Banks offer a lower rate on the personal loan; But is it really less: Check what interest rates are offered?
The situation as it is now with the cessation of various business activities and the loss of jobs, many in India and around the world could be facing financial strains. Although some countries have started to reopen as the situation has improved there, speaking of India, the situation is both critical and uncertain.
In the midst of this uncertainty, what has also become a huge distress is the reluctance of banks to lend money easily. In a conversation with a friend who applied for a personal loan, it was rejected on the following grounds:
1. His employee was not registered on the panel of the bank’s exclusive list
2. His salary was lower
3. And the same has not been verified or endorsed by the employer’s HR group.
4. Also, if any, all of the factors listed above were right, he would have gotten a personal loan from a private lender at a whopping 19 percent.
Note for some of the private lenders to obtain a personal loan, the minimum wage threshold has been increased to Rs. 40,000 per month.
In view of this, we can also highlight that in the arena of the Covid 19 pandemic:
Banks are very careful when it comes to lending money:
Given that the banking sector is not that far away, it will feel the heat of the rise in non-performance accounts which have been paused or relaxed as part of the year’s moratorium. last and should not be categorized as NPA. But now they have no way to go but to be more secure with their loans.
Documentation changes amid the personal loan pandemic
Other than the usual payslip which justifies that you are employed and that you can repay the borrowed money
Banks in the midst of the pandemic have requested new documentation formalities such as:
1. A home work certificate (WFH) issued by the employer.
2. In addition, the KYC is a definite need here, the personal loan being an unsecured loan.
Personal loan rates have been cut for various banks amid the pandemic:
|Bank||Loan Note Size||Interest rate per year|
|SBI||Up to Rs. 20 lakh||9.6-13.85%|
|Baroda Bank||Rs. 50,000 to Rs. 10 lakh||10 to 15.6%|
|GNP||Up to Rs. 10 lakh||8.95 to 14.5%|
|Union bank||Up to Rs. 15 lakh||8.9 to 13%|
|HDFC Bank||Rs. 50,000 to Rs. 40 lakh||10.5 to 21%|
|ICICI Bank||Up to Rs. 25 lakh||10.5 to 19%|
|Axis Bank||Rs. 50,000 to Rs. 15 lakh||10.49-21%|
|IndusInd Bank||Rs. 50,000 to Rs. 15 lakh||Starts at 11%|
|HSBC Bank||Up to Rs. 30 lakh||9.99 to 14%|
|Kotak Mahindra Bank||Up to Rs. 20 lakh||10.75-24%|
|Bajaj Finserv||Up to Rs. 25 lakh||13.00%|
Now, to get the best deal on a personal loan, your relationship with the bank, your creditworthiness, your credit history, your credit profile as well as your current income and future income prospects come into play.
So until and unless you have a nice payout that attracts you a minimum of say Rs. 50K per month, I forgot about personal loans for now and may be looking for others means of fundraising.
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