Wednesday 21 June 2017

When the going gets tough, a personal loan gets you going!


A personal loan can help you realise many short term and long term dreams. In the absence of adequate savings, you can always fall back on a personal loan.

Life is a crazy ride, full of ups and downs. It is a series of phases, the good following the bad, the unexpected following the expected. One can never truly predict what the next turn will bring, or whether one will be taken by surprise sooner or later. The old adage ‘Nothing is constant except change’ holds true in terms of the lives we lead!

The same applies to the state of our finances. Despite the most careful planning, there are days when we are short of funds to finance the smallest of expenses. Or our investments that we were most counting on, go awry and we lose a lot of money in the process. Or there comes a time when we need a large sum of money quickly, but we don’t have the means to raise it. 

But just like there are problems, there are solutions. In terms of one wishing to have more money but not able to accumulate it at once, the solution is to apply for a personal loan. 

What is a personal loan?


A personal loan is a sum of money that one may get from their bank, in lieu of their income, age and credit history. The personal loan interest rates are normally higher than other loan products such as home loans. This is because a personal loan is an unsecured loan, i.e. there is no collateral that the applicant furnishes like in the case of a secured loan, such as a home loan. Thus, the loan’s veracity and repayment is dependent only on the individual’s income profile and repayment behaviour, in the absence of collateral.[1]
 
Normally, the interest rates for personal loans are over 11%. The best personal loans in India today are available for personal loan interest rates ranging from 12% to 19%, for a minimum loan amount of Rs 50,000 and a maximum of Rs 20 lakh. The tenure may range from three months to 60 months.
The bank or financial institution lets you apply for a personal loan basis your eligibility, credit history and repayment capability. The lending institution normally does not concern itself with how the applicant intends to spend the money borrowed.

So what can you use the personal loan for?


There are many uses that you can put the loan amount to. Sample just a few of the many uses of a personal loan[2]:

  • Children’s education, wedding expenses
  • House remodel
  • Making a down payment for a new house purchase
  • An expensive acquisition for the house – large plasma TV with home theatre, for example
  • A month-long foreign trip with the family
  • Setting up a small business
  • A medical emergency
  • Repaying an old debt, etc.

Thus, there is no limit on how you can use the personal loan money. The only thing you need to watch out for is to repay the loan as mutually agreed upon with the bank, so as to not fall prey to penalties and higher rate of interest at a later date. Defaulting on personal loan repayments can also ruin your credit history, making it difficult to borrow any other loans in the future.


How to apply for the personal loan


Applying for a personal loan is fairly simple – depending on your bank – and in many cases, you can even apply for it online.
  1. Start by checking your personal loan eligibility. It is computed basis the following factors[3]:
    • Any existing debt in your name – home, car, credit card loan
    • Your age
    • Monthly income
    • Desired loan amount
    • Credit history
  2. Once you find out how much loan you are eligible to get, you can check the bank’s personal loan interest rates[4].
  3. Now that you are cognisant of the interest rates, apply for the personal loan. When doing this online, you just need to fill out the application form provided by your bank and upload the supporting documents asked for (income proof, residence proof, age proof, bank statements, IT returns, etc.)
  4. Depending on the bank, the loan application is now perused and the loan is approved if all details are found correct. The bank will provide you with a transaction ID that you must quote when checking the status of the loan. The loan may be disbursed in just a few hours if it is pre-approved.

Be sure to…


…Follow a regular repayment model. The monthly loan instalment (EMI) is auto debited from your bank account on a pre-decided date every month. You must ensure that you have sufficient account balance to pay the EMI.

…Not quit your job while you are repaying the personal loan, or if you quit, to engage in new employment shortly. The loan is granted on the basis of your income, and a lack of income can set back your repayment. After several rounds of payment defaults, the bank is free to prosecute the loan holder.[5]
 
…Apply for a personal loan transfer to another bank that is offering the same product for a lower rate of interest. You can keep a tab on the personal loan interest rates being offered by various banks, as also the processing fees they charge before effecting the transfer. You are free to pre-pay the loan even after transferring it to another bank.


[1] https://www.nerdwallet.com/blog/loans/credit-card-personal-loan/
[2] http://tips.thinkrupee.com/articles/personal-loan-advantages--disadvantages.php
[3] http://www.moneycontrol.com/news/business/personal-finance-business/-2086633.html
[4] http://www.idfcbank.com/personal-banking/loans/personal-loan.html
[5] http://www.lawyersclubindia.com/forum/Credit-card-and-personal-loan-default-75039.asp

2 comments:

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    Jamesolsen Terrazas
    email : info.iqfinanceplc@gmail.com
    skype: cpt_young1

    ReplyDelete
  2. IQ FINANCE PLC provides a full financial planning service to both the commercial and domestic markets. At IQ FINANCE PLC we believe that financial planning is about two things: creating wealth and protecting wealth. These two objectives are at the heart of everything we do. And, as a member of IQ FINANCE Services, we give you a small-company service but with a large-company set up – the best of both worlds.

    You are at liberty to engage our leased facilities into trade programs as well as in signature project(s) such as Aviation, Agriculture, Petroleum, Telecommunication, construction of Dams, Bridges and any other turnkey project(s) etc. Our terms and Conditions are reasonable.

    Leasing Price : 4%+1%
    Buying Price: 32%+2%

    Contact us for more details on our terms and procedure of transaction.

    Jamesolsen Terrazas
    email : info.iqfinanceplc@gmail.com
    skype: cpt_young1

    ReplyDelete