A personal loan can be used for almost any type of expense ranging from big-ticket appliance purchases and home renovations to luxury vacations and debt consolidation. Some other cases where personal loans may be useful include payment to unexpected medical bills, investment in the business, fixing your car, down payment on a new house, and much more.

When calculating the maximum personal loan amount in the case of salaried people, the bank/financial institution takes care that the EMI does not exceed 50% of the applicant’s take-home salary. Any existing loans that are being serviced by the applicant are also considered when calculating the personal loan amount.
And, for the self-employed, the loan value is determined on the basis of the profit earned as per the most recent acknowledged Profit/Loss statement and banking patterns, while taking into account any additional liabilities (such as current loans for business, etc.) that the applicant might have.

Approval of the loan is at the sole discretion of the loan sanctioning officer who bases his/her decision on the basis of the criteria specified by the bank/ financial institution. (Checking of banking and all financial documents and current residence and office verifications). The entire process can take from about 4days to about two weeks’ time. Once all the necessary documents are submitted and the verification process is completed, the loan, if sanctioned, is disbursed within seven working days by the bank. In order to avoid delays in loan processing and disbursement, do keep all necessary documents ready along with the post-dated cheques (PDC).

It is always a good idea to compare the offers of individual banks before you decide to settle on a specific provider. The first process is to check the process of the loan in a bank/Nbfc according to your business conditions (turnover, business vintage, income vs. existing obligations, cibil score, etc). Then to decide about the services and deals provided by the bank/nbfc. The best way is to let us do this task for you.

Charges occur in Unsecured Loans

1. Loan processing Fee : The bank has to bear some administrative costs while processing and sanctioning your loan. This is usually a small amount that includes the processing of docs, verifications of docs, and borrower’s premises, etc., which varies from bank to bank and typically costs about 1 % to 3.0% of the total amount of the loan.

2. Insurance premium: All lenders ask borrowers to take insurance for any physical damage to the property such as fire or house insurance and loan protection life insurance policy so that their legal heirs do not have to bother about loan outstanding if something happens to the borrower. You would need to pay the insurance premium. This is often a single-premium policy, which I think everyone should take.

3. Pre-EMI charge: Business loan - From the date of disbursement and from the 1st Emi occurs date, there are generally some differences and for that period bank charge pre-EMI interest. It can be from 2 to 10 days.

4. Document Charges: Some lenders ask for document charges ranging from 1500 to 3500 for the stamp papers enclosed with the agreement during the disbursement. Note: -All these charges are to be deducted from the loan amount by the bank in case of unsecured loans.

Charges occur in Secured Loans

1. Loan processing charges: The bank has to bear some administrative costs while processing and sanctioning your loan. This is usually a small amount, which varies from bank to bank and typically costs about 0.5 % to 2.0% of the total amount of the loan

2. Insurance premium: All lenders ask borrowers to take insurance for any physical damage to the property such as fire or house insurance and loan protection life insurance policy so that their legal heirs do not have to bother about loan outstanding if something happens to the borrower. You would need to pay the insurance premium. This is often a single-premium policy, which I think everyone should take.

3. Pre-EMI charge: After the disbursement of the loan if there is a delay in the borrower getting possession of the house, then the lender charges a simple interest called pre-EMI till the borrower gets possession of the house after which the EMI payment will start.

4. Document Charges: Some lenders ask for document charges ranging from 2500 to 4500 for the stamp papers enclosed with the agreement during the disbursement.

5. Technical assessment fee: Lenders deploy technical experts to assess the physical health and market value of the property for which a home loan is taken. These experts evaluate the property on many parameters such as statutory approval, layout approval, building specifications, compliance with construction norms, and so on. They also determine the market value of the property through various means that also include construction costs.

6. Legal fee: For a lender, the most important exercise remains to make sure that the property they are evaluating for financing should not have any legal dispute. For doing this, lenders hire certified legal experts who examine relevant legal aspects such as soundness of the title deed, thread, and devaluation of the property ownership, no objection certificate, occupancy certificate etc. Then give their final opinion to the lender as to whether they should go ahead with the lending. Most lenders ask borrowers to pay the legal fee directly to the empaneled legal expert.

7. Statutory or regulatory charges: These are the charges which are collected by the lender on behalf of the statutory bodies in the process of availing home loan. It is mostly in the form of stamp duty and GST on various charges which are collected by the lender and paid to the government.

Business owners have business and personal credit.

Loans for sole proprietorship and partnership businesses are guaranteed by an individual. So, the loan is reflected in your personal CIBIL report. However, if your company’s structure is LLC, then the business loan affects only the business’ CIBIL score.

Any interest levied on a business loan is exempt from taxation. This is because the interest paid is considered to be a business expense and not revenue. Registering as an MSME can also help you avail of business loan tax benefits on excise and other charges. However, the principal amount is not tax-deductible.

The interest rate for Business Loan is fixed. And the interest rate for home Loan is floating.

You can repay through Post Dated Cheques, Electronic Clearance Service (ECS) or Direct Debit.