What are types of Unsecured loan?
Business Loan / Personal Loan/ Ecommerce Loan / Professional Loan / Unsecured OD / Working Capital
How is my loan amount/eligibility calculated?
Loan amount is dependent primarily on your last two years income , the current loan obligation and the credit
score of the individual / entity and/or the partner/director/proprietor
of the borrowing entity as reflected in CIBIL
What is an EMI?
EMI or Equated Monthly Installments is the fixed sum of money that the borrower pays to the bank every month.
A part of the EMI goes towards payment of interest while the remaining goes towards payment of the outstanding loan balance.
What is a Loan Tenure?
A loan tenure is the duration or the number of years over which the borrower agrees to repay the loan.
This is typically in the range, 1-5 years
Pre Closure vs part- prepayment?
Pre closure means that a customer wants to close the entire principal outstanding amount at one go. Whereas part payment means that a customer wants to repay only a certain portion of the outstanding amount
Some banks have a lock-in of 6 months to a year while some banks allow you to pre close even after the 1st EMI has been debited from your bank. In addition, banks may levy a pre closure fee (2-5% of the amount being pre-closed). Some banks also allow part payment
What is the minimum and maximum loan limit offered
50000 – 10000000
How long does it take to disburse the business loan?
5-10 working days
What is Loan repayment?
Loans are meant to be repaid over a fixed period known as the tenure or duration of the loan through payment of a fixed monthly installment known as an EMI (Equated monthly installment). This process is known as loan repayment. The customer needs to give few PDCs (Post dated cheques) and sign an ECS mandate in favour of the bank disbursing the loan.
How is the interest on my loan calculated?
Interest on a loan is payable on the entire loan balance at any given point of time and the simplest method of calculating interest is:
Interest= (Principal X rate X time)/ 100.
What are the bases of interest rates calculation?
The interest on most loans is usually calculated on Monthly Reducing or Yearly Reducing balance. In Monthly Reducing Balance, as you pay your Emi each month, the principal part of the EMI is adjusted against the outstanding principal on a monthly basis, however in Yearly Reducing Balance, the principal is reduced at the end of the year, therefore the borrower pays interest on a certain part of the principal which has actually been paid back to the bank. This means that the monthly reducing system is a cheaper means of paying on your loan.
What is the difference between reducing and flat interest rate?
Reducing Balance Interest Rate needs the borrower to pay interest only on the remaining loan balance.
Flat Interest Rate is where the borrower needs to pay interest on the entire loan balance throughout the loan term.
Is there any extra charge payable when applying for loan?
Processing fees between 1-3% of the loan amount.
What is loan insurance/ credit insurance?
Most lenders offer an insurance plan covering the outstanding amount on the loan. This is usually a depleting term plan which covers the risk of an unfortunate event in the borrowers life that may lead to inability on the borrower or his/ her familys part to pay the loan installments. These are usually single premium policies taken at the time of availing the loan.
What is a Loan Outstanding?
At a given point in time every open loan has a balance principal, which is still required to be paid. This is the loan outstanding amount
What is a Loan Agreement?
A loan agreement is a legally binding contract between the borrower and the lender which outlines the terms and conditions on which the borrower and lender agreed to the loan. In the event a borrower is unable to make the loan payments, the lender can take legal recourse with the help of the loan agreement.
What is a Cheque bounce fee?
The lender can levy a charge on a borrowers account for each time the borrowers monthly payment does not clear. This is known as a cheque bounce charge/ fee.
What is a default?
Continued inability to pay your installments for any reason constitutes a default on your loan. At this point the bank/ lender can demand a payment of the full outstanding amount of the loan. The lender can also serve a legal notice on the borrower and in case of secured loans, acquire the loan security (property car etc) and try to dispose of the same to recover their money.
