24-30% per year
₹11,500 INTEREST PER ₹1 LAC
6.5% to a maximum of 20.95%
4% of the loan amount
4%-5% Per month
Flat processing fee of Rs 2500 +GST
15 – 60 Days
Loan can be defined as the fixed amount of money that the borrower has to return to its provider with interest as per deal terms and condition. In modern era, individuals take loan from authorize bank or financial organization as per their interest and need to fulfill their various important tasks. Bank and financial organization offers different loans types such as personal loan, home loan, education loan, vehicle loan, crop insurance and several others. These loans resolve instant need of money and provide you instant help. Applying for loan becomes even better and secure with the help of technology and to get instant loan online is easier than ever before.
Because most personal loans are unsecured loans, banks charge higher interest rates and fees than they would for, say, an auto or home loan, which is secured by your car or house, respectively. An unsecured loan is not backed by collateral.
As we mentioned earlier, a secured loan is one backed by collateral like a mortgage or car loan. And though most personal loans are unsecured loans, some banks or credit unions will offer personal loans backed by an asset like a savings account or CD. Maybe that CD has a high penalty for early withdrawal but you need the cash now. A secured loan is a way to get access to that money without paying fees or selling the asset, though you will be paying a monthly interest to the bank for the loan, and possibly fees as well.
The majority of personal loans are offered with fixed rates, so the interest rate and payment will remain steady over time.
Variable interest means exactly what it sounds like — your interest rate may change over the life of the loan. These are typically found with a line of credit, which some lenders offer. With a line of credit, the lender will approve you to borrow up to a certain amount.
Lines of credit made available by banks to clients who meet specific requirements, like having a certain amount in an account at that bank. Because you meet (high) asset requirements, no collateral may be required.
verdraft lines of credit connected to your checking account, so if you spend more than what is in your checking account in a given month you have some added flexibility (but remember you’ll pay interest on the amount you overdraw.)
One of the most common types of lines of credit is a HELOC, or home equity line of credit. Like the name implies, this a loan backed by a house. Most HELOCs have a variable interest rate that may include a lower promotional rate followed by a higher one.
One reason many people take out a personal loan is to consolidate debt, including credit cards, payday and other personal loans, utility bills, and medical expenses. The idea is to roll all — or many — of those into one loan with a single payment and interest rate.
Before choosing a personal loan, consider what other options you have for borrowing. For homeowners, a home equity loan, HELOC or cash-out refinance may offer a way to borrow cash at a lower long-term interest rate, though there may be fees and approval may take time. If your need for cash really is short term, the amount is limited and your credit is good, a 0 percent interest credit card might turn out to be a better solution.
“You should be asking what other solutions might be available,” said Theresa Williams-Barrett, vice president of consumer loans and loan administration at Affinity Federal Credit Union in New Jersey She also said you should make sure to review all the terms of the loan in detail with the lender.
Using a personal loan to cover a major purchase may seem like an easy short-term solution, but it’s essential to look at how the monthly payments,interest rates, and fees will impact your long-term financial plan.
“I generally recommend only taking out a personal loan in cases of emergency and if there are few borrowable and/or liquid assets,” said Dennis Nolte, CFP and vice president at Seacoast Bank.
Taking out a personal loan can also impact your credit score since you are taking on new debt.
Flexibility: With bank loans, you only need to worry about making your regular installment payments on time. This is an advantage over overdrafts, where you must pay the full amount when the bank demands it. In addition, banks don’t usually monitor how you use your loan as long as you make your payments on time, so you can invest it however you deem fit.
Cost Effective: In terms of interest rates, bank loans are usually the cheapest option vs. overdrafts and credit cards. According to Bankrate, as of October 2018, the average fixed interest rate for credit cards has surged to 17.49 percent, while certain bank-provided loans guaranteed by the Small Business Administration have rates ranging from 7.5 to 10 percent. The lower interest rates of bank loans will definitely save you money.
Retained Profits: While businesses that issue equity to raise capital often give a percentage of their profits to shareholders, banks require borrowers to pay only the principal and interest amount on a loan. As such, you will retain all your business profits.
Tax Benefits: When you use a bank loan for business reasons, the interest you pay on the loan is a tax-deductible expense. For example, if you are paying a 5 percent interest rate on a $30,000 loan, then your yearly interest is deductible on your 1040 Schedule C tax form
Bank loans have the following characteristics:
1. It is a short-term source of finance.
2. A bank loan may be either secured or unsecured depending upon the circumstances.
3. The interest charged by the bank on such a loan may be either fixed or variable.
4. If mortgage loan is to be obtained, the borrower has to pay a number of fees such as title searching fees, application fees, inspection fees, etc.
There are two parties involved in the loan transactions. One is the bank and the other is the loan applicant.
The applicant will apply for loans to the bank and bank will accept the application. Bank can reject the application if found financially not viable.
The loan amount may very-small, medium or large.
There might be the difference between the applied amount and the sanctioned amount on the basis of the quality and capacity of the borrower and the purpose for which applied.
Banks’ decision is final in the case of loan application.
That is bank can fully sanction, partially sanction or may totally reject the loan application after considering the goodwill of the clients, its own fund and other issues related with creditworthiness.
Generally, loans are given in cash. But in exceptional cases, the same may be provided in kind, such as raw materials, machinery, and other inputs etc.
Generally, banks disburse loan in installment basis. But when the bank is convinced, it may disburse the whole amount of sanctioned amount at a time.
Banks often disburse their loan against the existing current account of the client. If the client is new, the bank asks the person to open a current account. The bank provides the sanctioned loan through that account.
Generally, loans are provided against collateral. But the sometimes small amount of loans can be sanctioned on the basis of personal guarantee.
Banks never sanction loan without interest. But interest rate can vary on the basis of types of loan or track records of the clients.
Depending on types’ of the loan, goodwill of the clients and purpose, the periodicity of the loans can vary. The loan may be sanctioned for immediate use, short-term, and mid-term or long-term basis.
Loans are repaid on an installment basis or it may be a one-shot arrangement.
In preparing the loan repayment schedule, banks generally, focus on the possible cash flow stream of the clients’ projects.At a glance, these are the characteristics of bank loans generally that are seen in case of every’ commercial bank.
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