It should not be denied that personal loans levy high rates of interest. Although the minimum interest rate starting at 11.99%p.a., most personal loan interest rates average around this rate.
Prepayment in Repayment on my personal loan!
Being a powerful financial vehicle to increase liquidity and cash flow, taking personal loans should not be overdone. Apply for a personal loan with discretion is what Buddy Loan recommends. So the question arises – will prepayment of a personal loan reduce the debt burden and increase credit rating? The following information by Buddy Loan discusses this.
Effect of prepayment on credit rating
When a personal loan such as an online business loan or online home loan is prepaid, the amount of interest paid is lowered, because only that portion of the outstanding principal is charged with interest. Prepayment will not immediately improve credit ratings. But when consistent prepayments are done up to the closure of the loan altogether, this will have a positive effect on one’s credit ratings.
Types of prepayment
There are two types of prepayment.
- Full: A full closure of any loan, be it an instant business loan or vacation loans online (also known as foreclosure), ultimately repays the loan. It reduces the debt burden on the borrower of this loan to zero. It can improve credit ratings, but remember that a major consideration for credit bureaus is not the number of loans a person has, rather it is their repayment record of these loans.
- Part: Part payments reduce the debt burden slowly. The outstanding principal loan amount is gradually reduced. Banks levy interest only on the outstanding principal. EMIs are regularly reset based on the outstanding principal. Part prepayments do not have much effect on credit ratings. They only reduce a person’s debt burden on that personal loan. It’s also easy to get a personal loan if one’s prepayment history is good.
Should prepayment be done as a matter of personal discipline?
Taking personal loans such as a personal loan for travel or instant medical loan from Buddy Loan is not a bad thing. A personal loan is a great financial product to increase liquidity and cash flow. There is no reason to shy away from debt if it is useful, increases one’s resourcefulness, and saves time.
So keeping all this in mind, prepayment is useful only if a person has surplus money in hand. It is good to reduce one’s debt burden, but it has to be also noted that surplus cash is a great source of funds to invest.
- Surplus money can be used to purchase more assets, invest in assets.
- Prepayment is not recommended if a person is regularly repaying their personal loan.
- All debt is not bad debt. There is something called good debt too. When money is being used for productive income-generating activities, debt is actually a wealth creator.
Aadhaar card is mandatory for a personal loan!
AADHAR card is one among the many documents required for a personal loan. For the best information on personal loan click on www.buddyloan.com. Avail the best benefits with your present credit score.
Classified as one of the KYC (Know Your Customer) documents, AADHAR card can be substituted by any of the other KYC documents. Some of them are namely PAN card, Voters ID, ration card, Passport etc.
When is taking a personal loan a good idea?
Personal loans are a necessity in a variety of scenarios.
An online personal loan can be used for any purpose. This is unlike a mortgage loan that can only be used for borrowing money upon providing collateral. A home loan can only be used for buying a home. A travel loan online can only be used for travel. Whereas a personal loan can be used to buy a bike, home, jewellery, travel, and lots more.
The virtue of getting a personal loan itself improves one’s financial standing with the credit bureaus. Personal loans are given by many banks and non-banking financial institutions. Lenders have varying lending criteria. Some would want a higher credit score. Some could do with a nominal or average credit score. So getting a personal loan and then making regular repayments on the appointed date can dramatically increase one’s creditworthiness.
Purpose-specific personal loans
While there are generally personal loans, there are purpose-specific personal loans too. Some of them are as follows:
Vacation loans online: Apply for travel loan with minimal documentation from Buddy Loan and prepare for a vacation at a moment’s notice.
Easy medical loan: Best medical loans for surgery, personal medical loans, or urgent medical loans from Buddy Loan can be applied for and received for medically treating self or dependents. This is especially helpful when availing non-cashless treatment that requires immediate cash payment, although the borrower is covered by insurance.
This is because of lengthy insurance claim processes that remit money to the hospital after several days and the hospital cannot wait that long.
There are many personal loan products to choose from Buddy Loan. Choose one that suits and apply without a moment’s hesitation.
A personal loan requires Form 16!
In most cases, Form 16 is required if the person is employed or self-employed and with an annual income of over Rs. 2,50,000. For the best information on personal loan click on www.buddyloan.com. Avail the best benefits with your present credit score.
The following are the documents required generally.
- Duly filled and signed application form attested with passport size photograph
- Identity proof such as PAN card, AADHAR card. Address proof such as passport, voters ID.
- Bank statement of the last six months
- Salary slip of last three months
- Form 16 of the past three years
What is Form 16?
It is a form that encloses details of tax paid. Companies use this form as a means to inform their employees on tax deducted at source and paid to the government. Therefore, Form 16 is also called a TDS (Tax Deducted at Source) certificate.
There are two parts to a Form 16 form. Part A encloses employer information and employee information. Part B encloses details pertaining to income earned, deductions made, tax payable, etc.
Different types of personal loan!
- Vehicle loans: Includes car loans, bike loans. You can apply for a car loan or apply for a vehicle loan online. Car finance online and bike loan instant products have a transparent and easy application, disbursal process.
- Gold loan: Loan against gold is funds received against pledged gold. The market value of gold is assessed by the bank and online gold loan amount disbursed. Interest rates are not higher; bank gold loan products charge the same interest rate as other personal loans.
- Home loan: includes home renovation loan, home reconstruction loan, etc. After a housing loan eligibility check, the home finance company lends the amount based on the latest housing loan interest rates. It is very easy to apply for a home loan online – applications, document uploads, digital signatures, approvals, and receipt of money is all online.
- Educational loan: Personal loan for students or professionals is disbursed upon providing relevant documentation. The process of applying for a student loan or professional education loan is similar to other personal loan products. Documents required will be educational qualification certificates, proof of educational requirement, university letter, etc.
- Marriage loan: Instant marriage loan products are easy to apply and receive. It could be a personal loan for a honeymoon or loan for daughter marriage. The process for Shaadi loan online products from Buddy Loan is very easy and favourable.
Given the range of personal loans on offer on Buddy Loan, it is all the more important to keep relevant documents such as form 16, PAN card, AADHAR card, and other such KYC (Know Your Customer) documents ready to avail them.
Feature of the personal loan!
A personal loan from Buddy Loan is an attractive finance product that is dynamic, flexible, portable, and has transparent procedures and policies. All of these aspects make personal loans a must-have for anyone wishing to fulfil their immediate financing requirements instead of adopting the outdated system of saving money to purchase an asset or service.
The following information discusses some of the many features of a personal loan.
Unlike a home construction loan or home loan that is given in phases upon providing relevant documents, checking of housing loan eligibility, a personal loan is given upfront without any elaborate documentation. A person can be used for any purpose – unless a specific type of personal loan is taken, such as a bike loan instant finance product, for example. A general personal loan can be used for travel, education, personal expenditure, business financing, wedding expenses, etc. The virtue of having complete freedom of money expenditure makes personal loans a sought-after loan finance vehicle, unlike traditional loan products.
Traditional loan products require extensive documentation. For example, a home loan would require plan sanction letter, sale deeds, letter of consent from regulatory authorities, and the list goes on and on. In the case of a personal loan, all that is required is an address proof, identity proof, income proof, and bank statement at a minimum. So to apply for a vehicle loan or submit documents to a housing loan company is as easy as it gets. Obtaining and getting these documents ready takes hardly a day. Submission of these documents can also be made online. To make things better, an executive from the bank visits the applicant to take all of the physical documents personally.
Quick approval and disbursement
Being specially structured, and falling under the ambit of flexible loan disbursement policies, a personal loan is disbursed the fastest when compared to traditional bank loans. The average disbursement time-period is three days at the maximum. Some personal loans are disbursed within minutes, such as medical emergency personal loans at Buddy Loan, for example. Also, applicants can know the status of personal loans within 24 hours. If it is approved, they can ready themselves for receiving the money. If the application is disapproved, they can quickly start searching for other personal loan providers.
Suitable for all income groups
All income groups can hope to take a loan on gold, low-interest car loans, or any personal loan for that matter. This aspect creates an economic ecosystem of liquidity, stability and inertia. Without this, the economy would be stagnant, cash flow would be less, and all economic activities slow down due to lack of liquid cash. Thanks to the broad range of personal loans for all incomes groups, nobody can fall into a debt trap nor wait for cash flow to start their activities.
PAN card is mandatory to get a personal loan!
PAN Card is not mandatory if the person has other supporting documents such as AADHAR card, ration card, Voters ID, and/or Passport. For the best information on personal loan click on www.buddyloan.com. Avail the best benefits with your present credit score.
However, it is unusual for someone not to have a PAN card and to have one of the other identity proofs. It is always advisable to get a PAN card at the earliest. Some banks mandatorily ask for the PAN card. Some banks do not. However, a PAN card is essential to be viable and recognizable within the Indian banking and financial system as a responsible tax-paying citizen.
All persons with annual income exceeding Rs. 2,50,000 are required to have a PAN card. It is assumed that anyone without a PAN card has an income less than that. This means that this person is exempt from filing an income tax return. Most banks will not entertain such applicants when they apply for a business loan or apply for a car loan, for example, as their business or housing loan eligibility or car loan eligibility falls below the benchmark.
Documents required to apply for a personal loan
The following documents are required for a personal loan.
- Identity proof: Voters ID/ PAN Card / Passport
- Residence proof: Driving license / lease agreement / electricity bill / water connection bill
- Bank statement of last 3 to 6 months
- Salary slips of last 3 to 6 months
- Passport size photographs
- Address proof of office, Business continuity proof, business proprietorship proof (for self-employed)
What are the uses of a PAN card?
- Filing income tax returns: Without PAN card, this cannot be done
- Bank account opening: PAN card is mandatory. Even during a housing loan eligibility check, the furnishing of the PAN card is mandated.
- Purchasing or selling a vehicle: To apply for a vehicle loan, providing a PAN card is mandated by most banks. So to apply for a car loan online, consider getting a PAN card first. Don’t lose out on personal car loans with attractive interest rates for want of a PAN card.
- Purchase of precious items/jewels: Sometimes, purchasing gold or precious items can be an investment. A gold loan applies online procedure requires furnishing PAN card. Gold loan providers require these details. Best gold loan offers at nominal interest rates can be obtained.
Given the enormous uses of a PAN card, it is important to have one. It also holds as proof of identity. So even before starting to enquire about the latest housing loan interest rates or process for bike loan approval online, get the PAN card ready. Personal loans are not just easy to avail they are quick in case of emergency and increase your credit score by giving you a number of repayment options.