With the ongoing Covid-19 pandemic, the world is facing an unexpected curveball which has significantly affected everyone. The national lockdown has had a considerable impact on the economy. Many businesses and operations have shut down or have slowed, leading to unemployment and survival on savings. To help during this financial distress, many banks and financial institutions are offering personal loans. These loans are specified for the existing customers, salary and pension account holders.
Let us understand some facts and benefit of personal loans in Coronavirus times:
1Personal Loans are Collateral Free
Many financial institutions and banks provide personal loans to their customers. Being unsecured loans, these do not involve any asset to be pledged as collateral or security. All banks issue loans only based on your creditworthiness and financial discipline to repay the loan efficiently. A personal loans will ensure financial protection if you are suffering economically through the COVID-19 pandemic.
2Personal Loan Eligibility
The COVID-19 personal loans are currently available only for existing customers of the bank. For securing a loan, you should know the eligibility criteria of each bank. The minimum age limit to apply for a personal loan is 21 years of age during the ongoing pandemic.
Other factors that can be detrimental to your eligibility are:
- To secure a personal loan during this pandemic, you should have a credit score of above 750. For the smooth processing of the loan, it will be a wise decision toclear all credit dues.
- With the age limit being 21 years of age, you should also have a stable source of income as banks expect the return of loan amount in a stipulated period.
- Banks provide Covid-19 personal loans to those applicants who have employment stability. To avail this loan, you should have a minimum net income of RS. 15,000, monthly if you are a business owner, a salaried or self-employed individual.
3Personal Loan Interest Rates
During these challenging times, most of the banks have changed the interest rates on personal loans for their customer’s convenience. Previously, the interest rate ranged from 12% per annum to 20% per annum based on the applicant’s employment, credit score and other factors. Now, they range between 7% per annum to 10% per annum. Every bank provides a different interest rate.
4Personal Loan Amount
The loan amount for personal loans usually ranges between Rs 50,000 to Rs 20, 00,000 normally. Due to the pandemic, banks are offering a personal loan between Rs 25,000 to Rs 5, 00, 000. This way, you can meet your liquidity requirements amid the cash crunch.
5Personal Loan Repayment Procedure
Repayment procedure of personal loans takes place in the form of monthly EMIs (Equated Monthly Income). It also includes the interest amount charged on loan. Many banks set a standing instruction against the borrower’s bank account, and the monthly EMI is deducted on a specific date.
Considering the ongoing pandemic, according to the RBI guidelines, banks are providing a moratorium of up to three months on personal loan EMI’s till August 31st 2020. Hence, if you are facing cash flow issues, you should opt for a personal loan.
If you do not want to dip in your long-term savings, taking a personal loan will be an ideal choice. You can opt for COVID-19 specific personal loan to fight the temporary liquid crunch. Finally, you should consider your repayment ability before applying for a personal loan. Reliable banks like Axis Bank provide personal loans with suitable interest rates. It will be helpful to understand the terms and conditions before you borrow the loan.