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Personal Loan

What is a prepayment penalty?

Personal loans have seen a huge rise in recent days. More and more people are going for personal loans, especially after fintech companies appeared on the scene. The easy availability of funds and credit through these new-age finance companies has soared the personal loan market. You can now avail yourself of personal loans with just a few clicks. Further, the benefits that a personal loan carries make it a go-to funding option at any time. However, many people prefer to prepay such loans even though banks levy a prepayment penalty on personal loans. What is the prepayment penalty? Is prepayment beneficial? Let’s find out! [B-01] What is the prepayment of personal loan? Personal loans are short-duration loans. The tenure usually ranges from 1 year to 5 years. But many a time, people end up taking personal loans for a longer tenure than required. Once their purpose is fulfilled and they have sufficient funds available, they repay their loans in advance of the actual due date. This is known as the prepayment of a personal loan. Prepayments are of two types: Part- or partial-prepayment: Here, only a certain portion of the personal loan is prepaid. For instance, if the principal outstanding is Rs. 5,00,000 and you prepay Rs. 1,50,000, then it will be considered part of the prepayment of a personal loan. Full repayment: Here, the entire principal outstanding is repaid before the term of the loan expires. Continuing the above example, if the entire amount of Rs. 5,00,000 is repaid, then it will be considered a full prepayment. Whether prepayment and foreclosure are different You might have come across the term “foreclosure” as well. Prepayment and foreclosure are two different things. Prepayment is usually used to indicate partial repayment of a personal loan. But foreclosure occurs when the remaining loan amount is repaid in full. It is the legal term to denote the closing of the loan before the loan term expires. Full prepayment forms part of the foreclosure. Another way of foreclosing is when you transfer your loan from one bank to another. Borrowers usually transfer their loans from one bank to another because of lower interest rates, better terms, etc. In such a case, the second bank pays the outstanding balance to the original bank. The borrower will then repay his loan to the second bank. Benefits of prepayment Following are some of the key benefits of prepayment: Eliminates Debt: Prepaying your personal loan helps you eliminate your debt if you make a full prepayment. Even if you make a partial prepayment, your debt can be reduced to a great extent. Savings on Interest Cost: Personal loans carry a huge interest rate. Prepaying your personal loans can help you save a tonne on interest costs. Personal loan interest rates start at 12%–14% and can go as high as 18% per annum. Hardly any asset class provides that kind of return. As the saying goes, “each penny saved is a penny earned.” Prepaying your personal loans can help you save on such high-interest costs, which are equivalent to earning such high returns. Better Interest Rates: If you go for transferring your personal loans to another bank, then you can earn better interest rates and get better terms for your personal loans. This is the sole reason why many people go into foreclosure on their loans. Impact your Credit Score: Prepayment reflects positively on your credit report. If you prepay your personal loans, it can increase your credit score. Better Chances for Loans in the Future: If you prepay your loan, your outside liability gets reduced. Therefore, it opens the door for more credit access in the future. While availing of loans, your current debt obligations are considered. They might impact the amount of loan that you can borrow or the interest rate. You can avail of a higher loan amount in the future because of more disposable income in your hands. Prepayment Penalty on Personal Loans Prepayment penalty on personal loans varies among different banks. Most banks levy prepayment charges only for a specified period. Beyond that, there are no charges for prepayment. Furthermore, charges for partial repayment and full repayment may differ. Also, certain banks waive the prepayment penalty on personal loans if the loan is transferred to another bank. Usually, the prepayment charges range between 1% and 4% of the amount being prepaid or the principal amount outstanding. Should You Go For Personal Loan Prepayment? You need to consider various factors before opting for personal loan prepayment. These factors include the following: Prepayment Penalty: What is the prepayment penalty on personal loan that the bank is going to charge? You need to understand this before going for prepayment. Go through the sanction letter or loan documents to know the prepayment penalty. Principal Amount Outstanding: What is the principal amount outstanding? If it is only a nominal amount, prepayment will not provide much benefit. Current Interest Rate: What is the current interest rate that you are paying on your personal loan? You should consider prepayment if the interest rate is too high. Otherwise, you can consider investing the excess funds that you have. Tenure Remaining: What is the loan tenure remaining? Again, prepayment won’t be very beneficial if it’s only for a few months or a year. Mode of Prepayment: How are you going to prepay your loan? You might be considering transferring your loan to another bank. But you will have to pay processing fees and other charges. Opportunity Cost: The opportunity cost of not prepaying your loan is the investment opportunity that you missed. So, the interest you save through prepayment must be higher than the returns you could have earned from investments. [B-02] Conclusion The prepayment penalty on personal loan makes it important to carefully consider whether to prepay or not. Considering the above factors will help make the same decision. Visit Piramal Finance now for more useful information!
08-11-2023
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Personal Loan

FOIR: Meaning And Effect on Personal Loan Approval

Loan credit managers at financial institutions use different methods to determine loan eligibility and risk factors. In this way, FOIR is a valuable tool for lenders to assess the borrower’s ability to repay the loan and avoid default. The ratio also helps lenders understand applicants’ risk profiles and make better financial decisions. The fixed obligation to income ratio, also known as FOIR, is a metric used to determine your chances of getting a loan. The lower your FOIR, the more likely it is that you will be eligible. [B-01] What Makes FOIR a Vital Parameter? FOIR is also referred to as the Debt Service Coverage Ratio (DSCR). This is the ratio between your monthly income and your monthly debt payments, including all loans and credit card payments. A high FOIR means that you’ll have a harder time getting approved for a loan because it shows that you’re already spending more than you earn. A low FOIR means that you have room in your budget for new debt payments, which makes it easier for lenders to approve your application. What Are Fixed Obligations? Fixed obligations are the bills that you have to pay every month, like your rent or mortgage payment. It also includes debt like home loans, car payments, and credit card bills. Fixed obligations are the most important factors that lenders look at when deciding whether to approve or deny your loan application. If you have too many fixed expenses, it can mean that you won’t be able to afford other financial obligations, like making payments on any new debts you take out. How FOIR is Calculated? The fixed obligation to income ratio, or FOIR, is a measurement of your monthly expenses and income. It’s calculated by taking the total amount that you spend in a month and dividing it by your gross monthly income. While this seems simple enough, certain factors can skew your FOIR calculation and make it difficult to determine if you’ll be approved or not. The first of which is the nature of your expenses, such as mortgage payments, car payments, and credit card bills. Other fixed expenses like rent or utilities are all included in the calculation of FOIR. However, variable expenses like groceries and gas aren’t considered part of this calculation because they fluctuate with usage over time. Another important factor to consider when considering whether or not you’ll qualify for a personal loan is how much money is currently being paid toward debt. If these types of payments are keeping you from having enough money left over after paying the minimums on all debts combined, then it’s unlikely that any lender will approve a new loan. For example, if you make Rs. 50,000 per month and spend Rs. 40,000 on expenses like rent, groceries, and utilities (not including loan repayments), then your FOIR is 80%. This means that you don’t have enough money to cover all of your expenses and would likely be rejected for a loan if you applied now. Factors Affecting FOIR If you want to check whether or not you qualify for a personal loan based on this ratio, then some factors need to be taken into consideration: The first factor in a personal loan is how many dependents you have. The more earning members of your family you have, the better your chances are of getting a loan. The second factor is your current salary and other sources of income. All legitimate income can be combined to decrease FOIR and increase the loan amount. The third factor is whether or not you have any past dues on any previous loans. The fourth factor is whether or not there are any other liabilities on top of your current monthly expenses. The fifth factor is whether or not you have any assets that can be used as collateral for the loan. The sixth factor is your current employment status and how long it has been since you started working. The seventh thing to think about is whether or not you have a steady income that can be used to pay for your monthly bills. What are the ways to reduce your FOIR? There are many ways in which you can reduce your fixed obligation to income ratio. Use a co-applicant. You can consider taking a co-applicant with you to reduce your fixed obligation-to-income ratio. You can also consider applying for a personal loan with someone who has a good credit score and can help you reduce the amount of interest that will be charged on your loan. The co-applicant will be responsible for repaying the debt in case something happens to you. Maintain a Low Credit Utilisation Ratio. The best way to handle your credit is to keep your credit-to-debt ratio low. This means that you should only use about 30% of your available credit at any given time. If you have several cards, make sure that the total amount of money owed on all of them does not exceed this percentage. Your credit utilisation ratio is the amount of debt you have compared to your available credit line. If you use all of your available credit on monthly bills such as rent or mortgage payments, car loans, and student loans, you may be considered a high-risk borrower. Prompt Repayments Another important component of a good credit score is prompt repayment. This means that you should pay your bills on time and in full each month. If you have several credit cards, make sure that the total amount of money owed on all of them does not exceed this percentage. You should make timely payments on your credit card bills. If possible, try to set up automatic payments through your bank so that they are taken out of your account on the due date each month. This way, there is no chance of forgetting to make the payment. Avoid Taking Out Several Loans The best way to improve your credit score is to avoid taking out multiple loans at once. You will be given a credit score based on your history, and if you have recently taken out several loans, it will look like you are in financial trouble. [B-02] Conclusion If you follow these tips, you should be able to reduce your FOIR. It will take some time and effort on your part, but it is well worth the investment. For any help during the process, don’t hesitate to get in touch with the experts at Piramal Finance.
08-11-2023
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Personal Loan

Marriage Loan: Why Use A Personal Loan To Fund A Wedding

We all know that weddings are big events that come once in a lifetime. So, everyone wishes to have the style and glitz of a big, fat wedding. They want to make the wedding the most memorable ceremony of their lives. Most people aren’t afraid to spend a lot of money on a lavish wedding. This may cost those people more than they can afford. Also, the trend of candid photography and destination weddings has raised the bar to a different level. Hence, implying that your personal loan for wedding will help to bridge the gap between the present scenario and your dream wedding. A personal loan for wedding will make sure you avoid redeeming your investment or using your savings. Below, we will shed light on the reasons to help you know the importance of a personal loan for wedding. [B-01] Key Reasons to Choose a Personal Loan for Wedding Planning a wedding is a very time-intensive and hectic process. The stress doubles when you have a minimal budget. You want to avoid being in a situation where you face a financial crisis before the wedding. Only a personal loan for wedding can help you out of this situation at such a time. It can provide you with the required amount to take care of your dream wedding. A marriage loan is mainly a personal loan for wedding. You can opt for it to cover every expense related to the wedding. It is primarily a collateral-free loan, which implies that you do not need security against the disbursed amount. Also, the lender will have no say in how you intend to use the funds paid to you in the form of a wedding loan. However, let’s dive into why a personal loan for wedding is a good option to cover wedding expenses. Easy application process We are now living in a digital age. Everything is undergoing digitalization. So, you can easily apply for your personal loan for wedding with just a few clicks. You must provide essential information to your lender. This includes ID proof, name, address proof, salary slips, date of birth, or income tax returns. After that, the lenders will take care of all the paperwork while you start planning your wedding. Quick Funding You can take a personal loan for wedding to fund your wedding without any collateral. You do not go through a lengthy and time-consuming process with reputed lenders. You do not have to “become eligible” for a personal loan for wedding. The eligibility criteria for a personal loan for wedding are also simple. It only takes a few minutes to get approval on a wedding loan. It will be done in a few minutes, right after you submit your application online and get your documents verified. The loan amount is credited to your bank account within a day or two. Monthly Instalments If you somehow find a reliable lender, they will allow you to choose the monthly instalment option to repay your loan. It benefits newly-wed couples. That’s because it allows them to manage their finances. They will only be able to repay their loan once, soon after their marriage. Cover several expenses. The primary reason for taking a personal loan for marriage is that you can use the loan amount to fulfil any purpose, like a medical emergency, buying a car, financial crisis, etc. In the case of a wedding, you can cover all the expenses with the loan, which includes decoration, catering, venue, jewellery shopping, etc. Cover last-minute expenses. A wedding is generally a hassled affair that involves unforeseen expenses. Therefore, you need to be well prepared to handle those situations at your wedding. For instance, we always hire catering services and wedding venues for a certain period. But we may have to pay extra charges if the event extends beyond the specified time. This is a common thing to happen at a wedding, and a smooth marriage loan can handle it easily. Factors Affecting Your Eligibility For A Marriage Loan If you wish to borrow a personal loan or a wedding loan, you must know the eligibility criteria set by your lender. It is essential to read all the terms and conditions to ensure you meet the eligibility criteria. But below, we’ve listed the things that can make or break your chances of getting a wedding loan. CIBIL Score If you have an outstanding loan payment history and a good CIBIL score, you are more likely to become eligible for a marriage loan. If your CIBIL score is 750 or above, your application will be instantly approved. Employment Profile Your lender will verify your profile and your age, work experience, and job security to understand if you meet the eligibility criteria. All these factors will help the lender understand your financial situation and ensure you can repay your loan on time. Debt-to-Income Ratio Your lender will also check your monthly income (whether you are self-employed or a salaried employee). This is done to know if you can repay the loan on time. If you are a salaried employee, your monthly salary must be at least Rs. 25,000. Also, you should have at least 3 to 4 years of work experience. However, the lender will check your existing liabilities, like credit card debt, student loans, car loans, etc. This establishes a debt-to-income ratio. [B-02] Summing Up Availing yourself of a marriage loan is a logical option if you are short on money to cover your wedding expenses. Approaching a trustworthy lender for a hassle-free loan application process is essential. However, get a marriage loan from Piramal Finance and have your loan followed by an easy and quick process. They have a team of professional advisers who will guide you through the application process. This ensures speedy approval and fast disbursal in your bank account. You can get a high-value loan amount with zero foreclosure charges and prepayment.
08-11-2023
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Personal Loan

How To Check Pre-Approved Personal Loan Offers

A pre-approved personal loan is like an instant loan. Only a select few customers are eligible to avail of it. You can get a personal loan with minimum documentation. There is no need to furnish collateral for such a loan. If you have a good credit history, it is easy to get a personal loan. Many banks and non-banking financial institutions sanction pre-approved loan offers. This is done to build awareness among consumers and increase the sale of their loan products. In the case of personal or instant loans, they can be sanctioned quickly, within a day or two. The rate of interest on such loans can differ between banks. [B-01] How To Become Eligible For A Pre-Approved Loan? Banks send out pre-approved loan offers as a promotional exercise. It helps to increase the sale of their loan products. Here are some reasons why a bank may give you a pre-approved loan: You have a good credit score. It makes you a good customer for the bank. Banks may review your credit history with them. You may have a good balance and transaction rate. Again, this makes you a preferred customer for a pre-approved loan. You may have taken a loan from the bank. Also, you may have made quick and regular repayments. Bank may check your rates of income and expenses. Corresponding it with your credit history, they may find you worthy. There are many banks that offer pre-approved loans online. But every bank may give a different loan amount and rate of interest. You will also need to check their processing fee. The repayment tenure of such loans varies from 12 months to 60 months. Features Of Pre-Approved Loan Here are some of the most important features of a pre-approved personal loan. Quick disbursal: You can get the pre-approved loan in less time. If you are an existing customer of the bank, it is easier. Then, funds go directly to your account. Minimum documentation: Pre-approved loans are very hassle-free. They do not require extensive documentation. No security: You can get instant loans without any collateral or security. Different amounts: Banks offer pre-approved loans based on credit history and repayment records. Every individual may be granted different loan amounts. Repayment: Pre-approved loans can be repaid through EMI. If you have an account in the same bank, you can also avail of the auto-debit facility. Charges: You may have to pay certain fees to get a pre-approved personal loan. These include processing fees, EMI bounce charges, penal interest, foreclosure charges, and more. Benefits Of Pre-Approved Loans There are many benefits of a pre-approved personal loan. They make them an attractive option for many borrowers. You can meet your urgent financial needs with such a loan. Pre-approved loans online are sanctioned on the same day. So, you can use that amount for any purpose. A good credit history makes you eligible to get competitive interest rates. Choose your desired loan repayment period. This will help you avoid defaulting on loan repayments. You need not provide any documents if you are an existing customer of the bank. You can easily apply for the loan through a website or mobile app. It is a paperless process that can be completed online. The processing time of the loan is very swift. You can easily negotiate the terms of the loan with the bank. You may also be eligible to obtain special discounts. This could be in the form of lower interest rates, processing fee waivers, and more. Check Whether You Are Eligible To Get Pre-Approved Loan Offers The eligibility criteria for pre-approved loans online are very simple. You are eligible for such a loan if you have a good credit score. Most banks lend pre-approved loans only to existing customers. It is a plus point if you have a clean record of repaying your debts. Banks may consider your existing balance and income status to decide whether you are eligible for the loan. It is advisable to check with your bank whether you are eligible for such a loan. How To Apply For A Pre-Approved Loan? Here are a few steps to follow. They will help you apply for pre-approved loans online. Log in to your net banking account. Check if you are eligible for a pre-approved loan. Submit a loan application form. It is available online and offline. Choose the loan amount and repayment tenure. Bank will verify your request and sanction the acceptance letter. After this, you will get the loan amount in your bank. In some cases, NBFCs may ask for certain proofs. They may be salary slips, KYC details, and more. Is It A Good Idea To Get A Pre-Approved Loan? With a good credit history, you can get pre-approved loan offers from your bank. A good credit score can help you get a loan easily. Such loans may be available only for specified periods. So, check with your bank about the terms and conditions. To ensure that your application is not rejected, make sure you provide complete documents. Also, it is best to enquire about interest rates before taking the loan. You should also check the applicable fees to avoid any hassle later. Also, remember that only because the bank offers you a loan, you don’t have to take it. [B-02] Conclusion Taking a loan is an important financial decision. A pre-approved loan carries many benefits. Getting one such loan can be very advantageous for you. For the best advice on financial services, visit Piramal Finance. It is a premier entity offering multiple lending services. You can visit their website to get more information about all matters related to loans. You can even consult with them for the best personal loan options.
08-11-2023
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Personal Loan

Know 5 Reasons for Personal Loan Rejection

Are you short on cash and considering taking out a personal loan but are unsure about its approval and concerned that it will be denied? If this is the case, this blog is especially for you. Personal loans are among those that get easily approved, but certain reasons may lead to rejection. In this blog, we share 5 reasons to know about personal loan rejection. Knowing these 5 reasons, you can minimise the possibility of your personal loan rejection. Keep them in mind and follow the solutions given. So, here are 5 reasons for personal loan rejection: [B-01] 1. Credit score is lower than required When it comes to loans, credit scores are the most important. They are the first thing the banks or other lending institutions check while looking at the loan application. A credit score is a 3-digit number calculated to summarise the credit history of the person applying for the loan. It is used as an instrument to measure the creditworthiness of the person applying for the loan. A low or absent credit score increases the chances of personal loan rejection. Normally, a credit score of 700 or above is considered good for loan approval. You can get your free credit report online. What can be done? If your credit score is low, take steps to improve it before applying for loans. If you don’t have a credit score, ask your parents or siblings who do have a good credit score to become your guarantors. 2. No stable source of income If you do not have a steady source of income, obtaining a personal loan may be difficult. When it comes to loan repayment, banks and other financial institutions place a high value on financial stability. So, if you change jobs frequently or your income is unstable, it becomes very difficult to secure a personal loan. Freelancing gigs or a new business can provide unstable income options. No stable source of income is among the top 5 reasons for personal loan rejection. What can be done? If you do not have a stable source of income, you can secure a loan from the bank in which you have any kind of account, like a savings account, a fixed deposit, etc. Though there is no guarantee, there are still high chances that you will get a loan against them. 3. Insufficiency of income Another reason for personal loan rejection, similar to the above, is low or insufficient income for loan approval. Lenders think that you have a high chance of defaulting on the loan payment in the case of low or insufficient income. This makes them wary of approving loans for people with low incomes. For example, if your income is Rs. 20,000 and your EMI is Rs. 13000, there is a high chance that your loan will not get approved. The reason is that the lender will think that Rs. 7,000 might not be enough for your other expenses, and then you will default on the loan. You can check your loan eligibility through different eligibility calculations available online. What can be done? If your income is insufficient, you can take a loan against your investments, gold, etc. You can also take loans from NBFCs or other financial institutions. 4. Incomplete information or wrong documentation When you fill out an application for a personal loan, be very attentive to every little detail. Also, attach the correct and required documents only. Another major reason for personal loan rejection is insufficient information and incorrect documentation in the application. It is because incomplete or wrong information or documentation makes the identification of the person difficult. Banks or other financial institutions tend not to approve the loan without proper identification of the person asking for the loan. What can be done? Please first check that your documents are complete and proper. If there is any ambiguity or issue with the documents, correct them before applying for the loan. Also, do not make any mistakes while filling out the application for the loan. Be very careful about spelling and other information. 5. Existing Loans The last in the list of 5 reasons for personal loan rejection is already existing loans. If you already have several loans under your name or as a guarantor, it is a good reason for banks to reject your personal loan. Financial institutions have access to all your credit history, even if you take loans from different banks, NBFCs, or other financial institutions. So, it is also not possible to take loans from different institutions. What can be done? You need to first pay off your existing loans before applying for new ones. If you apply for a loan, you must first check for NBFCs that can give you a loan regardless of your existing loans. Their interest rates are usually higher when compared to the interest rates of banks. You can also check if there is the possibility of getting a loan against investments, gold, etc. [B-02] Conclusion We hope this post helped you understand 5 reasons for personal loan rejections. Knowing these reasons will make it easier to take steps to get your personal loan approved. Contact us if you need help getting a personal loan or applying for a loan. We at Piramal Finance are always there for any financial help or consultation you need. We have been offering different services for over 40 years and offer housing, business, and personal loans, among others. You can visit our website for more information.
08-11-2023
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Personal Loan

How To Check Piramal Finance Personal Loan Statement & Download E-Statement

Taking a personal loan is a big financial decision. If you have taken a personal loan, it is best to check the e-statement regularly. It will show a complete record of your loan transactions. Every bank provides a personal loan statement. It helps you verify the authenticity of every transaction. You can check various details in this statement. One of them is the loan amount disbursed to you. Another is the value of the repayments you have made. It is a summary of all the transactions relating to your loan. The process to complete a loan statement download is very easy. Piramal Finance offers a seamless way to access your loan statement. You can easily download it to check the details anytime you want. [B-01] Which Details Can You Check In Your Personal Loan Statement A personal loan statement helps check multiple details. If you want to know which one of them you can check out with Piramal Finance, then read on to find out more. You can check the details of the scheme that you have availed. The statement displays the loan amount that you have availed. aa It also dictates the repayment tenure chosen by you. You can check whether the interest rate on your loan is floating or fixed. The statement tells you the last date for payment of the next EMI. Plus, it also tells you the amount that is due. The loan statement download process shows a history of all the EMI payments that you have made in the past. If you miss out on any payment, it will show in the statement. Any penalties for late EMI payments will also be shown on the statement. Thus, after completing the loan statement download, you will be able to view every aspect of your loan. Ideally, you should check the e-statement regularly to detect any discrepancies early on. How Do You Check Your Personal Loan Statement? There are multiple ways to access and check your e-statement. Piramal Finance offers you the liberty to stay informed about the status of your loan. Check out some of the best ways to check your loan statement. Log In Portal You can visit the official website of Piramal Finance at the following link: https://staging.piramalfinance.com/customer-service/loan-statement. Here, you will be able to log in easily. Enter your loan ID or loan account number to gain access. You can navigate the website to check out their other offerings as well. After logging in, you will be able to check the complete details of your loan. You can also get the loan statement download option on the same page. It is best to check whether the details displayed here are correct. Mobile Application Piramal Finance offers its very own mobile app. All you need to do is download the app on your phone. You can use your credentials to log in to the app. The mobile application offers a separate section for viewing e-statements. In addition, you will also be able to view other details on the app. Email ID If nothing else works, you can send an email to the bank. Through this mail, you can request the details of the personal loan statement. Upon request, the bank will send the loan statement to your registered email ID. This facility is very useful in case you do not have access to the mobile application or the web portal. Reach Out To Customer Care You can reach out to the customer care executives at Piramal Finance. They will help you obtain the details of your e-statement. All you need to do is give them a call. The executives here will help you get the desired loan statement. Offline If online methods do not work for you, then you can access your loan statement offline. You can visit the nearest branch of Piramal Finance near you. Once you are here, they will help you with any details that you need. When you check your loan statement after downloading, make sure that it is complete. It should include the following details: Statement Number The loan statement will be mailed to you once a month. Each time, it will contain a statement number. This number will tell you about the series of statements. Rate of interest This is the current rate of interest applicable to your loan. The current EMI will be payable at this rate. If the rate changes, details of them will be mentioned in the statement. Account Summary This is a snapshot of your loan account. It will show all credit transactions. Plus, it will also show the amount of debt owed at the time of the statement. Details of Repayment This section will tell you about the number of monthly EMIs that remain to be paid. You can also check the details of the EMI that you have already paid. The balance of your loan will continue to come down as you continue to repay the EMIs. The remaining balance of the loan You can also check the balance of the loan that remains to be paid. As you continue to make payments towards EMI, this will fall. Other Information Information about any reversal redraws, etc., will be available in this section. [B-02] Conclusion Piramal Finance is a premier lending institution. If you have been looking for a hassle-free source of loans, then this is a good option for you. Get many benefits with your loan amount right here. Also, check out their website to understand every financial aspect of your loan. Over here, you can explore several loan options. Also, you will be able to connect with trained professionals. They will help you choose and get the best loan option that best suits your needs.
08-11-2023
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Personal Loan

Flexi Personal Loans vs. Term Loans: Which is Right for You?

A loan can help you meet large financial requirements even if you don’t currently have the required sums. However, there are multiple types of loans, and not all will suit you correctly. Moreover, taking the wrong type of loan can cause significant financial loss and inconvenience. So, we will cover the two most popular types of loans and help you make a wise choice. These are flexi personal loans and term loans. Both of these options will help you fulfill your financial needs, but multiple factors set them apart. These include their purpose, interest rate, repayment mode, tenure, and more. So, let us go ahead and compare both types of loans in detail to help you decide which one you should go for. Let’s start! [B-01] What are Flexi Personal Loans? Flexi personal loans are great for people who need to take out a loan for a one-time expense and pay it over time with flexibility. They can be paid back in any amount over up to 24 months. So, Flexi loans are the best option if you’re not sure when you’ll have the money. You can also withdraw sums as per your requirements and pay interest only on the drawn amount instead of the entire sanctioned sum. Notably, you need to repay the principal amount at the end of the term. But you can also make a partial or full repayment at any time in between, depending on the availability of funds. Pros and Cons of Flexi Personal Loans Flexi personal loans offer several benefits over term loans. It is generally a better option unless you prefer scheduled payments. Pros of Flexi Personal LoansCons of Flexi Personal LoansHigher liquidityNot ideal if you prefer planned and scheduled paymentsThe flexibility of prepaying your loanMay get cumbersome if the lender’s systems are inefficientMinimal or no documentation is requiredNot ideal for long-term loans or large amountsThe interest rate is charged daily and is payable every month Hassle-free transactions Low renewal fees Lower interest and EMI amounts What are Term Loans? A term loan generally comes with a fixed tenure and EMI. Term loans are suitable for those who want to borrow money for an ongoing expense, like paying off their car or mortgage. Term loans are usually paid back over a year or two with fixed monthly payments. So, they’re better if you know exactly when you’ll have the money at your disposal. For example, suppose you take a Rs. 1 lakh term loan from the bank at 11% p.a. for one year. The EMI for the loan comes to around Rs 8838 with a fixed one-year tenure. Pros and Cons of Term Loans Pros of Term LoansCons of Term LoansA predictable payment scheduleRequires collateralEarly loan repayment is possibleStringent eligibility requirementsLower interest ratesSlow funding timeHigher loan amount and duration Helps to achieve long-term goals Difference Between Flexi Personal Loan Vs. Term Loan Term loans and flexi loans differ in their payment flexibility, interest amounts, approval times, and various other factors. And you must understand their differences to select the right type of loan for your purpose. So, let’s check out the differences between the two loan types with this simple comparison table: Flexi LoanTerm LoanFlexi loans allow you to withdraw only the amount required from your bank account. You need to stay within your sanctioned loan limit.A term loan gets approved by the lenders for lump-sum use. Your sanctioned amount will be disbursed into your bank account after your loan is approved.Flexi loans give you instant approval and disbursal within 24 hours. Most lenders also provide online approval and disbursal of your loan.Term loans are approved after verification of your documents, which can take several days.Interest on the Flexi loan will be applied only to the amount withdrawn, not the entire sanctioned amount.Interest is applied to the entire sanctioned amount.It is generally between 12 to 60 months period.A term loan’s tenure can vary from 1 year to 10 or 30 years.Flexi personal loans offer flexibility in their repayment periods.Term loans have a fixed payment schedule. Frequently Asked Questions Here are some common questions related to Flexi loans and term loans and their answers: Where to use a flexi personal loan?Flexi personal loans generally come with flexible end-usage. So they can be taken and used to meet various personal financial needs of a person. Can you pay a Flexi loan early?Yes, you can repay your flexi personal loan early as the payment schedule is flexible. You can time your payments to match the availability of funds. What is the maximum tenure of a flexi loan?The loan tenure of a flexi personal loan varies across different lenders. But it is generally between 12 to 60 months period. What is the maximum tenure of a term loan?A term loan’s tenure can vary from 1 year to 10 or 30 years. You should use it for large expenses that you plan to repay in the long run. What is the maximum amount of a loan I can avail of?You get a pre-approved loan limit for any loan that is based on your credit profile. [B-02] Key Takeaways The main differences between the two types of loans are the tenure, interest amounts, purpose, liquidity, approval times, and repayment method flexibility. If you want a quick personal loan for the short term that you can pay back at your convenience, you should go for a flexi personal loan. However, a term loan is better if you want a large loan that you pay back in the long run in a scheduled manner. So, go for flexi personal loans if you need money quickly for daily requirements and prefer flexibility. And take a term loan if you want to make a big expenditure and repay it in a planned manner in the long run. Such an expense can be buying a car, a house, or making a large investment.
08-11-2023
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Personal Loan

How Can You Improve Your CIBIL Score To Become Eligible For Personal Loans?

Personal loans are needed for many reasons. These include debt repayment, medical emergencies, financial problem mitigation, and so on. Although personal loans can be used for anything, the chances of getting them approved are slim. Several factors govern the approval rate of personal loans. One of the most important factors is your CIBIL score for personal loan. Many people are unaware of the importance of a CIBIL score for personal loan. They don’t know their minimum CIBIL score for personal loan. As a result, they either get behind in improving their score or fail to pay attention to them. This results in their loan application being rejected. Read further if you do not want such things to happen with your loan application. In this article, we have described the ways to improve your overall CIBIL score for personal loan, and increase your chances of loan approval [B-01] Ways to Improve Your CIBIL Score for Personal Loan Let’s look at some ways to improve your CIBIL score for personal loan: Timely repayment of credit card dues. No matter how much credit you have on your card, always pay on time. If you convert the total outstanding into monthly EMI, the credit statement generated will have a due date for that particular month. Try to pay the debt amount as soon as possible. Missed payments, late payments, and so on will negatively impact your CIBIL score for personal loan. Therefore, you must pay attention to the deadline you have been given for repayment of the credit. It would be best if you kept the unbilled transaction at zero. This will help you avoid any penalty charges or interest on the overall outstanding amount for the particular month. Limit credit use. You can use a credit card to purchase anything when you don’t have the required funds. Your credit card can also be used to meet emergencies when you are not eligible for a loan. However, relying entirely on the credit amount granted on the card may negatively affect your CIBIL score for personal loan. Using a credit card or overspending means that you cannot fulfil the usual purchases, let alone repay debts. If you continue to make purchases on your credit card, the outstanding amount will increase. As a result, the overall interest charge will skyrocket. Therefore, you should limit your credit card usage to improve your CIBIL score. Try to use upfront money as much as possible. Use your credit card only when it is indispensable or you don’t have enough to pay upfront. Getting more credit cards after careful studies. Getting new credit cards can also help you increase your CIBIL score for personal loan between 700 and 900. When you have multiple credit cards under your name, you can use them to purchase things without overspending on a single card. As a result, the interest charged on a particular card will be within the nominal rate, which can help you improve your overall credit score. However, it would help if you went through the terms and conditions, policies, and other details of the credit card and the creditor. This is important, especially if you are looking to improve your CIBIL score for personal loan. Always keep an eye on the credit report. You must pay special attention to your credit report to understand whether your efforts are making any difference. You may not be able to see the results immediately, but continuing to apply these strategies will yield results in a couple of months. As you continue to use your credit card or get new credit lines, it will increase your CIBIL score for personal loan. Keeping an eye on your credit score will help you assess whether everything is under control. At first, it might not sound easy. With practice, you will undoubtedly be able to increase your overall credit score and get your loan application approved. Be patient and consistent with the process. Last but not least, you have to be consistent in your efforts to increase your overall credit score. Do not expect to reach your goal after only a couple of days. It will take time to build the credit score. If you give up on your efforts after a couple of weeks of not seeing any results, the chances of your loan application getting approved will never increase. Always track and monitor your credit score. It helps you understand if the efforts you have put into improving it are working or not. Moreover, this can ensure your CIBIL score reaches above 700 and remains within the higher limit. Do not forget that credit history is equally important as the CIBIL score for personal loan approval. [B-02] To summarise In this article, we have walked you through improving the overall CIBIL score for personal loan and increasing the chances of getting your loan approved. Try to keep the score above 700 to ensure your loan application never gets rejected. There will be several other roadblocks, but you can easily maintain a high score with a consistent approach. For more articles related to personal loans and other options, check out the Piramal Finance website today.
08-11-2023
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Personal Loan

What is a Moratorium Period in Personal Loans and Should You Go For It? 

What do you do if you are facing a lack of funds and don’t have collateral? Yes, the time-tested step here is to take a personal loan. But there’s a catch! Personal loans typically have high interest rates. And as soon as you get the loan money, you have to start making monthly payments. This can make it tough to manage your expenses despite taking a loan, as the loan itself becomes a large liability! This is where the concept of the Moratorium Period in personal loans comes in. The moratorium period on loans is a temporary break from paying installments. It can help you tide over a serious financial crisis. In fact, this concept was introduced in India to bring financial stability during COVID-19 lockdowns. However, the interest during the break gets accrued and raises the principal after the moratorium! So, what exactly is this double-edged sword, and when can you use it safely? We will address these questions in detail in this blog. Let’s begin! [B-01] What is a Moratorium Period in a Personal Loan? A moratorium period in a personal loan is the time period of a loan tenure during which no interest must be paid by the borrower. It is the amount of time you are allowed to wait before you have to start paying the loan back in equal monthly payments. The loan’s interest will be calculated using simple interest during this time. And the interest amounts will be added to the principal for the new payment schedule and tenure after the moratorium. How Does a Moratorium on Loan Work? The Reserve Bank of India allows 6-month moratoriums on personal loans and term loans, during which a borrower may not make any payments. The move to legalize moratoria was taken by the RBI in 2020 in response to the income uncertainty caused by COVID-19. During the moratorium, the lender computes the loan’s interest for this period by applying simple interest to the offered amount. The interest charged on your loan during the moratorium will be added to the principal amount. After this EMI holiday is over, you must pay your EMIs on the net amount. This amount includes the accumulated interest and the principal amount. Let’s take an example of a loan amount of Rs 1 lakh released with an interest rate of 11% per annum and a 2-year moratorium. In this case, a total interest of Rs 11,000 per annum will be accumulated for two years, creating a total sum of Rs 1,22,000 at the end of the moratorium. The interest and EMIs will be calculated on the basis of this amount, not the original 1 lakh. Benefits of Opting for a Loan Moratorium A loan moratorium offers you a break before you must start paying the EMIs on your personal loan. This makes it perfect if you are currently undergoing financial hardships but need money for a major expense of any type. However, the total amount outstanding will be higher at the end of this break. So, you should be able to pay the larger EMIs eventually. Let’s have a look at the key benefits of a moratorium in further detail: Flexible repayment plan A loan moratorium helps you plan your repayment in a strategic manner as per your expected income and expenses. It can help you accumulate funds and begin repayment in a planned manner. This alleviates financial and mental stress. No negative impacts on borrowing capacity A loan moratorium will not impact your credit score or future borrowing capacity negatively. But you should be able to pay the eventual instalments on time to avoid such negative effects. Helps during a liquidity crisis The most important benefit of a moratorium is that it delays your financial liabilities. So, a temporary loss in income won’t put you in a financial crisis. Drawbacks of Loan Moratoriums on Loans A loan moratorium also has some major limitations and precautions. Here are the main drawbacks of moratoria on personal loans: No waivers An EMI holiday does not lower your liabilities. Instead, it adds up the interest from the break period and increases the total principal. It only helps you temporarily by deferring the installments to a later date. Increased loan tenure The EMI break is temporary and ultimately increases the tenure of your loan. This can lead to a lot of debt in the long run and throw off your plans for the future. The sudden burden of payments The short-term respite from the skipped EMIs ends suddenly when the loan’s moratorium ends. The backlog of interest adds to the burden of heavy payments. And this can land you in serious financial trouble unless you have made perfect plans in advance. Frequently Asked Questions About the Moratorium Period If you still have any doubts about personal loan moratoria, check out these answers to common questions: Will the bank charge late payment charges for the moratorium facility? No. Late payment charges will not be levied on the loan during a moratorium. Which lenders can offer moratorium periods in India? Moratorium periods can be offered by any commercial bank, cooperative bank, or non-banking financial company. Will EMI deferring impact my credit score negatively? No. EMI moratoria will not affect the credit score in any direct manner. Does a moratorium include both the principal and interest amount? Yes, a moratorium includes the interest as well as the principal component of the EMIs. Are credit card payments covered under moratoriums? No. Credit cards come under a revolving credit type. Hence, they are not covered under moratoria. Can I cancel my loan’s moratorium period? Yes. You can easily cancel your EMI moratorium by contacting your bank to start the cancellation process. Are interests during a moratorium waived?No. The moratorium period on loans is a temporary break from paying installments, but interest during that period accrues and gets added to the principal. [B-02] The bottom line A moratorium is your best option if you are seeking temporary relief from financial pressures. But you must make and carry out plans to get money and make payments on time after the moratorium ends. Moreover, moratorium loans may require higher payments than a normal personal loan as the interest during the break is accrued. So, you should go for them only if you are temporarily facing serious financial hardships and have robust plans to bounce back in the future! Are you ready to opt for a moratorium period on your personal loan? You can approach any Indian financial institution and apply as per their procedures. However, the moratorium system can be risky if you don’t plan your finances perfectly. So, you should always prefer an experienced and trustworthy bank or NBFC. An example is Piramal Finance, which helps you get the best moratorium loans with expert help.
08-11-2023
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