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Beginner’s Guide to Loans

By Finserv MARKETS - Jan 31,2019
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Loan Guide

Ah, where would we be without loans? The benefits of taking a loan are undeniable and can’t be overlooked. For those who don’t know about the specifics of loans, you are at the right place! A loan, whether for personal use, home purchase or business purposes offers numerous benefits and can help you achieve your goals and objectives. It could be as simple as using the loan amount to purchase the house of your dreams or going on that vacation that you have been planning for quite some time! Before deciding to apply for any type of loan, do make sure to read this informative piece thoroughly and if needed consult experts. Let’s look at some of the common questions that people have regarding this domain.

What does a loan mean?

To put it quite simply, it’s a sum of money that you borrow from a lender / financial institution / Non-Banking Financial Company (NBFC) for the purpose of purchasing something valuable. You can repay the amount over a period of time in the form of Equated Monthly Instalments (EMIs) as agreed upon during the time of your loan application.

What can you purchase with the loan money?

Well, the answer is almost anything ranging from smartphones to a plot of land (you get the idea!). There are many different types of loans available in the market that are specially designed for enabling you to purchase specific things that help fulfil different objectives.

Types of Loans

  • Secured Loans

    These are loans that require a collateral as a guarantor for the loan that you are availing from a lender / a financial institution.

  • Unsecured Loans

    These are essentially collateral free loans and can be processed extremely quickly with ease and convenience as well as from the comfort of your home.

Advantages of loans

  • The most effective long-term borrowing procedure available for you currently.

  • You can choose between a fixed or a floating rate of interest depending on your need and financial planning goals.

  • You can borrow a small to a large amount of money as per your unique needs.

  • The entire process is online and can be processed in a matter of minutes. Your loan application can get approved in 3 minutes with loan disbursal within 24 hours. You can avail a personal loan offered by Finserv MARKETS that comes with instant approval & 24 hour disbursal

Other important factors to be taken into consideration

  • Prepayment: It is advisable that you review the terms and conditions of your loan with regards to “Prepayment / Pre-closure penalties (if any)”. This will help you decide the impact of paying off your loan earlier than the agreed upon tenure. Finserv MARKETS don’t charge for loan pre-payment & loan foreclosure.

  • Credit Score: Maintaining a good credit score will help you acquire loans more easily. It is recommended that you review your credit score on a periodic basis to ensure your eligibility is not affected.

  • Holiday Period: Some loans like for “Under Construction” properties might come with a EMI holiday period. This is the period where you don’t have to pay any EMIs against your loan.

  • Flexibility: Check for banks that offer flexibility on your tenure or EMI amount. E.g. Finserv MARKETS offers what is called as “Hybrid Flexi Loans” where you can choose the tenure for your loan along with paying off only the interest component during the initial time period of your loan

  • Responsiveness: You must also check for the lender’s ability to adapt itself to any new guidelines or policy changes from RBI

  • Interest Rate Type: Interest Rates essentially can be categorized as either floating or fixed. A fixed interest rate implies that your rate of interest stays fixed for the entire loan duration whereas with a floating one, the rate will change basis market conditions and volatility.

What is the procedure?

You will be initially required to fill out an application form with your personal details. This will help the bank/financial institution determine your loan eligibility. Once that’s done, the following documents will have to be submitted as a part of the process

  • ID (Identity) Proof:

    For example: Aadhar Card / Driving License / Passport etc.

  • Age Proof:

    For example, Aadhar Card / Birth Certification / Passport etc.

  • Address Proof

    For example, Electricity Bill, Aadhar Card / Passport / Rent Agreement (in case currently residing on rent) etc.

  • Proof of Professional/Educational Qualifications

  • Employment Details

  • Proof of Income

  • Bank Statements

  • Pan Card

A processing fee of 0.25% to 0.5% of the total loan amount will be applicable as a part of the loan application process, this varies from lender to lender. Once the information is verified and validated, your loan will be sanctioned and the loan amount gets directly credited to your bank account. You will be required to repay amount borrowed in manageable monthly instalments.

How long will be the repayment period?

It completely depends on your contract that you have negotiated with the credit provider. Some loans allow you to pay at a much faster rate while others are long-term and can be paid-off over a lengthy period of time.

What is a Personal Loan?

It’s an unsecured loan that helps individuals meet their personal needs. This could include funding your child’s education. No collateral like gold and property are needed for this credit.  You can obtain such loan either from a bank or a non-banking financial institution. Finserv MARKETS offers guarantor/collateral free loans. 

Which institutions provide loans?

You can apply for one at any of the following institutions:

  • Banks

  • Charities

  • The Government

  • Building Societies

  • Supermarkets

  • Peer to Peer Websites

However, if you are looking for a trusted lender that offers a host of benefits, try Finserv MARKETS. Bajaj Finserv Personal Loan at Finserv MARKETS provides a simple application process, easy and hassle-free and requires minimal documentation. What’s more? Your loan can be swift approval and disbursal with the personal loan amount credited to your bank account within 24 hours of approval!

“Finserv MARKETS, from the house of Bajaj Finserv is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!”

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522