Business loan & Personal loans are usually “Unsecured Loans”, which means they are offered without any collateral in return. Such loans are mainly based on the credit history of the customer who hasn’t defaulted on his/her credit card payments. An Unsecured Loans is usually of a smaller amount than a mortgage and used for personal purposes, instead of commercial/business needs. It includes loans for reasons like going on vacation, wedding, buying of new furniture and various other needs that arise for an individual. A short-tenure loan, the repayment period are usually of the time period of 1-5 years. Requires the least bit of paper-work and is usually approved within 48 hours of application submission. Additional to the processing fee, charges for late payment penalty, pre-payment fee, administration charges and cheque bounce charges are also included in the Unsecured Loans.
For salaried individuals it does not exceed 30-40% of take home salary and for self-employed individuals is based on the profit earned.
What is the difference between reducing and flat interest rate?
Reducing Balance Interest Rate needs the borrower to pay interest only on the remaining loan balance. Flat Interest Rate is where the borrower needs to pay interest on the entire loan balance throughout the loan term.
How is my Unsecured Loans approved?
Approval of loan is the sole discretion of the bank and takes any duration between 48 hrs to up to a week. It is always recommended to keep all documents ready while applying to avoid any unforeseen delays.
How does my credit history matter?
CIBIL (The Credit Bureau of India Limited) is the Credit Information Company. CIBIL collects and maintains records of an individual’s payments pertaining to loans and credit cards. These records are submitted to CIBIL by banks and other lenders, on a monthly basis. This information is then used to create Credit Information Reports (CIR) and credit scores which are provided to lenders in order to help evaluate and approve loan applications. Before approving your loan, the lender cross checks your repayment track record. A good CIBIL score help you fetch higher loan amount at lower interest rate.
Is there any extra charge payable when applying for Unsecured Loans?
Processing fees and Prepayment fees are charged extra and amount to anywhere between 2-3% of the loan amount.
Can I pay my Unsecured Loans along with my spouse?
Yes, Unsecured Loans can be applied together with a co-applicant who can be either your spouse or your parents. This way you can show a higher income and avail for a larger amount as the total loan is calculated on the sum total of the two incomes.
What is relationship discount?
Relationship discount is an added benefit provided by the bank if you have been involved with them for quite some time and have availed other loans from them. It is solely up to the discretion of the bank.
How to repay the Unsecured Loans?
Unsecured Loans are repaid in the form of EMI (Equated Monthly Instalments)
How is loan against credit card different from Unsecured Loans?
In case of loan against credit card the interest being charged is entirely dependent on the amount consumed using the card. Whereas, in an Unsecured Loans, the entire loan is drawn out as lump sum and repaid via fixed monthly instalments to the lender.
What are the benefits of having a Current/Saving Account for my Business loan?
You get preferred Processing Fee, priority processing and simpler documentation if you have a Current/Saving Account with Bank. This is taken into account at the time of disbursal of the loan. You can pay through Standing Instructions to debit your Bank Account with the EMI amount.
How much loan can I avail of Business Loan?
You can avail of a loan from Rs 50000/- to Rs 4000000/- depending on your income, repayment capacity and respective location product cap.
What security do I need to provide to obtain a Business loan?
To obtain the loan, there is absolutely no need to provide any security or collateral.
What are the loan tenure options for Business Loan?
You can repay your loan over a period of 12 to 60 months