FAQ's

FAQs

Q1. How is my loan eligibility decided?

Ans. When you apply for loan, the banks want to see how financially sound you are. Some of the main considerations on which loan eligibility is decided include your repayment capacity, age, income, source of income, credit score, educational qualification and the relevant documents that you submit in support of your loan application.

Q2. How can I increase my loan eligibility?

Ans. You can increase your loan eligibility by applying jointly with your spouse or other family members. The income of the co-applicant will also be considered for calculating the loan eligibility, enabling you to get a larger loan amount.

Q3. What are the types of loans available?

Ans. Many types of loans are available: home loan, home improvement loan, Car Loan, loan for two wheeler, Educational Loan, wedding loan, business loan, loan against security, personal loan and NRI loan.

Q4. How is the interest rate calculated on a loan?

Ans. Interest can be calculated on a daily, monthly, quarterly or annual basis. The outstanding principal loan at the end of each of these terms is taken into account for calculating the interest rate.

Q5. Can I pay my loan before the term expires?

Ans. Yes, you can always do that. However, depending on your loan agreement with the lender, you may be subject to prepayment charges.

Q6. On what basis are the loans classified?

Ans. Loans can be classified as secured or unsecured. Further, they can be based on fixed rate of interest or floating rate of interest.

Q7. How do secured loans differ from unsecured loans?

Ans. In case of secured loans, you are required to pledge your home or any other valuable security. In case of unsecured loans, there is no such requirement. Unsecured loans are for your short-term monetary requirements whereas secured loans can be taken for longer periods. The amount of loan that is available under unsecured category is limited, whereas, in case of secured loans, the loan amount can reach very high proportions depending upon the value of your home.

Q8. Can I avail a secured loan even if I'm not a homeowner?

Ans. Yes. You can take loans against securities or any other valuable assets that the bank is willing to accept.

Q9. Is interest rate always fixed on a loan?

Ans. No, it depends on loan agreement. Interest rate can be Fixed or Floating/Variable depending upon which option you availed at the time of taking a loan.

Loans with Fixed Rate of Interest - Once agreed upon, the interest rate remains same throughout the period of the loan.

Loans with Floating/Variable rate of interest - Some loans are based on floating interest rates. In such cases, the interest rate payable is linked to the market rate of interest like the bank’s prime lending rate. Any change in the official interest rate by the RBI may affect the rate applicable on your loan.

Q10. What is credit score and how it affects my loan prospects?

Ans. Some banks have provision for internally rating the borrower on different parameters. A rating or score is assigned to each borrower, and accordingly, the terms and conditions are decided by the bank. Higher credit score means higher loan prospects.

Q11. What is EMI?

Ans. EMI stands for “Equated Monthly Installments”. When you take a loan, the amount to be repaid every month is calculated in such a way that all your outstanding dues are cleared at the end of the loan period. This monthly payment that includes interest as well as the principal amount is called an EMI.

Q12. In what manner a loan is repaid?

Ans. Loan repayment is generally made with the help of Post Dated Cheques or through Electronic Clearance System that is directly linked to your bank account. In case of Electronic Clearance System, repayment is deducted automatically from your bank account on an agreed date.

Q13. What is the maximum duration of loan?

Ans. Loans are available in the Indian market for a period starting from 6 months to 25 years. The exact duration depends upon which loan plan you have chosen, and it generally varies from bank to bank.

Q1. What is a Personal loan?

Ans. Personal loan is an unsecured loan that does not require any security for borrowing money. Banks sanction these loans on the basis of your monthly income. In the absence of security, this is one of the quickest ways of borrowing money.

Q2. Why should I take Personal Loan?

Ans.Personal Loans give you full freedom to use the loan amount any purpose (legal and ethical) like home renovation, marriage expenses, medical expenses, holidays, consumer durables, higher education etc.

Q3. What is the process for availing a Personal loan?

Ans. You can apply for a Personal Loan by submitting your details online. The representatives from banks will approach you with different loan plans. If you wish, you can also visit the bank personally. Always check with more than one bank regarding the rate of interest and loan amount.

Q4. How much amount can I borrow?

Ans.Banks offer Personal Loans depending upon your monthly income. The exact loan amount depends on your eligibility and takes into account many things like your credit rating, job security, residential location and the ability to repay the loan amount in time.

Q5. Apart from the rate of interest, what are the expenses involved in taking personal loans?

Ans.Banks charge two types of fees from the borrowers. - Processing fee payable at the time of processing your loan application - Pre-payment fee payable in case you decide to pre-close your loan account Both these fees vary from 2-3%. Bargaining may help reduce the fees.

Q6. What is the rate of interest charged by the banks?

Ans. The rate of interest on personal loans varies from bank to bank and depends on prevailing market conditions. Usually, it remains in the range of 12-24%.

Q7. How long it takes to get a personal loan?

Ans. Some banks claim that they sanction personal loans in 72-hours. However, it is recommended that you keep all the required documents ready so that no delay takes place due to paperwork.

Q8. Can I apply jointly with my spouse to get a personal loan?

Ans. Yes, you can apply for a personal loan with a co-applicant.

Q9. How can I increase my personal loan eligibility?

Ans.You can apply jointly with your spouse. This allows you to increase your loan eligibility as the income of your spouse is also added to your income for the purpose of calculating the loan amount.

Q10. What is the loan range available in case of personal loans?

Ans. Banks normally sanction a minimum personal loan amount of Rs. 50,000. Depending upon your eligibility, income and repayment capability, the maximum loan amount can be extended up to Rs. 15,00,000. You can also combine the income of your spouse to increase your loan eligibility.

Q11. What is the loan period available in case of personal loans?

Ans.You can avail personal loans for a period of 12 to 60 months.

Q12. What is the mode of repayment?

Ans. Lenders accept repayments in two ways – Post-dated cheques or Standing Instructions to debit your personal account. It is better to have a personal account with the bank you are taking loan from. You may get the benefits of preferred interest rates, priority processing and simpler documentation if you are an existing customer with the bank.

Q13. Can I get some discount from the banks?

Ans.Some banks offer relationship discount. If you are already with the bank as a borrower or any other customer, you become eligible for discounts in the form of lower interest rates, exemption in processing fee or other benefits or facilities as decided by the bank from time to time.

Q1. How can I apply for a car loan?

Ans.You can apply online or walk into any of the banks with all the supporting documents that are required to prove your income, address and identity.

Q2. How long it takes to get Car Loan sanctioned?

Ans.If you have all the documents ready, it does not take more than two days with most of the banks.

Q3. What is the process involved in taking a Car Loan?

Ans.First, you apply for a Car Loan with all documents. Your application will be processed and any additional document, if required, will be asked for. Thereafter, loan is sanctioned and loan amount is disbursed.

Q4. Are Car Loans unsecured? Please clarify.

Ans. Basically, Car Loan is a secured loan requiring hypothecation of the vehicle in the name of the lender. The charge on the vehicle is registered with the local Transport Authorities.

Q5. What is the maximum extent of Car Loan?

Ans.Lenders these days finance up to 95% of the cost of the vehicle. You can repay these loans in up to 84 installments. Lenders also provide finance for one-time road tax, registration fee and insurance premium of the vehicle.

Q6. What extra benefit should I look for in case of Car Loans?

Ans. Besides bargaining for competitive interest rates, you should also look for facilities like Free Personal Accident Insurance as provided by many lenders.

Q7. Do I need a guarantor or security for availing Car Loan?

Ans.No personal guarantor or additional security is needed for availing Car Loan. The only requirement is to hypothecate the vehicle that you are financing in name of the lender.

Q8. I want to purchase a used car. Can I apply for loan?

Ans.Yes. Car Loans are also available for purchasing used cars and you can apply for the same. However, some lenders put a condition that the vehicle should not be more than 5 or 10-year old.

Q9. What interest rate is charged by the lenders on Car Loans?

Ans.Though the rates vary from bank to bank, they generally remain in the range of 10-18%. However, some banks have tie-ups with the manufacturers and dealers that help in reducing the interest rates to a very large extent. Subject to some terms and conditions, these discounted rates can be in the range of 4-8%.

Q10. How do banks calculate interest on Car Loans?

Ans. Banks calculate interest on the basis of monthly reducing balance.

Q11. Can I include a co-applicant for Car Loan?

Ans.Yes. You can apply jointly with your spouse or any other blood relation staying with you.

Q12. What is the process of repaying the Car Loan?

Ans.The loan is repaid in monthly installments through post dated cheques.

Q13. When the hypothecation is removed from the registration certificate of the vehicle?

Ans.After you have paid back the full loan, the bank will issue a ‘no objection certificate’ that can be used to get the hypothecation cancelled from the Transport Authority.

Q14. Is there any penalty to be paid if I want to pre-pay the loan?

Ans.Yes, some banks charge pre-payment penalty which is usually 1% of the pre-paid loan amount.

Q15. Can I avail a loan on my existing car?

Ans.Yes, some banks offer loans against an existing car, provided that the vehicle is not hypothecated in the name of any other lender.

Q1. What are the eligibility criteria for financing a Two Wheeler?

Ans. Generally, the banks require that you should be an Indian Citizen with minimum 21 years of age. Apart from this, a minimum salary of 4,000 is required in case of salaried people. Most of the banks have their own eligibility criteria.

Q2. What is the maximum loan amount available for purchasing a two-wheeler?

Ans. Lenders provide up to 85% of the On-Road cost of the Two Wheeler. Leading banks in India offer loans ranging from Rs. 10,000 to Rs. 90,000.

Q3. Can I repay the loan earlier than the agreed term?

Ans.Yes. You can pre-pay the loan amount any time after initial six months. Different lenders charge varying rates for prepayment of loan. It may vary from 2 to 4% of the outstanding balance.

Q4. Can I get Two Wheeler loan for an imported bike?

Ans.Lenders in India provide finance for all Two Wheelers of Indian make. You can get Two Wheeler loans for all models of motorcycles, mopeds, scooterettes and scooters from Hero Honda, Bajaj, TVS, Hero Motors, Suzuki, Yamaha, Kinetic Honda & Royal Enfield. However, if you wish to buy an imported bike, you can avail personal loan.

Q5. How is the interest rate on Two Wheeler loans calculated?

Ans.Lenders calculate interest rate on a monthly reducing balance.

Q6. Am I required to arrange a guarantor for taking Two Wheeler loan?

Ans. Normally, the lenders do not require any personal guarantee. However, if you are not able to meet the requirements of the lender, you may be asked to furnish a personal guarantee for your loan.

Q7. What is the tenure of Two Wheeler loans?

Ans. You can repay the loan amount in comfortable installments spread over 6 months to 48 months.

Q8. What are the lending rates?

Ans.The interest rates vary from bank to bank. Generally, they revolve around 10-18%.

Q9. What documents are required to avail a Two Wheeler Loan?

Ans. Only basic documents like applicant’s Identity Proof, Residence Proof and Income Proof are required to avail a Two Wheeler Loan.

Q10. How much time it takes to get two-wheeler loan?

Ans. Once you submit loan application with all the relevant documents, the loan can be approved on the same day.

Q11. What security is required to get Two Wheeler loan?

Ans. You do not require any additional security other than the Two Wheeler that you are financing. The registration papers will bear hypothecation in favour of the lending bank until the repayment of the loan is completed.

Q12. Can I sell the two-wheeler during the duration of loan?

Ans. No. You will have to first settle the loan in full.

Q1. For what purposes can I avail a Home Loan?

Ans. You can apply for a home loan to:
• acquire/construct a home
• renovate or expand your home

Q2. I want to finance a home? How should I start with?

Ans. You can apply for an in-principle approval for home loan before actually identifying a home to be purchased. This will make the search for your home a lot easier because you know your maximum budget in advance. If you have already identified a home and budget is not a constraint, you can apply for a home loan straightaway. The in-principle approval remains valid for 3 months. It means that the rate of interest and the loan amount quoted to you will remain in force for the next three months only.

Q3. How should I apply for Home Loan?

Ans.You are required to submit home loan application along with the supporting documents. The bank will go through the documents and inform you about its decision in due course of time. You are advised to shop around and check with more than one bank to get the best terms and conditions on your home loan deal.

Q4. What is the processing fee charged by the banks?

Ans. You are required to submit home loan application along with the supporting documents. The bank will go through the documents and inform you about its decision in due course of time. You are advised to shop around and check with more than one bank to get the best terms and conditions on your home loan deal.

Q5. How is the Home Loan eligibility determined?

Ans. The basic thing that a lender looks for is your repayment capability. This aspect takes many things into consideration like your income, educational qualification, job security, age, spouse's income, the number of dependants in the family, stability in profession, assets and liabilities, savings, etc. After considering all these things, your loan eligibility is determined.

Q6. How can I increase my loan eligibility?

Ans.You can club the income of your spouse and apply jointly. Both the salaries will be taken into consideration for the purpose of calculating the loan amount eligibility. For clubbing the income, your spouse should either be a joint-owner in the property or a guarantor. Home loan will be restricted

Q7. What is the maximum home loan amount?

Ans. Banks do not sanction more than 85% of the cost of property. You are required to mortgage the property for which the loan is being taken.

Q8. Should I opt for Fixed or Floating rate of interest?

Ans.The answer to this question depends on your preference and understanding of the market conditions. However, you can minimize the risk by opting for a home loan that is a combination of both these rates.

Q9. What incentives should I target while negotiating for home loans?

Ans. Some of the incentives that you should try to grab from the banks are:
        • Waiver of pre-payment penalty
        • Reduction/waiver of processing fee
        • Free property insurance
        • Loan sanction in principle before identifying the property to be purchased

Q10. How long will it take to get home loan?

Ans.Banks take 10-15 days for processing your loan application once all the supporting documents are handed over. Another week is required for verifying the property and making disbursement.

Q11. What security is needed for taking home loans?

Ans. Usually, the banks rely on the mortgage of the property that is being purchased with the help of home loan. If the loan amount is too high or some extra security is needed to cover risk in any loan transaction, banks may ask for some additional securities.

Q12. What is the interest rate on home loans?

Ans. The interest rate varies from bank to bank. The market conditions and the RBI controls also affect the prevailing interest rates. Usually, it ranges from 9-16%.

Q13. What tax benefits are available in case of home loans?

Ans. Any individual who takes home loan is eligible for tax benefits on both the principal and the interest component. The Income Tax Act, 1961 provides tax benefits in the form of deductions from the taxable income.

Q14. What is the EMI?

Ans. Home loans can be repaid in upto 360 installments. Each installment includes principal and interest component in such a way that at the end of the repayment period, the entire loan becomes fully repaid. This monthly repayment is called Equated Monthly Installment or EMI.

Q1. Who is eligible for Educational Loans?

Ans. All students who want to finance their higher education can apply for Educational Loans. You should be an Indian resident in the age group of 16 to 35 years.

Q2. When the repayments of educational loans begin?

Ans.You get 1 year period after the course so that you can search for a job and repay the loan. The repayment begins after 1 year of the course period or 6 months after getting a job, whichever is earlier.

Q3. What is the repayment period allowed for educational loans?

Ans. The loan term can be extended upto 5-7 years after commencement of repayment period.

Q4. What documents are required for availing educational loans?

Ans. You are required to submit following important documents:
        1. Proof of admission to the course that you want to finance
        2. Schedule of fees/expenses for the course
        3. 2 passport size photographs
        4. Statement of the Bank account for last six months

Q5. Which expenses are covered by educational loans?

Ans. Educational Loans cover your course fee, examination fee, refundable deposits required by the institute, purchase of books, travel expenses for students studying abroad, etc.

Q6. Which Banks in India offer Educational Loans?

Ans. Most of the Private Sector and Public Sector banks in India are offering loans to students for educational purposes.

Q7. How can I apply for educational loans?

Ans. You can personally visit the Banks offering these loans or you can apply online by filling a simple application form.

Q8. What professional courses do the Banks cover in their education loans?

Ans. Banks cover almost all the leading educational institutions and universities in India. Management students, Technology students, Medical and Engineering college students can get these loans after securing admission to their respective institutes.

Q9. What is the interest rate charged by the banks for taking educational loan?

Ans. The interest rate varies from bank to bank. However, as most of the banks are trying to aggressively outsell each other, the interest rates are on the competitive side. Apart from the pricing of the loan product, the most important thing that you should look for is the quality of service offered by the bank.

Q10. Can I take educational loan on floating rate?

Ans. Some banks offer a choice between fixed and floating interest rates.

Q1. What is a loan against property?

Ans. Banks offer loan to the customers on the basis of any property which they own. Customers are required to pledge their property to the lender in order to take a loan against property.

Q2. Against which properties can I take a loan?

Ans. You can take loan against any property as long as its title is clear and there is a marketable value associated with it. It can be a residential property, commercial property, built-up property or even land.

Q3. How loan against property works?

Ans. You have to pledge your property to the lender. On the basis of the market value of your property, the bank will arrive at your loan eligibility. This way you can raise money without having to sell your property in the market. The loan is required to be repaid in monthly instalments along with the applicable rate of interest.

Q4. Who can avail loan against property?

Ans. The foremost requirement is that you must be the owner of the property against which a loan is to be taken. You also need to be at least 18 years of age and should have some tangible source of income to repay the loan.

Q5. Can I avail a loan against my ancestral property which is in the name of my grandfather?

Ans. Yes, but you will have to show the documents supporting your entitlement of the property. If property has not been partitioned, other legal heirs may also be required to apply jointly with you for a loan against property.

Q6. For what purposes can I use loans against property?

Ans. Loans taken against property can be used for any purpose. Generally, people take these loans to:
•  Expand their business
•  Marry their child
•  Arrange money for higher studies
•  Go abroad on vacations
•  Meet medical treatment expenses
•  Improve/Renovate home

Q7. Which banks offer loan against property?

Ans. Almost all the banks offer these loans because there is very less risk associated in it. Some of the leading players in the market that provide loan against property include HDFC, Kotak Mahindra Bank, ICICI Bank, State Bank of India, Union Bank of India and Bank of Baroda.

Q8. How much value of the property can be received as a loan?

Ans. It depends upon bank's lending policy and the location of the property. Generally, banks do not offer more than 75 percent of the value of your property.

Q9. Can I avail a loan against property for the second time?

Ans. Yes, you can do so. In that case, a second charge is created on the same property in favour of the lender.

Q10. What happens if I fail to repay loan?

Ans. The bank may take action for the repossession of your property to recover its outstanding loan amount. To allow recovery of the loan amount, courts can order foreclosure (sale in the open market to recover dues) of your property. Once your property is foreclosed, you lose all the rights in your property.

Q11. Is there any tax rebate available on loan against property?

Ans. No, there is no such rebate available for the borrowers.

Q12. In what manner banks accept repayments?

Ans. Normally, you are required to give post dated cheques to the bank for the entire duration of the loan. Some banks also provide the facility of Electronic Clearance System under which your monthly instalment is deducted from your bank account directly by the lender on an agreed date every month.

Q13. What documents are required for taking a loan against property?

Ans. All documents relating to the ownership of the property to be pledged is the common requirement for all categories of borrowers.

For salaried class people, following documents are required:
•  Proof of Residence
•  Proof of Identity
•  Latest Bank Statement/Passbook (where salary/income is credited for past 6 months)
•  Latest Salary Slips
•  Form 16 for the previous years

If you are self-employed, then following documents are needed:
•  Certified Financial Statement for the last 2 years.
•  Proof of Residence
•  Proof of Identity
•  Latest Bank Statement/Passbook

Q14. I live in co-operative society apartments. Can I get loan against my apartment?

Ans. Yes, but you will have to submit a no-objection certificate issued by the co-operative society of which you are a member.

Q15. How a loan against property is better than other forms of loan?

Ans. A loan against property involves less rate of interest than personal loans or unsecured loans available in the market. This loan also provides you a longer repayment period and a variety of plans to choose from.

Q1. Who are eligible for business loans?

Ans. Sole proprietorship businesses, partnerships and private limited companies are eligible to apply for business loans.

Q2. What are the income requirements for taking business loans?

Ans. Many lenders require that the business concerns interested in availing business loans should have a minimum net income of Rs. 150,000 p.a. for loans upto 15 Lakhs. If the requirement is larger, the net income requirement also increases.

Q3. For what purposes business loans are given?

Ans. Business loans are sanctioned to supplement working capital requirements, short-term cash needs and business expansion plans. You can also acquire another business, new inventory, equipments, or any other business asset.

Q4. What is the maximum term for which business loans are given?

Ans. Usually, lenders sanction business loans for 12 to 48 months.

Q5. What are the main features of business loans?

Ans. • No security is required for loans upto 15 lakhs (conditions differ from lender to lender)
        • No guarantee required
        • Fast Loan Processing
        • Minimum Documentation

Q6. In what form the business loans are available?

Ans. Business loans can be sanctioned for a fixed term or may involve a revolving line of credit or they may be in the form of an overdraft facility.

Q7. How I can get a business loan of 50 lakhs?

Ans. You will have to provide a security for taking large business loans. Most of the public sector and private sector banks offer these loans.

Q8. Are business loans available without any security?

Ans. Yes. You can apply for unsecured business loans to meet your short-term needs.

Q9. How much unsecured business loan can I get?

Ans. Different banks have set their own criteria for lending unsecured business loans. The maximum loan amount varies from bank to bank.

Q10. How should I apply for business loans? Is online application free of cost?

Ans. You can personally visit the banks or apply online. Online application form does not cost anything.

Q1. Who are NRIs?

Ans. NRIs are Indian citizens who stay abroad for employment or for carrying on business or vocation or for any other purpose. Being financially empowered, they enjoy a special status in the Indian economy.

Q2. For what purposes loans to NRIs are available?

Ans. NRIs can take loans to purchase/construct a new house. They can also take loans to repair, renovate or extend an existing house or to purchase a plot for construction of a dwelling unit.

Q3. What is the maximum amount of loan available to NRIs to purchase a home in India?

Ans. As per RBI directives, the home loan amount to NRIs should not exceed 85% of the cost of the dwelling unit. The 15% margin money can be met from direct remittances from abroad through normal banking channels, the NR(E) or NR(O) account in India.

Q4. What are the eligibility criteria for availing NRI loans?

Ans. • Minimum age of 21 years
        • Valid Indian Passport
        • Steady source of income
        • Employed abroad for at least 2 years
        • Valid job contract or work permit

Q5. What is the maximum and minimum amount of loan available to NRIs for purchasing a home?

Ans. Most of the Banks offer a minimum loan amount of Rs.3 lakhs and a maximum loan amount equal to 60 times the Net monthly income of the NRIs.

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