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Personal Loan

Why should I apply for a personal loan?

You should apply for a personal loan because of the following reasons:

  • No collateral needed: A personal loan is an unsecured loan, so you do not any collateral/security to avail a personal loan.
  • Flexible end use: Unlike a car loan or a home loan, a personal loan can be used for various purposes, ranging from medical emergency expenses to home renovation.
  • Minimal documentation: The documentation process to avail a personal loan is far simpler and faster that the process to avail a secured loan.
  • Debt consolidation: You can consolidate multiple loans and/or credit card dues by taking a personal loan. This will not only make debt repayment easier but will also help you to save on interest payout.

What is the minimum salary required to get a personal loan?

The minimum monthly salary requirement to avail a personal loan varies from lender to lender. However, it generally ranges between Rs. 15,000 and Rs. 25,000 per month.

What is the best credit score or CIBIL score to get a personal loan?

Credit score is a 3-digit number that ranges between 300 and 900. It serves as a measure of creditworthiness and financial health of an individual. Thus, higher the credit score, greater are the chances of getting a personal loan approved. Generally, a credit score of 750 and above is considered good. You can improve your credit score by paying credit card bills on time, decreasing your outstanding debt and maintaining old credit card accounts in good standing.

What role do credit history and score play in getting a personal loan?

Your credit history and credit score reflect your handling of credit in the past. Hence, they not only affect the chances of being approved for a personal loan, but often impact the rate of interest too. Higher the credit score, greater are the chances of approval and receiving a lower preferential interest rate.

Can I get a personal loan being a pensioner, if I have a pension account with one of the leading banks in India?

Yes, you can get a personal loan even as a pensioner, if you have a pension account with one of the leading banks. However, you should ensure that your bank offers personal loans to pensioners and you meet the eligibility criteria as specified by your prospective lender.

Can a student apply for a personal loan?

Generally, students are not eligible for a personal loan as a stable source of income and a good credit score are necessary pre-requisites. However, if you have a stable monthly income and fulfill the lender’s other eligibility criteria, you may easily avail a personal loan.

What is the minimum score to get a personal loan?

It depends on the eligibility criteria set by the lender. Most lenders do not specify a minimum credit score for a personal loan. Some lenders might lend money to applicants with low credit score (less than 750) but the interest rate applicable is usually higher in such cases.

Can I get a personal loan if I have a home loan?

Yes, you can apply for a personal loan even if you already have a home loan. However, the chances of getting the loan approved will depend on your repayment capacity, which in turn depends on your monthly income and credit score.

Can self-employed individuals apply for a personal loan in India?

Yes, self-employed individuals like businessmen, doctors, chartered accountants, etc. can apply for a personal loan in India provided they meet the eligibility criteria. Moreover, some banks and NBFCs provide special personal loan offers for doctors, chartered accountants and businessmen.

Can I get personal loan without a salary slip?

Yes, you can get a personal loan without providing salary slips. You can submit your bank account statement/ a copy of Form 16/ employee certificate from the employer, etc. as a proof of income to fulfil the eligibility criteria. However, it is always recommended to confirm the list of required documents with the lender as it may vary from one bank to another

Can I use a personal loan for marriage purpose?

Yes, you can avail a personal loan to meet marriage related expenditure as personal loans come with flexible end use. Some lenders even provide personal loans specifically named as wedding/ marriage loans.

Can I take a personal loan from two different banks at the same time?

Yes, you may avail a personal loan from two different lenders at the same time. However it is not advised to do so, as it will not only affect your credit score but will also increase your EMI payout. It will be better to take one personal loan of a larger amount than two personal loans of smaller amounts. This way you can pay lower EMIs for a longer tenure and also improve your credit score. Moreover, you will save upon processing fees and other loan related charges.

Which is better, a personal loan or a credit card?

Both personal loan and credit card are means of borrowing money. Which one is better depends on the purpose behind borrowing money. If you need to borrow a fixed amount for a finite period of time, go for a personal loan. On the other hand, if you want revolving credit for lifetime, go for a credit card.

How do Personal Loans Work?

Personal loans are unsecured credit with flexible end-use that typically have a tenure of 12 months to 60 months. If a shorter tenure is chosen, individual EMI amounts are higher, while a longer tenure results in lower individual EMIs. The following are the key features of a personal loan:

Personal Loan Features

  • Collateral/Security Required: You don’t need to provide any collateral such as house or car to avail a personal loan. The loan is approved only on the basis of your creditworthiness, which depends on your credit score, income, repayment history, employer reputation, etc.
  • Flexible End Use: Unlike a car loan or home loan, personal loans can be used for multiple purposes, such as to meet expenses of a medical emergency, travel, house renovation, debt consolidation, etc.
  • Flexible Tenure: Personal Loans come with flexible tenure usually ranging from 12 months to 60 months.
  • Minimal Documentation: You can apply for a personal loan online and even offline with minimal documentation. Key documents that lenders generally need the applicant to provide include a proof of identity, a proof of address and a proof of income.
  • Quick Disbursal: Personal loan disbursal can happen within a period as short as a few hours, once the application is approved. Turnaround times can also be as short as a few minutes, if you are able to avail a pre-approved loan offer.
  • Flexible Loan Amount: The eligible personal loan amount is based on an individual’s repayment history, monthly income, age, profession, employer reputation and other such factors. Lenders offer personal loans of amount as low as Rs. 10,000 to as high as Rs. 40 lakh.

Loan Verification Process

The verification process for a personal loan involves the following key steps:

  • Step 1: Once you have submitted your online application on Crustcorporate.com, your chosen lender receives your online loan application.
  • Step 2: Subsequently, the lender’s representative will call you to verify application details and arrange for pickup of documents required for your loan application.
  • Step 3: Once the documents have been collected and successfully verified, the personal loan application is approved.
  • Step 4: Loan is disbursed once the applicant signs the loan agreement.

How is a personal loan disbursed?

Once your personal loan application is approved and the loan has been sanctioned, disbursal occurs in one of 2 ways:

  • Option1. Direct transfer of funds to a savings/current bank account specified by the applicant.
  • Option2. An account payee cheque/ draft sent to the applicant’s mailing address by post.

Currently the 1st option is more commonly used as disbursal is quicker and there is no risk of a cheque/draft getting lost in transit by post.

Factors affecting personal loan disbursal limits?

The main factors affecting the disbursal limits of personal loans include the following:

  • Income of the applicant – higher income level tends to increase the disbursal amount
  • Current EMI payable – higher EMI payouts typically decrease the disbursal amount
  • Number of dependents – higher number of dependents usually decrease the disbursal amount

The list of factors impacting disbursal limits of personal loans mentioned above is not exhaustive and there may be others that impact the disbursal decision made by lenders.

what are the different ways to pay personal loan Emi?

Timely EMI payments of your personal loan are essential to ensure that you maintain a clean credit history and good credit score. There are multiple ways you can pay your loan EMI:

  • Standing Instructions – You can use NACH mandate to set up standing instructions.
  • Autopay – You can use internet banking to set-up autopay for EMI payment.
  • Online Transfer – EMI payments can be made online using NEFT, RTGS, IMPS payments.
  • Cheque/Draft – Post-dated cheques (PDC) or drafts can also be used to pay your PL EMI.
  • Do keep in mind that the different EMI payment options mentioned above may or may not be available in case of your lender.

Some must know terms related to personal loan

The following are a few specific terms related to personal loans that you must know:

  • Personal Loan for Women: It is a special category of personal loan offered to women by several banks and NBFCs. A preferential rate of interest is applicable in such cases to promote and support female entrepreneurs and working women.
  • Personal Loan for Pensioners: It is offered to senior citizens so that they can meet their retirement needs, medical expenses, or plan a trip without any financial constraint.
  • Pre-approved Personal Loan: This is a special category of personal loans, also known as instant personal loans. These are usually offered to existing customers (account holders/credit card holders) of the bank or NBFC. Instant personal loans are characterized by minimal to no documentation and quick disbursal of the loan amount (generally within a few hours). However, the loan amount sanctioned in such quick personal loan offers depend on the applicant’s profile and cannot be changed.
  • Top-up Loan: This is a personal loan issued to a borrower who already has an unpaid personal loan from the current lender. Top-up personal loans are usually available to select PL customers of the NBFC and they often feature an interest rate similar to that of a standard personal loan.
  • Balance Transfer: Balance transfer is the process by which the principal outstanding of an existing loan is transferred to a new lender offering a lower interest rate. This decreases the overall interest payout over the loan tenure.
  • EMI: Equated monthly installments (EMI) are the scheduled monthly payments that a borrower needs to pay over the loan tenure to pay off the amount borrowed along with interest accrued.
  • Partial-Prepayment: In case the borrower decided to repay a loan amount that is greater than the monthly EMI payout, the extra amount is considered to be a partial-prepayment. Such partial prepayment decreases the outstanding loan principal and in effect reduces the total interest outgo for the loan. In such cases, prepayment penalties and related taxes may be applicable.

Charges and fees related to personal loan

Apart from interest charges, some additional charges may also be applicable to a personal loan. Some of the most common ones that should be kept in mind are as follows:

  • Processing Fees – This is a fee to cover the administrative charges related to the disbursement of a personal loan. Processing fees are usually between 1% and 3% of the loan amount sanctioned.
  • Prepayment/Foreclosure Charges – When an amount in excess of the standard EMI payment is made, it is counted as pre-payment of a loan. In case an outstanding loan is paid off before the end of its tenure, the process is termed as foreclosure or complete pre-payment. In most cases, lenders charge a fee known as foreclosure charge at the time of making this complete prepayment. Typically prepayment/foreclosure charges range from Nil to 5% of the principal amount prepaid plus applicable taxes on top of the loan principal outstanding.
  • Late Payment Charges – These charges are levied when the borrower is late in making EMI payments. This is typically a fixed charge that borrower will need to pay along with the due amount.
  • Cheque Bounce Charges – In case an EMI payment is missed as the account linked to the post-dated cheque is low on funds or the account has been closed, a cheque bounce charge will be applicable. This is typically applied as a fixed charge of around Rs. 500.

Can I get personal loan without a salary slip?

Yes, you can get a personal loan without providing salary slips. You can submit your bank account statement/ a copy of Form 16/ employee certificate from the employer, etc. as a proof of income to fulfil the eligibility criteria. However, it is always recommended to confirm the list of required documents with the lender as it may vary from one bank to another.

Can I get a personal loan if I have a home loan?

Yes, you can apply for a personal loan even if you already have a home loan. However, the chances of getting the loan approved will depend on your repayment capacity, which in turn depends on your monthly income and credit score.

Can I get a personal loan being a pensioner, if I have a pension account with one of the leading banks in India?

Yes, you can get a personal loan even as a pensioner, if you have a pension account with one of the leading banks. However, you should ensure that your bank offers personal loans to pensioners and you meet the eligibility criteria as specified by your prospective lender.

What role do credit history and score play in getting a personal loan?

Your credit history and credit score reflect your handling of credit in the past. Hence, they not only affect the chances of being approved for a personal loan, but often impact the rate of interest too. Higher the credit score, greater are the chances of approval and receiving a lower preferential interest rate.

What is the impact of GST on personal loans?

The impact of GST on personal loans has not been much as it is not levied on EMIs. However, the service tax has increased from 15% to 18%. As a result, the one-time costs including processing fee, prepayment charges, etc. will rise.

How can I bargain for a better rate of interest on my personal loan?

You can get a lower rate of interest on your personal loan by following the below tips:

  • Maintain a good credit score as it is suggestive of financial stability and repayment capability. Higher the credit score, greater are the chances of availing a personal loan at a lower rate of interest.
  • Apply for loan at a bank with which you already have a savings account or fixed deposit. Good pre-existing relationship with the lender has a positive impact on your repayment ability, which may help you to get a loan at a lower rate of interest.
  • Banks and NBFCs often release special personal loan offers during festive season. These offers generally have an attractive rate of interest. Thus, applying for a personal loan during the festive season may help you get a loan at a lower rate of interest.

How can I avoid personal loan rejection?

While getting a personal loan application approved completely lies in the hands of the lender, the below steps can be followed to avoid rejection:

  • Carefully check the eligibility criteria set by the bank/NBFC and ensure you meet them.
  • Check for inaccuracies in your credit report as they might affect your credit score and hence your chances of getting a personal loan.
  • Reduce your outstanding debt by paying any existing loan installments and credit card dues.
  • Keep your credit utilization ratio below 40%.
  • Avoid multiple loan applications at once.

What is a top up loan?

Top-up loan refers to the second personal loan that can be taken over an existing personal loan. The second loan can either be used to consolidate debt or to meet a new requirement.

What are the pros and cons of personal loan balance transfer?

It may happen that you took a personal loan at a higher rate of interest because you needed the funds immediately. However, you later find that other lenders are offering a lower rate of interest. In such a case, personal loan balance transfer is the most effective way to reduce your burden. Let’s look at the various pros and cons of balance transfer to help you take an aware decision: Pros:

  • Lower rate of interest: You will have to pay interest at a lower rate to the second bank.
  • Shorter tenure/ Lower EMI: You may choose to pay the same EMIs for a shorter tenure or lower EMIs for the same tenure.


  • Processing fees: You will have to pay processing fee to the second bank for balance transfer.
  • Prepayment Charges: You may have to bear the prepayment charges to the first bank.Thus, you should always do a cost benefit analysis before availing a personal loan balance transfer so that your savings on the interest component is greater than the processing fees and prepayment charges.

What will happen if I don’t pay a personal loan EMI?

Missing a single EMI might not have a major impact on your credit score, however, missing multiple EMIs will. Repeated failure will not only affect your credit score but also increase your outstanding debt. In rare cases, preliminary notices can be sent by the lender mentioning the outstanding loan amount and penalty charges. The bank may also go for legal proceedings or approach the guarantor (if any).

What do the terms settlement, default and closed mean with respect to a personal loan?

You may come across terms like settlement, default or closed with respect to your old or current loans/ credit cards while going through your credit report. These terms are in fact not specific to a personal loan and their meanings are as follows:

  • Settlement: This means that you were unable to pay off the loan amount. As a result you and your lender came to an agreement to pay only a portion of your dues instead of the entire outstanding amount. As much as 30% to 40% of your outstanding loan may be waived off by the lender as part of the settlement process. This should however be used as a last resort as it has severe adverse effect on your credit report.
  • Default: This means that you have defaulted on your loan, i.e., you have not paid your outstanding loan. Additionally, you and the lender were unable to come to an agreement regarding the outstanding dues. This is the worst possible outcome of taking a loan as it impacts your credit score severely and most lenders will deem you a risky borrower in the future.
  • Closed: This means that you have successfully paid off your loan. A successfully closed loan account helps maintain a good credit score and represents you as a low risk borrower to prospective lenders.

What does prepayment mean and are there any charges for it?

When a borrower pays off the loan amount before the designated due date, it is called prepayment. Yes, many banks and NBFCs charge a prepayment fee ranging from 1% to 5% on the outstanding principal amount of the loan.

What do partial prepayment and foreclosure mean?

Partial prepayment or part prepayment means when you pay off a part of your loan amount in advance, while foreclosure is when you completely pay off the loan amount before the due date.

What are the advantages of part prepayment and foreclosure?

Despite the associated charges, loan prepayment is an economically viable option. If you completely pay off/ foreclose the loan in advance, you save substantially on the interest component. Additionally, your outstanding debt decreases.

On the other hand if you partly prepay the loan amount, you can choose to either reduce your EMI payout or the loan tenure. Moreover, the part prepayment also helps you save on the interest component and decrease the outstanding debt.

Business Loan

What is the processing fee for business loans?

The processing fee varies from bank to bank that can be Nil for a bank and can exceed up to 4% of the loan amount as per the loan requirements.

What is the best credit score or CIBIL score to get an instant business loans?

Any CIBIL score that is as close to 900 is considered best by financial institutions.

What is the maximum amount can I take through a ban loan for business?

The maximum loan amount offered by banks via business loan is up to Rs. 1 crore.

What is the interest rate offered by financial institutions to get a business loan?

The interest rate offered by various banks and NBFCs starts from 11.90% onwards.

How to choose the ideal repayment tenor for business loans?

Ideally, if you avail short-term loan then the repayment tenure should not exceed 12 months. However, it may increase as per the desired loan amount. The maximum repayment period can be chosen up to 5 years.

Can I get an instant business loans with a 750 credit score?

Definitely, any CIBIL/credit score of 750 or above is considered by any financial institution. With a score of 750 you can avail business loans at comparatively low interest rates.

What is the impact of GST on business loan for new business?

The GST plays an important role in getting business loans, as more the GST is paid, larger shall be the business volume. Therefore, it becomes easy for banks to rely on such applicants or borrowers.

What is the minimum turnover requirement for a loan to start a business?

The minimum annual turnover criteria is defined by the lender and varies from bank to bank.

How should I choose the best loan to start a business?

You can visit paisabazaar.com to check and compare from various bank loans for business offered by numerous banks and NBFCs. You can pick the deal that suits your business requirements.

Who can get Business Loans?

The below mentioned entities can get business loan:Individuals, artisans, retailers, manufacturers, traders, Startups, MSMEs, sole proprietorship, partnership firms, LLPs, NGOs, Co-operative societies, trusts and many more.

What information do you need for small business loan for new business?

The key information that you require to know before applying for small business loans is as follows: Check whether you meet the eligibility criteria defined by the desired bankCheck and gather all the necessary documents required by the lenderCheck and compare small business loans interest rates from various banks/NBFCsCalculate the small business loans EMI for better cash flow managementCheck for hidden charges or fees to be charged by the lenderCheck the availability of loan balance transfer and foreclosure options

I am 19 years old; can I get a business loan?

Yes, any individual who is 18 years and above at the time of loan application is eligible to apply for business loan.

How much is the minimum and maximum loan amount I can get?

The minimum loan amount offered is Rs. 10,000 and maximum loan amount can exceed Rs. 50 crore, depending on the business requirements and applicant’s profile.

What is the maximum age of availing business loan?

The maximum age of availing a business loan is up to 65 years at time of loan maturity.

What is the business loan tenure?

The business loan tenure or repayment tenure ranges from 12 months – 5 years, and may exceed depending on business requirements.

Do I need to submit any collateral to bank before applying for a business loan?

No, you are not required to submit any collateral to bank or NBFC, for few specific secured business loans, collateral is required.

Can I get a Business Loan without collateral?

Yes, you can get an unsecured business loan from financial institutions wherein no collateral is required.

What are the repayment, pre-payment and foreclosure charges and processing fees of a business loan?

All the fees and charges of a business loan vary from bank to bank. Every financial institution has different charges, so you need to check online from their official website.

What are the pre closure and part-prepayment charges in business loans?

The pre-closure and part-payment charges vary from bank to bank. It may be Nil from some banks and may exceed up to 4%-5% of the loan amount.

What are the types of business loans in India that I can avail?

Ans: There are different kinds of business loans offered by banks and NBFCs and that include MSME loan, Mudra loan under PMMY, secured and unsecured business loan, short- and long-term loan, working capital loan, equipment finance, line of credit, equipment finance, bill discounting, loan for construction equipment, machinery and equipment purchase loan,

What are the loan schemes initiated by Government of India?

Some of the popular schemes include MUDRA scheme under PMMY, SIDBI loan, CGTMSE, PMEGP, Standup India, Startup India, psbloansin59minutes.com, NSIC, NABARD, etc.

How does the business loan work?

If you take a loan for new business from a bank or lender, you shall receive a lump sum amount that you need to repay in a defined period of time that is in form of EMIs, at an interest rate that can be fixed or floating rates. There is no minimum loan amount criteria to borrow and the maximum loan amount can go up to Rs. 1 crore, depending upon business requirements. The repayment tenure ranges from 12 months to 5 years. In some case the repayment tenure may exceed as per the sole discretion of the lender.

Uses of business loan

You can use business loans for various purposes, as mentioned below:

  • For business expansion or relocation
  • To meet working capital requirements
  • Enhance business cash flow
  • To purchase land or space for business operations
  • To purchase equipment/machinery/raw materials
  • To stock up inventory
  • To pay rent/salaries/hire employees/staff training, etc.
  • Scale-up operations or to upgrade technology
  • New product or technology setup or installation
  • Office premises’ renovation

Business loan types

Term Loan Currently many types of term loans are available, such as short-term loan, long-term loan and other small business loans. An entrepreneur can avail these loans according to his/her requirements and economical position. Mainly the loan tenure for a short term loan is 12 months and for long-term loan it goes up to 5 years. Term loans are divided into two parts, unsecured business loans and secured business loans. In secured loans, the collateral or security can be a certain property, machinery or a business ground and they will usually possess lower interest rates as compared to an unsecured one. Most of the business loans are unsecured loans and do not require any collateral or security to be submitted to banks or NBFCs.

Working Capital Loan Get small business loan and working capital loan to overcome the day-to-day financial requirements of enterprises. The daily expenditure of enterprises include paying-off salaries, buying raw materials, paying rent, undertaking trainings, etc.

MUDRA Loan Under PMMY Micro Units Development and Refinance Agency (MUDRA) loan is a funding provided by most of the leading banks to Micro, Small and Medium Enterprises (MSMEs) nationwide. Under the Pradhan Mantri MUDRA Yojana, loans of minimum Rs. 50,000 and maximum of Rs. 10 lakh are provided to start an enterprise or an SME unit. Through the Mudra Loan Yojana, the Government wants to ensure that proper funding is provided to first-time entrepreneurs or existing business owners. PMMY is a scheme launched by Government of India to offer funds up to Rs. 10 lakh to non-farm small/micro enterprises and non-corporate companies. Mudra loan scheme is divided into three categories named as Shishu, Kishore & Tarun wherein these loans are offered by Private Sector Banks, Public Sector Banks, Regional Rural Banks (RRBs), etc. Small business loans are also offered under this scheme.

Loans for Self-employed Entrepreneurs This is the most popular category among all as the loans for self-employed entrepreneurs are taken in large numbers. The loan amount can range anywhere between Rs. 50,000 being the minimum and can reach up to 10 crore. The interest rate offered depends on the financial history of the applicant and is decided by the lenders as per their discretion.

Stand-Up India Stand-up India scheme was introduced by Government of India to provide funding to people who come under SC/ST category and women entrepreneurs. The primary purpose of this scheme is to help banks in offering loans between Rs. 10 lakh and Rs. 1 crore to at least one SC/ST borrower and at least one women entrepreneur per bank branch in enabling them to set-up their own enterprise.

Startup India Startup India Scheme is an initiative by the Government of India that offers financing and handholding support to Startup entities for growth and expansion. Additional key functions include promotion of Startups, wealth creation and employment generation. To avail benefits of government schemes, an entity needs to be recognized as a Startup by applying on Startup India Mobile App/portal and obtaining the certificate of recognition.

Bill-Invoice Discounting Invoice discounting is a financial instrument offered by banks and NBFCs. Bill discounting is a source of working capital finance for the seller of goods on credit. it is a discount which, a financial institution takes from a seller’s customer. Through the payment being made by letter of credit, buyer has the option of buying goods from the seller. Bills that come under bill discounting are termed as ‘bills of exchange’.

Letter of Credit Letter of credit is a payment instrument used mainly in international trade in which bank provides monetary guarantee to enterprises which deal in import and export of goods. Letter of credit is used for both import and export of goods. Enterprises doing businesses overseas have to deal with unknown suppliers and they require assurance of payment before performing any transaction. Therefore, letter of credit is important to provide payment assurance to the suppliers or exporters.

Point of Sale Point of Sale Loan is a type of funding wherein merchants offer their customers some financial assistance at point of their purchase. This funding is provided in order to assist their customers in buying a product or service from their shop. Business owners, enterprises, MSMEs, entrepreneurs, retailers can avail Loan against POS machines to start a new business or to manage their existing businesses. Point of Sale Loan is also termed as Merchant Cash Advance in which the loan amount depends on business volume generated via POS terminals.

Overdraft Loan An overdraft means overdrawing money from ones’ current/savings account. In simpler words, an account holder takes out more money that has been deposited in the account. An agreed rate of interest will be charged, if the overdrawn amount is within the limits of a preceding agreement.

Features of Business loan

Top Features of Business Loan:

  • Interest Rate: 11.90% onwards
  • Nature of Loan: Short- and Long-term, Working Capital, Secured and Unsecured Loans
  • Minimum Loan Amount: No Limit to Borrow
  • Maximum Loan Amount: Up to Rs. 1 crore (collateral-free loans), can exceed as per business requirements
  • Repayment Period: From 12 months to 5 years

Home Loan

Types of home loan

Banks and Housing Finance Companies (HFCs) offer home loans for different purposes. So before applying for any type of home loan, assess your requirements in order to get a suitable home loan scheme. Some of the types of home loans available are as follows:

Home Purchase Loan: It is the most common type of home loan availed usually to buy ready-to-move-in properties, under construction properties and pre-owned homes/resale properties. As per RBI guidelines, lenders can offer loan-to-value (LTV) ratio of up to 75-90% of the property value

Composite Loan: It is a perfect financing solution for individuals who want to buy a plot of land either for investment or for building a house. In this type of home loan, the first disbursement is made towards the purchase of plot. The subsequent payments depend on the stages of construction of the house

Home Construction Loan: This type of home loan is available for individuals who want funds for the construction of a house. The loan is granted only if you own a plot of land and plan to construct a house on it. Just as in composite loan, here too the disbursement depends on the stages of construction of the house

Home Improvement Loan: The can be availed to fund home renovation and home repairing expenses of the existing house. The interest rate for this loan is same as that for a regular home loan. However, its loan tenure is shorter than the regular home loan

Home Extension Loan: It is for those who require funds to add more space to their abode. Under this loan type, financial institutions usually lend 75-90% of the construction estimate, depending on the loan amount and LTV ratio

Bridge Loan: It is a short-term home loan and is suitable for individuals who wish to buy a new house with the sale proceeds of the existing home. The loan helps in covering the gap between the purchase of a new house and the sale of an existing house

Interest Saver Loan: It is similar to home loan overdraft facility. In this, the borrowers’ home loan account is linked to their bank account. Any amount deposited in the bank account over and above the EMI amount is used as prepayment towards the loan, thus, saving on the interest amount

Step Up Loan: Yet another type of home loan in which borrowers pay lower EMIs during the initial years of the loan tenure. However, there is a provision of increasing the EMI amount over time. This makes the loan affordable for young professionals who just start their career.

Which bank is best for home loan?

Some of the most popular banks offering home loans in India are HDFC Bank, SBI, PNB, ICICI Bank, Bank of Baroda, Axis Bank and Canara Bank. However, the best home loan for you would be the one that matches your needs. Therefore, to get the best bank for home loan first analyse your requirements. Also, when comparing home loan offers don’t jump for the offer that offers lowest interest rate, rather check on the entire deal. Besides the interest rate, pay attention to other parameters such as loan repayment and prepayment policies, processing fees, etc.

Are there any tax benefits of a home loan?

Yes. Both the loan principal amount and the interest paid towards loan repayments provide tax benefits under Section 80C, Section 24(b) and Section 80EE of the IT Act respectively.

Can I get a home loan for the entire property value?

No. Banks usually keep a 20% margin when providing individuals with a home loan. This means that the lender may agree to provide you with 80% of the property value as a home loan, while you will have to shell out the rest 20% by yourself. In some cases, the lender can agree to provide you with up to 90% of the property value as a home loan. 0

Who can co-sign a home loan with me? Can my friend co-sign a home loan for a flat?

Your family members like father, mother, siblings, etc. can co-sign a home loan with you. Other than that your spouse or adult children can also be co-signatories in case you are applying for a home loan. In India, as per existing rules, your friend cannot co-sign a loan as he/she is not a blood relative or otherwise related to you.

How many people can co-sign a home loan with me?

At present, up to 7 people can co-sign a home with the primary applicant. However, all of them need to be blood- relatives of the family member.

What are the reasons for home loan rejection?

Factors that can play a crucial role in home loan rejection are mentioned below:

  • Bad or low credit score
  • Incorrect personal details in credit report
  • Rejection of loan by other banks
  • Unstable income
  • Age factor
  • Location of the property
  • Poor repayment capabilities

How to avoid home loan rejection?

The below mentioned steps can prove to be beneficial to avoid home loan rejection:

  • Credit Score: It is advisable to maintain a credit score of 750 and above to have a good chance of your application being approved. Banks & Financial Institutions rely on credit score before approving your home loan to check your credibility and loan repayment history. So, you should always maintain your credit score to avoid home loan rejection.
  • Insufficient Income: Banks and financial institutions look into your monthly income to see if you will be able to repay your equated monthly instalments (EMIs) or not. It is always advisable to take a home loan with EMI not more than 40% of your monthly income. Lenders have certain minimum income and employment requirements which play an important role in the loan-approval process. Make sure that you meet all the requirements before you apply for a home loan.
  • Too many applications for home loan in a short span of time: If you apply for a home loan from different lenders, it indicates banks and financial institutions that you are short of credit and need to apply to several sources to fill the gap. Lenders think that you will not be able to repay your loan, which leads to rejection of your home loan application.
  • Existing loan portfolio: Currently, if you have a number of loans to repay, then your lender might think that you will not be able to take on another EMI on your existing income, which will lead to your home loan rejection. So, it is better to apply for a home loan once you have paid off a few of your other loans to reduce your EMI burden.

How to improve home loan eligibility

Potential home loan borrowers can enhance their home loan eligibility in the following ways:

  • Improve your credit score: A good credit score improves your chances of loan approval so that you can avail a home loan at lower interest rates and better terms. Paying your bills on time and maintaining credit utilisation ratio below 40% are some of the ways to improve and maintain your credit score.
  • Pay higher down payments: Financial institutions lend 75-90% of the property value. This implies that the remaining 10-25% of the property value has to be contributed as down-payment by borrowers. To increase your home loan eligibility, make higher contribution towards your home loan down payment. Doing so will lower your LTV ratio; thus, improving your home loan eligibility.
  • Add an earning co-applicant: Add an earning co-applicant with good credit history and satisfactory repayment capacity to increase your home loan eligibility. Joint home loan might even help you get higher loan amount and concession on your home loan interest rates (if the co-applicant is a woman).

How home loan EMI is calculated?

Equated Monthly Instalment (EMI) is the amount that you repay each month against your home loan principal amount and its interest amount. So, while calculating the home loan EMI, both the principal amount and the accrued interest on the loan is taken into consideration.

Are there any prepayment charges in case of a home loan?

In case of a floating rate home loan, lenders don't charge a pre-payment penalty as per RBI directives however a penalty may be applied in case of prepayment of a fixed-rate home loan.

What is home loan balance transfer?

Home loan balance transfer is a facility that allows home loan borrowers to transfer their outstanding home loan to a new lender for lower interest rate or better loan terms. Almost all lenders offer the home loan transfer facility to their customers. Paying your loan EMIs regularly is one of the factors that help you enjoy loan transfer facility. But before going for home loan balance transfer, carry out a cost-benefit analysis. Calculate the difference between the interest rates offered by the two lenders, the amount of the loan left unpaid and the remaining tenure. Home loan balance transfer is not an ideal option if the outstanding loan amount is low, if only a few repayment years are remaining or the difference in the interest rate is leading to negligible savings. Also, do not forget to consider processing fee charges, which the new lender would be charging for balance transfer.

Loan Aganist Property

Charges applicable on mortgage loan

While availing a mortgage loan, certain charges are levied by the banks or the HFCs to process the loan. This amount varies from bank to bank and should be considered while selecting the financial institution. Let us take a look at these charges.

  • Processing Charge: It is a necessary fee payable at the time of loan application. Even if the loan is rejected, the processing charge would be forfeited by the financial institution.
  • Foreclosure and Prepayment Charges: If the borrower wants to pay off the complete loan amount before the due date, it is called foreclosure. In case, the borrower decides to pay a part of the loan amount before time, it is called prepayment. For both prepayment and foreclosure, banks levy a charge on certain categories.
  • Other Charges: Some common charges include legal fee, documentation charges, stamp duty, technical evaluation fee, title search report fee, etc.

Loan against property prepayment

A distinctive feature of LAP is the flexibility to prepay the outstanding loan amount any time during the loan tenure. As per latest RBI guidelines, no prepayment charge is levied in case of individual borrowers, who have a floating rate of interest applicable on their loan against property. However, corporate entities are still charged a certain fee for prepayment, but it is minimal. Prepaying your loan amount helps to bring down the outstanding principal amount.

Benefits of Prepayment of Loan Against Property Prepayment of the outstanding amount under Loan Against Property offers various benefits. Some of them are:

  • Reduced loan tenure: Prepayment of the loan helps in reducing the outstanding amount. This feature can be utilised in reducing the loan tenure so that you can get over the liability as soon as possible.
  • Cost-saving on EMIs: Once you have prepaid the loan, the amount to be repaid decreases, thus, the monthly instalments of the loan also go down
  • Reduced interest cost: As part of loan prepayment, you pay the principal amount first, which ultimately reduces the interest amount. This helps to reduce the interest cost
  • Greater ease of loan repayment within stipulated tenure: Repaying your loan borrowed against the property would become easier.

What types of properties are accepted by lenders providing Loan Against Property (LAP)?

Different lenders have different criteria for the type of property to be accepted against a mortgage loan. However, mostly all financial institutions accept residential, commercial or industrial property. It is important to note that the physical condition and age of the property may affect its acceptance by the financial institution.

What is the maximum loan tenure available under LAP?

Mostly, the tenure of a loan against property goes up to 15 years. However, this may vary from one lender to another.

Can NRIs avail loans against property?

Yes, there are several financial institutions that offer loan against property to NRIs.

Do banks accept uninsured property to sanction loan against property?

No, in most cases, the property mortgaged to avail a loan against property needs to insured.

Credit Cards

Why You Should Have A Credit Card?

Apart from offering the ease of use, it is essential to have a credit card for the following reasons:

  • Helps in building a good credit score
  • Interest-free credit period of up to 45 days
  • Hassle-free transactions both online and offline
  • Comes with excellent rewards, cashback, discounts, offers, etc.
  • Handy in emergency financial situations
  • To make big-ticket purchases and pay later in easy EMIs
  • All transactions are secure as they need OTP & PIN authentication

Health Insurance

What is Health Insurance?

What is Health Insurance Premium?

What Health Insurance Covers?

Home Insurance

Which contents are covered under a home insurance policy?

Home insurance covers the following contents-

  • Furniture
  • Furnishing items
  • Expensive belongings
  • Precious items like jewelry, gemstones, etc.
  • Electronic items like laptops, televisions, etc.
  • Home appliances like refrigerator, washing machines, etc.

Is it compulsory to buy home insurance from the designated bank?

No. It is not compulsory for you to buy a home insurance policy from the bank sanctioning your home loan. Neither the Reserve Bank of India (RBI) nor the Insurance Regulatory & Development Authority (IRDA) of India has issued any guidelines that mandate you to buy home insurance from the bank where you have applied for a home loan. You can choose to buy homeowners insurance from any insurer of your choice. In case you designated bank forces you to buy home insurance from them, you can refuse them and file a complaint against them to the banking ombudsman.

What do you mean by reinstatement cost?

It is the cost which would incur on reconstructing the damaged property. As per standard regulations, reinstatement cost includes value of foundation and it doesn’t include land cost.

How is the sum assured computed?

Sum assured for the structure and content is calculated separately in following pattern. Sum assured for the structure and content is calculated separately in following pattern.

Sum assured for the structure

Sum assured = Built up area x cost of construction per square foot It is computed on the basis of reconstruction value and not on its market value. For instance, if the built up area of your house is 1500 sq. ft and the construction rate decided by the insurer is Rs 1000 per sq. ft., sum insured for your home structure would be Rs 15,00,000.

Sum assured for the conten It is calculated either from the actual cash value (ACV) of the asset or from the replacement cost, i.e., Current Market Value – Depreciation

Car Insurance

When should you renew car insurance policy?

The policyholder should renew his car policy before the expiry of his existing policy. This will ensure that there is no break in policy and you can continue to avail benefits such as no claim bonus.

What is Zero Dep in Car Insurance Policy?

Zero Dep refers to Zero depreciation car insurance. It is an add-on cover that allows the policyholder to get compensation up to the insured declared value (IDV) or current market value of the car without taking depreciation into account. You need to pay an extra premium amount to avail benefits of zero DEP in your 4 wheeler insurance policy.

How many times we can claim car insurance in a year?

The limit to filing a claim for 4 wheeler insurance per year varies from one insurance provider to another. Most insurance companies allow multiple claims in a year until the IDV is not exhausted. You should check your policy document to know the exact number of times you can claim your four-wheeler insurance policy in a year.

What is bumper to bumper Car Insurance policy?

Bumper to bumper car insurance refers to the insurance policy that provides complete protection to the insured car without considering the depreciation of its parts. In other words, this type of four-wheeler insurance allows the policyholder to obtain compensation up to the market value of the car in case of damage or loss to the car. However, it attracts about 20% higher premiums than your regular 4-wheeler insurance policies.

Two Wheeler Insurance

What documents should I submit to get discount on two wheeler insurance on the basis of my age and occupation?

To avail discounts on the basis of your age and occupation, you would need to submit Pan Card and employment or education certificate respectively.

Can I replace a new vehicle in my current two wheeler insurance policy?

Yes, you can replace your new vehicle in your existing insurance policy. Call the insurance company to make changes effective.

Can I cancel the policy during the tenure of the policy?

Yes, you can cancel the policy during its term, provided you submit documents to prove that your vehicle has been insured elsewhere or the registration certificate of your vehicle has been cancelled by the Regional Transport Office (RTO). Once the policy is cancelled, the insurer will refund the remaining amount, after deducting the premium for a period in which coverage has been given. The refund is possible only if there has been no claim during the policy tenure.

Why should I buy comprehensive insurance policy when law mandates only third party, injury, and death or property loss?

Although, as per law it is compulsory only to buy third party bike insurance it is strongly advised to purchase a comprehensive policy to protect your vehicle from both man-made and natural calamities. By buying the comprehensive cover, you can claim from your insurer for accidents or damages caused to the vehicle. Without comprehensive cover, the entire responsibility to pay the bill comes on your shoulder. Thus, by opting for a comprehensive insurance policy, you can get complete peace of mind that whatever happens to your vehicle, the insurer will share your financial burden.

Travel Insurance

Why do I need Travel Insurance?

Unfortunate events such as baggage loss, passport loss, a medical emergency or an accident can affect your travels, whether for business or leisure. International Travel Insurance protects you from such perils by ensuring that you are not left stranded in any kind of emergency.

Are business travellers eligible to purchase a Travel Insurance policy?

Yes. Our travel insurance is designed for both leisure and business travellers. Business travellers who go abroad frequently can avail of multi-trip plans.

What is Return of Minor Child Cover?

With International travel insurance you are eligible for reimbursement up to $7500. This involves reimbursement in terms of transportation of the unattended child in case of your hospitalisation for more than 5 days.

How many times can we extend the policy in a one-year duration?

You can extend the policy any number of times provided the total duration of the policy is less than or equal to 360 days.

Life Insurance

How long do life insurance policies last?

Life insurance policies last till the end of the policy term chosen by you at the time of purchase or till a claim is paid as per the terms and conditions of the policy.

What is life insurance?

Life insurance is a payment made to your family in case of your death during the policy term or a payment made to you on surviving the policy term. In return for this payment, you make periodic fixed payments to the life insurance company.

Is life insurance policy necessary?

Yes, life insurance policy is necessary for the financial well-being of your loved ones in your absence.

How much does a life insurance policy cost?

The cost of a life insurance policy depends on certain factors of the policyholder like age, gender, amount of life insurance cover, policy term, premium payment term etc.

Fixed Deposit

What are the charges applicable on Fixed Deposit (FD) for premature closer within 7 days from the date of opening an FD?

No interest is payable for deposits prematurely withdrawn within the period of 7 days from the date of deposit and no premature closure charges are applicable.

At what frequency will I receive interest on my FD?

Interest frequency depends on FD plan. For re-investment plan, interest is paid at maturity along with the principal, whereas for traditional FD, interest payout is done monthly, quarterly or periodically basis the customer’s choice.

What is the tenure of Fixed Deposit?

You can avail of ICICI Bank Fixed Deposits for a minimum deposit of Rs 10,000.00 for General Customers and Rs 2,000.00 for Fixed Deposits for Minors.

Choice of Plans:

Select from 2 Investment Plans:

  • Traditional Plan: Earn interest monthly/quarterly basis as per your convenience with a maturity period ranging from 7 days to 10 years.
  • Reinvestment Plan: Earn interest compounded quarterly and reinvested with the principal amount with a maturity period ranging from 6 months to 10 years.

Is there any auto renewal facility available on Fds?

Yes. You are eligible for tax benefits on the principal and interest components of your balance transfer loan under the Income Tax Act, 1961. As the benefits could vary each year, please do check with our Loan Counselor about the tax benefits which you could avail on your loan.

Savings Account

Do I need to be over 18 years of age to open a savings account?

Yes. If you want to open an individual savings account, you need to be over 18 years old. However, a minor can be a joint account holder with an adult family member such as parent/guardian.

Do all banks provide cheque facility?

Yes. All banks provide cheque facility however in case of several public sector banks you do have the option of a basic savings account that does not have cheque facility. In that case, you can only withdraw money by visiting the bank and using a withdrawal slips available at the branch. Additionally, there are mobile only banking accounts such as Digibank by DBS and Kotak 811, which do not feature cheque book facility.

Are there charges for an ATM card linked to a savings account?

Yes. ATM Debit cards carry an annual fee of approximately Rs.150 plus applicable taxes (varies from one bank to another). However, many private sector banks waive the annual fee provided you use your Debit card for shopping transactions of a specified denomination during the year or you maintain the minimum average balance requirement specified by the bank.

How can I check my savings account balance?

You can check your savings account balance online through net banking, or by visiting the bank or any ATM. Nowadays, almost all banking transactions can be done online and you need not visit the bank for the same. You can access your account online through net banking and also through mobile banking.

Is saving account interest taxable?

Interest earnings of up to Rs.10000 accrued on your savings account balance is tax free under Section 80TTA. Higher amounts earned as interest are subject to TDS.

Recurring Deposit

Can I redeem my Recurring Deposit before the original term?

In the event of the Recurring Deposit being closed before completing the original term of the deposit, interest will be paid at the rate applicable on the date of deposit, for the period for which the deposit has remained with the Bank. In case of premature withdrawal the deposit may be subject to a penal rate of interest as prescribed by the Bank on the date of deposit.

What are the charges applicable on Recurring Deposit (RD) for premature closer within 7 days from the date of opening an RD?

No interest is payable for deposits prematurely withdrawn within the period of 7 days from the date of deposit and no premature closure charges are applicable.

Is TDS applicable on Recurring Deposits?

According to Finance Bill, 2015, effective June 1, 2015, TDS shall be applicable on the interest earned on recurring deposit/ variable recurring deposits etc. Interest earned from fixed deposit/ recurring deposit / variable recurring deposit shall be clubbed for the purpose of computing the total interest paid/ payable during the financial year and applicability of TDS.

It has also been proposed that banks need to deduct tax on interest credited/ paid or likely to be credited/ paid exceeding Rs. 40,000 to a depositor at bank level as against the existing process of branch level. As per the provisions of Finance Act 2009, w.e.f April 1, 2010, valid PAN is required to be submitted by all customers whose tax needs to be deducted. In the absence of a valid PAN, tax will be deducted at the prevailing rate or 20% whichever is higher. Also, Form 15G/ H shall not be treated as valid, unless PAN is mentioned in such forms.

How much amount I can put in Reccuring Deposit (RD)?

You may deposit a minimum of Rs. 500.00 per month in Reccuring Deposit (RD) and thereafter, deposit in multiples of Rs. 100.00.

Tenure: 6 months to 10 years (in the mutiple of 3 months).