As we all know the ongoing pandemic crisis has derailed our normal life, and most importantly, it has impacted the personal finances of the common Indian. Pay cuts, deferred salaries, and loss of revenue for those in business have become common.
Considering all the hardships the citizens are going through, the government has taken various measures to support the varied class of people to cope up with the consequences of lockdown. As a part of the measure, several banks and NFCs have announced the launch of special, low-interest rate loans i.e. COVID-19 personal loan scheme to induce liquidity in the hands of the common man.
You might be wondering now how these loans can be beneficial to you and how are they different from a regular personal loan?
Here are a few things which you need to know about the COVID-19 specific personal loan. This information will help you make an informed decision while choosing a COVID-19 personal loan over a regular personal loan.
Purpose/Objective: As its name implies, COVI-19 personal loans can be put to various uses, but it has a restriction to use for raising business capital.
Rate of Interest offered: The interest rate for a COVID-19 personal loan ranges between 7% and 10% per annum, which is much lower than a regular personal loan. The loan sanction depends upon the borrower’s credit score, income, and repayment capacity.
Banks who are offering: COVID-19 personal loans are offered by all the reputed banks. Anyone those who want to tide over the ongoing financial crisis can avail of this loan from the lender of their choice. Such loans are offered by SBI, Union Bank of India, Indian Overseas Bank, Indian Bank, UCO Bank, Bank of India, Bank of Maharashtra, and Punjab National Bank. All the other banks only provide loan moratorium for three months, from March to May 2020.
Eligibility criteria: These loans are mostly offered to the existing customers such as those who have their salary account, existing home loan, personal loan, car loan, etc with the lenders. The loan is also offered based on previous repayment track record/ CIBIL score, debt to income ratio to ensure that they do not default while repaying their loans.
Loan amount: The loan amount varies as per the profession of the individual i.e. whether he/she is a salaried or a self-employed professional. You can check the maximum loan below.
For Salaried Individuals: 10 times the latest monthly gross salary income to a maximum loan limit of Rs. 5 lakhs.
For Non-Salaried Individuals: 60 % of the last annual income based on ITR, to a maximum of Rs. 5 lakhs.
Documents required– Proof of income, latest 3 months’ salary slip, ITR documents, Proof of Address, Aadhaar card, PAN Card, etc.
Is it a good idea to take these loans?
You can apply for this loan when-
Applying for COVID-19 personal loans make sense for those individuals who are looking to consolidate their multiple debts. Suppose you have a credit card outstanding. You can use these loans, which are available at a much lower interest rate, and repay the credit card issuer. They can surely help you if you make smart use of them.
Do not apply for this loan in the below circumstance-
On the other hand, taking such loans would not be a smart choice, where you want to utilize the funds availed of through this loan to meet your cash flow requirement. And, if you want to avail this loan to meet cash flow requirements, make sure that you are confident of repaying it on time without making any defaults.
Where the future is uncertain, it does not make any sense to add up on more liabilities on your shoulder by increasing the burden on your shoulder. Instead, you should compare the other products available in the market that meets your current requirements. Do not make a mistake by getting swayed by the product only because the cost is lower. It is best to avoid fresh leverage in the current environment.
So, if you are facing a severe financial crisis due to the ongoing pandemic, it is probably advisable to opt for a budget-friendly product that suffices your purpose.
In this pandemic situation, we will advise you to opt for a product with a contactless process and a touchless process. This will reduce your need to visit the banks for further verification regarding your loan approval.
BookMyMoney has the perfect offerings for you. Here, you can choose from a range of pre-approved, contactless process, Personal Loan with minimal documents, and hassle-free procedure. Make sure before you apply for a personal loan or MSME loans with us, you check your eligibility so that your loan processing becomes fast. Once everything is verified, the money will be credited to your bank account within less time.
To apply for a personal loan with BookMyMoney, you need to click here.