As
per a recent report, the last two fiscal years saw a 41% surge in personal loan
borrowers belonging to the 18-30 year age bracket. It was also observed that
most of these loan disbursals were initiated by various non-banking financial
institutions across the country.
Ideally,
an NBFC personal loan is an unsecured variant
that offers substantial funds to the borrowers without the hassle of pledging
collateral. A potential borrower can utilise this fund to meet any number of
financial requirements without end-use restrictions.
A
report by CRIF stated that small ticket personal loans availed through NBFCs
have surged by 162% as of the end of March 2020.
While
this loan option has gained immense popularity among borrowers, it is crucial
for individuals to gather extensive information on personal loan interest rates
to eliminate any risk associated with borrowing these funds.
Factors
related to an NBFC personal loan
Here
are some factors that every applicant must know before signing a personal loan
agreement.
Considerable
amount
A
personal loan offers borrowers a substantial amount, which is suitable to
finance big-scale expenses. As this credit form requires no collateral and
guarantor, the loan disbursal process is swift. Typically, the loan is approved
within minutes from application, making the funds instantly accessible.
Documentation
and eligibility
An
NBFC personal loan requires an applicant to submit certain documents like KYC,
salary slip, bank statements of 3 months, employment proof, etc., for approval.
A financial institution may require borrowers to submit additional documents to
avail the funds.
Personal
Loan eligibility, on the other hand, differs from lender to lender. The general
requirement includes-
A
borrower must be an Indian resident aged between 23 and 55 years.
He/she
must be employed with an MNC, public or private institution.
Must
possess a credit score not less than 750.
Should have sustainable employment and salary.
No
end-use restriction
An
NBFC personal loan comes with no end-use restriction. This makes it apt
financial support to deal with a liquidity crisis. Borrowers can use the
disbursed fund to manage the balance between monthly spending and savings.
Rate
of interest
A
personal loan’s interest rate depends on a borrower’s credibility and the
lending institution's norms. Moreover, the repayment tenure is quite flexible,
which can extend up to 60 months.
In
this regard, a potential borrower can use a personal loan EMI
calculator in an NBFCs website to estimate the EMI rate. An excellent
way to reduce the interest rate is to increase the CIBIL score and save more
simultaneously.
Balance
transfer facility
To
avail better interest rates and favourable terms, borrowers can transfer their
existing personal loan to an NBFC and save substantially.
Tax
benefits
As
per the Income Tax Act, 1961, a borrower can gain tax benefits on a personal loan interest
payment if the disbursed amount is used for home renovation or purchasing
assets.
Many
NBFCs also offer exclusive benefits to personal loan borrowers. Bajaj Finserv
provides a pre-approved offer that makes the loan application swift and
hassle-free. These offers are also available on products like personal loan,
credit card, business loan, etc. Check your pre-approved offer today by
entering your name and contact number.
Apart from gathering information on the factors linked with a personal loan, an applicant must be aware of the processing charges, flat interest, etc. This will ensure healthy financial planning and enable lucrative savings from a borrower’s end.
Reference:
https://www.bajajfinserv.in/what-are-the-tax-benefits-on-personal-loan
