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Personal Loan

Pros and Cons of Early Closure of Personal Loans

Personal loans are a popular choice in India for meeting urgent expenses of all types. However, the large interest rates and monthly installment burdens can become stressful. As a result, people often pay off their personal loans as soon as they have the funds to do so. But is the early closure of personal loans financially beneficial? This blog will answer this question by considering the pros and cons of pre-closing your personal loan based on your status so you can make an informed decision. If you choose to go ahead, we will also tell you how to close personal loan early in this quick guide. So, let’s start! [B-01] What is Early Closure or Pre-Closure of Personal Loans? Pre-closure is when you partly or fully repay a loan before the due date. Pre-paying a loan lowers your liabilities and offers peace of mind, but it is not always financially advisable. Yes, you don’t have to pay interest and can get rid of debt. But you may have to pay a penalty amount to the lender as the lender loses the expected income from interest. So, we will discuss the pros and cons of personal loan pre-closure before going into the process of pre-closing personal loans. Benefits of Early Closure of Personal Loans Here are the benefits you can enjoy by early closure of personal loans, which you must consider if you have the financial means to pre-close personal loans. Quick Relief from Debt Pre-payment relieves you of your entire debt in one go! After pre-closure, you no longer have to pay EMIs with an added interest. Net Savings Possible Pre-paying your personal loan will reduce your overall interest payout on that loan. Bearing relatively low pre-payment charges in this process is often more economical than paying the complete interest. However, there are exceptions if the pre-payment penalty is higher than the remaining interest. This is unlikely if you pay the loan off early just after the lock-in period, but you must check your math first! Better credit score Your credit score is at risk if there are delayed payments or if you already have a lot of debt. And this makes it tough to get new loans. But pre-closing personal loans allow you to settle your loans quickly to lower your liabilities, eliminate delays, and increase your credit score. This increases your chances of getting approved for another loan in the future. Disadvantages of Early Closure of Personal Loans Early closure of personal loans also has a flip side. Here are the disadvantages you may face by paying off your personal loan before it is due. Lock-in period Most loan providers apply a one-year lock-in period from the day the loan is disbursed. So, you will have to wait for this period to get over before you can pre-pay the loan, even if you have the required funds in advance. This lowers or removes the savings you can make on pre-payment, as you have already paid large amounts in interest by the time the lock-in period ends. Pre-payment charges You may have to pay extra charges to the lending institution for the early closure of your personal loan. It can be a flat fee, or it may be calculated based on the interest still due. This can lower your expected pre-payment savings if the amount is similar to the net interest on upcoming EMIs. You may even lose money instead of saving it, especially if you are paying late or after a long lock-in period. So, you must consider the interest rate and penalty amount to calculate how much you save or lose before making a decision. Notably, there are no pre-payment charges in the case of floating interest rates. But personal loans with floating interest rates are rarely available. Loss of lump sums You may have to cut back on other expenses to save money for the early closure of personal loans. Moreover, you will pay a large amount in one go instead of investing it to earn more or cover future needs. How to Close Personal Loan Early? The procedure for early closure of personal loans is quick and easy. If you have made up your mind to pre-close the loan, follow these four steps: Visit the bank or institution where your personal loan is active. Carry and present the necessary documents, such as ID Proof and bank statements, to the respective officials at the bank and make the request for pre-payment. Also, carry the cheque or demand draft with which you will then pay the remaining loan amount (fully or partially), processing fees, and pre-payment penalty as instructed. Once the entire amount is paid, the bank will give an acknowledgement letter and then a loan agreement that you must keep safely for future reference. The entire process is quite simple and should not take more than a few days. [B-02] The Final Verdict When it comes to personal loan pre-payment, the right choice depends mainly on your financial standing, lock-in period, loan amount, remaining interest, and interest rate. In general, you should go for early closure of personal loans just after the lock-in period after ensuring that the amount you save by not paying the remaining interest is greater than the pre-payment fees. This will reduce your liabilities and improve your credit score while saving you a significant amount! On the other hand, if the penalty is greater than or equal to the interest you will be paying, you may continue to pay the loan EMIs to avoid paying a large sum at once unnecessarily. Early closure of personal loans is also not viable if you do not have sufficient funds to bear the large loan amount and penalty. Partial pre-payment with a smaller penalty and lower future interest (due to principal reduction) is also a good option in such a case. Besides, you should understand the terms and conditions of your loan provider before taking the loan to determine if early closure or partial pre-payment will be beneficial. If all this leaves you confused, contact a reputed financial agency like Piramal Finance that provides reliable advice and favourable loans to solve all your personal loan repayment issues.
08-11-2023
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Personal Loan

What is The Minimum Period Required To Get Approved For a Personal Loan

It’s no secret that personal loans help when you need extra money for specific needs. Whether you’re looking to make a large purchase or cover an unexpected expense, a personal loan can give you the funds you need without going through a lengthy approval process. But what minimum time is required to get an approved personal loan? And how does your credit score impact the approval process? Keep reading to find out more! [B-01] The minimum period required to get approved on a personal loan When applying for a personal loan, the amount of time it takes to get an approved personal loan depends on several factors, including your credit score and income. Generally, the minimum period for approval is around two weeks or less. Your credit score is important in determining how long it will take to approve a personal loan. A higher credit score gives lenders more confidence that you can repay the loan and makes them more likely to offer you a favourable rate. If your credit score is low, however, it could take two weeks to get an approved personal loan, as lenders may need additional documentation before deciding on your application. Income also influences how quickly you can get an approved personal loan. Lenders want to make sure you can afford the loan repayments, and typically, they will want to see proof of income. Having a steady income with a high salary makes it easier for lenders to approve your application quickly. If you don’t have a consistent income stream or are on a lower salary, getting an approved personal loan might take longer than two weeks as lenders may need more time to assess your ability to repay the loan. Finally, the type of personal loan you apply for can also affect how long it takes to get your approved personal loan. Some types of approved personal loans require more documentation or involve more complex processes, which could lead to delays in approval times. How long will it take to process my application for an approved personal loan? The time it takes for your loan application to be processed will depend on several factors, including the lender, the type of loan product applied for, and your eligibility. Usually, a fully completed application can take 24-48 hours to process. In some cases, you may receive an answer within minutes if you are eligible. Once your application for an approved personal loan is processed it can take between 5-7 business days for funds to become available, depending on the lending institution and repayment terms agreed upon. This timeline also depends on whether or not any additional documents are required before the disbursement of funds is made. It is important to note that the personal approved loan process can be longer in some cases if additional information is needed or there are complications in verifying your identity or creditworthiness. It is also important to ensure that you have all the documents required by lenders to expedite processing and avoid any delays. Generally, it is best to be prepared with all the necessary information and documents to apply for a personal loan quickly and easily without any delays or complications. Be patient during the application process as it can mean more savings on interest payments and more time to get approved. If you have questions, please don’t hesitate to contact your lender directly for assistance. What are the documents I need to provide Proof of Identity: A valid government-issued photo ID is required, such as a driver’s license, passport or national identity card. Proof of Residence: You will need to provide documents that prove where you live, such as a utility bill or rental agreement for the past three months. Employment Documents: This usually includes your pay stubs, income tax returns from the last two years, and/or any other proof of income you may have. Bank Statements: Banks ask for statements from your current and/or previous accounts going back at least three months to assess your financial situation and creditworthiness. Collateral Documentation: If you are applying for a secured loan, you must provide documentation proving your ownership of the collateral. This may include title deeds, land certificates or bills of sale. Other Documents: Depending on your specific situation and requirements, some lenders may ask for additional documents such as credit reports or other financial records. It is best to check with the lender beforehand what they require to avoid surprises. Once all the required documents have been submitted and verified by the lender, you can expect to receive an approved personal loan in a few days. After approval, the loan will be disbursed into your bank account within a few hours or days, depending on the lender’s processing times. It is important to remember that each lender has different requirements and documentation needs, so it is best to verify the list of documents they will ask for in advance. This can save you time and stress when applying for a personal loan. Can I use the loan for any purpose? The loan can be used for any purpose as explained in detail. For example, you could use it to finance a vacation, consolidate debt, pay for college tuition or medical bills, make home improvements or repairs, purchase furniture or appliances, or cover emergency expenses. However, some exceptions exist: lenders may not allow you to use personal loans such as gambling-related activities and investments. It is important to consider your current financial situation and goals when deciding how best to utilize a personal loan. You should also compare different lenders’ terms and conditions before deciding to take out a personal loan. Is there a prepayment penalty if I want to pay off the loan before the end of the term Most personal loan lenders do not impose any prepayment penalty if you choose to pay off the loan before the end of the term. However, some financial institutions may charge a fee for early repayment. It is important to check with your lender before deciding to pay off your loan early and ensure you understand all associated costs or fees. You can typically start making prepayments at any time; however, how much you can pay may depend on other details stipulated in the loan agreement. Some lenders might require that each payment be at least a certain amount (such as Rs.10,000). You will also want to ensure there are no hidden fees or penalties associated with doing so. [B-02] Conclusion A personal loan can come in handy when you need cash quickly. We hope that we were able to give you a clear idea about the time you can expect to get an approved personal loan. However, if you still have any queries you can connect with us here
08-11-2023
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Personal Loan

How to Manage EMI for a 20 Lakh Personal Loan?

It has become easy to apply for a loan. You can easily apply for a personal loan through your bank or a third-party financial institution. You can then pay off your loan through every monthly instalment (EMI). However, managing EMI for large principal amounts can be difficult. Here are some different ways you can manage personal loan EMI with ease. [B-01] Different ways to manage personal loan EMI Research beforehand You need to make sure you can repay the amount you have borrowed if you want a good personal loan EMI experience. Before applying for a loan, do proper research and make a detailed plan. Check your savings, income and future employment opportunities before selecting an EMI plan. You can use various online calculators to determine your loan repayment capacity. The calculators will also help you understand your ideal loan tenure. Create savings for an emergency To be financially secure, you should maintain a savings or emergency fund. If you have unexpected financial troubles, you can use these funds to pay personal loan EMI. Keeping a savings fund as an emergency net will ensure you do not miss your EMI date. Missing a date can make you a defaulter. Add a co-applicant You can apply for a personal loan with another family member or spouse. You can add the co-applicant to the personal loan EMI payment plan. It will reduce the repayment burden as the co-applicant can also make payments. However, you should check the applicant’s CIBIL score and income before adding another applicant. Both factors can affect the principal amount and interest rate offered. Choose low-interest-rate loans The most important part of a loan is the interest rate. It affects the personal loan EMI amount. You reduce your EMI when you have a lower rate of interest. It is beneficial to research interest rates beforehand. You should understand how the interest rate is calculated. This should be done before you accept the terms of the loan. You may be offered lower interest rates if you have a high CIBIL score and good credit history. Reorganize your budget Financial discipline is an important part of loan repayment. You have to adjust your personal loan EMI in your monthly income. After you have taken out a loan, create a list of all your expenses. From this, you can select which expenses are necessary or not. Reorganizing your budget around personal loan EMI can help you make regular payments. Set reminders and automate Many people forget to pay personal loan EMI before the due date if they have emergencies. Setting a reminder will help you make payments on time. On-time payments ensure you do not incur any fines. Set up reminders to make the EMI payment 2-3 days before the due date to ensure you do not miss the deadline. You can also ask your bank to set up a recurring EMI payment. Here, the money is automatically deducted from your account on or before the due date. Increase payment amounts You can always increase the payment amount on personal loan EMI. For example, you can speak with the relationship manager and adjust the EMI if you have just received a salary raise. You can also ask to step up your EMI every quarter or year. Increasing the payment amount will help you repay the loan faster. Refinance Refinancing is a smart decision if you are unsure about whether you will be able to pay your EMIs on time every month. You can reduce the personal loan EMI amount by refinancing. Refinancing is the process of repaying one loan with a newer loan. Most people choose this option if the new loan has better features, e.g., lower interest rate, longer tenure, etc. Refinancing may give you more time to pay back the loan. Personal loan EMI after refinancing may be lower. Make repayment a priority You boost your credit score every time you pay a personal loan EMI on time. Making loan repayment a priority is a smart way of managing a 20 lakh personal loan. Every month, first deduct and pay your EMI before other expenses. By making repayment a priority, you will avoid late payments. Lump sum prepayment Another effective method to pay off personal loan EMI is to use lump sums as prepayment. The tenure of your loan can decrease if you pay using the dividends you receive from your investments. For example, if you have a 1 lakh rupees bonus in a year, you can prepay for a personal loan EMI. This will decrease the tenure and reduce the amount you have to pay. Pay extra EMI Making an extra personal loan EMI payment each year can be difficult, but it does not mean you cannot try. Paying an extra EMI each year will help reduce the amount. Many employees receive bonuses during Diwali or Christmas. These can be used to make extra payments to the personal loan EMI. [B-02] Conclusion Borrowing money has become very easy. Numerous banks and financial institutions will lend you money with affordable EMIs. However, you must read all the terms and conditions of the loan you are choosing. For most people, getting a loan is the easy part. Managing loan repayment is difficult. Using the tips given above, you can easily manage personal loan EMI. Furthermore, the features of the loan also make a difference. Go through all details of the loan thoroughly before you apply for the loan. Understanding your loan repayment capacity is the first step. The second step is managing your EMI payments properly. If you’re ready to learn more about personal loans, visit Piramal Finance for more tips!
08-11-2023
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RD

What is the RD Calculator, and Is It Possible To Withdraw RD Before Maturity?

The RD Calculator is a tool that helps you calculate the return on your investment. It tells you how much money you will have at the end of the term and how much interest you will earn. It also calculates the total cost of your RD, including any fees or charges. You can use it to explore different scenarios, such as what happens if you invest a different amount or if rates change. Recurring deposits offer flexibility, with the option to close the account or withdraw the funds early in the event of financial emergencies. This blog discusses the RD calculator and whether it is possible to withdraw the RD before maturity. [B-01] What is the RD Calculator? Recurring Deposit (RD) A recurring deposit is a fixed amount of money that you deposit at regular intervals into your RD account. The interval is variable, but it is usually set to monthly or quarterly. You can use the RD calculator to figure out how much money you will receive upon maturity. You have to take the following things into account while calculating: The initial principal amount you have deposited in your account The opening date of your recurring deposit account Interest rate selected for the term period Most financial institutions often give a higher interest rate to senior citizens RD Calculator You can calculate the maturity amount in the RD calculator that you will receive after the end of the RD period. The calculator is simple to use and provides results immediately. How Does the RD Calculator Function? You can calculate the RD returns using a simple formula. However, you can get quick and accurate results with an RD Calculator. Some of the benefits of the RD calculator are as follows: You can get accurate results It saves you time It is convenient to use You can plan your finances in the long runRD Interest Formula A = P(1+r/n) ^ nt, Note: A is the amount that matured at the end of the term P denotes the principal amount r = the annual interest rate n = the number of times that interest has been compounded t = the RD’s tenure RD Calculator The following is a process for using the RD Calculator online: Enter the amount of the monthly deposit you intend to pay. Enter the duration (number of months) of your RD investment. Then, enter the interest rate provided by the bank or financial institution. Now, click the “Calculate” button. Is it possible to withdraw RD before reaching maturity age? Yes, you can withdraw your RD amount before maturity, but you may have to pay the penalty. It is essential to make all the payments at the initially agreed-upon intervals (monthly, quarterly and so on). Even if you skip one deposit, you will have to pay a fine. Your RD account may even be automatically closed if you miss three or more consecutive RD deposits. The principal and interest accrued on an RD are only paid to you at the end of the tenure. Full withdrawal of the RD amount When you fully withdraw your RD amount before your maturity period, you will receive your interest that has been accrued to date. It is calculated based on the rate of interest paid. It also depends on how long the deposit has been with the bank. The institution will also charge a penalty of 1% for early withdrawals of recurring deposits. If you make an early withdrawal, certain institutions will cut your interest rate by 1% to 2% till the time the RD is held in the account.Example: Your RD for RS.10,000 per month for 1 year at 8% interest starts on 09-01-22 and ends on 09-12-22. But due to some emergency, you want to withdraw on 09-07-22. In this case, you have deposited RD for 6 months, from 09-01-22 to 09-07-22. As it is an early withdrawal before maturity, you will get a penalty of reduction in the interest rate. Your interest rate will be slashed as a penalty from 8% to 6%. So you will get the RD amount for 6 months with 6% interest. The normal minimum lock-in time for an RD account is three months. Before this time, if an early withdrawal was taken, the account holder would only get the original principal amount and no interest. You will not be qualified for the bank’s incentives offered on the recurring deposit, apart from the penalty. Partially withdrawing the RD amount Generally, lending institutions do not allow partial withdrawals. If you want to partially withdraw an RD, you can use a loan or overdraft facility. This is made possible by using the remaining balance in the RD account as collateral. The lender will charge you a penalty of 1% for the time that the deposit has been held by the bank.Example: If you have deposited Rs 10,000 for 1 year at 8% interest but withdraw Rs. 30,000 for an emergency. For this Rs. 30,000, you would have received interest of Rs. 703. In this case, you will get a penalty of 1%, i.e., Rs. 30703*1% = Rs. 307.03. While most institutions do not allow partial withdrawals, you can do so if you have been making recurring deposits at the post office for at least a year. You might think of the money that was taken out as a loan that you can repay all at once.Example: You have an RD account in the post office for Rs. 10,000 for 1 year at 8% interest. Suppose you take out a partial amount of Rs. 60,000 after one year; this amount will be considered a loan and must be repaid on time back to your RD account within the stipulated period. [B-02] Conclusion The RD Calculator is a valuable tool for calculating your RD investment returns. By entering the basic information regarding your recurring deposit, including the deposit amount, tenure and interest rate, you can quickly calculate the returns. It is a very handy tool for keeping track of your savings and for long-term planning. Though you can withdraw prematurely from recurring deposits, it is best to avoid doing so to the extent possible. Only when the amount is allowed to grow until its mature period can you maximise your gains. Piramal Finance is a reputed financial services company with attractive loan offerings, including home, personal and business loans. Do check out their blogs for more relevant content regarding finances and investments.
08-11-2023
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Personal Loan

Fluctuations In Personal Loan Interest Rate In This Festive Season You Need To Know

Every seasoned finance expert advises people to watch the official websites of major banks during the festive season. Like every other business, financial institutions want to woo their customers. And there is no better time to do that than when they are merry and in the mood for celebrations. The festive season in India begins with Diwali and goes on till the New Year. During this time, people are often on the hunt for gifts for their dear ones. It is also the time of new beginnings, like renovating a home, buying a car, or establishing a business. Leading banks in the country foresee this. Hence, they slash personal loan interest rates to help people overcome financial limitations. Different banks offer different discounts on personal loan interest rates. Lucky consumers might also be able to land a deal where they can enjoy a loan processing fee waiver. Without further ado, here’s more information about variations in personal loan interest rates during the festive season. [B-01] Why apply for a Personal Loan during the Festive Season? From flexibility to a stress-free application process and low-interest rate, here are five reasons that make personal loans attractive during the festive season: One can avail of a greater Loan Amount Usually, the amount one can borrow through a personal loan is limited. However, the limit is raised by financial institutions during the festive season. Depending on the bank, one might be able to avail anywhere from 5 to 25 lakhs. The money borrowed can help manage various expenses associated with the festival season. There is greater flexibility Loans like home loans, car loans, or business loans should be used for a specific purpose. For instance, one can’t take a business loan and use it to buy a personal car. Nonetheless, a personal loan can be used for almost anything. For example, the borrower can use it to get Diwali gifts for the family or organise Durga Puja at home. Lower Personal Loan Interest Rates The primary reason why personal loans are great during the festive season is because of the low-interest rates. As mentioned earlier, banks slash personal loan interest rates during the festive season. So, people can avail of them at pocket-friendly interest rates and without worrying about high EMIs. Hassle-Free Application Process A lot of lending institutions these days are inching toward the digital mode. Of all the loan options, personal loans are one loan option that can be easily availed online. So borrowers don’t have to make regular visits to the bank’s branches. Instead, the documents can be submitted online. Once verified, the funds will be transferred to the applicant’s bank account instantly. There is no requirement for Collateral Personal loans are unsecured. Meaning, borrowers don’t have to pledge a property, vehicle, or anything else to avail of the loan. Instead, the bank will use credit scores, salary certificates, etc., to analyse their eligibility. How to get the best Personal Loan Interest Rates during the Festive Season? People who plan to get a personal loan during the festive season should keep a few things in mind. The following tips will help land the best personal loan interest rates: Maintain a Good Credit Score The credit score or CIBIL score is a 3-digit number that ranges between 300 and 900. It refers to a person’s creditworthiness. Or in simple words, it serves as a record of a person’s past loans and repayments. A low credit score shows that the borrower has been inconsistent with repaying the loan amount on time. A high credit score of at least 750 is considered ideal by lenders. It shows that the applicant has made payments on time without defaulting. Such people can often enjoy lower personal loan interest rates. Income and Job Stability matters Lenders want borrowers who can repay the loan amount on time. They find the right borrowers through several factors. One such factor is employment stability and income level. Applicants employed in their current organisation for six months or more are likely to get lowered personal loan interest rates. In addition, applicants who work at reputable companies might be able to enjoy discounts on personal loan interest rates. When it comes to income level, the higher a borrower’s income, the lower the personal loan interest rate. This is because lenders consider borrowers with high incomes to be reliable. As a result, such applicants can afford the repayments and are less likely to default. Avoid taking Loans often The festive season and the low personal loan interest rates can be tempting. However, people mustn’t borrow more than they can afford. Doing so can lead to unforeseen circumstances in the future. Hence, determine the needs, figure out a budget, and then apply for a loan. This will help steer clear from accumulating huge debt. Conclusion: Find the Right Lender The festive season pushes people to apply to multiple lenders. However, every loan application can affect the credit score negatively. A high number of loan applications means a fall in the credit score. Hence, people must check their eligibility criteria, income, and other financial aspects before applying to a lender. [B-02] In addition, people must work with the right lenders, like Piramal Finance. Piramal Finance’s personal loans can be assessed through a simple application process. The documentation is simple, and the personal loan interest rates are pocket-friendly. The amount borrowed can be used for any purpose. For instance, borrowers can use it to go on a vacation with family or do Diwali shopping. Interested borrowers can reach out to Piramal Finance through their website. To learn more about personal loan interest rates, check the personal loan webpage here.
08-11-2023
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Personal Loan

All you need to know different offers on pre-approved personal loans in this festive season

A personal loan can help you get funds to meet your needs. A loan such as this is often unsecured. Banks and lenders usually forward such loans to customers who have a clean financial record. If you want to secure funds from a bank, it is easy to get a pre-approved personal loan. There are several offers on pre-approved loans. So, if you are considering getting a personal loan this season, then festive offers are going to make it easier for you. Make sure that you understand how much personal loan you need. After this, you will need to decide on other things like the repayment period, based on your income. Subsequently, you can use an online personal loan calculator to estimate the interest and amount of the loan. Personal loans bring financial freedom to you. During the festive season, what can be more exciting than being able to spend money where you want? Whether it is for travel or shopping consumables, there are so many ways to utilize the funds obtained through a personal loan. Let us take a look at the benefits of a pre-approved personal loan. This will help you take advantage of the ongoing offers during the festive season. [B-01] Benefits Of Taking A Pre-Approved Personal Loan During the ongoing festive season, you can take advantage of several offers. Banks and lenders are more willing to help you meet your financial goals during this time. And, to encourage you to opt for loans, they deliver many offers. Here are some benefits of taking a pre-approved personal loan from a bank around this time. No Collaterals There is no need to lock your assets with the bank. Unlike other loans such as a home loan or car loan, you need not mortgage anything to get approval for the loan. This means greater financial independence for you. You can continue to use your assets without any restrictions. No Usage Restriction You can use the approved loan funds for any reason you want. It could be paying for a vacation or meeting utility expenses. There is no restriction on how you can use these funds. You may be able to get a good offer on these funds as well. Instant Approval It takes very little time for a pre-approved personal loan before the funds effectually get transferred into your account. As soon as you meet your basic eligibility, you can get approval for the loan from the bank. Most lenders run multiple offers on their loan products. This frequently happens during the festive season. Beneficial For Short Term You can get a pre-approved personal loan for a short period. Based on your requirement, you can get the loan for a few months or a few years as well. But remember that you will have to repay the loan amount in the tenure chosen by you. Why should You Take A Personal Loan During This Festive Season? The flexible end use of a pre-approved personal loan is not the only reason why it is favourable. You can use the loan to meet the expenses that stand during the festive season. You can get a loan for an amount that is suitable for you. So, it is possible to plan your expenses and decide upon an amount that will meet them conveniently. You can get very attractive rates on interest on such loans. Things To Consider When Borrowing A Personal Loan During The Festive Season Before deciding to get a pre-approved personal loan during this festive season, you should consider a few factors. Most lenders are willing to offer a loan to those who have a credit score above 750. Your application for a pre-approved loan may get rejected if your credit score is below that. If you want to benefit from ongoing offers, make sure that your credit score is in a healthy range. Always remember to borrow only the amount which you require. Anything in excess will only add to your financial burdens. No matter how tempting the offers may be, it is best to borrow only up to a certain limit. Always check your eligibility for a personal loan. When you apply for a loan and your application gets rejected, it adversely impacts your credit score. You may not be able to apply for a loan for some time after that. Compare different lenders before zeroing in on any one provider. During the festive season, many loan providers will be willing to offer different deals. Make use of the one that suits your requirement the most. But always consider and check your ability to repay the loan. And avoid falling into a debt trap. It is best to avoid applying for a loan from many providers at once. This may lead to the rejection of your loan. Every application for a loan gets lodged into your credit score report. So, be wary of applying for too many loans at once. [B-02] Conclusion Applying for a pre-approved personal loan during the festive season is a good option. During this time, you can get many attractive deals and offers on the loan amount. It is a good idea to enjoy the festivities without facing any financial constraints. But remember to borrow smartly and repay the loans in due time. For many such attractive offers, do check out Piramal Finance, which is the leading destination for the best borrowing options. You can get extensive knowledge of many different financial offerings on the platform. Also, you can use their accurate online loan calculator. Additionally, you can also browse for different loan options to suit your requirements. Browse the website for a lot of financial offerings.
08-11-2023
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Personal Loan

What is prepayment penalty on personal loan and how to get avoid it?

A personal loan is the most famous financial product ever created. If you have taken a personal loan, you will relate to the headache of EMIs. While the EMIs take a lot of load from your head, missing an EMI robs you of the night’s sleep. Nobody likes to pay an EMI, and people try to avoid it if they can. Most people take a loan if they are financially struggling. And once their condition improves, they try to repay the loan as soon as possible. However, banks prefer to avoid early payments on personal loans. So, most banks levy a prepayment penalty if you try to pay off the personal loan. So, let’s see what is a prepayment penalty on a personal loan and how to avoid it. [B-01] What is a prepayment penalty on a personal loan? Though it may seem a little odd, why should you pay the penalty for paying the loan early? Banks do so to discourage you as they get a more extended period of interest on EMI. You can either make a full prepayment or pay it in parts. If you read the loan agreement, you will find banks mentioning they will charge you a percentage of the total loan amount if you close the loan early. This charge varies for each financial institution. Typically, banks waive the prepayment charges if you have paid more than 12 EMIs. The RBI circular on prepayment penalties says “banks shall not charge the prepayment fines on any floating rate term loan.” However, it doesn’t apply to personal loans as it comes under fixed-rate term loans. Pros and Cons of Paying off a personal loan early: Pros: Saving on Interest : The interest rate for a personal loan is relatively higher, so a considerable part of savings goes to waste as EMI. For example, if you have taken a loan for 5 years, but your financial condition improves in the 4th year. Now you can close the loan early and save the interest. In this case, the bank loses one year of interest, so there is a prepayment penalty. Increases the chances of getting a new loan: Banks and NBFCs prefer to lend to those whose total EMI is not more than 50% of their monthly salary. The bank may reject your loan application if you are paying an EMI and applying for another loan. So, it’s essential to reduce the EMI/NMI (net monthly income) to under 50-60% if you want a new loan. Paying your personal loan early can increase the chances of getting approved for another loan. Reduces the percentage of Unsecured loans in the credit mix: A credit mix is defined as the promotion of total secured and unsecured loans. As we know, a personal loan is an unsecured loan, and you can lower the percentage by paying it early. Credit rating companies give higher credit scores to people with a diversified portfolio. Increases CIBIL score: Paying the personal loan early can also increase your CIBIL score. It’s because closing a loan fully and early acts as an excellent booster for credit score. A clean and high CIBIL score can help you obtain a loan quickly and with a much better term. Cons: Requires a large payment: Closing a loan early has its advantages; however, you will require to make a significant payment. This can affect your financial condition temporarily. Impacts liquidity negatively: Closing a loan early requires a considerable sum of money. Doing so sometimes requires breaking up other investments. This may cost severely in case of any medical or financial emergency. So, consider paying off your loan early if you have additional savings. We have seen the pros and cons of closing the personal loan early. Let’s see how you get rid of the prepayment penalty. How to get rid of the prepayment penalty: As we know, banks charge a prepayment penalty to discourage you from closing the loan early. There is no easy way to get away from the prepayment penalty. It’s because once the loan agreement is signed, you can’t do much on this front. Let’s talk about the options you have in the case of a prepayment penalty. Read the fine print: This is the most important and wise thing you can do before signing the loan agreement. At the same time, some banks don’t charge a prepayment fee, most charge, and some financial institutions don’t come clean regarding this. Details like foreclosure penalties are often mentioned in the fine print, which rarely anyone bothers to read. So, if you want to get away from prepayment penalties, don’t apply for a personal loan from these banks. Negotiate better: If you have a better CIBIL score, use it for your benefit. With a better CIBIL score, you can negotiate better with the lender on the loan terms. You can ask for a better interest rate and a loan free of prepayment penalty. Most banks have a limit of 12 EMIs, after which you can close the loan early. Some banks also don’t charge a foreclosure fee if you pay the loan after a specific time. [B-02] Conclusion Closing a debt early is a good idea as it saves you some money on interest. While the prepayment fine may seem like an issue, it isn’t much of a concern. As per the industry norms, foreclosing a debt is always a better option than giving EMIs for the entire term. When you prepay a loan in whole or in partial payment, it lowers the interest on the outstanding amount. This helps save a significant amount of money as the EMI gets lower. Moreover, closing the personal loan early affects your CIBIL positively, and steers clear from existing loans. So, closing the personal loan early is a good idea even after paying the prepayment penalty. You can use the EMI calculator of Piramal Finance to know your EMI before applying for a loan. You can also apply for a personal loan from Piramal Finance at an attractive interest rate. For more articles on personal loans and other financial news, read our blog and subscribe to our newsletter.
08-11-2023
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What Is my Personal Loan Number & How Do I Find My Loan Number?

When you apply for a personal loan and it is accepted, you must keep records of your payments. However, it might be hard, especially if you already have more than one current loan. Banks also work to keep a record of each personal loan they make. The LAN, or loan account number, makes things a lot easier for both sides. [B-01] What Is the Account Number for The Loan? When the personal loan is accepted as well as the loan account is formed, your bank gives a special set of numbers to your loan account. Each loan account has its loan account number. If you’ve taken out two or even more loans with the same organization, the personal loan account numbers would be varied. Banks use the loan account number, which is specific to each loan account, to keep a record of all the personal loans you have approved. Loan Features and Advantages Loans are classified into different types depending on a variety of criteria. You may choose the type of loan you want depending on your needs and eligibility. The lender will have the last decision on the personal loan amount they want to provide you based on various criteria such as repayment ability, income, and so on. Every personal loan will have a payback period and an interest rate Each loan may be subject to several charges set by the bank. Many banks provide fast loans that are paid between minutes and hours. The bank sets the interest rate depending on the Reserve Bank of India’s rules. The bank sets the amount of security required. In some situations, a third-party guarantee might be applied place of security. Loan repayments must be paid in equal monthly instalments during the loan’s specified time. Prepayment in whole or in part could or could not be an option. Prepayment fees may be applied by these types of personal loan and banks. Eligibility for Loan The loan qualifying conditions depend on the form of loan you want. In general, you may confirm your eligibility using the basic criteria listed below. A good credit scores Continual income flow At the time of taking a personal loan, you must be between the ages of 23 and 60. Security proof, such as investments, FDs, real estate, and so on. A good working relationship with your bank A track record of regular debt payback Types of Loans According to the security provided by the clients, a personal loan is divided into two parts; Loans with Security These loans demand the client to put up assets as security for the funds borrowed. If the client becomes unable to pay back the loan, the bank may use the offered assets to recover the due amounts. When compared to unsecured loans, the rate of interest on a such personal loan is much less. Loans with No Security No security is required for loan delivery on unsecured loans. To decide whether or not to provide the loan, the bank examines the borrower’s previous connection, credit rating, and other factors. Because there is no means to collect the loan amount if the client fails, the rate of interest on a such personal loan may be high. The Required Documents. Applicants with a Salary Formal application with picture Identity and address verification Bank account report over the last six months The most recent salary slip Form 16 Applicants Who Are Self-Employed Formal application with picture Identity and address verification Bank account report over the last six months Business proof Overview of the business Income tax returns (personal and company) for the past 3 years Last 3 years’ financial gains or loss reports and balance sheets What Is the Benefit of Knowing Your Loan Account Number? To handle your loan, review your loan progress, and submit Instalments, you must remember and understand your personal loan account number. If you return your loan by online banking, online wallets, debit card, or by contacting a bank office, you must provide your loan account number. Your loan account number is also useful if you want any extra help or support related to your loan. Only when you have provided the personal loan account number the bank would be able to help you with your questions. If you would like to edit any personal details on your account, then you will need your loan account number to do so. For example, if you updated your contact details and want to change them, you must provide your loan account number. How Can You Get Your Loan Account Number? There are various methods for getting your personal loan account number. Here are a few examples: Review Your Loan Statement The loan report sent by your bank when your personal loan is approved contains all of your loan data, including your account number. The report will also provide details on the instalments you paid and the unpaid balance. Browse Your Bank’s App or Website. You may also confirm your loan account number by connecting to your current banking account on the internet site or mobile banking app’s client login tab. Dial The Bank’s Toll-Free Customer Service Line. Contact the bank’s toll-free customer service number for guidance and help with your personal loan. Go to any of your bank’s branches. You may take your PAN card and bank account information to the branch where you received the personal loan. Give the information to the bank’s officer. Following verification, the agent will give you your personal loan account number. [B-02] Conclusion The loan account number is an important feature to be aware of. You can monitor your Installments, verify the amount you’ve received, and make smarter investment choices by using your loan account number. Remember your personal loan account number now that you understand what it is and how necessary it would be for your personal loan information. To know more about such types of topics, visit Piramal Finance.
08-11-2023
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Personal Loan

How to Calculate Eligibility for Different Types of Personal Loans?

It has become easy to apply for a personal loan. You can apply for many different types of personal loans. They can be used for anything, such as vacation or education expenses. You need not apply for a loan with the same bank. You can also apply for a personal loan from other banking and financial institutions. One thing is often ignored: personal loan eligibility. Even if you apply for a loan, there is no guarantee you will be approved. The reason is simple: your application’s approval depends on eligibility criteria. Your application is evaluated against each. If you check most of the boxes, you receive the loan. Your application is rejected if you do not meet all requirements. It sounds simple enough. So, what determines personal loan eligibility? [B-01] General personal loan eligibility criteria Many factors determine if you are eligible for a personal loan or not. The factors include your monthly income, age, and whether you are employed. Different institutions have different criteria. CIBIL score You need a good credit score to avail of a personal loan. It is important to ensure that you do not default on any payments. You can check your CIBIL score by requesting a credit report from your bank. Income Your loan eligibility is heavily dependent upon your income. You can get higher principal amounts if you have a higher income. However, a steady income is a bonus. Location Where you live also plays a role in determining personal loan eligibility. Your salary is evaluated against the cost of living in that city. If you reside in a metropolitan area, you will need to have a higher salary to apply for a loan. Employer Working for a good organization is also something that would be a factor in determining personal loan eligibility. Working at an organization with a good credit history can boost eligibility. While institutions rarely refuse applications simply because of your employer, they may reject the application if they think you cannot make the EMI because of your job. Real estate Your application has a higher chance of being accepted if you own a home. Renting a property means a part of your income is spent there. As a result, you have less money to manage EMI and expenses. It reduces your ability to repay the loan. Many lenders see this as a risk. Age You should be 25 years old if you are self-employed or own a business. If you work for an employer, you are required to be 21 years old at the time of application. Your maximum age at the time of loan maturity should be 65 years. Nationality Most lenders provide loans only to Indian citizens or residents. However, some lenders also provide loans to non-resident Indians (NRIs). NRIs will have to meet another set of criteria. Personal loan eligibility based on employment As mentioned before, personal loan eligibility criteria differ from one lender to another. The general criteria for salaried individuals, self-employed professionals and business owners for personal loans are listed below. Business owners and self-employed professionals You should be in your current profession for at least 2-3 years. Your minimum income per annum should be 1 lakh rupees. You need to submit income tax returns for the last two years. You need to submit proof of business. You need to provide a business registration certificate, license, or GST number. You need to submit a TDS certificate (Form 16A) if you pay your salary. Salaried individuals You should be employed at your current organization for at least six months. Your minimum income per month should be at least INR 25,000. However, some lenders accept INR 15,000 p.m. salary. You should submit your salary slips for the last six months. You have to submit Form 16 or income tax returns. Apart from this, there might be different concessions depending on the lender. Personal loan eligibility changes with each bank. Documents required to prove personal loan eligibility You can provide the following documents. Proof of identity: passport, Aadhaar card, PAN card, etc. Proof of Signature: PAN card, passport, etc. Proof of Address: utility bill, rent agreement, ration card, etc Proof of income: Bank statements from the last six months, TDS returns or Form 16. You cannot use the same document as proof of two or more criteria. Tips to improve the personal loan eligibility Always pay your bills on the due date. If you miss a payment, it can decrease your credit score. This will affect your eligibility. If you have a lot of debt, try to clear it as much as possible before applying for a personal loan. Debt can affect your CIBIL score. A full-time job makes it easier for you to become eligible for a personal loan. The lender is sure that you can pay back the loan. That makes it easier for them to tender a loan. However, if you do not have a job, you should be able to provide proof of income. Maintain a trustworthy relationship with the lender. Your age decides your eligibility. Lenders limit how old you can be when applying for a loan. The logic is simple: the younger you are, the more time you have to earn money. [B-02] Conclusion Read all the terms and conditions before applying for a personal loan. It is equally important to calculate personal loan eligibility before applying. A personal loan can help in many ways. However, having a good understanding of the financial product is necessary before making any purchase. The tips in this article will help you understand the facts and apply for a loan. If you are ready to read more, visit Piramal Finance.
08-11-2023
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