Things to remember about your personal loan
by 17, December, 2010 8 |
Evaluate all loan offers. The first condition for loan offer selection is the total money outflow that the loan will cost. The second factor is the EMI. A loan offer with a lower EMI and a longer tenure may seem attractive, as it could be easy on your purse strings, however not all such loans prove to be cost effective in the long run. Hence, first calculate the total loan cost and then try to opt for a higher EMI, which you can comfortably manage to enable a shorter loan tenure.
Personal loans constitute around 17% of the retail loan market share. However, in recent times banks have tightened unsecured lending due to the prevailing financial uncertainty and the increasing number of defaults in this segment. The focus of the banks currently is to keep defaults to a minimum. However, a personal loan for the credit worthy is indeed a boon in the hour of sudden need. This article explores the advantages of a personal loan for such an individual and provides a checklist one needs to keep track of when choosing a loan offer.
Why an unsecured loan
A secured loan would mean that you need to pledge a house or other forms of security as collateral to obtain the loan. However, a personal loan needs no such security pledge.
An unsecured loan is easier and less time consuming to access compared to a secured loan, which has a longer processing time. A personal loan can be accessed within a day’s notice and is easy to procure with minimal documentation. The borrowing range varies between Rs.50,000 and Rs.20L and the repayment tenure ranges from a year to 5 yrs.
The purpose for an unsecured loan is loosely defined and is not intended for one specific use, you could obtain it for wedding expenses, cruise holidays, as an education fund, to pay up sudden hospitalization expenses, purchase a car or a consumer durable and so on.
Six pointers to choose your personal loan
Calculating the cheapest loan offer: Personal loans come with very high interest rates ranging from 14% to 24%. Compare interest rates and get the complete picture by understanding the annualized interest rates for each offer. Then figure out the total amount of repayment you need to shell out with all the offers before opting for the loan of your choice.
Processing fee et al: You need to keep in mind the processing fee and other fees that will be levied when you apply for your personal loan.
Prepayment penalty check: Ask upfront if there would be any penalty payments for prepayment of the loan at any point in time. More often than not loan consumers tend to pay up their loans earlier than planned to be rid of debt. Hence, its important to know if your personal loan offer allows part prepayments. If that is the case, then you should be aware from what time frame in the loan period you can start prepaying and understand the cost you incur due to such prepayments in part or full.
EMI and tenure: Evaluate all loan offers. The first condition for loan offer selection is the total money outflow that the loan will cost. The second factor is the EMI. A loan offer with a lower EMI and a longer tenure may seem attractive, as it could be easy on your purse strings, however not all such loans prove to be cost effective in the long run. Hence, first calculate the total loan cost and then try to opt for a higher EMI, which you can comfortably manage to enable a shorter loan tenure.
Keeping track of your credit history: Especially in the case of unsecured loans, your credit history, which is recorded by CIBIL ( Credit Bureau India Limited) plays a critical role in your loan application being accepted. A good repayment track record ensures not only an instant loan approval but brownie points in the form of more attractive interest rates.
A personal loan is the best way out when you cannot access your personal savings to meet an unexpectedly huge expense. These pointers should help you on your way in landing the best deal on your personal loan.
Once the loan is over, make sure you get back your original promissory note without delay.
Banks will refuse to return the original stating it is a "Bank document".
But that is a false, illegal statement.
As per Indian Contract law and Negotiable Instruments Act, a promissory note is a bill of exchange, that must be surrendered in original to be canceled.
In your case, after you have repaid all EMIs and recd the no dues letter, make sure the bank returns you the original note by writing to the bank.
If it refuses, take it to RBI Ombudsman and requesting that the Ombudsman force the bank to pay back the original promissory note value to you since it refused to return back the original note.
What must be the reason for the bank to keep back the original promissary note -(Do you mean the agreement copy signed while taking the loan ??) after the tenure of EMI's are sucessfully over ??
and where exactly is the RBI ombudsman ??
Hi Ananda, Also let us know, as what do you mean by this sentence " If it refuses, take it to RBI Ombudsman and requesting that the Ombudsman force the bank to pay back the original promissory note value to you since it refused to return back the original note."
if the bank files to give the origianl agreement/promissory note during the first request, then can we make the bank pay us back the promissory note Value back to us ???
True.
For that to happen, you need to either file a case in court or approach the Ombudsman.
The Ombudsman is free.
The RBI Ombudsman details are available in RBI website.
Once your personal loan is over, the bank is bound by law to return back the original security against which it lent you the money. In this case the promissory note you signed and gave to bank in return for money.
Naturally the bank will not return it, as it entails lots of work and effort by it.
First make sure you have a loan completion and no-due certificate from the bank.
Send it a letter by post and await a reply within 10 days. Once no reply comes (the bank will not reply), approach the Ombudsman and write them a complaint stating Indian Contract Act that states a security must be surrendered to the drawer for it to be discharged.
In your case, the bank must have produced the promissory note back to you and demanded the money. Tell RBI that the the bank took the money but refused to return the security. Tell them its a violation of Indian law and ask them to order the bank to return back the money to you.
The RBI is bound by law to order the bank to return the money to you.
The bank will immediately return the promissory note to you.
i need a personal loan for repairing my house my monthly salary is 6350 and on hand salary is 5700 . my father was retired from bsnl . i get salary slip from my office . i am working in Indian Telecom Industries ltd. from last 2 years .i have my own house . my acc.is in Sbi
Visit this url – http://www.bankbazaar.com/personal-loan.html and enter your details to check your loan eligibility. Once that is done you can then apply for your personal loan through BankBazaar.com for quick approval and sanction if you meet the eligibility criteria for the loan amount required. Thanks for stopping by.
i need a personal loan of amount 300000, whr i can pay the emi is 10000 per month
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i got the secured personal loan against my car in2009.due to the decline in my business firm in july 2010,i had to shut down my firm..then i asked bank to reschedule my loan emi ,also i found out later that the bank also charging much higher interst rate of 17%.,so i asked them to reduced it,as i couldn,t abal to pay it…
IN the mean time on august25 i got legal notice from the bank,,i had to reply in 15days, but in next 2 days they picked my car through magistrate order by making my case as ex-party in which they picked my car by showing it my auto loan agreement,which i already paid it to the same bank of which i later got personal loan against it..MYcase is already in the court i want to know what could be done in this case,