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Personal Loan

What is a Personal Loan?

Personal Loan is an unsecured loan that is generally used for a personal purpose. This type of loan could be used for paying off debts, going on vacations, buying appliances and latest gadgets, home improvement, unexpected medical expenses, and so forth.  The banks calculate the eligibility of the borrower before approving the loan application. A Personal Loan is offered based on the credibility and repaying capacity of the borrower. The funds from a Personal Loan could be used for any type of expense as per the convenience and requirement of the borrower. As a Personal Loan does not require any security or collateral, the rate of interest charged is comparatively higher than other types of loans. Unlike the high rate of interest, the loan tenure is shorter than the other types of secured loans and can be used for any personal need.

 

Key Facts About Personal Loan

Personal Loan Interest Rate MCLR linked rate of interest starting at 10.99%
Loan Amount 
  • Minimum amount: 50,000
  • Maximum amount: 50 Lakhs
Loan Tenure Ranges between 12 months to 60 months
Nature of Personal Loan Unsecured Loan (No security or collateral is required)
Loan Turnaround Time Loan disbursement within 7 working days from the date of submission of loan application
Processing Fee Ranges between 1% to 2% of loan amount
Prepayment Ranges between 1% to 2% of loan amount

 

Different Types of Personal Loan

There are different types of Personal Loans based on need - for example:

Festival Loans Loans offered during festival season at discounted interest rates for a shorter period of time.
Consumer Durable Loans Small loans offered to purchase durable consumer products including televisions, ACs, etc.
Marriage Loan Loan offered for marriage expenses
Vacation Loan Loan taken for travel (Domestic and International)
Home Renovation Loan for renovating/ upgrading your home

 

Personal Loan Eligibility Factors and Key Documents:

A Personal Loan is offered based on certain factors that determine the eligibility of the borrower. Some of these are enumerated below.

Eligibility Criteria
Credit Score
  • Good repayment record on past loan repayments, credit card monthly payments and loan instalments etc.
  • Good Credit Score (650 and above)
Type of Company
  • Rating of the company you are employed with affects Personal Loan terms
  • Listed companies get a higher loan amount
Repayment Capability of the borrower
  • Applicant should be a long-term employee of the  current organization
  • Continuity of business is checked for a Self-employed business owner
Age 
  • Varies from bank to bank
  • Normally 21 years and above is required
Who can apply?
  • Salaried Employee
  • Self-Employed
  • Self-Employed Professionals

 

The above factors help in the calculation of the eligibility that affects the EMI also. To know the amount of EMI, you can use Pooja Consultancy's Personal Loan EMI Calculator.

 

Key Documents for Personal Loan

Following documents are required to apply for a Personal Loan:

Age proof Any one of the following:

  • Aadhar Card
  • PAN Card
  • Voter ID
  • Driving license
  • Passport
Address proof Any one of the following:

  • Aadhar card
  • Registered Rent Agreement
  • Driving license
  • Election Card or Passport
  • Home Light/Tax Bill
  • Office Light/Tax Bill
Income documents   Salaried Employee

  • Salary slips in case of salaried employees (Last 3 months)
  • Form 16 of latest 2 years
  • Bank account statement of last 6 months reflecting salary credit.
  • Any other EMI Serving bank account statement of last 6 month.
  • Employment Certificate-Offer Letter/ Joining Letter/ Increment Letter.

  Self-Employed Professionals/ Business Owners

  • Financials including Balance Sheet,P & L statement and Computation of Income.
  • Income Tax Return in case of Self-Employed last 3 years Return required.
  • Saving/Current Account Bank Statement
  • Ownership Proof Compulsory required.
  • Business Proof Compulsory required.
Other documents
  • Loan application form
  • 2 passport size photographs

Home Loan

What is a Home Loan?

  • Buying a home could be one of the biggest achievements of a person's life. In most cases, it takes an entire lifespan to fulfill the dream of purchasing one's own home.
  • Selecting the ideal property involves a lot of research and planning.
  • Arranging for finance is probably the toughest and the trickiest part of the process.
  • You could dip into your savings for the entire payment OR
  • Decide to get a Home Loan at a good interest rate
  • A decade or so earlier, borrowing from a bank used to be a cumbersome process but today financial institutions have simplified the entire Home Loan application and disbursement process.
  • All leading financial institutions offer Home Loans with attractive interest rates, flexible repayment periods, quick turnaround times and unique product features.
  • Before finalising on a lender, one must understand the ins and outs of a Home Loan
  • How should I compare what each bank is offering me?
  • Is there anything in the fine print I should be worried about?
  • Let pooja consultancy help you get the ideal Home Loan - let's seal the deal!

Key Facts about Home Loan

Rate of interest

 

  • MCLR linked rate of interest.
  • Home loan current rate of interest range in between "8.40%" per aanum to "11%" per annum depends on profile of "Customer" and Parameters of " Home Loan Programme".
Loan tenure

 

  • Minimum 5yrs and Maximum 30 years
  • For salaried -30 Yrs Maximum (Subject to Maximum Age of Applicant should not cross 65 Yrs.)
  • For Businessmen-20 yrs Maximum (Subject to Maximum Age of Applicant should not cross 70Yrs)
Nature of Home Loan

 

  • Secured against property being purchased
  • Property should be cleared from all the aspects like "NA NOC Title Clear","Legal Title Report" etc.
Partial Prepayment

Foreclosure

 

  • Partial repayment refers to repaying a part of the outstanding loan amount before the maturity date.
  • Home Loan full foreclosure refers to closing a loan in full before the maturity date and is vailable at NIL fee.
Income Tax Benefits

 

  • Income Tax benefit can be claimed on principal and interest amount of Home Loan under Section 80C and Section 24 of the Income Tax Act, 1961.
Loan to value ratio (LTV)

 

  •  Varies between 75% to 90% of Property Market value.
Processing fee+Other Cost

 

  • Ranges between 0.25% to 2% of sanctioned loan amount.
  • Insurance Cost- Life Insurance and Property Insurance (It's optional in some bank otherwise compulsory)
  • Notary,Franking,Registered Mortgage and Advocate legel Fees Etc.

You Can Avail a Home Loan for:

  • Buying a property within a residential development currently under construction.
  • Purchasing a ready-made property from a builder or the current owner of the property.
  • Purchasing a plot in a private development, from the current owner or from the government development authority
  • Construction of one's own property
  • Purchasing a plot as well as financing the construction of the home

 

Home Loan Eligibility Factors and Key Documents:

Eligibility: Before sanctioning a Home Loan, banks will check your eligibility based on certain factors to decide whether you are eligible to apply for a loan. Based on the eligibility check, your home loan amount will be sanctioned.

Eligibility Factor
Age 
  • 21 years and above at the time of loan application
  • 70 years at loan maturity
Credit Score/ Credit History
  • Credit Score should be 650 or above
  • Credit History includes repayment of existing and past loans and credit cards payments
Type of Employment/  Stability
  • Salaried or self-employed
  • Job or business stability- at least 2 years
Income (Higher the income, higher the Loan Amount)
  • Salary in case of salaried employees
  • Business turnover, annual income, net-profit etc. in case of self-employed basis latest filed financials

 

The above-mentioned factors affect your loan amount considerably. Once your loan application is accepted you need to furnish some key documents that will support your identity and stability as a citizen of a country. Some of the key documents are listed below:

Type of Document
Age proof
  • PAN Card
  • Aadhar Card
  • Voter ID
  • Driving license
  • Passport
Address proof
  • Registered Rent Agreement
  • Driving license
  • Lease or Passport
  • Aadhar card
Financial documents
  • Last 6 months salary slips in case of salaried employees
  • Last 3 years Income Tax Return in case of self-employed
Other documents
  • Loan application form
  • Photographs
  • Signature ID proofs
  • 12 Month bank Statement
  • Property Documents
  • Initial Processing Fees Cheque

 

Types of Home Loans

Home Purchase Loan: This type of a Home Loan is availed for purchasing a new house.

Home Loan For Purchasing Land: This type of a Home Loan is availed to purchase a piece of land either for construction or investment.

Home Construction Loan: This loan availed specially for the construction of a house. Banks typically offer this type of loan for constructing a house on an existing land.

Home Improvement Loan:  Borrowers can also avail a Home Loan for renovating, improving or repairing their current house. The interest rates charged for this type of a Home Loan is similar to a conventional Home Loan.

Home Extension Loan: A loan taken for expanding an existing house.

Loan Against Property

Loan Against Property (LAP) is a type of secured loan. A secured loan is a loan where the borrower mortgages his or her asset or property as collateral to the bank or the other lending institution. LAP could be used for several personal and professional needs such as house renovation, business expansion, purchase of a new machinery and other requirements. Typically the banks and other lending institutions offer loan against residential, commercial and industrial property.  A borrower usually gets a fixed percentage of the property value known as LTV (Loan To Value) as loan amount against the property. The loan to value (LTV) varies from one bank to another. Usually, the loan to value ranges from 40% to 70% of the property value. The borrower can continue using the property that is mortgaged with the bank for its respective use.

However, both LAP and Personal Loan could be used for personal and professional needs but the interest rates of LAP are comparatively lower than a Personal Loan. This loan variant can be availed by salaried, self-employed professionals and self-employed business owners. The banks offer LAP either at the fixed rate of interest or at an adjustable rate.

Purpose of Loan Against property

Loan Against Property could be used for several purposes mentioned below:

    • Business Expansion
    • Purchase of a new property
    • Purchase of raw material
    • For immediate working capital requirement
    • Acquiring a new machinery
  • Investment in new technology for business

 Key Facts About Loan Against Property (LAP)

Loan Against Property can be further understood with the below mentioned key facts:

Loan Against Property Interest Rate Starting from 9% Per Annum Reducing
Loan to Value (LTV)
    • Ranges from 60% to 70%
    • LTV as per different property types:
    1. Commercial property- 55-65% of Market Value
    1. Residential property-65-75% of Market Value
    1. Industrial property- 40-55% of Market Value
    2. Residential Plot or Commerical Plot - 35-50% of Market Value
    3. School,Hospital,College etc - 40-60% of Market Value.
Loan Tenure Flexible loan tenure up to 15 years, however, the tenure varies depending on the age of the borrower
Processing Fee Ranges from 0.50% to 1% of the loan amount
Loan Amount
    • Minimum  20 Lakhs
    • Maximum  100 Crores  (Based on the type of property and loan purpose)
Who can Apply?
    • Salaried Individual
    • Self-Employed Individual
    • Professional
    • NRI (Subject to documents verification)
Prepayment of Loan Prepayment could vary from 2-5% (Read loan sanction terms carefully)

Eligibility Criteria for Loan Against Property (LAP)

To obtain Loan Against Property the borrower should fulfil the eligibility criteria. The following factors affect the loan eligibility of the borrower:

Eligibility Factor
Age
  • Minimum 21 years (At the time of loan application)
Job Experience or Business Stability
  • Salaried Employees: Minimum of 2-3 years
  • Self-Employed: Cash profit of at least 3 years
Credit Score Good Credit Score
(650 and above is usually acceptable)

Required Documents for Loan Against Property (LAP)

If borrowers are eligible for the loan, they are required to submit the required documents for a timely and hassle-free disbursal.  Refer the below table to know more:

 Type of Document  Salaried Employee Self-employed
Salary slips/ ITR
    • Salary slip for last 6 months
  • Bank statement or copy of passbook of last 6 months
    • ITR (Income Tax Return) for last 3 years as certified by CA
  • Copy of Passbook or Bank Statement for last 6 months
Income Proof Any one of the following:

    • Form 16
    • PF Statement
    • Appointment Letter
    • Balance Sheet of last 3 years
    • Profit and Loss Statement of last 3 years
    • Schedules and Annexure
Identity proof Any one of the following:

    • Aadhar Card
    • Passport
    • Voter ID
    • PAN
  • Driving License
Any one of the following:

    • Aadhar Card
    • Passport
    • Voter ID
    • PAN
  • Driving License
Job or Business stability  Full-Time job with a relevant number of years Proof of business registration:

    • GST Number
  • Incorporation Certificate
Photographs  Two passport sized photographs signed across Two passports sized photographs signed across
Residential address proof  

Any one of the following:

    • Registered Rent Agreement
    • Passport
    • Utility Bill (Up to 3 months old)
    • Driving License
Any one of the following:

    • Registered Rent Agreement
    • Passport
    • Utility Bill (Up to 3 months old)
  • Driving License
Other documents 
    • Employment contract
    • Appointment letter if job is less than 1 year old
  • Cheque of processing fees in favour bank or NBFC
Cheque of processing fees in favour bank or NBFC

Business Loan

What is an Unsecured Business Loan?

The growth and sustainability of a business depends on the continuous inflow of funds. The funds might be required to expand the business or purchasing equipment. The funds can be borrowed in the form of a loan from banks and other financial institutions. Business Loans are typically unsecured in nature which means no collateral or security is required to borrow a loan. Business Loan is a debt provided to the company or the self-employed professionals or business owners that are to be repaid along with the principal amount. The rate of interest is usually pre-determined by the lending institutions. A Business Loan in India is offered at competitive interest rates, with a low processing fee, and without any security or collateral. Several leading banks and NBFCs including HDFC Bank, ICICI Bank, Capital First, Citibank, Fullerton India, Tata Capital, and so forth are offering business loans.

Key Facts About Unsecured Business Loan

A Business Loan can be better understood with the help of the table below:

Business Loan Interest Rate Competitive interest rate starting at 14% Per Annum Reducing
Loan Amount
    • Minimum 3 Lakhs
    • Maximum 1 Crore
Nature of Business Loan Unsecured (No mortgage required)
Loan Tenure Ranges from 24 months to 60 months
Processing Fee Up to 2% of loan amount

Types of Business Loans

Some types of Business Loans are explained below:

    • Term Loans: Term Loans could be used for business expansion or capital infusion requirement of an organization. Generally, a term loan is the loan offered for the acquisition of long-term fixed assets including land or building, machinery, and other business needs.  The interest rate can be either fixed or floating and are usually have a fixed repayment schedule.
    • Special Business Loan Scheme for Women Entrepreneurs: Today banks are offering attractive business loan scheme for women entrepreneurs at low rates of interest. However, women entrepreneurs who have business ownership of less than 50% are not eligible for special loan schemes.
    • Working Capital Loans: These types of loans are offered to meet the daily operating expenses of the business. These loans can be further classified as secured and unsecured loans.

Business Loan Eligibility

There are certain important eligibility factors for Business Loan. The following factors are:

Age
    • Minimum- 21 years
    • Maximum- 65 years

(Age may vary from bank to bank)

Who can apply?
    • Sole Proprietorship
    • Partnership Firm
    • Private Limited Companies
    • Closely Held Public Listed Companies
    • Societies
    • Trusts
    • Limited Liability Partnership
    • Professional like Doctor, CA Etc.
Business Profitability Business should be in the profitable state for at least 3 consecutive years.
Company Financials Complete financials including Balance sheet and Profit & Loss statement for latest 2 years, Tax audit reports.
Credit Score Good Credit Score (650 and above)

 

Business Loan Key Documents

The following documents are required for taking Business Loan:

Type of   Document
Identity   Proof Any one of the following:

    • Aadhaar Card
    • PAN Card
    • Driving License
    • Voter ID
    • Passport
Address   Proof Any one of the following:

    • Aadhaar Card
    • PAN Card
    • Driving License
    • Voter ID
    • Passport
    • Bank Statement (Bank Account Passbook updated and of recent three months)
Ownership   Proof Proof of ownership of residential or commercial property (including parental property)
Financials Complete financials including Balance sheet and Profit & Loss statement for latest 3 years, Tax audit reports.
Other    Documents
    • Loan application form
  • Passport Size photographs duly signed across

 

Cash Credit Overdraft Facilities

What is Cash Credit Loan?

A cash credit loan is a short-term source of finance, having a tenure of up to one year. Under the short-term finance option, the bank offers its applicant to take a loan up to a certain limit depending on their credit history.

This type of loan is extended to businesses and companies to fulfill their working capital requirement. This allows the customer, typically a business or company with a proven track record of profit, to withdraw money which is more than the balance available in their accounts. Cash credit is also known as Bank Overdraft facility.

Leading banks, such as IDBI Bank provides cash credit facility for businesses to finance their day-to-day requirement. The finance can be utilized for the purchase of raw materials, stores, fuel, for payment of wages for labor, power charges, for storing goods till they are sold out & for financing the sales by way of sundry debtors/receivables. Cash Credit facility is granted to companies to bridge the working capital gap, by way of a running account. The withdrawals are regulated and the withdrawal limit is arrived at based on the structure of current assets and liability.

Security

Cash Credit (CC) is granted against hypothecation of stock and assets such as raw materials, work-in-process, finished goods and stock-in-trade, including stores and spares.

Features of Cash Credit

1. This loan is given to meet the working capital requirements of a business.

2. It is given against a collateral security.

3. Interest is generally charged only on the amount of loan taken by the customer and not on the amount of credit sanctioned.

4. This is a short-term loan with specified monthly/quarterly repayment structure as decided by the lender.

5. The applicant is allowed to withdraw the funds made available to him to meet the day to day working capital requirement by way of a running account.

6. A cheque book is issued in the name of the company and he can withdraw funds as per requirement

7. The applicant has the option to repay the loan as frequently as desired (daily/weekly), or as per the repayment, the structure is drawn by the lender.

8. Even individual applicants can avail this type of facility against their fixed deposits (as a loan) and save on interest.

Cash Credit Overdraft Facilities