- Not following the process carefully could lead to a loan rejection!
- Check out here the process you need to follow when taking different loans in India
Often we go wrong in the process when it comes to applying for a loan. The result is either outright rejection or higher interest rates on a loan. Either of these can be mentally and financially disturbing. Rejections can be hard to deal with if you don’t have adequate savings to meet your financial needs. Whereas, higher interest rates break your backbone with an increasing outflow of money from your pocket. All that can, however, be avoided easily if you follow the loan process carefully. If you don’t know how you should go about it, you can read here the process of getting different loans in India. Keep scrolling!
Let’s Begin with a Personal Loan
A personal loan is a multi-purpose loan that you can get from banks and non-banking finance companies (NBFCs) across India. You can take this loan for marriage, education, travel, medical emergency, and many other financial needs. But how should you go about applying for a personal loan? Well, you should follow the process mentioned below.
Check the Personal Loan Eligibility Criteria of Different Lenders
Personal loan eligibility criteria do not remain the same across lenders. Plus, the criteria not only pertains to your income but also your age. Any deviation from it can lead to a loan rejection. To ensure rejection does not come in your way, do check the eligibility criteria of different lenders. We can help you do so by providing the age, income, and other criteria regarding a personal loan.
HDFC Personal Loan
HDFC Bank is a dominant force in the personal loan segment owing to attractive interest rates, flexible repayment options, and much more. Its interest rates are as low as 10.75% per annum and the maximum repayment period is 5 years. To grab HDFC Personal Loan, it is important to meet the following criteria.
- Salaried can apply for a personal loan when they are between 21 and 65 years of age
- The minimum monthly income should be INR 25,000 after all statutory deductions and existing loan EMIs, if any
- You must have worked for at least 2 years, with at least a year of experience with the current employer
What Criteria Does the ICICI Bank Set for a Personal Loan?
ICICI Bank is also a popular lender for a personal loan. The bank sets the following conditions to apply for ICICI personal loan. Check them out!
|Salaried Individuals||Self-employed Individuals and Working Professionals|
What is the Eligibility Criteria for Getting a Personal Loan from Kotak Mahindra Bank?
Kotak Mahindra Bank is steadily rising and giving competition to the biggies. With increasing reach among the masses, it has created its own niche in the personal loan segment. Let’s check out what it asks for when you apply for a Kotak personal loan here.
- The age of the applicant should be 21-58 years
- The minimum net monthly income should be INR 40,000
- The current work experience should be a minimum of 6 months
- You must have been staying in your current city for a minimum of 1 year
- You must have a telephone number at your current residence
- Applicants must have completed graduation before applying for a personal loan.
Bajaj Finserv Personal Loan Eligibility Criteria
Bajaj Finserv offers personal loans to salaried working in both public and private entities. It gives a maximum loan of INR 20 lakh to eligible applicants so that they can meet their needs. So, if you want to get a Bajaj Finserv Personal Loan, you must meet the following conditions.
- The applicant must be a minimum of 23 years when applying for a personal loan
- The maximum age of the applicant must not exceed 55 years
- One must earn a minimum monthly salary of INR 25,000-35,000
On What Basis Does YES BANK Decide the Eligibility for a Personal Loan?
YES BANK offers an impressive loan amount ranging upto INR 30 lakh. But how can you be eligible for YES Bank Personal Loan? Find out the eligibility criteria below.
- Salaried working with both public and private entities can apply for a personal loan at YES BANK.
- Applicants must be around 23-60 years of age
- The minimum net monthly salary of the applicant should be INR 25,000-35,000
- You must have work experience of at least 2 years with a minimum of 6 months with the current employer.
How Much Personal Loan Can You Get to Fulfill Your Needs?
Above, you saw the general eligibility criteria of different lenders for a personal loan. Most lenders give a personal loan upto INR 15-20 lakh, but some provide upto INR 40 lakh and more. However, the loan quantum will depend on your income, credit score, existing obligation, if any. The greater amount you earn the more repayment potential you will have, resulting in higher loan disbursals. If you already have an existing loan obligation, the lender will consider that too while deciding the personal loan amount for you. There’s a Fixed Obligation to Income Ratio (FOIR) that comes into play here. Ideally, the lender wants your proposed EMI to be within 50% of the net monthly income after any loan obligation you have.
Importance of Credit Score in Personal Loan Approval
Even if you meet the eligibility criteria stated above, you may not get an approval for a personal loan in case your credit score is not good. Lenders disburse personal loans to individuals having a minimum credit score of 700. Whereas, if you have more than 750, the loan will not only get approved easily but also come at attractive interest rates.
Compare Personal Loan Interest Rates
Personal loan interest rates can be high given that it is an unsecured loan. The rates can range from 10%-25% per annum on average. That’s why comparing personal loan interest rates of different lenders and choosing the most affordable deal makes sense for you. We can help you do so by showcasing the interest rate of different lenders in the table below.
|Lenders||Personal Loan Interest Rates|
|HDFC Bank||11.00% - 21.00%|
|ICICI Bank||10.50% - 18.00%|
|State Bank of India (SBI)||9.60% - 13.60%|
|YES BANK||10.75% - 18.00%|
|Bajaj Finserv||12.00% - 16.00%|
|Kotak Mahindra Bank||10.25% Onwards|
|IDFC First Bank||10.50% - 25%|
Check Out the Documents You Need to Submit
Documentation is a key aspect of personal loans that you can get without submitting any collateral to the lender. The authentication of your candidature is greatly assessed with the documents you submit regarding identity, address, income, etc. So, what are those documents you need to submit to the lender? Check them out below.
- Identity Proof – PAN Card (Mandatory)/Voter ID/Passport/Aadhaar Card/Driving License
- Residence Proof – Voter ID/Passport/Aadhaar Card/Driving License/Electricity Bill/Telephone Bill
- Income Proof
- Last 3 Months Salary Slips, Last 3-6 Months Bank Statement (Salaried)
- Last 3 Years Income Tax Return (ITR), Profit & Loss Account & Audited Balance Sheet (Self-employed)
- Latest Passport Size Photographs
Note – The actual documentation process may vary from one lender to another.
How Should You Approach a Home Loan?
Buying a home through a home loan involves a series of steps. As this is related to a property, there can be many terminologies you may not be aware of if you are taking a home loan for the first time. The following are the steps you should take when buying a home via a loan.
Search the Property According to Your Budget
You are a good judge of your budget. So, search the property that you can afford to buy given your income and repayment capacity. To assess your feasibility better, it is important to know the Equated Monthly Installment (EMI) you’re likely to pay towards a home loan. For a proper estimation of the EMI, you need to be aware of the interest rate movement. The home loan interest rate has fallen to 7%-8% per annum on average, following a repo rate cut of more than 100 basis points so far in 2020.
Have the Bucket Ready for Down Payment
Home loans are not financed fully to the extent of the property cost. They are given upto 75%-90% of the property cost. This loan to value ratio differs across the loan quantum. Loans upto INR 30 lakh, above INR 30-75 lakh and more than INR 75 lakh are financed upto 90%, 80% and 75% of the property cost, respectively. So, you need to pay a good 10%-25% to the seller of the property upfront. The down payment can be a considerable amount, so you need to start accumulating a few years before applying for a home loan.
But is Down Payment the Sole Obligation for You?
No! Besides arranging the down payment sum, you also need to pay the home loan processing fee, stamp duty and registration charges. Now the processing may or may not include both legal and technical verification costs. If it does not include the same, you need to pay for them separately. The processing fee, on the whole, accounts for 0.25%-1% of the loan amount plus Goods and Services Tax (GST). Some lenders fix a cap on the fee amount to ensure maximum customer traction. Whereas, the stamp duty and registration charge will depend on the market value of the property.
So What Should You Do After Having the Required Down Payment Amount?
Approach the seller and ask for the property documents from the concerned individual. He/she may not give you the original documents, so ask for photocopies. Read those documents carefully so that you won’t face any problem when the legal team will authenticate the property you wish to buy. If the concerned seller is not agreeing to hand you over the photocopies of the property documents, move to the next seller. If you don’t understand the legalities, take help from others who would know that. Thereafter, you should sign the Agreement to Sale with the seller by paying the required down payment sum. That agreement will contain the details of property transactions between you and the seller. It will also mention that the property is going to be transferred to you in due course of time. Keep the down payment receipt with you for future reference.
Check the Eligibility Criteria of Different Lenders
Before applying for a home loan, you should check the eligibility criteria of different lenders. Most lenders will allow you a loan when you reach a minimum of 21 years. The maximum age of the applicant must not be more than 60 years (salaried) by the time the loan wraps up. In case it exceeds 60 years, the tenure will get reduced accordingly. This is done to ensure salaried borrowers can repay the loan while they are working. On the other hand, self-employed can service the loan till the time they are around 65 years old.
Compare Interest Rates Before Applying for a Home Loan
As home loans span for as long as 30 years, you will need to be particular about choosing the interest rate so that the overall outgo is reduced. As of now, home loan interest rates have come down a lot. Even then, you should compare and choose the lowest one. Help yourself by looking at the interest rate of different lenders in the table below.
|Lenders||Home Loan Interest Rates|
|State Bank of India (SBI)||8.05%-8.55%|
|HDFC Limited||8.65% - 9.95%|
|ICICI Bank||8.75% - 9.80%|
|LIC Housing Finance (LIC HFL)||8.65% - 10.25%|
|PNB Housing Finance (PNBHFL)||8.50% - 10.35%|
|Bank of Baroda||7.45% - 8.80%|
|Axis Bank||7.60% - 8.05%|
Apply for a Home Loan
You can apply either online or at the nearest branch of the lender by mentioning your personal and professional details. Submit all the property documents along with your identity, address and income proofs to the lender, who will ask you to give it a cheque of processing fee. In case it does not include legal and technical verification costs in its processing fee, you will need to issue separate cheques for them.
Submit the following documents to authenticate your identity, residence, income and property.
- Identity Proof – PAN Card (Mandatory)/Driving License/Passport/Voter ID/Aadhaar Card
- Residence Proof – Driving License/Passport/Voter ID/Aadhaar Card/Utility Bills
- Income Proof
- Salary Slips for the last 3 Months, Form-16 (Salaried)
- Last 3 Years ITR, Profit & Loss Account and Audited Balance Sheet (Self-employed)
- Property Documents – Agreement to Sale Copy, Down Payment Receipt, Flat Allotment Letter, Property Map & Chain, etc.
- Latest Passport Size Photographs
What Will Happen After You Apply for a Home Loan?
The lender will send technical and legal verification teams to authenticate the property you want to buy. The technical team will see whether the construction of the property is done as specified in the property map or not. Based on their observation, the technical team will make a report regarding the value of the property and send it to the lender. The lender will go through the report carefully before deciding the loan amount for you. Whereas, the legal team will check the property chain to see if there is any foul play. If there’s no such thing, it will notify the same in its report to the lender. But if it finds anything suspicious and notifies the same, your home loan application could be rejected.
Visit the Property Registrar Office
The lender might take a few days to go through the technical and legal reports. After that, you should visit the property registrar office along with two witnesses. Complete all legal formalities like getting the sale deed signed in the presence of an advocate appointed by the lender, paying the stamp duty and property registration charges. A photocopy of the sale deed will be handed over to you. Whereas, the concerned advocate will send the original sale deed to the lender. After that, the lender will credit the remaining amount to the seller. In return, you will need to pay the home loan for the time you wish to. After paying the loan fully, you can visit the branch of the lender and ask it to issue you a No-objection Certificate (NOC) and the original property documents.
What is the Process of Getting a Gold Loan?
If you are facing any financial crisis but do not have the required credit score to apply for a personal loan, having gold ornaments can help you come out of the situation. You can pledge such ornaments and get a gold loan from the lender to meet your needs. The loan is disbursed based on the value of gold ornaments. Recently, the Reserve Bank of India (RBI) has allowed banks to disburse upto 90% of the value of these ornaments till March 31, 2021. Before that, the maximum disbursal was limited to 75%. Remember, the 90% norm applies to banks only and not NBFCs. Before checking the processes of getting a gold loan, let’s just glance at the gold loan interest rates of top lenders.
|Lenders||Gold Loan Interest Rates|
|State Bank of India (SBI)||7.50%|
|HDFC Bank||9.50% - 17.55%|
|ICICI Bank||10.00% - 19.76%|
|Muthoot Finance||12.00% - 27.00%|
|Manappuram Finance||12.00% - 29.00%|
|YES BANK||9.00% - 15.00%|
Apply for a Gold Loan
It’s up to you to choose the mode of application – online or offline. Whatever you choose, you will need to visit the branch of the lender and submit gold ornaments for the processing of the loan. The lender will evaluate the value of your ornaments by checking how much gold is available in the same. Ornaments can have other metals apart from gold. So while evaluating the gold weight, the composition of other metals will not be considered. Based on the prevailing gold rates, the lender will assess the value of the ornaments. Once the value comes out, the lender will fix a loan amount for you. It will be around 65%-90% of the value of your gold. You can get upto 1-4 years to repay the gold loan.
The best part about a gold loan is that you don’t need to submit any income proof. The reason being it’s a secured loan. Check out the documents that you need to submit for getting a gold loan in India.
- Identity Proof – Aadhaar Card/PAN Card/Voter ID/Driving License/Passport
- Residence Proof – Aadhaar Card/Voter ID/Driving License/Passport/Utility Bill
- Latest Passport Size Photographs
Once you repay the loan fully, visit the lender, ask for a no-objection certificate and get the gold ornaments released to you.