Personal loans

T.Y.BBI PERSONAL LOAN

INTRODUCTION

A loan is a redistribution of financial assets over a time between the

lender and the giver of the loan. The borrower initially receives an

amount of money from the lender, which they pay back usually but not

always in regular installments to the lender. This service is generally

provided at a cost, discounted as interest on the debt, to the lender.

Acting as a principal of loans is one of the principal task for financial

institution for banks. Loans are generally funded by deposits for other

institution issuing of debt contract, such as bonds is a typical form of

funding.

Due to rising of basic needs, personal loan facilitated by various bank

play a vital role in fulfilling the people desire of buying their dreams.

They are ideal when we need or buy a product for ideal when do not have

ready cash.

Personal loan are better choice compared with consumer durable loans. In

fact before we consider taking a consumer durable loan we might

consider a personal loan instead as the procedure is slightly longer but the

rate of interest is lower. Flexibility of duration and availability of various

schemes make personal loan an attractive option.

1

http://images.google.co.in/imgres?imgurl=http://www.bestcreditfinance.com/_Images/Personal_Loans.jpg&imgrefurl=http://www.collegerecruiter.com/employersblog/archives/2005/12/&h=244&w=274&sz=20&hl=en&start=7&tbnid=8AuCup26oxRPHM:&tbnh=101&tbnw=113&prev=/images%3Fq%3Dpersonal%2Bloan%26gbv%3D2%26svnum%3D10%26hl%3Den%26sa%3DG


It is an all purpose a loan, which is given in most cases without any kind

of security like a car, home, shares or any kind of property.

Most nationalized, foreign, and co-operative banks offer personal loan.

Besides banks, some other finance companies and financial institution

also offer them.

Lending rates differ for different financiers and currently from 12% to

30%. These loans are available in the range of Rs 15000 to Rs 10 lakhs.

The repayment period varies widely; some lenders usually permit

repayment up to a maximum of 60 months. And most lenders restrict the

lending to a maximum period of 36 months.

Most bank will give anywhere between Rs20, 000 and Rs10 lakhs (Rs 1

million) for a maximum for period of 60 months. To be eligible for the

loan you need to be between the age of 25years and 58years in case of a

salaried individual or between 25 years and 65years if you are self-

employed.

While issuing the loans, banks look at factors like your salary or profit,

the number of years you have worked in a particular organization and the

number of years you have stayed in your current residence.

2


Advantages and disadvantages of personal loan

With a lot many lenders on the block willing to offer their loan services

to all, applying for a loan nowadays, is no longer a problem. Gone are the

days when you had to wait to buy something or go out and do what you

wanted to, because a hassle free and available to all personal loan is now

no more a dream, but a reality.

Today, various loans are available in the market to suit individual needs

of the people. In Personal Loans as well, different types of loans are

available. They can serve you well in your financial limitations while

making your living better. No delay should be done in availing a loan

especially when it suits your financial situation and can be available to

you in a desired time.

A personal loan is often described as unsecured loans because it allows

you to borrow money without having to provide security against it. You

can use the personal loans for the purchase of your house or a car. The

personal loans are better for a longer time period.

Following are some of the advantages of the personal loans-

- While making an evaluation of the cost of the loan you need to consider

the TAR (Total Amount Repayable) which means that the total amount

that you owe towards the bank or a lender which also includes the rate of

interest on the loan and the payments need to be made on a monthly

basis. A suitable deal is where you get a lower TAR.

- The maximum amount that you can borrow ranges up to £25,000 and

the time period for the refund is up to ten years. The advantage with the

3


personal loan is that when you take a maximum amount as a loan then

you have to pay a lower rate of interest.

It is totally different from the terms and conditions for the mortgage. The

unsecured personal loans are not protected for your property so if you are

not able to refund the loan then you can be rest assured that your house is

safe.

- The interest rates for the personal loans are also fixed. This makes it

easy for you to make a planning for the payments that has to be made.

The refunding amount also remains stagnant all the way through the time

period of the loan.

- With a dynamic market scenario of loans the rate of interest has seen

so many ups and downs. Now to get a loan it has become simpler than

ever before. The financial companies offer you loans through their

telephone service. They have toll-free numbers and they guide and

provide you the best deals and offers.

Following are some of the disadvantages of the personal loans:

- Various financial companies and clever lenders introduce certain plans

like- make a purchase and pay it later, offer free gift items, etc. These

will only raise your price of the loan. So take a wiser decision and go for

the basic loan with favorable terms and conditions. Always make a

choice for those loans which have a low rate of interest and where the

terms of the refund are moderate.

- Don’t make a hasty decision in choosing a personal loan. It is not right

to take a loan from just another bank. Make a survey and try to find out

various offers and plans that various other banks and financial companies

have to offer. Now with the internet things has become very simpler. You

can visit various financial companies, what are the offers and plans these

4


companies are offering. Accordingly you can take a decision whichever

plan suits you.

- The PPI (Payment Protection Insurance) provides you the refund on a

monthly basis if you are not able to work, you have met with an accident,

in case you have suffered a heavy loss in your business, you are not

employed anywhere, and make a payment for your loan in case of your

death. You should be aware of this type of insurance as it is a costly affair

and it adds an amount ranging from £1,000 to £5,000.

- According to a survey majority of the personal loans are paid off before

the completion of their tenure. You need to look out for those lenders

who take heavy amount for the settling of your loans before the tenure.

- You have to handle the annual percentage rates very carefully as it

entirely depends on your financial credibility. You probably might

not be eligible as to be entitled for it. You need to have a good credit

history otherwise you won’t be able to qualify for the lender’s

potential customer list.

Here are few guidelines before taking any concrete decision

regarding the personal loans:

- Analyze all the offers and schemes before applying for the loan. There

are various lenders who are not real and their motive is just to earn

profits.

- To be entitled for a personal loan the procedure followed is rigorous

although there is less documentation involved in it.

- Go through the contract thoroughly and reassess the closure price and

for any hidden cost (If any). It is an important step which will only

benefit you.

5


- If you are planning for a personal loan then most of the time it is

cheaper than getting a credit card.

- Excluding the consumer durable loans the rate of interest for the

personal loans are high.

Personal loans - Special emphasis on bad

credit personal loans

Before approving a loan application, the lender calculates

the following two affordability parameters to make sure

that the chances of repayment are not bleak:

Credit history, to ascertain the loan seeker's past

financial record as good or average or bad.

Debt to income ratio (DTI = Debts/Income), to

compute the loan seeker's current monetary position.

Depending on the above-mentioned calculations, the

lender categorizes the loan seeker as: prime customer

(person with a good credit record), near prime customer

(person with an average credit record) or sub-prime

customer (person with a poor or bad or adverse credit

record).

A sub-prime client is further categorized to get a better

idea of the hazards that he may pose - low adverse credit,

medium adverse credit or heavy adverse credit. After this

detailed evaluation and classification, the lender approves

the loan application/amount and decides the loan

terms/conditions.

Sub-prime loan seekers can avail credit support under the

6


'bad credit personal loans' category. Available in both

secured and unsecured form, this special personal loan

sub-category helps people bring their lives back on track.

For obvious reasons, prime and even near-prime

customers can negotiate for a favorable loan deal. But,

sub-prime customers have to settle for high APRs, and

stringent loan terms and conditions. Still, secured loans

are more gainful and are generally easier to get as

compared to unsecured loans.

Secured bad credit personal loans, the best solution

for homeowners and property owners are comparatively

safer for the lenders, as they are availed by pledging

collateral. As a result, there are chances that the loan

seeker may get a less stringent loan deal.

But, unsecured bad credit personal loans, probably the

only option for those UK residents who are incapable of

offering collateral, are risky for the lenders, as they are

availed without pledging collateral. As a result, the

creditor cannot afford to offer a flexible loan deal.

How to ensure a safe personal loan?

7

http://www.loans11.co.uk/bad-credit-secured-personal-loan.htm

http://www.loans11.co.uk/bad-credit-secured-personal-loan.htm


The online media for applying for loans is becoming

increasingly popular these days. Being time saving and

convenient, it's preferred by most of the borrowers.

Nobody likes visiting the bank manager in persona to

apply for a loan. But, one must ensure that s/he is

applying to the right lender and not to a loan shark. Loan

sharks are unlicensed lenders who take advantage of

those who are rejected elsewhere or are suffering from

extreme bad credit. These lenders usually prey on

vulnerable people like the unemployed, lone parents, bad

credit holders, etc.

So, whenever you apply for personal loans, make sure

that the online lender you are dealing with is registered

with OFT (Office of Fair Trading) and regulated by FISA

(Finance Industry Standard association). Loan sharks are

not licensed and therefore they operate outside the law.

These unlicensed moneylenders charge very high interest

rates and use violence and threat if the borrower is unable

to repay the loan.

Personal loans should be taken with great care and

caution. The loan agreement should be read carefully

before signing and if needed, professional help from a

financial consultant should be taken. An unlicensed lender

otherwise may make you life hell. He does the following:

Grant you personal loans on very expensive rates

Harasses you if you fall behind your repayments

8


Pressurizes you to borrow more from them to repay

your existing debts

Personal cash loan

9


It can be a viable short-term solution for temporary monetary

problems because these allow consumers to receive funding for

bills, expenses, and other necessary costs. When handled wisely,

they can improve an individual’s current financial situation. When

not handled wisely, however, a personal cash loan can lead to

serious trouble. If help is needed, funding can be qualified for

quickly, with little documentation. However, because of higher

interest rates and serious default terms, one should cautiously

consider taking out this form of funding.

There are many different funding programs, including payday

advances, cash advances or other unsecured cash loans. They

are available through store-front and financial companies, as well

as on the Internet. While there really are no regulations for which a

personal cash loan can be used, people typically use them to help

pay bills on time, or to pay for some unforeseen expense that they

do not have adequate savings to cover. Unfortunately, some

people may also use personal cash loans to meet their perceived

need for instant gratification. Using money in this manner can get

a person into financial trouble quickly. Because these programs

can have high interest rates and little tolerance for missed

payments, they are best used in emergency situations, or when

the borrower knows they can repay the obligation.

Getting a personal cash loan can be quick and easy, which is good

for the person who is in financial need. Lenders who offer personal

cash loans do not have many requirements. Most lenders require

the borrower to be at least 18 years old and to have had a

checking account open and in use for at least 90 days. The

borrower also must show documentation that proves they receive

a minimum of $1000 per month to qualify. Most lenders typically

10

http://www.christianet.com/christianbusinesses/christianfinancial/index.htm

http://www.christianet.com/loan/personalloans.htm


do not require good credit and rarely run credit checks for instant

loans. However, lending companies may check for other

outstanding debts or in-process bankruptcies.

This funding can be a blessing or a curse to the one who is

borrowing. When a person takes on a personal cash loan, it is

important to realize they are in debt to the lender. As the Bible

says, "borrower is servant to the lender" (Proverbs 22:7). This can

be very overwhelming and should encourage the individual to seek

financial freedom. However, unforeseen financial difficulties

sometimes arise and people need personal cash loans to pay

these obligations. It is important to be very selective in this process

and choose lenders that offer the lowest rates and best terms.

Personal loan guaranteed

11


Personal loan guaranteed are available from many sources, and

are relatively easy to obtain either through the Internet, finance

company, bank, or even a credit card company for anyone with

collateral. The quickest (and apparently most common) financing

is payday loans. They are secured by the next paycheck, and

allow the borrower to receive funds between paydays. They do not

require a credit check when they are short term and $500 or less.

There is a fee for this type of financing that is taken out up front, so

actual funds received from a personal loan guaranteed are the

amount less the fee.

When larger amounts are needed, such as to buy a computer, or

furniture, or to pay tuition or vacation expenses, a credit check will

most certainly be done. In that case, in order to avoid having

several companies check credit (and thus lowering personal credit

rating), it would be wiser to use a broker who would make a one-

time check and pass that information on to possible lenders. A

bank statement and paycheck stub will be needed to prove

earnings enough to qualify for this personal loan guaranteed.

Typical fees for personal loans guaranteed are 15-30% of the

amount borrowed.

When one has to begin borrowing on future paychecks or on the

home, it may a good time to review financial priorities. It is

important to keep money in its proper place: "For the love of

money is the root of all evil: which while some coveted after, they

have erred from the faith, and pierced themselves through with

many sorrows." (1 Timothy 6:10). Remember that God promises

each person who believes in Him treasures unimaginable in

heaven. Don't store up treasures here, concentrate on the best

that is yet to come.

12

http://www.christianet.com/christianbusinesses/christianfinancial/index.htm


Another source is the home equity line of credit. The larger

personal loans guaranteed by the equity in the home are good for

debt consolidation, home remodeling and the like. The interest rate

is lower than the payday loans. This kind of financing equates to a

second mortgage, and if selling a home before it's paid off, that

personal loan guaranteed comes out of the sale proceeds first.

When counting on the proceeds of a house to make a down

payment on the next one, this could present a serious problem.

The best way to handle this kind of personal loan guaranteed is to

stay put until both the loan and mortgage are paid off.

There are basically Two Types of Personal Loans:-

1) Secured loan

2) Unsecured loan

13

http://www.christianet.com/loan/personalloans.htm


1) Secured loan

a) The loan that is secured against some sort of fixed or

immovable/movable asset is known as secured loan.

b) This sort of guaranteed personal loans is easily available on account of

the collateral that is provided alongside; thereby making the lending

institutions more comfortable in forwarding the loan.

c) Secured personal loans involve rates of interest that are much lower

and easy options for repayment.

d) Due to the collateral that is provided, banks and financial institutions

usually are unperturbed by defaults in payments or by debts that are

pending.

e) Secured personal loans are made available to the individual within a

period of thirty days after submitting an application.

How Does A Secured Personal Loan Benefit the Borrower And the

Lender?

1. Secured Personal Loans can be repaid over a longer period of time,

with a lower monthly payment.

2. They are cost effective on account of the low rates of interest

charged on the loan.

3. Since the loan has been secured by pledging the assets of the

borrower, the risk to the lender's investment is greatly reduced.

4. Their easy availability is another factor. Very few loan applications

for secured loans are turned down; since the loan would be secured

on the strength of the borrower's assets

14


Secured personal loans can only be obtained by a borrower after keeping

an asset such as real estate property, car or jewelry as collateral with the

lender.

These kinds of loans help the lenders make sure that they will get their

money back, and hence they approve and provide the loans for any

amount of money with more security. Other than that, the approval of the

loan application also depends a lot on the borrower’s credit history, his

current monetary position, his current employment status and the

obtainable equity in the deposited collateral.

2) Unsecured loan

An unsecured personal loan allows you to borrow money without having

to provide security against it, such as your home or car. This is what

makes a secured personal loan different from unsecured personal loan.

The people who don’t own their own house and students who are living

away from their home are the most suitable borrowers of unsecured

personal loans.

If you don’t have enough financial resources to repay the loan and those

who don’t want to put their costly items in jeopardy, then the unsecured

personal loans are the best option for you. You have the danger of getting

your property seized in secured loans and unsecured personal loans are

total contradictory to it which offers less botheration to the borrowers.

Usually the borrowers are attracted towards those offers where you are

hassle-free. These all factors are the major contributors to the popularity

of the unsecured personal loans.

15


An individual can take a personal loan for a variety of reasons. Loans for

personal debt help provide funds to purchase your dream car, pay for

your mortgage or home improvement requirements. In fact unsecured

personal loans help meet most of the financial emergencies that an

individual can think of. The main advantage of the unsecured personal

loan is that anybody is entitled for an unsecured personal loan whether

with a good credit or a poor credit. Generally it has been witnessed that a

borrower with a poor credit is not given the unsecured personal loans

easily by the lenders. But there are some lenders who still provide

unsecured personal loans to the people with poor credit. There are people

who have the privilege of unsecured personal loans after being a bankrupt

or after their property being taken over.

The rate of interest is higher for the unsecured personal loans as

compared to the secured personal loans. In the case of unsecured personal

loans the lender is at a risk because incase you are not able to make a

repay of the loan then the lender has nothing to take the possession of as

there is not collateral made against the loan.

The unsecured credit line and unsecured credit cars are also forms of

unsecured personal loans. The unsecured credit cars are offered to those

borrowers those who are financial stable and have a good financial

background. For unsecured credit card you need not deposit a

considerable amount and on the contrary to this you have to make a

decided amount in advance in secured credit cards.

The main and the most important factor of the unsecured personal loan is

that you need not deposit any collateral against the loan to the lender.

Through unsecured credit line the businessmen are benefited the most as

16


they are in need of cash. The unsecured credit line is offered according to

one’s financial status. It is up to the business man what he wants to do

with the credit whether he uses to buy some machines or use it to expand

his business. It is evident that the interest is only charged on the amount

you have taken.

The rate of interest for the unsecured loan is relatively higher than the

secured loans. No doubt that unsecured personal loans are the most

preferred by majority of the people but there are some strict rules and

guidelines attached with it. Before you arrive to any concrete decision

you need to have all the details of the details pertaining to the unsecured

personal loans. It is true that you don’t have to make any collateral for the

unsecured personal loans but still the refunds has to made on time. Just in

case you fail to make a refund of the loans there are probabilities that you

can face federal lawsuit against you which will only make the matter

worse. Your current financial status will be affected and in a worse

scenario you will be denied for any form of loans in the coming time.

Some important facts about unsecured personal loans:

- For unsecured personal loan you need to have a good past financial

record. The basic condition for offering an unsecured personal loan is

your credibility to refund the loan.

- For getting an unsecured persona loan you do not have to deposit any

collateral against the loan with the lender.

- The loan approval process of the unsecured personal loans is very quick

the reason being less paperwork is put into use. There is no appraisal of

the property involved adding to the fast approval process of the

unsecured personal loans.

17


- The loans are approved achieving a target of £25,000.

- The rate of interest of the unsecured personal loan is dynamic in nature

and can differ from seven to thirty percent.

- The terms and guidelines of the unsecured personal loans are not so

favorable. The time period for the repayment of the loan can vary from

six to ten years. Under this condition the smaller the loan period the more

you have to pay on a monthly basis.

The Benefits behind an Unsecured Personal Loan

There is no requirement of collateral, and the borrower need not pledge

his assets to procure the loan.

There is no necessity for documents regarding the borrower's tax returns,

or for financial statements. The information on the borrower's financial

background need not be verified by supporting documents.

Quick approvals, and an easy application process, are other attractive

benefits of this loan

Unsecured loans + unsecured personal loans

- Favorites among the borrowers.

In the last two years, the percentage of unsecured loan

takers has increased considerably in the UK loan market.

Not only the tenants, most homeowners also prefer taking

loans without pledging any asset, especially the home, as

18


security to the lender. The risk of repossession of home

plays heavy on the minds of the borrowers, when they

weigh different loan options. Unsecured loans are masters

in luring customers because of the features cited below:

Available for a range of different amounts and

repayment terms.

Not secured against any asset.

No restriction on the purpose of availing loan.

Amount available usually ranges from £500 to

£15,000.

Loan tenure may stretch from 6 months to 10 years.

Different lenders offer different APRs.

Most borrowers wonder that if nothing is secured, then on

what basis the loan amount is calculated for unsecured

personal loans. There are many factors that play a vital

role in deciding the amount to be granted as unsecured

loans. Some of the parameters are listed below.

Credit History of the borrower - A borrower with few

arrears, defaults, and miss payments is more likely to

get a greater amount than the one who has an

unhealthy credit record. So, better the credit score of the

borrower, higher the amount granted as unsecured

loans.

Disposable income of the borrower - By disposable

income, one means the approximate income of the

borrower left per month after paying all living

expenditures, installments of other loans and credit card

19

http://www.loans11.co.uk/unsecured-personal-loan.html

http://www.loans11.co.uk/unsecured-personal-loan.html


payments etc. On the basis of this, the lender decides

how much amount the borrower will be able to pay as

the installment of the new loan.

Debt to income (DTI) ratio - This determines the

affordability of the borrower. DTI is calculated by

dividing the monthly income of the borrower by his

expenditures. This reveals the paying capacity of the

borrower. If the DTI ratio is more than 0.36, the borrower

will get a good amount as unsecured personal loans.

Credit policies of the lender - Every lender has a

different credit policy. So, the loan amount, tenure and

the APR charged is subject to the lender's criteria. For

instance, the high street banks may not at all provide

unsecured personal loans to those with bad credit

history; whereas, an online lender may approve the loan.

There are innumerable factors that help in determining

the loan amount of unsecured loans, the major ones being

discussed above. The borrowers' requirements and say

also works. In most cases, the borrowers mention the

purpose for which they are procuring unsecured loans in

the loan application form. As per the purpose, the lenders

grant unsecured loans.

20

http://www.loans11.co.uk/unsecured-loans.html


Short Term Personal Loans

Short Term Personal Loans can be got through banks and online financial

companies, and a wide variety of other sources. With such a Short Term

Personal Loan: The rate of interest involved is usually high. This is

because the period of repayment is usually for a short time. Such types of

short term personal loans have to be beneficial to both the borrower and

the lender, and high rates of interest are one of the ways by which a bank

or a financial company stands to benefit.

- This type of short term funding is often utilized to help individuals

who are in need of varying sums of money for a short period. Many

of the lending companies usually provide for such a loan, and also

stipulate the maximum amount of money that can be borrowed under

such a circumstance.

- Banks, while giving this type of short term personal loan, usually

require collateral, before disbursing the same. Online financial

companies only require a credit check, but lend very small sums of

money. Banks do not offer more than $15, 000 or $20, 000 dollars as

well, and individuals seeking larger sums of money, would have to

tap other sources for funding.

- Because of the negative and positive aspects of short term personal

loans, it is recommended that the individual does his research

thoroughly, before he applies for funding.

Fast Cash Advance Loan

Sometimes, you may be in need of a quick payday loan, so that you could

meet an unexpected money crisis. Car repair and other unexpected bills

21


usually occur at inconvenient times. In case you do not have the extra

cash to meet these unexpected expenses, you could really consider

applying for a cash advance.

A Fast Cash Advance Loan:

- Is similar to a bank loan- only cash advances are a lot easier to

qualify for, and enjoy a shorter term. Chances that your application

for a bank loan may be denied are high as banks have a requirement

of sufficient income, a collateral and good credit rating.

- Has a two week term. Therefore your loan is due along with your

next paycheck. Requires that the applicant must be at least 18 years

of age. The cash advance company would also be checking out

/confirming your salary and employment. While the company is keen

to help you out, it also wishes to satisfy itself that you can repay the

loan.

- Renders you eligible to receive funds up to a maximum of $1000,

with a cash advance. Some companies allow larger sums to be

borrowed.

- Typically fast cash advance loans are due within the period of two

weeks. Taking the circumstances of the borrower into consideration

however, some cash advance companies would expect that at least

half the loan amount will be repaid in two weeks, and the balance in

a month. Such loans are called 30 Day Payday Loans.

- But remember that before taking such a 30 day payday loan, choose

a company that allows for long term loans, and do not assume that all

cash advance companies would give long term cash advance. Far

better to enter into a long term loan agreement, before taking the

loan, otherwise you would have to pay extra interest and fees for the

late period.

22


Military Personal Loans are easy for servicemen to get anytime. Military

jobs involve good salaries and high status and sometimes these could

complicate matters by incurring extra expenses.

23


An ICICI Bank personal loan is the one stop for all your financial needs

to fulfill any of your desires. You can now secure a fast and easy personal

24

A PERSONAL LOAN OF ICICI BANK

http://images.google.com/imgres?imgurl=http://www.comat.com/Images/icicibank_logo2.gif&imgrefurl=http://www.comat.com/solutions_and_services/government/rural_business_centres.html&h=65&w=233&sz=8&hl=en&start=1&um=1&tbnid=Qjzbvz3AQbLm8M:&tbnh=30&tbnw=109&prev=/images%3Fq%3Dicici%2Bbank%2Blogo%26svnum%3D10%26um%3D1%26hl%3Den%26rlz%3D1T4ADBF_enIN239%26sa%3DG

http://www.keylines.net/images/icici_logo.gif


loan for an amount up to Rs 15lakhs at attractive interest rates, with an

ICICI Bank personal loan.

With ICICI Bank personal loan you can get instant money for a wide

range of your personal needs like:-

1. Renovation of your house

2. A holiday with your family

3. Your child’s education

4. Buying a laptop or a electronic equipments

5. Medical expenses or any other emergencies.

The best personal loan cant’s get easier than an ICICI Bank personal

loan. To secure a instant personal loan all you need is one of the

following:-

1. A salary slip

2. Your credit card statement

3. Repayment track of an existing loan.

For instant, at ICICI Bank, your net salary needs to be 96,000 annually or

you need to have a net after tax of Rs 60,000 per annum. If you are a

salaried individual you should have worked in your current organization

for at least 1 year and if you are self-employed then you must have been

running your business for at least 3 years. You must have also been in

your current residence for at least a year.

The loan is sanctioned within 3 working days. The processing fee is

generally around 2% of the loan amount and is deducted up front the

disbursement amount. Most bank charge pre-payment penalty of between

3% to 5% of the remaining amount.

25


Objective

1. The various personal loan provides by ICICI Bank aims at

provides financial support from the banking and financial system

to the needy people for taking personal loan in India.

2. The main emphasis is that the needy people should be provided

with an opportunity to take personal loan with financial support

from the banking system with affordable terms and condition.

3. To make people aware to take advantages of the various types of

personal loan provided by various bank.

4. To provide easy finance to the people.

FEATURES

1. Personal loan with a peace of mind: - ICICI bank personal loan

provide a free life insurance cover (including total and permanent

disability due to accident or sickness) to the value of the loan

outstanding. The insurance cover is for outstanding balance of the

personal loan as on date of death or total and permanent disability

due to accident or sickness, will be covered excluding any

defaulted installment.

2. A loan for every one: - loans for both salaried and self-employed

personnel with freedom to jointly apply with your spouse.

3. Quick and hassle free loan: - quick processing time of 24 hours

with hassle free documentation. No security or personal guarantors

required.

4. Get more from your loan: - we offer attractive interest rate with

loan from Rs 10,000lac to Rs 1,00,000 lac or to 10 times to the net

remuneration whichever is lower.

26


5. Flexible repayment option: - you have flexibility to Choose the

repayment period of upto 5 years (60 installments) and we also

allow early settlement at a nominal fee.

6. Loan ranging from Rs 20,000 to Rs 15 lac

Eligibility Terms for your Personal Loan

You can avail of an ICICI Bank Personal Loan if you meet the following criteria:

Criteria Salaried Self - Employed

Age 25 yrs. - 58 yrs. 25 yrs. - 65 yrs.

27


Net Salary Net annual

income - Rs.

96,000 p.a

Net Profit after tax

- Rs. 60,000 p.a

Eligibility Employees of

Public Ltd. cos.

Private Ltd. cos.

MNC’s Or

Government.

Doctors, MBA's,

Architects, CA's,

Engineers, Traders

& Manufacturers

Years in

current job /

profession

1 Year 3 Years

Years in

current

residence

1 Year 1 Year

Documents

Documents

( Pre Sanction)

SalariedSelf

Employed

Latest 3 months Bank

Statement (where

Yes Yes

28


salary/income is credited)

3 Latest salary slips Yes

Last 2 years ITR with

computation of income /

Certified Financials

Yes

Proof of Turnover (Latest

Sales / Service tax returns)

Yes

Proof of Continuity current

job (Form 16 / Company

appointment letter )

Yes

Proof of Continuity current

profession (IT Returns /

Certificate of business

continuity issued by the bank)

Yes

Proof of Identity (any

one)Passport / Driving

License / Voters ID / PAN

card / Photo Credit Card /

Employee ID card

Yes Yes

Proof of Residence (any one)

Ration Card / Utility bill / LIC

Policy Receipt

Yes Yes

29


Proof of Office (any one)

Lease deed / Utility bill /

Municipal Tax receipt / title

deed

Yes

Proof of Qualification Highest

Degree (for Professionals /

Govt employees

Yes Yes

Service Charges for your Personal Loan

Enclosed find the service charges for an ICICI Bank

Personal Loan

Prepayment of the loan is possible after 180 days of

availing the loan.

Foreclosure charges as applicable would be levied on the

outstanding loan.

Part pre-payment is not allowed.

No other fees or commitment charges are levied.

Description of

charges

Personal Loans

30


Loan Processing

Charges /

Origination

Charges

2* % of loan amount +

Origination Charges of 1%

of loan amount

Prepayment

Charges

5% on the principal

outstanding

Charges for late

payment (loans)

2% per month

Cheque Swap

Charges

Rs. 500/-

Cheque bounce

charges

Rs. 200/-

Note:

1) Origination Charges are included in the Advance installments/ First

installment.

2) Service Tax and other govt. taxes, levies, etc.

Application Process

31


Key Benefits

1. Small business loan with no mortgage and no security required

2. The loan is provided in the form of overdraft, letter of credit or bank

32

Information

Documents

Processing application

Application to bank

Disbursement of loan

Loan agreement

Sanctioning of loan

Repayment

Verification


guarantee and you can borrow upto a maximum of Rs. 25 lacs.

3. Faster sanction.

4. Flexible payment scheduled- Part payment or Pre payment.

5. One stop solution with a bouquet of products.

Security

Personal loans are very flexible. They do not required collateral securities or

assets banking. They are disbursed based purely on the financial of the loan

applicant. Additionally your spouse income can be considered in calculating

the loan amount provided he/she guarantees the loan or the loan is taken

jointly.

Loan Repayment

Personal loan are repaid in the of Equated monthly installments. EMI are

calculated based on the loan amount, the rate of interest and the tenure of the

loan. “Banks calculate interest using the reducing balance method. The actual

interest is calculated on a daily reducing balance”

Transferability

If your lender is charging a high rate on your loan and you are able to find

another bank willing to lend at lower rate, you can transfer loan to the new

bank and thereby reduce the cost of your loan.

Advantages and disadvantages of different loan programs

Loan Program Advantages Disadvantages

Fixed-rate mortgages Predictable monthly payments

Less risk if market conditions

You pay more in interest

Higher interest rate

33


cause rates to rise

Rate does not change

Unable to take

advantage of lower interest

costs if market changes to lower

rates

Adjustable rate

mortgages

Flexibility

Lower initial monthly payment

You pay less for short term

ownership

May be easier to qualify for

higher loan amounts

More risk

Inability to predict future

housing costs

Potential higher

payments (at max. interest rate)

Stated income

mortgages

Don't need to verify income Higher rates

Need a low LTV to

qualify

Combination loans

(such as an 80/10/10)

Avoid PMI

Potential tax advantages

Possibly higher monthly

payments

Two monthly payments

instead of one

Combination loans

(such as an 80/10/10)

Avoid PMI


Possibly higher monthly

payments

Two monthly payments

instead of one

Home equity line of

credit

Flexible access to funds


You only draw what you need

You only pay interest on what

you borrow

Ties up equity making it

unavailable for other needs

Higher interest rate than

a first mortgage

Home equity loan Predictable fixed payments

Possible tax advantages

Ties up equity making it

unavailable for other needs

Higher interest rate than

a first mortgage Cannot pay

down and withdraw additional

funds

Types of Personal Loans

On the basis of mode of repayment, personal loans are of three types - installment loans, balloon loans and single

34


payment loans. Installments loans are repaid in the form of monthly installments. The monthly installments carry both the principal and the interest elements of a loan amount. In case of balloon loans, interest is paid at regular intervals and the principal amount is repaid at the end of the loan period. In case of single payment loans, the entire principal as well as its interest is paid at the end of the loan period.

Installment Loans: Installment loans are paid in regular amounts on a schedule, usually monthly, until the loan amount is repaid. There are no closing fees associated with installment loans.

Single Payment Loans: In this loan, the entire amount of the loan is due at the end of the loan period. This is probably the most familiar kind of loan to most people, where the entire sum of the loan is paid back at once, only with interest.

Balloon Loan: Similar to single-payment loans, balloon loans sometimes allow more than one payment, but generally have most of the amount due at the end of the loan period.

On the basis of mode of repayment, personal loans are of three types - installment loans, balloon loans and single payment loans. Installments loans are repaid in the form of monthly installments. The monthly installments carry both the principal and the interest elements of a loan amount. In case of balloon loans, interest is paid at regular intervals and the principal amount is repaid at the end of the loan period. In case of single payment loans, the entire principal as well as its interest is paid at the end of the loan period.

35


36

http://www.southamptoncil.co.uk/images/HSBC%20Logo.jpg


HSBC Bank offer wide range of personal loan like:-

Home renovation or other home related expenses.

Marriage expenses.

Travel expenses.

Education expenses.

Transferring an existing loan from another bank.

Purchasing consumer durables or equipment.

Retiring other debts.

Any other personal needs and contingencies.

Flexibility to choose the EMI dates - 1st or 10th of every month

FEATURES

Flexible personal loan tenor of up to 5 years (i.e. 12, 18, 24, 36,42, 48 and 60

37


months).

Personal loans available from Rs. 50,000 up to Rs.15,00,000*.

Easy monthly repayment through Equated Monthly Installments (EMI) with

post-dated cheques or direct debit to your bank account from HSBC India.

Transfer of an existing personal loan from another bank to HSBC India, at

attractive interest rates.

No collateral/guarantor requirement.

Easy documentation, quick processing and disbursal.

Hassle free personal loan based on 12 months credit card/retail loan track

record.

Eligibility Criteria:

1. Applicant can be salaried / self-employed individuals and should be a

resident Indians.

2. Professional self-employed individuals eligible for a personal loan are

Doctors, Chartered Accountants, Cost Accountants, Company Secretaries,

Architects, Engineers and Management Graduates.

3. The minimum age of the Applicant / Guarantor should be 21 years for

salaried and self-employed individuals.

4.The maximum age of the Applicant / Guarantor at loan maturity should be

58 years for salaried individuals (60 years for Central Govt. employees) and

65 years for self-employed individuals.

5. The minimum years in continuous employment / business should be 1 year

38


for salaried individuals and 2 years for self-employed individuals.

6. The minimum net annual income should be Rs.75,000 p.a. (including co-

applicant's or applicant's income) for salaried and self-employed individuals.

7. The minimum stay at current residence should be 1 year for salaried and

self-employed individuals. Terms and conditions apply. All loans at the sole

discretion of The Hong Kong and Shanghai Banking Corporation Limited,

India. Loans available for applicants and properties in and around the limits

of cities where HSBC has branches and is subject to change from time to

time.

Documents

For salaried individuals

1. Latest salary slips showing statutory deduction.

OR

2. Form 16 (declaration from employer giving details of income and

deduction, duly signed by an authorised signatory of the company.

3. Latest acknowledged IT returns and

4. Bank statement for the last three months

For self-employed individual

1. Computation of income for last two year certified by a CA.

2. P/L and balance sheet for the last two years certified by a CA.

3. Copy of acknowledged IT returns for the last two year.

4. Bank statement for the last six months.

Photo identity (anyone)

1. Passport

2. Photo pan card

3. Defense identity card

39


4. Voters identity card

5. Driving license

6. Photo ration card

7. Government identity card.

Proof of residence (anyone)

1. Passport

2. Ration card

3. Telephone bill

4. Electricity bill

5. Driving license

6. Society out going bill

7. Voter ID

8. Life insurance policy

Note :

Only passport can be used as both proof of individual identity and proof of

residence address

Proof of age (anyone)

1. Passport

2. Driving license

3. Voter ID

4. School living certificate

5. Photo ration card

4 easy ways to repay personal loan

40


1. lower EMI in the first year You can start by repaying an amount you can afford today. After a year, you can pay a higher EMI.

2. Interest on utilise loan amount only , not on the entire loan Simply estimate the maximum loan amount you need. You can

withdraw money as when you need and interest will be charge only on the amount you withdraw.

3. Last EMI waiver This repayment option gives you the benefit of getting a last EMI

refunded by paying a marginally higher interest rate (available for loan of 48 months tenor only an applicable if you repayment is consistent throughout the period of the loan.

4. Standard EMI repayment Your EMI for each month will be the same for the tenor of the loan.

Survey Report

I have done a customer survey from 1st Aug., to 31st Aug., 2007 about personal loan provided by the banks in that survey I have asked a few questions to the people and I have got following results:

41


Are you aware of the personal loan?

Do you plan to pursue personal loan in future?

Which bank would you like to prefer for pursuing personal loan?

42


What type of interest rate would you prefer?

43


How much importance has the personal loan assume?

Do you think the procedure for personal loan is_

Frequently asked question

1. What are the minimum and maximum loan amounts?

44


You can avail of loans ranging from Rs 20,000/- to Rs 15,00,000/- depending on your eligibility, income and repayment capacity.

2. What are the loan tenure options?

The loan can be repaid over a period of 12 to 60 months.

3. Are there any additional charges?

A processing fee of 2% of the loan amount is payable upfront. This fee will be deducted from the disbursal amount payable to you.

4. How much time will it take for my loan to be approved?

Loans are approved within 72 hours of submission of complete documentation.

5. Do I have to provide any security, collateral or guarantors?

No security, collateral or guarantors are required for obtaining a Personal Loan.

6. How do I repay the loan?

You can repay the loan in Equated Monthly Instalments (EMI's) through post-dated cheques favoring ICICI Bank Limited, or if you have an ICICI Bank account you can mandate us to directly debit the same.

7.Can I prepay my loan?

Yes, you can prepay the entire loan outstanding anytime after 180 days of availing the same. Prepayment charges as applicable would be levied on the outstanding loan amount. No part prepayment is allowed.

8. Do I need to open an account with ICICI Bank for

45


availing and/or servicing the loan?

We will encourage you to start a banking relationship with us so that we will be able to offer a host of other value added services, which are complementary to the loan, however opening an account with us is not mandatory.

9. How do I approach ICICI Bank for a Personal Loan?

You can approach us in any of the following ways

24 hour Customer Care Centre Apply Online [email protected] You can just walk into any of any branches.

46

https://infinity.icicibank.co.in/web/services/jsp/Locateus.jsp

mailto:[email protected]

http://www.icicibank.com/pfsuser/loans/personalloans/plapplyonline.htm

http://www.icicibank.com/pfsuser/services/contactus.htm

Personal loans

Economy & Finance

Transcript of Personal loans