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2006-10-15
Why Pesonal is most Important?
 
We all have our very own personal financial needs that just spring up out of nowhere. And how many of us hoard money for such needs? Public and private sector banks offer an impressive range of personal loans to meet your exclusive financial needs. “A personal loan is a cash loan given to a customer. Actualy its an unsecured loan – that is - it comes without any collateral security or asset backing. A personal loan is given based purely on the financials of the individual. Well, here’s what this loan option is all about:

USING PERSONAL LOANS
A personal loan can be used for any purpose. The lender does not need the borrower to give a reason for taking this loan. A spokesperson for the State Bank of India says, “A personal loan can be taken for any kind of personal expenses such as marriage, family functions, medical emergencies, educational expenses and travel expenses.”

ELIGIBILITY CRITERIA
Personal loans are given to salaried individuals, self-employed professionals (CAs, doctors, MBAs, etc.) and business owners. The broad criteria usually include minimum and maximum age and income. The loan applicant must be between 25 to 60 years of age or the retirement age, whichever is earlier, and up to 65 years in case of a self-employed person. The loan applicant’s eligibility is directly proportional to his/her net income—a salary in case of a salaried person and business income in case of a self-employed person. For a self-employed person the minimum business income requirement is usually Rs 60,000 per year.

SECURITY
Personal loans are very flexible. They do not require any collateral security or asset backing. They are disbursed based purely on the financials of the loan applicant. “Additionally, your spouse's income can be considered in calculating the loan amount provided he/she guarantees the loan or the loan is taken jointly.”

LOAN REPAYMENT
Personal loans are repaid in the form of Equated Monthly Instalments (EMIs). EMIs are calculated based on the loan amount, the rate of interest and the tenure of the loan. “Banks calculate interest using the reducing balance method. The actual interest is calculated on a daily reducing balance".

TRANSFERABILITY
If your lender is charging a high rate on your loan and you are able to find another bank willing to lend at a lower rate, you can transfer your loan to the new bank and thereby reduce the cost of your loan.
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