Applying for a Loan is a convenient manner to finance expenditure. Apart from your savings, you also benefit from planning for future expenses without worrying about the exhaustion of accumulated funds. Today, there are many options to help you avail of funds for emergencies. The kind of Loan highly matters.
Factors like interest rate and Personal Loan terms are necessary to help you assess your repayment
capacity and differentiate between schemes. Knowing how it differs from Payday
Loans help you make an informed decision.
Definition
Banks and institutions offer attractive schemes to
customers. They differ between occupations. A Personal Loan for salaried is
unsecured. You receive the amount according to the lender’s terms for
legitimate purposes. You need to repay them according to the conditions laid
down.
Payday Loans are for the short-term. Also known as
advance cash, they get sanctioned quickly and require the borrower to repay
them within a short tenure. The charges are also higher compared to a Personal
Loan for the self-employed.
Eligibility
Follow the Personal Loan
eligibility set by the
lender. They allow you to borrow finance up to Rs. 25 lakh based on your
eligibility, amounting to a larger sum compared to Payday Loans. The upper cap
of your Payday Loans is the salary amount.
Tenure
Borrowers can opt for a Bank Personal Loan tenure of
12 to 60 months. On the other hand, Payday Loans require to be honoured between
two to four weeks duration on the receipt of the paycheck. If you cannot honour
the borrowed funds, you need to renew the Loan and other associated costs into
a fresh set of fees.
Documents
To verify their eligibility, potential borrowers need
to submit their KYC documents, bank statements, and income proof. You can also
assess the repayment amount using the Personal Loan calculator. The only
eligibility criteria for Payday Loans is a steady income equivalent to the
borrowed sum.
Borrowing cost
The interest rates for Personal Loans are reasonable,
starting from 11.9% per annum. Lenders also levy processing fees, insurance,
and service charges. Payday Loans get instant approval. However, they attract a
higher interest rate. Sometimes, you calculate the interest rate on a daily or
weekly basis. You can apply for them from the banking app as well.
Age and CIBIL score
Applicants between the age of 21 and 60 years,
self-employed or salaried, are eligible to apply for the Loan to finance their
requirements. Candidates in cities should earn at least Rs. 25,000 and Rs.
20,000 monthly in other towns across India to be eligible for borrowing funds.
Self-employed persons should make a basic net profit from the business they
run. A CIBIL score above 750 is a necessity for approval.
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