How do professional loans compare to normal personal loans?
A professional loan is an unsecured loan given to a professionally qualified person who provides professional services either as an individual or as a business. Typically, professionals such as doctors, accountants and company secretaries are eligible for professional loans. These loans are given to professionals to meet their personal or professional needs. But if you are a professional, should you go for this type of loan? Let’s take a look at it.
Eligibility and benefits: These loans require minimal documentation, offer the most competitive interest rate, have minimal fees like processing fees, and have no hidden fees.
Manish Chaudhari, Head of the Digital and Corporate Alliance, Poonawalla Fincorp, said: “Eligibility for a professional loan is based on revenue and existing commitments and also takes into account the customer’s previous credit history.”
He continued, “Some of the unique features of these loans are that they come with the option of a partial payment and no prepayment fees are charged in the event that the customer requests prepayment from their own sources. This makes it a more affordable and smarter choice as customers can optimize their interest outflow. “
In addition, the loan does not require the physical signature of documents or the delivery of postdated checks. The process is carried out by signing the loan agreement online and e-NACH (EMI repayment instrument) and is therefore suitable for the current pandemic situation. In the future, a top-up will be possible if the customer wants to take out an additional loan amount, added Chaudhari.
However, you need to know that eligibility criteria differ from bank to bank or lender to lender.
Therefore, before applying for a professional loan, you should always check whether you meet the eligibility criteria.
Documents required: The documents required to obtain these loans are very simple, e.g. With these documents, the application for immediate approval and disbursement of the loan can be submitted online.
A professional can also obtain the loan offline by visiting the nearest branch of the lender from whom they wish to obtain the loan.
Comparison: Professional loans score points over personal loans because they come with advantages such as better prices, flexible term options, lower processing fees, higher loan amounts and various tailored offers. These loans are tailor-made and take into account the needs of professionals.
Chaudhari said, “Professional loans are generally cheaper than personal loans, starting at just 9.99% per year for employees and self-employed. For example, if you take a ₹10 lakh professional loan at 9.99% for 36 months versus a personal loan at 12%. A professional loan can at least help you save ₹34,000 interest outflow only over the term of the loan. For example, suppose the professional loan has features such as partial payment with no fees and full prepayment with no additional fees. In this case, the interest outflow can be further reduced and optimized based on the business cash flows. “
The total average ticket size for getting professional credit is usually between ₹10 lakh and ₹12 lakh.
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