Loans

For offering home loans, Roongta Group has tied up with Andromeda (India's largest Loan distributor) which brings alongwith it all the leading Banks and NBFC's offering Home Loans at best rates.

Home Loan

What is Home Loan?

A Home Loan is a secured loan product where the lender provides finances for the purchase or construction of a residential/commercial property. One can also avail a housing loan to buy a plot of land and construct on it. Home Loans are also issued to extend/ repair/ renovate/ alter a new or second-hand property. The Home Loan is taken by a borrower against the property/security to be bought. This is done by giving the banker a conditional ownership over the property i.e. if the borrower fails to pay back the loan, the banker can retrieve the lent money by selling the property.

Most lenders get the property valued independently and provide loans based on their estimated value. It is important to remember, however, that frequently their valuation is significantly lower than the actual cost and hence the requirement of the borrowers goes up. Home loans in Indian Banks are provided up to maximum of 80% (90% for loan amount below INR 20 lakhs) of the value of the house. Home loans are repaid using Equated Monthly Installments (EMIs) spread over a fixed tenure.

Roongta Securities brings You The Best Deals In Home Loans Using Its Extensive Network. Apply For A Home Loan Today.

Interest Rate

Fixed Interest Rate

Fixed interest rate refers to repayment of home loans in fixed equal installments over the entire period of the loan. In this case, the interest rate doesn’t change with market fluctuations.

During the early part of the tenure, the monthly payments are used to service the interest and the principal is served in the later parts of the tenure.Very few lenders in India offer pure fixed rates where the rate of interest remains constant over the entire tenure. Most lenders have a reset clause of 3-5 years. If the borrower is certain that the rate of interest is the lowest in the market, only then should he opt for fixed rates of interest.

Floating Interest Rate

Floating interest rate implies that the rate of interest will vary vary with market conditions. Home loans on floating interest rates are tied to a base rate plus a floating element thereof. So, if the base rate varies, the floating interest rate also varies.

The interest rates will depend on the base rate of the bank. As and when the bank changes their base rate, the interest rate changes. The change can either be in terms of the EMI or the tenure. For example, if the bank increases their base rate, the customer could choose to increase his EMI or to increase his tenure. Or if the bank decides to decrease their base rate, the customer can reduce his EMI or his tenure. In recent times, some lenders have come up with innovative home loan products like dual rate of interest. This is where the interest rate on loans remains fixed for initial 1-5 years and thereafter switches to a floating rate of interest. But, it is up to the borrower to decide what suits him best. Before taking a decision, it is advisable to compare home loans from different lenders in detail.

Home Loan Application Fees and Charges

Home Loan Lenders levy some fees and charges at the time of loan sanctioning. It is important to make yourself aware of all these charges before you decide you finalize the deal.

Processing Fee

This fee is charged by the bank for processing the home loan and is non-refundable. In case you decide not to take the loan from the bank, then the entire amount is forfeited. The amount generally varies in the range of 0.5 to 1% of the total home loan amount.

Payment of processing fees doesn’t mean that your loan is approved. You may have paid the processing fee but your loan could still not be sanctioned due to various other reasons. Therefore, before paying the processing fee, bargain on the amount and get it confirmed from the bank in writing.

Prepayment Fees

Prepayment fee comes in to play when one wants to prepay the home loan before the end of the tenure. Different banks have different charges so one should take the time out to know them. Few banks offer no prepayment charges in case the prepayment is done from the borrower’s own sources. But in case the person is shifting the loan to a different lender, most of the banks charge a fee in the range of 1% to 2% of the outstanding loan amount.

Also, according to the RBI norms, banks are not allowed to levy foreclosure charges on home loans anymore.

Tip: All the charges should be be taken down in written from the bank and the written document preserved. This is to avoid confusion in case the bank asks you to pay a different amount after sometime.

Home Loan Eligibility Criteria

as per the next sheet

Types of Home Loan

1. New Home Purchase Loan

This type of loan is a simple home loan that allows you to purchase a new residential property.

2. Balance Transfer

as per the next sheet

3. Home Improvement Loan

If you ever wanted to renovate your home with a new aesthetic look or just wanted to structurally enhance and strengthen it, this type of home loan is what you’re looking for. It is basically concerned with the costs to renovate or repair your existing home.

4. Home Construction Loan

This type of loan is taken when the borrower wants to construct a new home on a given plot of land.

5. Home Loan Advantage

This type of home loan is linked to a current account thereby reducing your interest outflow depending on your idle balance in your bank accounts

Home Loan Tips

Before you get into a home loan agreement, be sure to keep a checklist of things to clear out while signing on the necessary documents. Below are some of the things you can keep in mind to make sure you don’t receive a sour deal.

Home loans are available from mainly two types of lenders–commercial banks and housing finance companies. Different lenders may quote you different rates of interest and other terms and conditions, so you should contact several lenders to make sure you’re getting the best value for money.

Find out how much of a down payment you are required to pay, and find out all the costs involved in the loan (including processing fees, administrative charges and prepayment charges levied by banks). Knowing just the amount of the EMI or the interest rate is not good enough. Similarly, ask for information on loan amount, loan term, and type of loan (fixed or floating) so that you can compare the information and take an informed decision.

The following are important things to know and remember.

i) Interest Rates

Ask your lender about its current home loan interest rates and whether the rate is fixed or floating.  Remember that when interest rates in the economy go up so does the floating rates and hence the monthly re-payment.

If the rate quoted is a floating rate, ask how your rate and loan payment will vary, including the extent to which your loan payment will be reduced when rates go down by a certain percentage. Ask your lender to what index your floating home loan is referenced / linked and the periodicity of updation of that index. Also ask your bank whether the index is internal or external and how and where it is published.

Ask about the loan’s annual percentage rates (APR). The APR takes into account not only the interest rate but also fees and certain other charges that you may be required to pay, expressed as a yearly rate. Banks are obliged to reveal the APR if requested for by the customer.

ii) Reset Clause

Check the reset clause, especially in the case of fixed interest rate loan as the rates will not be fixed throughout the tenure of the loan.

iii) Spread/Mark up

Check if the margin in the case of the floating rate is fixed or variable. The rate of interest you have to pay will vary accordingly.

iv) Fees

A home loan often requires payment of various fees, such as loan origination or processing charges, administrative charges, documentation, late payment, changing the loan tenure, switching to different loan package during the loan tenure, restructuring of loan, changing from fixed to floating interest rate loan and vice versa, legal fee, technical inspection fee, recurring annual service fee, document retrieval charges and pre-payment charges, if you want to prepay the loan. Every lender should be able to give you an estimate of its fees. Many of these fees are negotiable / can be waived also.

Ask what each fee includes. Sometimes several components are lumped into one fee. Ask for an explanation of any fee you do not understand. Also, remember that most of these fees are perhaps negotiable! Do negotiate with your bank before agreeing to a particular fee. See how the all inclusive rate compares with the all inclusive rates offered by other banks. While planning your finances, don’t forget to include the costs of stamp duty and registration.

v) Down Payments / Margin

Some lenders require 20/30 percent of the home’s purchase price as a down payment from you. However, many lenders also offer loans that require less than 20/30 percent down payment, sometimes as little as 5 percent .Ask about the lender’s requirements for a down payment and also negotiate with him to reduce the down payments.

Once you know what each bank has to offer in terms of rates, fees and down payments, negotiate for the best deal. Ask the lender to write down all the costs associated with the loan. Then ask if the bank will waive or reduce one or more of its fees or agree to a lower rate. Do make sure that the bank is not agreeing to lower one fee while raising another or to lower the rate while raising the fees. Ask for clarification in case you do not understand any particular term. All banks are obliged to explain the most important terms and conditions of the home loan in detail.

Once you are satisfied with the terms you have negotiated, please do obtain a written offer letter from the lender and keep a copy with you. Read the offer letter carefully before signing.

Banks have their own standards for calculating eligibility. Factors like age, annual income and loan tenures play an important role. You should do some shopping to check which bank is offering you a higher loan eligibility. Adding up your spouse’s income may be a good option to increase your eligibility. In case of NBFCs customers can expect higher eligibility.

Every bank has its own set of eligibility criteria so as to properly assess your repayment capacity. The Repayment capacity per say is based on your monthly disposable income or surplus income, (which is based on factors such as total monthly income / surplus less monthly expenses) and other contributing factors such as your spouse’s income, assets, liabilities, stability of income and so on.

The main concern from the bank’s perspective is to make sure that you can comfortably repay the home loan on time. The higher your disposable monthly income, the higher the amount you will be eligible for. A bank typically assumes that about 55-60 % of your monthly disposable income is available for repayment of the home loan. There are exceptions to this however where some banks calculate the income available for EMI payments based on an individual’s gross income and not on the disposable income.

As always, the loan amount depends on the loan tenure and the interest rate. Banks generally fix an upper age limit for home loan applicants.

Different banks have different eligibility criteria, however, we can broadly classify them into the following buckets:

Monthly Income – One of the most important considerations when a bank decides the maximum loan amount it can disburse, is your monthly income (if you are a salaried individual. if you are a self employed person, your yearly profit would identify your maximum loan amount)

The loan amount basically depends upon the net income of an individual and a bank usually provides home loans up to 60 times of an individuals net income. For e.g. if a person take home salary is Rs 30,000 he /she may be offered a home loan of around Rs 18 lacs. However, the finality of this decision is based on a few other criteria.

Other EMI – If you have any previous loans or EMIs pending, a bank will always consider the risk and the financial load you are taking on to decide to give you a home loan.

Available Income – The income that is left in your bank account after deductions of any EMIs is a very important consideration for giving out a home loan. The Home Loan Eligibility Calculator will be calculated after deduction of the EMI’s that you are paying monthly.

Property Attributes – If you are a home owner already, you should know that banks provide upto 75% of your home property value as a loan amount. So for example, if your home or property is worth 50 Lakhs, you can get upto 75% of that amount as the loan amount, which in this case works upto 37.5 Lakhs. Here, based on your income and property value banks decide your exact home loan eligibility.

Banks also have certain norms for the property before granting a loan. These are with respect to the minimum area requirements for a flat which may be carpet area or built up area. The bank also considers the age of the property in case of an existing property, the location of the property and also the reputation of the builders constructing the property. Thorough analysis and inspection of the property to check whether the title is clear or not is an additional check in addition to things like ownership disputes and so on.

Credit History – The credit history of an individual plays an important role in deciding the amount of the loan. Credit history is basically the credit report of an individual based on credit information recorded by CIBIL through all your loan transactions. Based on your credit score, a bank or any other financial institution decides whether an individual is eligible for a loan or not. The credit history is generally affected by outstanding credit card payments and any unsecured loans.

Age – Age plays a crucial role in determining your eligibility for a home loan. One has be atleast 21 years of age to apply for a home loan. The minimum age requirement may be different for different lending institutions. The maximum age may vary from 58 to 65 years depending on the income source of the individual. Age also determines the tenure and EMI of the loan. For e.g. if an individual is 35 years of age and retires at 60 then his/her loan tenure will be 60-35=25 years and the EMI will be calculated accordingly. The longer the tenure the lower will be the EMI’s. However the longer the tenure, the costlier the loan is as one ends up paying more interest.

Co-applicant – In order to enhance the eligibility for having a loan one can have a co-applicant such as a spouse or close nominated relative or friend. As a result of this the total eligible income for having a home loan increases and thus as a result the loan eligibility becomes higher. However banks permit only certain relationships to become the co-applicant.

Many existing home loan customers are coughing up high interest rates. If you’re amongst them, you should consider shifting your home loan from your existing lender to a new one. This facility is called a ‘balance transfer option’ and many banks offer this facility nowadays. Doing so will decrease the monthly EMI you are paying towards your loan and will bring in savings.

If You Want To Save Money On Your Home Loan, Apply For A Home Loan Balance Transfer Right Here!

You should also consider shifting from the old BPLR system, where the interest rate constantly changes, to the new base rate system. This is more transparent than the previous one and ensures you don’t end up paying more unnecessarily.

One of the most popular products among Home owners, a Balance Transfer can help you get a better deal on your Home Loan thus enabling savings. You can also use a balance transfer to take a top up loan from a bank, which allows you to pay off your other loans by taking a consolidated loan from a bank.

Home Loan Balance Transfers are primarily used for High value loans, where rising tenures and expensive EMIs become too troublesome, due to flux in market conditions. A Home Loan Balance Transfer can go a long way in helping sustain a long tenure home loan or loan against property and also gives one the option of working with competing banks for better rates.

Save Money With A Home Loan Balance Transfer!

Many people don’t know that banks don’t increase Home Loan EMIs but they increase the tenure of the home loan when the floating interest rate increases. If you are paying higher interest rate on your home loan then we can help you save a lot of money.

Pre-payment of your home loan does not have any penalty and switching your home loan balance to a new bank has never been easier!

Balance Transfer for Home Loans and Personal Loans is a product, offering the customer a choice to transfer the outstanding balance of the home loan availed for better terms & conditions, EMIs and possibly well sized savings that could be better invested elsewhere.

Many customers look at Home Loan Balance Transfers as making their loans more efficient. In some cases, the nature of Floating Interest Rates leaves customers with longer tenures, higher EMIs and so on. Many customers find their solution in Home Loan Balance Transfers which help to move from higher rate of interest to lower rate of interest or increase in loan components as Top ups.

Eligibility For Balance Transfer

Home Loan balance transfers have stringent eligibility requirements that one is typically familiar with while taking a home loan or a personal loan.

The eligibility of the Balance Transfer will be based on the seasoning and track-record of existing loan only ñ Minimum Clear Repayment Track Record of 18 Months is required.

Balance Transfer Loans have a fair amount of eligibility criteria that can help you obtain the right deal. Below, we will list some of these requirements to help you get a Balance Transfer for your loan.

  • * Resident Indian: Salaried or Self-employed
  • Vintage of at least six months
  • Good repayment track record
  • Repayment Track Record of Existing Loans
Documentation for Balance Transfer

Just like the documentation requirements for Home Loans, applicants will need to provide a set of documents to approve the home loan balance transfer.

What Is Loan Against Property

Loan against property (LAP), are basically loans provided by banks against the security of one’s own property. LAP is designed to meet the financial needs of someone who already owns a house or multiple properties so as to get the best out of their assets. Its important to remember that the property which you are putting up for your loan should be free any encumbrance (i.e. it is not given as security for any purpose or any other loan).

Banks provide LAP for both Salaried as well as Self-Employed individuals. The rates and loan amounts differ based on your property and your annual income.

Banks will always want to consider all risks, which is why while you are applying for your loan against property, there are certain factors the bank considers with respect to your property to mitigate its risks in giving out the loan. These factors determine your rate of interest, and loan amount. You can get a LAP of up to 80% of the registered value of your property depending on the Bank’s policy and the property type and valuation.  The value of the property would be determined through a valuation conducted by the Loan Provider.

Individuals apply for LAP for a variety of reasons. Some of the common ones are your childs wedding, loans for new business ventures, second homes, vacations, medical treatment just to name a few.

How To Apply For Loan Against Property

Application
Processing
Documentation
Property Verification/Valuation
Sanctioning of the Loan
Disbursement

Important Questions on Loan Against Property

What kind of processing fee do you need to pay for Loan Against Property?

A nominal fees and charges are to be paid to the Bank depending upon their term and conditions.

How much time does the bank take to disburse the loan?

The processing of the loans usually takes 7 to 10 working days once all the documents are submitted. It also depends upon your profile and documentation.

How is interest charged on Loan Against Property?

Some financial institutions make LAP available only under the floating rate. Fixed rate loans are off limits. Borrowers need to enquire before finalising a LAP from lending institutions.

It is normally available for residential properties only, but can be available for commercial property also.

Does the property have to be insured?

Yes the property has to be insured against fire, flood, earthquakes and other appropriate hazards during the tenor of the loan.

How can I repay my loan?

The repayment of loan is done through Equated Monthly Instalments. It can be paid through Post Dated Cheques (PDC) or Electronic Clearance System (ECS).

Can I pre-pay my loan?

The loan against property can be pre-paid along with the pre-payment charges. Usually the bank charges a fee in percentage of the principal pre-paid.

Loan Against Property Eligibility Criteria

Some of the Elgibility Criteria when applying for a Loan Against Property Are As Follows

Income

• Age (min. 21 years)
• Property Valuation
• Existing Liabilities (if any)
• Current Work Experience
• Financial Documents
• Number of Dependants

The eligibility for LAP is calculated on basis of either the percentage of property value that you own and the amount of income you have to enable you to return the EMI on the Loan. So you can get Loan against property upto annex % of property value and the net amount that you earn after other EMI has been deducted from your net income

Loan against Property is given on the below mentioned property types and the percentage of loan you can get is given below:

Loan Against Property – For a Residential Property

Self Occupied – 65% of Property Value
Vacant – 55% of Property Value
Rented – 55% of Property Value

Loan Against Property – For a Commercial Property

Self Occupied – 50% of Property Value
Vacant – 40% of Property Value
Rented – 40% of Property Value
This varies from Bank to Bank by 5 – 10% of the above mentioned percentages.
In order to calculate how much you would be estimated to pay, most banks use a formula which is given below.

Loan Against Property for Salaried Individuals:-

{(NTH – Obligation) * 60%} / EMI per Lac

Loan Against Property for Self Employed Individuals:-

{(NTH – Obligation) * 65%} / EMI per Lac

Whichever is lower from the value of the property or your income- that loan amount will be given to you.

Other Eligibility Criteria Revolves Around the Maximum Age of The Person Applying For The Loan

For Salaried employees – 60 Years

For Self-Employed – 70 Years

Loan Against Property Tips

Loan against Property (LAP) refers to a secured loan category somewhat like a home loan where the borrower provides guarantee by using his property as security. The right of ownership of the property is still with the borrower, and if for some reason, the borrower is unable to repay the loan amount, the property can always be sold off to pay off the debt.

The maximum loan amount varies from bank to bank and could range from Rs.2 lakhs up to Rs.100 lakhs. The loan amount depends on the property valuation, your income and of-course your repayment capacity.

The maximum loan amount can come upto 80% to 100% of property value for commercial setups and up to 80% for residential properties (This is really variable as it completely depends on the valuation of your property).

The maximum loan tenure in Loan Against Property cases is 15 years.

Be ready to provide security, collateral or guarantors in order to obtain a Loan Against Property, not to mention a long verification process.

Most banks do not accept properties that are on lease or that are based on power of attorney.

The maximum age limit of eligibility is 60 years.

Loan Against Property features Fixed or Floating interest rates. You also have an option of changing from Fixed to Floating interest rates and vice versa once every year.

A processing fee is usually 0.05% to 3% of the loan amount and is payable upfront. This fee however will be deducted from the disbursal amount payable to you. We recommend that you try and negotiate a 0% processing fee or atleast a flat discount. Most bankers and agents will be happy to do this to ensure the loan gets sold to you.

You can also prepay the entire loan outstanding anytime after 180 days of availing the loan. Pre-payment charges will be levied accordingly. If you intend to do so, please ask for the pre-payment amount to be waived or a reduction in the penalty charges.

You can also increase or enhance your loan against property eligibility. For that you need to show income of atleast three persons, most preferably a family member or a business partner.

Additional Points To Remember When Considering a Loan Against Property

Compare Loan Against Property offers from 3-4 banks, and select the one which offers maximum benefit to you and your purpose.

Pay special attention to the tenure of the loan. The EMI may be less for longer tenures, but the total interest outflow will be higher.

If its possible, consider pre-payment options. All banks charges 2% – 3% of the loan in case you decide to pre-pay the outstanding amount.

Default in payments results in penalties. It can also adversely affect your credit history and profile. So make sure to make your payments on time. This really plays an important role in getting more loans. Dont miss payments or you will be penalized.

Make sure that all deals and offers agreed upon are supported by relevant papers. So make sure you always ask for a letter in a banks letter-head mentioning the likes of, exact rate of interests, processing fees, pre-payment charges along with interest-schedule, when you decide to finalize your loan with a particular bank or agent.

Make sure you recheck all terms and conditions, before signing any documents. Please Read the Fine Print.

Do not sign any blank documents. Even if it takes you a few hours to fill-up the form, take your time. Do not leave anything for the executive to fill-up.

Once you have received a loan do your best to pay it back as quickly as possible. Banks make their money off the interest they charge and the sooner you pay back a loan the less money you will have to pay in interest.

Personal Loan in India

A personal loan is a loan for your personal use, be it your child’s wedding, a dream vacation, or a shopping extravaganza. A personal loan does not require any security or collateral and can be availed without much fuss. Typically personal loans range from Rs. 50,000 to Rs. 30 Lacs with a tenure typically ranging from one to five years. Getting a Personal loan is quite stress free and there are typically a number of offers in the market most of the time.

Apart from the rate of interest banks also charge some fees which are usually of two types. Once when you are applying for the loan and once when you are pre-closing the loan. The fees when charged at the time of processing called as Processing Fees vary from 2-3% of the loan amount. This could be reduced if you have the ability to bargain. the second charge is the prepayment penalty paid at the time of pre-closure. This too varies from 2 – 3 %. Similar to processing charges, you can also try to get this fees reduced.

Personal Loan Amount

An individual can borrow as much as they can repay. This in banking terms would mean a personal loan that has an EMI that does not exceed 40% of your monthly take home income, where the EMIs for existing loans are also deducted.

Personal Loan Interest Rates

Personal loan rates vary from bank to bank, and are anywhere between 14%-26% depending upon your profile and the policies/scheme you decide to opt for.

How Fast Can I Get a Personal Loan? (Instant Loans)

Personal loans don’t take too long to process. Banks usually disburse your loan within seven working days. However, it is recommended that you keep all your documents ready and in order, especially the post dated cheques (PDC), to avoid any delays. How fast you get your personal loan is dependent on your document collection process.

Personal Loan Co-Applicants

Personal loans can be taken with Co-Applicants to help you increase the loan amount you are eligible for. The income of the co-applicant also features in your valuation and helps in increasing your chances of getting a personal loan.

Personal Loan Eligibility Criteria

While lending money the lenders take into account various factors to arrive at the decision whether to lend the money or not and how much to lend. This universal rule of lending equally applies to personal loans extended by the banks and Non Banking Finance companies (NBFC). Since personal loans are given without any security or third party guarantee, the lenders are extra cautious and have stringent norms for establishing eligibility of borrower.

Eligibility criteria

Profile of the borrower

A lender advances loan in the expectation of it being repaid within specified period. So income of the borrower is the main criteria to establish the eligibility for personal loan. Due to this reason, students, housewives and retired people are not eligible for personal loan facility from the banking system. Since a loan has to be repaid within certain period and that too with the current income, one can avail personal loan during his working life and not beyond that.

Salaried people can apply for personal loan anytime between 21 years till completion of 60 years of age assuming that the age of retirement is 60 years. In case the age of retirement specified for any particular organisation is lower than 60 years, the eligibility to apply for the personal loan will come down accordingly.

Since self employed do not have any specified age for retirement and generally work  beyond 60 years they can apply for personal loan upto 65 years of age. Moreover as self employed do not start earning as early as a salaried, the minimum age for applying for personal loan for self employed is generally kept higher at 25 years.

Stable Employment

As a lender is interested in the timely and orderly serving of personal loan, regular flow of income is a prerequisite for availing a personal loan. So the lenders advance personal loans to the persons who have regular and consistent income. Those who are in employment, should at least be working for minimum of two years. At least one year with the current employer is generally also insisted by the lenders. Likewise for self employed the lenders want consistent and established source of income, for which the borrower has to submit documents like profit and loss account with balance sheet for at least two previous completed years to substantiate the income. Due to irregular source of income, film and television artists generally find it difficult to get a personal loan.

Financial Statements

For establishing your eligibility you need to submit some financial documents to the lenders in addition to your regular Know Your Customer (KYC) documents. For salaried the financial documents required to be submitted are simple. Copies of the salary slips for past six months along with form no. 16 and or copy of the Income Tax Return (ITR) filed for previous two years are sufficient. However for self employed elaborate set of documents are needed to be submitted to the bank. The self employed have to submit copies of their ITR along with certified copy of profit and loss account along with balance sheets for previous two years are needed. The lender may also ask for copy of the bank statement to verify the volume of the business stated in the profit and loss account.

Employer type

Since personal loans are very risky product from the lender’s perspective, the lender wants to ensure that the borrower will be prompt and regular in servicing the personal loan. For this purpose, the lenders take into account the employer where you are working, to assure themselves about lower risk of default on the part of the borrower. Most of the lenders have a categorised list of employers for the purpose of granting personal loans to salaried people.

People working with government department and those with government companies have better opportunity for being eligible for personal loan than those working with other employers. Likewise persons working with top listed companies or reputed private companies including Multi National Companies have better prospects of getting a personal loan.

Outstanding EMIs

Lenders assume that certain portion of your existing monthly income, generally 40%,  is available for servicing of any loan taken by you. So your personal loan eligibility gets curtailed in case you are serving any existing loan. The amount of EMI of such existing loan being served will be reduced from the surplus  available for serving any loan.  Accordingly the amount of EMI which you can service for personal loan will also come down accordingly. As the amount of personal loan eligibility depends on how much EMI you can pay month after month, any running loan will significantly reduce your personal loan eligibility. In case the balance EMIs for running loan are not many, you can arrange to prepay that existing loan and thereby significantly enhance your personal loan eligibility. In such a situation, the personal loan eligibility will be higher than the balance of the existing loan outstanding being repaid.

Credit history of the borrower

With the advent of credit information bureau like CIBIL, the lending for banks and NBFCs has become easier as the complete history of credit transactions of the prospective borrowers is available to the lender. The credit information bureau provides the credit history and credit score of the borrower to the lending institutions on request. A good credit history and higher credit score, points towards disciplined dealings in credit and loan transactions. A good history and a better credit score provides a primary assurance to the lender about the borrower timely serving the loan taken. Moreover with higher credit score, the lender may give you higher personal loan than what you would be eligible with lower score.

A better credit score also help you negotiate and get better interest rates on your personal loans with higher eligibility at the same time. Generally a CIBIL credit score of more than 750 is considered satisfactory and higher the score higher comfort the lender gets and better terms the borrower can ask for from the lender.

Tenure opted

Since the repayment of a personal loan has to be made by way of an equated monthly instalment (EMI) which is generally fixed for the entire tenure of the loan, one can get higher personal loan eligibility, with longer tenure, as the amount of EMI one can service gets constrained by your disposable income. The tenure of the personal loan is also restrained by your age at the end of the tenure you wish to opt.

As  personal loans carry high rate of interest and as the lenders charge prepayment charges in case you prepay the personal loan fully before the original tenure, one has optimise the tenure taking into account various factors.  A longer tenure is not necessarily good for each borrower.

Co-borrowers

For home loans the lenders allow your children, parents and spouse to be co borrowers to enhance your overall eligibility in terms of higher home loan amount but for personal loans the lenders, generally, do not allow any other person to join as co-borrower. So the eligibility for personal loan is fully ascertained on the basis of your own income and you have no scope to enhance it by adding anyone else.

However if the personal loan to be taken is in the nature of marriage loan, the bride and groom are allowed to make a joint application for such loan.  So in case of marriage loan making  your future life partner as co borrower can help you get higher amount of personal loan if the other person is also earning.

Personal Loan Tips

Now a days with easy availability of personal loans from banks as well as from Non Banking Financial Companies (NBFC) people face a problem of plenty and find difficulty in choosing the right lender to minimise the cost and optimise the benefits. Here are some tips to do that.

1. First and most important tip is to check your credit score on any of the credit information bureau like CIBIL before you apply for any loan. Your credit score is the starting point for the lender to help to decide whether you can safely service the personal loan being applied for. Generally a CIBIL credit score of 750 and more is acceptable to the lenders as most of the loans have been given to person with this minimum qualifying credit score. So unless you have the minimum qualifying credit score, it does not make sense for you apply for personal loan as the application is most likely be rejected.

2. After you have checked your credit score and before you apply for personal loan, you should do a thorough research about the various personal loans available in the market. There are various websites like https://www.roongtasecurities.com where you can get details of various providers of personal loans. While doing this research you need to ascertain who is providing the personal loan for the tenure for which you want as the maximum tenure of personal loan varies amongst various lenders. You also need to understand the processing charges levied by various lenders for processing your loan application. You should also do a thorough research on the various terms and conditions attached with prepayment charges because this is the major cost after the interest cost.

3. As personal loans carry very high interest rates, you should properly work out your personal loan requirement.. The requirement of personal loan should be arrived at with detailed working rather than with just guess work. A good estimate of requirement of personal loan should neither be on higher side nor on lower side. This exercise will help you minimise the cost of the interest which you pay on personal loan as well as help you avoid payment of prepayment charges which are levied in case you prepay your personal loan before its tenure. Some of the lenders allow you to prepay your personal loan only after you have paid certain instalments. There are other lenders who let you part prepay your personal loan every year upto certain percentage of the amount outstanding. So in case you are not sure of the tenure within which you would be able to pay the loan, it would be good idea to select lenders who offer you such flexibility in prepayment of the loan.

4. Generally lenders do not allow you to have two personal loans at the same time. So in case you are already servicing a personal loan, the probability of your getting another is low. So ensure that there is a gap of at least six month between two application for personal loans.

5. The eligibility for personal loan is dependent on your ability to pay the certain every month. So in case you are not able to get the personal loan within the tenure initially opted by you and since the lenders do not allow any joint borrower except in case of wedding loan, the only option available to you to enhance your eligibility is to opt for the longer tenure of personal loan.

6. Since your loan amount eligibility is also dependent on the amount of any existing liability being serviced, it is advisable to pay up all your credit card outstanding in case you have opted for carry forward of the credit card outstanding due as allowed by the credit card issuer.

7. Deciding about the tenure of personal loan is the most difficult part of the entire process because in case you opt for the longer tenure you end up paying either interest for the longer period for extended period else you will have to bear the prepayment penalty. In case you opt for shorter tenure resulting in higher Equated Monthly Instalment (EMI) it may cause stress on your cash resources. This may some times may affect your credit score and credit history as well. So do a thorough calculations and deliberations on the amount which you can comfortably service month after month.

8. As the banks generally charge processing fee for processing your loan application, which adds to your cost, you will be able to reduce this cost if you have good credit score as well as have existing relationship with the lender. The processing fee is negotiable and can even be waived fully if you have strong credential and negotiating skills.

9. It is preferably to avail the credit facility from your existing bank as it reduces the processing time of the application. Check from your existing banker whether they have any personal loan product for you and also check whether you are a preferred customer of the bank.

10. Since interest is the most important cost component of the personal loan, it is very important for you to understand the interest rate mechanism. Whether it is fixed rate or floating rate. It is important to understand how the interest is charged on personal loan being offerred. In case of flat rate the interest is charged on the entire amount of loan throughout the tenure of the loan without giving credit for the EMIs paid. You should opt for the loan where the interest is charged is on reducing balance of the loan instead of the original amount of the loan.

11. While filling up the application form, it is very important that you fill up all the details correctly. Be honest with whatever details you submit to the lender. Do not fabricate any documents or details. This may cost you dearly, sometimes in jail, in case the misinformation happens to be material one. Please fill up the entire form yourself instead of signing on the dotted lines.

12. This the most important tip. As it happen in marketing. Do not rely on the promises verbally made to you by the representative. Insist for written confirmation for all the benefits or concessions offered by you.

13. Work out your overall cost taking into account the rate of interest as well as the processing charges which you may have to pay before you zero in on any particular lender.

14. Last but not the least. Always read the application form thoroughly. If the fine prints are not fully legible use a magnifying glass if need be. In case you do not understand the fine print, take help of person who can help you understand the same.