More articles for you

Your one stop place for everything related to finance and lending

Personal Loan

How To Get A Personal Loan Without Security?

Security, or collateral, is one of the primary challenges people face while applying for a loan. It guarantees returns on the loan amount if you fail to repay on time. For example, you may want a large personal loan without security. Hence, the bank might ask you to give a certain percentage of your home as an equity mortgage. Similarly, a vehicle loan will have the car under your title as collateral. Thus, a without security loan is often granted based on what you will use as collateral. The lower the risks, the higher the value of your collateral. It can help your loan be approved faster. Moreover, you don’t have to worry about having a bad credit score. However, providing security comes with risks. If you fail to make timely payments, the lender may seize your collateral. Let’s look at some ways in which you can get a personal loan without security. [B-01] Consider Unsecured Loans One of the best ways to get a personal loan without security is to opt for an unsecured loan. As the name suggests, unsecured loans don’t require collateral. All you have to do is show proof of income. Sometimes, you may also have to provide the details of your guarantor. A guarantor is someone who can repay your loan in case you default. For unsecured loans, any missed payment is charged with a late fee. As the outstanding balance on the loan starts increasing, the interest will also increase. Thus, you need to pay more than the initial interest amount. That’s what offers a guarantee to the creditor while issuing unsecured loans. Risks of a Personal Loan Without Security Here are some of the risks associated with a personal loan without security: For unsecured loans, the risks associated with the credit will automatically increase the interest rate. Therefore, you cannot expect the creditor to offer you a loan at a nominal rate because they also need a guarantee for the money they lend you. And a higher interest rate is the way to do so. Not all unsecured loans come with the option of foreclosure or early pay-offs. For instance, you won’t be able to pay 30% of the loan amount during the first few months since foreclosure is often penalised for unsecured loans. You need to pay a considerable fee if you want to pay any amount upfront for a personal loan without security. This is one of the scariest things that could happen if you take out an unsecured loan, especially from a private lender or peer-to-peer lender. When you take a personal payday loan, you need to repay the amount within the first payment cycle of your salary. Failure to do so will incur a significant interest charge on your principal amount, automatically making it more challenging to pay off the debt. With these known risks, you can steer clear of the actions and ensure the total amount due doesn’t increase or the chances of failure are significantly reduced. Get the credit score high Another way to get a personal loan without security is to maintain a high credit score. A credit score is a number assigned to your credit account based on your actions, credit history, etc. Maintaining a credit score above 650 consistently is better to ensure the chances of the loan application being rejected are reduced significantly. However, it is not easy to maintain a high credit score at such a level. For instance, if you use your credit card to purchase something but always make the payment late, after the due date, it will negatively impact your credit score. Similarly, your credit score will decrease if you pay the minimum amount every month instead of the total amount due. The higher the debt, the lower the credit score, significantly reducing the chances of getting the loan application approved. Show substantial and valid income documents Another thing you have to be sure of is your income. You should submit valid and robust proof of a consistent income flow to get a personal loan without security. This will help ensure the creditor that you can quickly repay the loan without making late payments or missing a single payment due to a shortage of funds. If you directly link your salary account with that of the loan account, the EMIs will be deducted automatically, and you won’t even have to worry about missing the payments. Besides, the income proof with pay stubs from the past six months, a letter from your employer, and other such documents will increase the chances of the loan application getting approved. If you fail to provide all these documents, you might not be able to get the loan with the same principal amount you asked for or with a lower average interest rate. Choose a proper creditor Last but not least, you should connect with a proper creditor who is trustworthy and reliable and offers personal loans without security. This way, you won’t have to worry about giving any collateral to take the loan. Check the interest rate being charged, the allowance for foreclosure or upfront payment, and so on. This will help you to avoid any penalty being levied on the loan amount due to a violation of the terms and conditions of the creditor. [B-02] Final Takeaway If you want to know more about “without security loans,” connect with the experts at Piramal Finance today! Find out all the aspects of an unsecured loan and how to reduce the associated risks.
08-11-2023
Read More
Personal Loan

How Do Lenders Decide on Personal Loan Eligibility?

A need for a loan can arise at any point in life. And the reasons for this can be many. From a wedding to debt consolidation or even home renovation. In these needy times, personal loans are your friend. They can be accessed instantly and without collateral. Although it isn’t always so simple to get one. There are certain parameters you need to satisfy for a lender to sanction the loan. Since personal loans are unsecured and lenders’ money is at stake, they have set these parameters to determine if you are worthy of credit. Let’s have a detailed look at how lenders decide on personal loan eligibility. [B-01] Personal Loan Eligibility: How Is It Calculated? Different lenders use different methods to determine personal loan eligibility. However, there are two most common ways to calculate it. Let us take a look at it. Multiplier Method This method uses a basic formula. Loan eligibility = your salary multiplied by a number between 9 and 18. The number may vary based on your credit profile and the company you are employed at. Fixed Obligations to Income Ratio (FOIR) This is one of the most commonly used methods by banks and other financial institutions to calculate personal loan eligibility. Firstly, total monthly debts are taken into account. It includes EMI payments, credit card bills, rent, and other living expenses. This sum is then divided by the total monthly income of the applicant, multiplied by 100. FOIR = (sum of total debt/total monthly income) X 100 An ideal FOIR ranges between 40% and 55%. It is the ratio of your debt to your income. Factors that Determine Personal Loan Eligibility Employment Type Lenders will first check whether you have a stable source of income. This includes salaried individuals, self-employed individuals, and business owners generating consistent income. Checking this is required on the lender’s part to ensure you will be able to repay the loan in time without defaulting. Credit History and Score One of the most important parameters for personal loan eligibility is your credit score. A credit score reflects the borrower’s past credit history. It is an account that has information on your debt accounts, outstanding debts, and repayments of debt in the past. It is a way to ascertain the borrower’s repayment capability. A score above 750 is generally considered a healthy credit score. A lower credit score can get you a loan, but the interest rate charged will be higher. Hence, it is advised to improve your credit score before applying for a loan. This can be easily done by repaying outstanding debts, paying the EMIs on time, and not applying for multiple loans at the same time. You can also check loan eligibility online. Repayment History The next parameter is your repayment history. Meaning, how regular you have been in clearing your debts in the past. This shows your credit management behaviour. Late payments and defaulting leave a bad impression on the lender. This can lead to rejection or make your chances of getting a personal loan a bit more difficult. Work Experience Employment history plays a key role in bank loan eligibility. A lender or a bank will check how long you have been employed. Working with the same employer for a prolonged period or at a multinational or government organisation further improves your creditworthiness. If your work profile reflects stability, the chances are you might get a loan with lower interest rates. Age As they say, “age is just a number,” but not in the case of personal loan eligibility. Your age can give an insight into your financial stability. People who are too young or too old may indicate unstable earning ability. Hence, most lenders prefer people between the ages of 23 and 55. Income A regular inflow of income is a good sign for personal loan eligibility. It assures the lender of your repayment capability. It is best to mention your additional sources of income as well. This can include the spouse’s salary, rent from leased-out properties, business income, etc. Your income also plays a role in determining the amount of loan you can get. [B-02] Conclusion Personal loans are an effective way of dealing with unforeseen emergencies. The above-mentioned points play a major role when applying for a personal loan. Lenders need to know your repayment capabilities before they loan you the amount. The whole process becomes hassle-free if you have a healthy credit history and CIBIL score. Your monthly income and employment history also play a crucial role. Understanding these requirements will not only improve your chances of getting a loan, but it may also help you get better interest rates. For more such blogs and other personal loan-related queries, head over to Piramal Finance.
08-11-2023
Read More
Personal Loan

How to get a personal loan with a PAN card & KYC documents?

Once in your lifetime, you would have come across loan offers, right? But there’s not an offer; instead, a piece of brief information on a personal loan. Do you know what a loan or personal loan is? In the world of finance, the term “loan” means lending money. The loaning process is done by one or more organisations, individuals, or entities to other organisations, individuals, etc. Now that you understand what a loan is, it is also imperative to understand the concept of a personal loan. It is money you borrow from an organisation, an individual, or any other entity to fulfil your requirements. Usually, people take personal loans for reasons like buying a flat, renovating their existing house, getting married, getting an education, and so on. You can seek personal loans from online lenders, banks, or credit unions. Once you take a personal loan, you need to repay it within a fixed time with interest, as mentioned in your agreement. Are you looking for a personal loan? Do you plan to cover debt consolidation, medical bills, moving expenses, or other unexpected expenses? If yes, stick with this blog till the end. You will be able to gather all the important information related to personal loans and how to get them. [B-01] Types of personal loans There are generally two types of personal loans. These are secured and unsecured. So, let us know about these in brief. Secured loan This type of loan requires some collateral. It acts as a condition for borrowing. For example, you visit a bank and ask for a personal loan. If they offer you a secured loan, then you will have to secure your loan with a physical asset. The asset could be a house or a car, or it could be cash, such as a certificate of deposit or a savings account. If you fail to repay the loan, then your collateral will be kept by the loan authority to satisfy the amount of debt. Unsecured loan This kind of loan does not require you to keep any collateral, so an individual can enjoy a personal loan without any risk. But do you know this personal loan asks for higher interest? If you are a person who is not willing to take a risk with their existing savings or property and you can pay more interest for a personal loan, then this type of loan might work for you. Eligibility criteria for a personal loan Now that you have received brief information on a personal loan, it is also important to understand if you fit the eligibility criteria for a personal loan. You should be between the ages of 21 and 60. You should work in local, state, or federal government; public-sector companies; or private businesses. Other requirements vary per your loan requirement and depend on the organisation’s rules. Some might ask for at least two years of job experience; some offer loans only to those with an income of at least Rs. 15,000 to 25,000. What are the personal loan documents required for a personal loan? If you are willing to seek a personal loan, here is a list of personal loan documents you might be asked for. PAN Card: To apply for a personal loan, it is important to have your PAN card ready. Identity proofs: Identity proofs play an essential role in every arena, and when it comes to loaning, they are much more important than anything else. So, you might have to submit copies of your Aadhar card, voter ID card, driving license, or passport. Address proof: For address proof, you can use your passport, Aadhar card, voter ID card, or driving licence (the same personal loan document as ID proof). Bank statements play an important role in loaning, so the authority might ask for your previous 3 to 6 months of statements. Salary slips: Just like your bank statement, the latest salary slips for approximately 2 to 3 months are required. If you can’t submit your salary slip, you can also submit a current-dated salary certificate. Personal loan with PAN card and KYC documents Once you have all the documents you need for a personal loan and know what you need and who you are eligible to borrow from, you can move on to the next step. Nowadays, most organisations offer both online and offline loan methods so that you can choose your preferred option. If you have a valid PAN card, loaning can be much easier and a better experience. With the help of a Pan card, you can lend up to Rs 50 lakh, and the interest rate, loan repayment tenure, and processing fee vary from lender to lender. The process for lending a personal loan might vary a bit from organisation to organisation, but in general, the following are the steps that you should follow. First, fill out the application form for a personal loan, which might ask for your professional and personal details. Then you need to choose a particular amount you want to borrow from the organisation and the tenure of repayment. After that, you’ll need to show all the necessary personal loan documents, such as a PAN card and an Aadhar card, so that they can be checked. If your loan is approved, the loan amount will be transferred to your bank account. If you seek a personal loan with the use of a PAN card, then you might enjoy the following benefits: No need for collateral: You can enjoy the benefits of a personal loan without giving up anything valuable, like a home, savings account, or anything else. Interest rates: The interest rate to acquire a personal loan on a PAN card is very competitive. You might come across various options and offers from different organisations. Disbursement is quick: Even though you’ve applied for a personal loan, the money can be in your account within 24 hours after your application has been approved. If you seek a personal loan with the use of an Aadhar card, then you might enjoy the following benefits: Not much formality is required: If you choose to have a personal loan on your Aadhar card, you might have to submit only a few personal loan documents, like address proofs. Quick transfer: Once your loan is approved, you can receive the money in your account within one or two days. [B-02] Conclusion If you want a personal loan, you can get one with the help of a PAN card and an Aadhar card because the government has made these options a much better and easier way to seek a loan. The process is also very simple, and you can enjoy various benefits like quick transfers, no need for collateral, no need to fulfil several formalities, and much other stuff. Have a look at Piramal Finance for more options.
08-11-2023
Read More
Personal Loan

What is the Debt-to-Income Ratio?

The debt-to-income ratio (DTI) represents a borrower’s debt repayment capacity in relation to their total monthly income. Meaning, how much of a person’s monthly income goes into paying away their debts. This ratio helps the lender or a financial institution determine the borrower’s ability to repay the loans. A low ratio signifies that the debts are being paid on time. This attracts more lenders, as it shows the borrower doesn’t have too many debts. At the same time, a higher ratio is a sign of below-par financial health. This makes obtaining a loan difficult and expensive. [B-01] Debt-to-income ratio calculator It may sound hard, but calculating DTI is simple. Add all your monthly debt payments and divide them by your monthly gross income. Gross income is the income you earn before paying taxes and other deductions. To calculate your monthly debts, add the following: monthly rent, EMIs, home/auto/medical loan, mortgage, credit card bills, and other debts. For example, suppose your total monthly income is Rs. 1,50,000. Your total debt obligation for the month is 50,000. Then your debt-to-income ratio would be (50000/150000)*100 = 33.33%. This shows 33.33% of your income goes toward the repayment of debts. What is a good debt-to-income ratio? The lower the debt-to-income ratio, the better it is. This shows you have fewer debts to repay. Hence, this makes new loan approvals easier and quicker. However, a good debt-to-income ratio will differ from lender to lender. Generally, a DTI ratio of up to 40% is considered suitable for loan approvals. DTI ratios above 40% may get loans, but the interest charged would be higher. But keep in mind that this is just one of the many parameters for taking a personal loan. What Happens When a Debt-to-Income Ratio is Too High? A higher DTI ratio can impact your financial life in one or more ways. Let’s take a look at how it can affect you. When the DTI ratio is higher, it shows you are spending a larger part of the income paying off debts. This means there are fewer savings and investments. A higher DTI ratio lowers the chances of getting loans. This can be a problem in an emergency. Individuals with a higher DTI ratio can secure a loan, but the interest charged by the lenders is usually on the higher side. How to Lower a Debt-to-Income Ratio Having a good financial plan is important when it comes to lowering the debt-to-income ratio. You also need to be aware of your debts and expenses. A lower DTI ratio ensures that you might secure a loan in the future when it is really important. Some of these steps might help in lowering your debt-to-income ratio and improving your credit score. Postpone a purchase if it isn’t an emergency. This will cut down on credit card bills. When there are fewer purchases on credit, it will lower the debt-to-income ratio of the individual. Stop taking on more debt unless your ratio falls below 40%. Pay off all your debts, if possible. Paying off debts helps improve your credit utilisation rate. This further improves your credit score. Closing previous loans can help as well. Some people combine all their multiple high-interest debts into one and consolidate them by taking a personal loan. Increase EMI payments to finish the debts quickly. This helps in the long run. Find additional sources of income, if possible. Finding a side hustle, taking online classes, or working on weekends can help increase income. Calculate the debt-to-income ratio every month. This helps in monitoring and understanding how the debt is being managed. One can find what is working in their favour to keep the DTI ratio low. It is also motivating to see the debts being managed in an organised way. Why is the debt-to-income ratio important? The DTI ratio helps the lender measure your loan repayment capacity. It tells how much of your monthly income is going toward clearing off debts. This also affects your credit score, which a lender considers while approving loans. A low debt-to-income ratio increases your chances of getting a loan. A good DTI ratio signifies that the borrower’s financial health is in good shape. That means they are in a position to secure a new loan and will be able to repay it without defaulting. Does the debt-to-income ratio impact the credit score? The debt-to-income ratio does have an indirect impact on your credit score. A lender doesn’t know what your gross earnings are. So, they can’t make accurate calculations. But they do look at how much credit you have. They compare your credit card account balances with the sum of all the credit limits on your cards. A lender will be more interested in the debt history of the borrower than their income history. Nonetheless, to secure a loan smoothly, maintaining a healthy DTI ratio is as helpful as a healthy credit score. [B-02] Conclusion To conclude, the debt-to-income ratio can benefit both the lender and the borrower. As it shows the relationship between a person’s income and debts, it can assist the lender in determining the borrower’s repayment capabilities. And as an individual, by calculating DTI, one can see their expenses and work on them. You can review your debts every month and find ways to lower them. This can be done by either managing your expenses or increasing your income. For more finance-related tips, you can go to Piramal Finance and read more blogs.
08-11-2023
Read More
Personal Loan

A Beginner’s Guide to What is a Personal Loan and How it Works

Do you want to apply for a personal loan but are unsure how to go about it? If you have heard about it but have no idea what it is or how it works, this article is for you. In this article, we will explain everything you need to know about personal loans before applying for them. So, keep reading to get a perfect beginner’s guide on what a personal loan is and how it works. [B-01] What is a personal loan? One-time borrowing from a financial institution or a bank is known as a personal loan. This kind of loan is repaid through EMIs (Equated Monthly Installments). You obtain a personal loan with interest and EMIs. A personal loan falls under the category of an unsecured loan, meaning you do not need to give any collateral for it. It simply means that you do need to place any asset under the bank’s control to obtain it. How does it work? Almost all banks and other financial institutions offer personal loans. You get a lump-sum (one-time) amount in your bank account after it gets approved. You can get your amount disbursed in approximately 7 business days. It can vary according to different banks and your application process. There are also instant loan options available, through which you can get a loan within minutes. As an example, consider a personal loan. The monthly EMI, for instance, would be Rs. 4,758 for a personal loan of Rs. 2 lakh with a duration of five years and an interest rate of 15%. The consumer would have paid Rs. 29,039 for the premium and Rs. 28,057 for interest after the first year. The consumer would pay Rs. 57,422 less in interest if he chose to prepay the entire amount today. For what purpose can you get a personal loan? You can get a personal loan for literally anything. The best part about them is that there is no specific purpose or use tied to them. Banks do not track for what purpose you are using the money. Generally, people get a personal loan for the following purposes. To cover wedding expenses Travel expenses For medical needs Children’s higher education To afford any expensive purchase To renovate their houses For any emergency, etc. Benefits of getting a personal loan There are lots of benefits to getting a personal loan. For example, Personal loans do not require any collateral. You do not require a lot of documents. That means the documentation process is less complex compared to other loan options. The disbursal of the amount is also very quick compared to other loan options. The interest rate remains fixed over the whole term of the personal loan. The time period for which you can avail yourself of a personal loan is very flexible. You can select a time period according to your payment capacity. You can use the amount for any purpose according to your needs. There is no specific purpose when it comes to personal loans. Documents needed for a personal loan The list of common documents that will be required at the time of applying for the personal loan is as follows. Address proof Identity proof Age Proof Salary slips or any other income proof Bank statement or passbook Income tax return How do I choose a personal loan? While choosing a personal loan, you should keep the following points in mind. You should give priority to the points according to your requirements. Interest rate: The interest rate is the most important aspect that you should consider while choosing a personal loan. Personal loans are the easiest and quickest to get, but their interest rates are also among the highest. If your other requirements are fulfilled, then you should go for the lowest interest rate. Disbursal of amount: If there is an emergency, you can choose the personal loan, which disburses in a few hours. Fees and charges: Always double-check all fees and charges associated with personal loans. Tenure: Choose the personal loan according to the tenure that suits your repaying capacity. Generally, it ranges between 1 and 5 years. EMIs are completely dependent on the tenure of the loan. The shorter the tenure, the bigger the EMI, and vice versa. Credit scores: Choose the personal loan according to your credit scores. If your credit scores are not good, choose the one that gives little importance to them. Documentation: If possible, try to look for less complex documentation and application processes for personal loans. How do I apply for a personal loan? You can apply for a personal loan by following the steps given below. Firstly, check your credit score. You can do that online by using any credit score checker. Some of them are available for free. The next step is to check your eligibility to get a personal loan. For that, too, different calculators are available online. Now, research and compare different financial institutions’ interest rates, terms and conditions, tenure, time taken to disburse the amount, etc. Choose the lender according to your requirements. Get your required documents ready. Fill out the application for the loan as accurately as possible, as misinformation or any mistake can lead to loan rejection. Then, submit the application with the documents. Keep patience while your financial institution processes your application and disburses the amount. Finally, after getting the loan amount, you are free to use it any way you want. [B-02] Conclusion Personal loans have become a go-to solution for any financial issue. This is mainly because of the emergence of many fintech companies that provide easy and quick personal loans. As easy as it sounds to get them, you also need to keep in mind not to take on too many loans at once. Because if you fail to repay them, it will negatively affect your credit scores, which creates problems in the future when you try to get other loans and credit cards. We hope that you are now clear about how personal loans work and how to apply for them. If you want to talk to someone about them or anything else related to money, you could contact Piramal Finance.
08-11-2023
Read More
Personal Loan

What Factors Decide Your Personal Loan Eligibility

Personal loans are unsecured credit that you may get from NBFCs. You can also obtain it from other financial organizations. Organizations give these loans based on different factors. These will include: the borrower’s income level capacity for repayment occupation credit history. You can meet the requirements by securing loans from various financial institutions. But the lenders will set specific eligibility criteria for a personal loan. It will help them decide if they can get a personal loan. [B-01] Considerations that Go Into a Personal Loan Eligibility Check Your eligibility for a personal loan depends on some important factors. Here are some of them: Age Age is the most critical factor in determining your eligibility for a personal loan. The lender will consider your age when you apply for the loan. It provides proof of your financial stability and earnings history. When you are in your early twenties, you may be earning less. But, over time, it will increase as you grow older. In the same way, your earning potential may decrease once again if you are older than sixty. Salaried people between the ages of 21 and 55 are likely to get personal credit. Money Received Every Month Your lender will check to see whether you make a good amount of money monthly. With this, they will infer if you can repay the loan within the given time. Your capacity to repay debts depends on your level of income. It is an important factor in your overall financial profile. The terms of the minimum loans vary from lender to lender. The lender will check your home and business books to understand your income. Your credibility increases when you pay loans on time. And, when you pay on time, your credit score soars. Credit Rating and History As stated before, personal loans are unsecured. So they do not need collateral or asset support. Hence, lenders rely on credit ratings. These ratings will let them know if they should provide credit to you. These scores also determine eligibility for a personal loan. Your credit score reflects the patterns of your initial EMI payments. As a result, you must focus on making the EMI payments on time. Any delay with regular payments will make you a defaulter. This has an impact on the approval process for your loan. Prior Professional Experience Freshmen have lower credibility than working people. This is due to financial stability. Thus, you should apply for a loan after working for more than a year or two. This helps show your financial stability to repay loans. Generally, the lenders will see if you have been earning for more than 5 years. Thus, if you require loans for your newly set-up business, you should have three years of work experience. In contrast, business owners need at least five years of experience working in the industry. Tenure Tenure, or period, holds an important place when it comes to repaying loans. This also determines your eligibility for a personal loan. You must choose a shorter repayment term when applying for a personal loan. Shorter terms give you more chances to repay the loan. This will increase the likelihood of approving your application at the best interest rates. Also, you must choose the loan amount based on your capacity for repayment. That means if you have eligibility for a personal loan of Rs. 2 lakh, you may use an EMI calculator to check your monthly payments. You must input the loan amount, interest rate, and duration into the fields. Documents Required For A Personal Loan When you apply for a personal loan, you will need to provide these documents: Proof of one’s identity: This includes a PAN card, passport, Aadhaar card, voter ID card, and driving licence Evidence of address: It includes a voter ID card, Aadhaar, and a driving licence Statement from the bank covering the last three months Employment identification Paychecks from the most recent three months The Benefits of Obtaining a Personal Loan With the Correct Eligibility for a Personal Loan Here is a list of the benefits if you are eligible for a personal loan and take one. Fast Approval The application procedure for a personal loan often takes less time than a mortgage loan. The approval process is completed in a few days when someone applies for a loan and has a good credit score. Unrestricted by Collateral You do not have to provide collateral. All that is necessary is for you to have the documents and a good credit score. Versatility The personal loan amount may be helpful for various purposes. It may be used to travel, buy a machine, or receive medical treatment. Some other things include making improvements to the home, getting married, paying for children’s education, and many other things. Increases One’s Credit Score Increasing your credit score with this method is an excellent choice. Your credit score will improve once you make payments on the EMIs within the allotted time frame. Easy to Obtain Anyone who has a credit history that is at least adequate and a credit score around 750 is an ideal candidate for receiving a personal loan. Minimal Documentation The amount of paperwork required for a personal loan is often relatively small. Nevertheless, the kind of papers necessary here must be authentic. [B-02] Conclusion A personal loan might assist you in meeting your financial obligations without requiring you to provide collateral. Checking your eligibility for personal loan requirements is something you need to do before deciding to get a personal loan. Multiple lenders provide personal loans nowadays. They check personal loan eligibility and give borrowers a wide range of products from which to choose. Choose wisely, however, so that you may get the most outstanding personal loan possible. It will make paying off your debts simpler and less stressful. Piramal Finance is one of the best personal loan and financing options if you are looking for one. Get in touch with the team and check your eligibility for a personal loan today!
08-11-2023
Read More
Personal Loan

Can Two Personal Loans Be Taken Out at the Same Time?

The short answer is yes. You can take out two personal loans at the same time. Taking out two personal loans can be tricky, but it’s not impossible. Most people take personal loans for big buys, debt merging, emergency costs, etc. In such cases, one can’t avoid taking out a second loan. Personal loans are repaid with fixed monthly payments. The lender will disburse the whole amount in one go to the applicant’s bank account once the loan application is cleared. Taking out a second loan can be tricky. So, before you check eligibility for a personal loan, do a detailed study. This article highlights everything you need to keep in mind when applying for a second personal loan. [B-01] Things to keep in mind while applying for two personal loans Repayment capacity Calculate your repayment capacity before applying for a second personal loan. You need to check if you are earning enough to pay the loans. Lenders could find it difficult to trust you if the majority of your income is allocated to paying EMIs. This is because having a high EMI-to-income ratio means you can default more easily. Have a repayment plan while applying for a second loan; this ensures you do not default. Interest rate Banks and lending institutions will offer a higher interest rate for a second loan as they see it as a risk. Because you already have an initial loan, there are chances of your becoming a defaulter. Before applying for a loan, it’s a good idea to check your CIBIL score to see if it will hurt the interest rate. Debt-to-income ratio The debt-to-income ratio (DTI) is a crucial factor that lenders consider when approving a personal loan. The ratio reflects the percentage of the customer’s income used towards debt repayment. A high DTI shows that a large percentage of income is used for debt repayment, whereas a lower DTI shows that a lower percentage of income is used for debt repayment. While approving personal loans, banks look at the DTI of the customer. So, one should ensure that DTI is low, especially when applying for multiple loans. Debt cycle If one is not careful, one may find themselves in a debt cycle due to applying for multiple loans. At first, it might seem like a good option to take out a second personal loan to cover an expense, but this can turn into a cycle. Therefore, you should seriously consider whether you need a second loan when you already have one. On-time repayment It is hard to keep track of all the payments when you have multiple loans. One might end up missing a deadline, which can cause problems. There will be a penalty, and it will affect the CIBIL score. So, when applying for multiple loans, set up automatic payments from the bank. CIBIL score An applicant’s credit score is cross-checked before sanctioning a personal loan. Most lenders approve a loan only if the score is above 750. In the case of multiple loans, the CIBIL scores can decrease as the credit companies see the person as a future defaulter and a risk to financial institutions. So, check eligibility for a loan only after checking your CIBIL score. You should conduct regular checks on your CIBIL score. It will help you plan your future payments. For example, an outstanding amount can affect the credit score. Therefore, you should try to pay it on time, which will ensure it does not affect your CIBIL score in the long run. Tracking your CIBIL score is important if you have multiple loans or use many credit cards. Preclosure One of the ways to manage multiple loans is by trying to pay one loan early. Preclosing a loan that has a higher interest rate can help manage debt. It will not only help you save money, but it will also improve your credit score. Preclosure can help you manage multiple loans and ensure you do not default. Documentation Financial institutions might ask for additional documentation if you apply for multiple loans. It is to make sure that you can repay the loans that you have applied for. Providing the right documentation is necessary if you wish to avail yourself of multiple loans. Alternatives to personal loans Personal loans are a long-term commitment and can get expensive if not well planned. So, here are some alternatives to personal loans that will help: The first question to ask is: Can you delay this expense? Try saving up for it. Choose a loan only if you need it immediately, if you cannot delay the expense, or if you cannot save money for it. Create a payment plan that will not affect the CIBIL score. Keep your repayment capacity in mind, so you do not end up in a debt cycle in the long run. Apply for a personal loan with a co-applicant. Co-application improves your chances of getting approved. The financial institution might look at the co-applicant’s credit score and approve the loan. It is because a joint application will reduce the risk for the institution as the co-applicant will become liable to pay for the loan if you cannot. If you desperately need a loan and there are no other options, you may have to provide collateral with the loan. [B-02] Conclusion Multiple loans can get expensive and difficult to manage. However, they can be availed of if needed. Many institutions offer multiple loans, but your eligibility for them will be determined based on your credit history, income, and other factors. Instead of coming to a general conclusion about loans, talk to an expert. For more information on banking, finance, and personal loans, check out Piramal Finance.
08-11-2023
Read More
Personal Loan

Savings Account Personal Loans: How To Get Them

Savings account personal loans are a popular option for consumers who need a small sum of money but don’t want to take on the risk of a credit card or other unsecured loan. If you’re wondering how to get savings to pay for personal loans, here’s what you need to know: [B-01] Choose a bank you already have an account with If you already have an account with a bank, then you are in luck. You have a better understanding of the terms and conditions of the loan. You can ask questions about the loan process. Thus, it will be easier for you to apply when you already have an account with the bank. When choosing a bank, make sure that they offer savings accounts personal loans. They should also be able to give you details. It will include: how much money they will lend, their interest rates, the fees associated with these loans. Once again, we recommend staying away from payday lenders. They generally charge much higher interest rates than banks! Ask about the minimum requirements for applying for a personal loan You’ll need a good credit score, a steady income, and a bank account. If your bank account is not with the same institution where you’re applying for the loan, you may be required to provide documentation of your income. This can include pay stubs and employer verification. You may also be asked to show that you have cash reserves in an amount equal to several months’ worth of payments on your loan. Verify your information at the time of application At the time of application, you’ll need to verify your information. This will help the lender ensure that you’re who you say you are and that all your data is correct. In addition to verifying your identity, they will also want to verify the following: Employment details (your employer’s name and address) Income details (salary or wages paid by the employer) Residency details (where do you live?) They might also ask for more information from a credit reporting agency like Equifax or Experian. Understand the interest rate you will be paying on your loan An interest rate is the amount you pay in interest to borrow money. It is expressed as an annual percentage rate (APR), which is how much it costs you over time to borrow money. The APR is calculated by taking the total finance charge (including fees, if any) and dividing it by the amount of credit extended, or multiplying it by 100, and then rounding up or down to two decimal places. The finance charge includes additional charges that may be added to your balance, such as annual fees and default charges. The only way you can avoid paying these extra charges is if you can make all your payments on time without missing even one! Steps to Get Savings Account Personal Loans Getting a personal savings account loan is easy and quick if you do it online! First, you need to find a lender offering personal savings account loans. Many lenders provide this type of loan, so it shouldn’t be hard for you. You can look at the options available and choose one that best suits your situation. Second, you need to apply for the loan online by filling out the lender’s application form with all your required personal information (such as contact details, income source, etc.). This step should take less than five minutes! Third, once you’ve sent in your request, the lender will look at all the information you’ve given them and decide whether or not they can approve it based on things like your credit score, how much money you make, etc. This could take up to 24 hours. If approved, congratulations! Soon after approval, they will send over the funds via check, which should be deposited immediately into the bank account(s) specified during the application process. Find out if there are any additional fees You can also ask your lender what fees they charge so that you can be prepared. The fees usually include the following: Late payments and overpayments: These are sometimes charged when you miss a payment or make a payment that exceeds the agreed amount. Other miscellaneous fees: These may include late processing fees and early repayment fees (ERF). It’s essential to be prepared when getting a loan It’s essential to be prepared when getting a loan. You should check your credit score before applying for a loan so that you understand the interest rate you can afford. If you don’t know your credit score, speak with someone at the financial institution where you keep an account who can help figure it out for you. You should also know how much money you can afford to pay back on this personal loan. This is important because if there are other debt obligations on top of this one, it might not be feasible for them all to be paid off at once. Finally, find out about the interest rate that will accompany this personal loan and make sure it’s reasonable for the kind of financial situation you’re in (or plan on being in). [B-02] Conclusion Getting a personal loan can be daunting, especially if you are new to the process. So Piramal Finance is here to help you. There are many different options available, so it’s important to know what each entails before deciding. A personal savings account loan is an alternative way of getting money when traditional lenders won’t approve your application or offer rates that are too high for your budget. This type of financing offers low rates and flexible payment terms so customers can pay off their balance over time without worrying about interest charges piling up on top!
08-11-2023
Read More
Personal Loan

Personal Loan Part Prepayment Charges and Foreclosure Fees

You might decide to pay out the outstanding principal in full or in part to pay off your personal loan a little bit sooner. The latter is known as a part prepayment because you only pay a portion of the loan balance. Personal loan foreclosure fees will be assessed if the debt is fully repaid. On the other side, if you only pay a portion of your personal loan, you will be charged prepayment penalties. [B-01] Personal Loan Prepayment Procedure Now that you have a better understanding of personal loan prepayment, let’s examine the general process that must be followed. If you’ve decided to foreclose on your debt, take the foreclosure fees into account. If you are making a partial prepayment, take a similar look at the prepayment penalty. For this, you might make use of a personal loan prepayment calculator. Next, speak with your bank’s nearest branch to go over the prepayment. You can submit a request online as well. Make sure you have access to the necessary documentation. Once your request has been received, a representative may get in touch with you to discuss any foreclosure fees or penalties and take payment. Benefits of Personal Loan Prepayment Faster debt relief It’s time to pay back the loan you took out to cover a few important costs. Your personal loan, however, could potentially result in severe financial trouble if it is not managed carefully. Your monthly savings are also reduced by the EMIs on personal loans. For this reason, if you have any additional money coming in, it is frequently advised that you prepay your personal loan in full. You might have to pay a small prepayment charge when you pay off your loan early. However, the prepayment fee is undoubtedly a minor thing to pay in that regard, given that prepayment might help you become debt-free well before the conclusion of the loan payback term. Not to mention, you won’t have to worry about your money being depleted by loan EMIs. Prepayment reduces the amount of interest paid The lock-in term is one of the most crucial factors to think about when it comes to loan prepayment. This refers to the time frame in which the lender forbids the borrower from making any prepayments, in whole or in part, towards the loan balance. Try prepaying your debt, either totally or partially, after the lock-in period is over and you have some spare money. You will save a lot of money by doing this and also end up avoiding paying interest on the amount you borrowed. Remember the prepayment fee that comes with loan prepayments; it would still be a good deal to pay it, considering the amount of loan interest you would avoid paying. Partially prepaying your debts can reduce them The topic of partial prepayment on a personal loan is discussed here in the context of the previous points. All it can do is make your debt load lighter. You lessen your debt load when you partially prepay the amount of your outstanding loan. This also reduces the amount of interest that is payable on the entire amount that is still owed. If you do want to prepay your debt, aim to do so in the first few years of the loan term. Improve your credit score Your debt load is eliminated or reduced all at once when you prepay your loan, either entirely or partially. Outstanding loans have a direct impact on your credit score, so this helps to raise it. Your credit score automatically increases when the outstanding loan balance is lowered or paid off in full with partial or full prepayment, increasing your chances of obtaining another loan. Personal loan foreclosure charges As we just explained, you might need to get ready for a related charge, whether you are partially prepaying your loan or foreclosing it. When looking at it from the bank’s perspective, the cost of borrowing is higher than the cost of lending. After lending you the money, the financial institution makes money off the difference between the two sums for the duration of the loan. There is a possible loss of income for them if you prepay the debt or foreclose on it. To make up for it, they impose a price or penalty on you, which is known as foreclosure charges. So, should you make a prepayment on your personal loan? The interest rate, the type of loan, the duration, and the prepayment fees are just a few of the variables that will affect the answer to this question. Financial institutions that have minimal prepayment costs should not be taken advantage of. Always choose the one that is most inexpensive by comparing your interest rate to the prepayment penalties on the personal loan. Prepayment Fees Charged By Banks When compared to the cost of lending, a bank’s cost of borrowing money is lower. The bank retains the difference in the amount after lending the money for the duration of the loan. The rate of interest that the bank would normally earn during the additional time decreases if the consumer chooses prepayment. Some banks impose prepayment fees to make up for the loss of prospective revenue. Bank prepayment fees differ significantly from one bank to another. Depending on the bank a customer borrows from, there may be a variety of restrictions, but generally speaking, the interest rate is between 4% and 5% on the outstanding loan amount. Additionally, prepayment penalties can vary, based on the loan term that has been fulfilled. Some banks may offer no prepayment fees after 3 years, while others may offer cheaper rates after a set amount of time. [B-02] Wrapping Up Existing borrowers may find it appealing to prepay their personal loans because it lessens their overall repayment load and interest charges. Prepayment fees, if the lender levies them, and a decrease in liquidity, however, may act as a disadvantage. By switching their personal loan to lenders with cheaper personal loan interest rates, borrowers with limited liquidity can lessen their repayment burden and interest expense. For more articles on personal loan prepayment, personal loan foreclosure charges, and foreclosure fees, log onto Piramal Finance.
08-11-2023
Read More