IIBF CAIIB RETAIL BANKING | PERSONAL LOANS & EDUCATION LOAN
PERSONAL LOANS:- There comes a time when we might not have the money that is required to do or buy certain things. At those times, people opted to borrow money from lenders.
These lenders can be banks Financial Institutions or Non-banking financial institutions or even some individuals. They give money to those who come asking for the loans on a guarantee or trust that the amount will be paid with extra benefits (in the form of interest). This whole process is known as lending or taking a loan.
TYPES OF LOANS
The loans can be categorized on the following basis:
|Security provided||Purpose||Pledged Assets|
On the basis of Security Provided:-
Secured Loans: There is a requirement to pledge collateral for the loan that is sanctioned.
Unsecured Loans: Loans are sanctioned without any collateral but on the basis of the borrower’s past relationship with the bank, credit score, and some other factors, they are called secured loans.
On the basis of Purpose:
Education Loan: A loan provider to aid the borrower to pursue his or her education, is termed an education loan. It is available for both, domestic & international courses.
Personal Loan: When individuals face a liquidity crisis we can go for a personal loan. The purpose can range from debt repayment to purchasing household items.
Vehicle Loan: The loan taken for the purpose to finance a two-wheeler or four-wheeler is known as a vehicle loan.
Home Loan: When a loan is taken to purchase a house or flat or to construct a house, for renovation or repairing the existing one or you want to buy a plot, it is termed as a home loan.
Based on the Pledged Assets:-
Gold Loan: When physical gold, gold bar, or jewelry, is pledged to see the loan it is known as a gold loan.
Loan Against Assets: The loan is pledged against insurance policies, property, mutual funds, shares, bonds, or FD certificates, the loan is to be taken against assets.
If an individual faces the situation of liquidity, he or she can take a personal loan. The reasons for personal loans can vary. It could be either to buy a house or a car, furniture or gadget, to make down payments of heavy purchases, prepare for medical emergencies, or even to repay any old debt standing.
Loans are granted on the basis of the individual’s relationship with the bank, credit score, and many other factors.
These loans are most of the time unsecured and are only have personal guarantees in the name of security. It is seen that the personal loans have high credit risk and delinquency rates, which is the reason why PSBs (public sector banks) sanction these loans after careful appraisal while the private banks are all on for the personal loans.
Thus, Eligible persons can get an unsecured loan without pledging collateral in return. It is easy & can get online in today’s time.
TERMS & CONDITIONS:
Underwritten is eligibility criteria, the purpose for which personal loan can be granted, the maximum amount that can be sanctioned for personal loans, the security that is required for the personal loan, where the amount would be distributed, the interest rate, any Moratorium period that would be granted and the repayment schedule, etc.
Eligibility: Individuals who are professionals or have high net worth, salaried employees, people who I am getting regular pensions and a growing regular pension on a monthly basis through their bank. All the mentioned parties are eligible to get a personal loan for one or another reason.
A quick personal loan can be taken by Eligible persons. The eligibility criteria to be eligible for personal loans is as follows:
Age: In most cases, it ranges from 21 to 67 years.
Income: One could be:
- Salaried individual,
- A person who has a high net worth,
Nationality: An Indian citizen who is residing in India
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Purpose: These loans can be taken for various purposes such as to finance the marriages (dependent, children or self), medical purposes, to finance the education of self or children, to do repairs, renovation work or building extensions to their homes, to travel (domestic/international) or for any other personal reason.
Clean/ Unsecured loans: the loan that could be sanctioned as a personal loan can be varied from bank to bank and depends on the schemes that have been approved by each of those banks or the target groups.
Secured Loans: When personal loans are secured through pledge or hypothecation, the amount that can be sanctioned under them also varies from what can be sanctioned under unsecured personal loans.
Security: Personal loan can be taken by providing equitable and legal mortgage of commercial and residential properties. Even though hypothecation charge, the personal loan can be taken.
Disbursement: The amount that is sanctioned under personal loans gets distributed to suppliers or dealers whenever it is feasible. It can also be credited to the borrower’s account when the personal loan is clean.
Rate of interest: The interest that is chargeable only personal loan distributions vary from bank to bank.
Moratorium: In cases of personal loans, there is no moratorium period granted.
Repayments: The repayment schedule varies for secured and unsecured loans. The general repayment time is mentioned as below:
Clean/Unsecured loans: These are allowed to be repaid in 36 to 60 equated monthly installments
Secured loans: They are allowed to repay the loan amount in 60 equated monthly installments.
Documentation: Although personal loans are easy to avail, they still require normal documentation. Usually, the following documents are asked by the banks:
- Photographs: Passport-size
- KYC documents: It could be PAN, Voter ID Card, Aadhaar Card, Valid driving license, and a valid passport
- Bank Statements: 3-month statements of Bank account
- Salary slips Slips pertaining to the last two months’ salary in the case of salaried employees.
Today personal loans are easy to avail. Banks are offering them at flexible tenures, low-interest rates, without any collateral, minimal documentation with an easy application process.