential eligibility criteria for a personal loan are similar to those of most Banks and NBFCs, each lender has an individual policy.
It is not necessary that if an applicant faces rejection from one lender, no other lender will grant a loan unless the applicant’s credit record has a settled loan track, there are undue delays in repayment of the loan, or there is an EMI Bounce.
Secure lenders, such as mortgage lenders, judge the request based on the applicant’s profile and the property, but the main factor for approval of an unsecured Personal Loan is the Eligibility Criteria.
Are you dreaming of exploring the globe or envisioning your perfect wedding? Choose a Personal Loan and transform your dreams into reality.
Whether you need assistance to overcome a financial challenge, manage unexpected expenses, or pay off debt faster, a Personal Loan can provide the necessary support.
Regarding Personal Loans, there’s no need to worry about collateral or security since they are usually unsecured loans designed to provide financial assistance.
Banks focus solely on the eligibility and creditworthiness of the borrower for issuing an unsecured Personal Loan as for the borrower receiving funding via a Personal Loan is a quick and seamless experience, more so with the convenience of online processing.
Typically, the borrower should fall within the age bracket of 18-21 to 60-65 years to meet the eligibility criteria.
Banks offer Personal Loans to salaried individuals employed in Government entities, recognised multinational corporations (MNCs), and public or private companies. Banks also offer Personal Loan facilities to self-employed applicants who can provide proof of business existence, income tax returns (ITRs), and other essential financial documents.
The applicants should provide the necessary KYC (Know Your Customer) and Income proof per the documents list.
The applicant’s income must be above the minimum required benchmark to meet the eligibility criteria required for a Personal Loan.
It is mandatory to have a specific duration of employment or business existence.
The CIBIL rating of the applicant is an essential criterion for Personal Loan approval a minimum score of 720 points is required by most lenders, with an on-time repayment record for all credit taken.
So when you apply for a Personal Loan, you must consider the above points to get the loan approved quickly.
Asses as to what is your loan requirement and repayment capacity?
The primary objective for both you and lenders is to ensure that you do not find yourself in a position where you obtain a personal loan and face the inability to meet the financial obligations for its repayment.
To steer clear of this situation, begin by assessing the amount of funds you will need while keeping in mind that specific lenders may also levy an origination fee.
Now, with the help of a Personal Loan Eligibility Calculator, determine the monthly payment amount for your loan. It can be challenging if you are not aware of the rates and repayment terms the lenders will provide. However, you can experiment with the numbers to estimate the potential cost of the loan and determine whether your budget can accommodate it.
Before Applying For a Personal Loan, inquire about any origination fee or upfront costs imposed by the lender to help determine the monthly payment you can comfortably afford.
Before deciding on any lender, you should thoroughly research to find the best per your need. To know more, Please Check Details of Primary Lenders.
For immediate financial needs, a Personal Loan provides swift access to funds. Personal Loans come with flexible payment options for up to 72 months. The terms and conditions may vary according to the profile of the customer and the loan amount approved. Here is a guide to understand how to Apply For a Personal Loan.
Documentation forms the basis for processing a Personal Loan. Therefore, the applicant must provide complete, valid, and clear copies. Before the commencement of the application process, an Applicant should ensure the availability of the required documents to expedite the Personal Loan Process. Primary documents are standard for most lenders, which include the following.
Proof of Identity can be either: an Aadhaar card/Pan Car/ Driving License/Passport with a Passport size photograph.
Proof of the Residential Address where you reside: An Aadhaar card copy with the applicant’s current or permanent address has become mandatory for most lenders.
If the Aadhaar card reflects a permanent address, the applicant has to submit a current address proof valid document for the same, including Passport/ Driving License/ Voter ID or any other government-recognized document.
Signature Proof: A Pan Card or a Bankers’ verified proof is required to authenticate the applicant’s signature.
Income Documents: That will confirm the applicant’s monthly income to calculate the eligibility for the loan amount; valid income proof is to be submitted. These Include:
Salary slips for the last two months to know the monthly remuneration of the applicant and a Form 16 for proof of continuity.
A self-employed customer needs to submit the Income Tax Returns filed for the last three years
A Bank statement for the previous three months for the salary account of a salaried applicant and a self-employed applicant has to submit six months’ Banking of all Company and personal Bank accounts and proof of Business vintage. Most lenders demand own
hip proof for self-employed persons. It could be either the office or the residence.
Once the documentation is in hand, you must fill out an application form for a personal loan. You can fill out the form online or offline by visiting the nearest branch of the Bank. However, when you apply for an Instant Personal Loan Online, you simplify the process and effectively save time. The details filled in the form must be accurate and match the documentation further, apply along with the documents for further processing.
On receipt of the application, the Bank verifies the Documents and customer details and initiates a reference number. The applicant is informed of the file number via a Mobile SMS.
The Bank will next review your Credit Score and evaluate factors such as your repayment history, The CIBIL Score allotted must be above the required benchmark. There should be no delays or defaults in the applicant’s credit history.
A bank representative may conduct a home visit to verify the address provided in your application. Furthermore, suppose the applicant is unavailable at the home address. In that case, a neighbour check is done, or if the residence is rented, the landlord is asked to confirm the applicant resides at the given contact address.
Ownership proof is required if the residence is self-owned, which will expedite the verification processing.
The employer verification is waived if the applicant provides an email contact from the company domain. If not, a representative will visit the office premises to confirm the customer’s employment details.
The verification is more detailed for self-employed persons, with a Bank officer physically visiting the office premises to verify details and check the profile.
If you hold an account with the Bank, getting access to instant personal loan approval within seconds is quite convenient. This digital solution ensures a seamless and effortless borrowing experience, assisting customers in fulfilling their urgent financial requirements.
It is paperless and In1stant Online Personal Loan disbursal for saving account holders, so if you have an account with the Bank, you can visit the website and apply for a loan once it is approved, the amount will be disbursed in no time.
With all the above checks conducted positively, the Underwriter can check if the applicant meets the Personal Loan Eligibility Criteria Requirements. A financial calculation confirms the existing credit and obligations and whether the applicant can comfortably pay the monthly instalment for the loan amount requested.
On completion of the process, the essential terms and conditions of the Personal Loan are tabulated and communicated to the applicant. These include:
The customer accepts the lender’s Loan terms by signing an agreement all other charges are notified to the applicant, such as the Foreclosure and Part payment terms and additional fees. At this stage, the customer must be aware of the notifications and forward queries, if any. The Personal Loan terms, once decided, remain fixed for the entire tenure.
The Loan amount is transferred to the applicant’s account by ECS (electronic clearing services). Subsequently, the installment is presented to the customer’s account on a designated date per the fixed term.
A loan schedule is dispatched with the number of EMI and the break up therein.
The Bank transfers the funds approved via a Personal Loan to the customer’s account within 72 hours of the application. Most Banks have adapted to digital processes where feasible and are streamlining processing further to make a Personal readily available when needed!
An understanding of the know-how of the Personal Loan process will help our esteemed clients to receive funds without any delays or glitches.
What do you do when a financial emergency knocks at your door? If you have enough money for the expenditure, any urgent financial situation sways away. However, loans feel like the only viable situation if you fall short of money. While conventional loans are sought by many individuals, ICICI Personal Loan Top-Ups also serve as a more flexible and convenient alternative. Wondering what is a Top-Up Loan and how it works? Grab your reading glasses, sit back, and delve into this guide to discover more!
As its name suggests, the top-up loan allows you to borrow additional funds on top of your existing loan. If you have an existing loan, a Top-Up Loan offers a hassle-free and quick way to access additional funds while eliminating the need for extra paperwork. It also has lower interest rates as compared to Personal Loans. For instance, if a borrower needs funds for home renovation, education, or medical expenses, a top-up loan can be more cost-effective than applying for a fresh loan with higher interest rates.
Borrowers who Apply For ICICI Bank Top Up Personal Loans can use funds as per their requirements and the documentation is simple. In addition, timely repayment of a Top-Up Loan can also positively impact the borrower’s credit score by demonstrating their financial discipline. To be eligible for a Top-Up Loan, the applicant must meet the following criteria:
Before you get a Top-Up Loan on paper, here are some cost components associated with it:
Calculating the total costs involved in a Personal Loan Top-Up can help borrowers understand the financial implications and make informed decisions. Here’s a summary of the key factors to consider:
Several factors affect the cost of a top-up loan, but you can consider these two:
While a Top-Up Loan can be a cost-effective and convenient way to access additional funds when you have an existing loan, different banks have different terms and conditions. Navigating through the financial ecosystem of Personal Top-Up Loans can be daunting. Whether you Apply For a Top-up Loan at ICICI or any other financial institution, ensure to work with professionals to make well-informed financial decisions.
Need more help with the ICICI Personal Loan Top-Up Procedure? Contact the professionals at Your Loan Advisors now!
In the economic landscape, Personal Loans have become a convenient solution for individuals seeking financial aid for different reasons. However, individuals may find themselves burdened with inflexible repayment terms, high-interest rates, and sometimes multiple loans. This is where Personal Loan Balance Transfer comes into the big picture, offering individuals a way to alleviate their financial stress. Wondering how? Read on to find out!
On paper, a Personal Loan Transfer can be defined as a process wherein you transfer the outstanding balance of your existing loan to a new lender offering better terms and conditions. The priority here is paying the loan amount back successfully without any delays or bounces.
Typically, the tenure allotted for a Personal Loan Balance Transfer is between 12 to 60 months, and the tenure is granted on the eligibility of the applicant to re-pay the EMI and the sanctioned loan amount. Also, as the transfer process is unsecured as you can avail of it without any security guarantee or mortgage.
Although a Personal Loan Balance Transfer has many advantages, here are some things to consider before the transfer:
When you become diligent in your financial approach and assess the fine print, risk factors, and perks from various lenders, a Balance Transfer Personal Loan can help you save money, reduce stress and achieve better financial stability. However, if you need the help of seasoned professionals along the way, Your Loan Advisors are an excellent option.
When you pick Your Loan Advisors for assisting you with your Personal Loan Balance Transfer, you get transparent insights into market offerings. Discuss your options with the giants in the field, avail the best deals, and get a personalised analysis of your saving and other financial perks.