Given the exponential growth of India's economy, professional loans have become super popular. Professional loans are loans for self-employed individuals and business owners who need money for their operations or expenses. If you are an entrepreneur or self-employed, you need to know about the types of loans, interest rates, repayment time, collateral needs, and how to apply for one. In this blog, we shall delve into everything you need to know about professional loans.
Who Is Eligible For A Professional Loan In India?
To get a professional loan in India, one must meet certain eligibility criteria. Typically, an applicant should be between 25-65 years old, have a decent credit score, and a stable income source for at least three years. Some lenders might require a minimum annual turnover as well. So, before you apply for a professional loan, make sure you research lenders and ensure that you meet their eligibility requirements.
Professional Loans’ Interest Rates
One of the most important factors to keep an eye on while applying for a professional loan is the interest rate. Different lenders offer different interest rates, which may further vary based on the amount and tenure of your loan. Usually, rates can be anywhere from 10% to 20%. Lastly, remember that if you go for an unsecured loan (which doesn't require collateral), the interest rates could be higher than for secured loans (which do require collateral).
When you're checking out professional loans, remember that some lenders might offer floating interest rates that can vary with the market, while others might have fixed interest rates that are static. So, figure out which one works better for you and go for it after due consideration.
Repayment Period For Professional Loans
In India, the repayment period for professional loans typically ranges from 1 year to 5 years. However, some financial institutions do offer longer tenures that can last up to 10 years, depending on the loan amount and the borrower's eligibility. The repayment period generally includes the principal amount and the interest.
When it comes to picking the right repayment period for your loan, it's important to strike a balance between manageable monthly payments and minimizing the amount of interest you'll end up paying. If you choose a longer repayment period, your monthly installments will be lower, but you'll end up paying more in interest over the course of the loan. Alternatively, if you opt for a shorter repayment period, you'll have to pay more each month, but you'll save money on interest. The correct balance between the two factors is entirely up to your financial situation. So, make a call after due consideration.
Loan Application Process
To apply for a professional loan in India, you'll need to go through a few standard steps. After ensuring you meet the criteria that your choice of lender has set, the next step is to gather the required documents. Typically, these include your PAN card, Aadhaar card, income tax returns, bank statements, business registration documents, and proof of professional qualifications. Be sure to have all the necessary documents ready before starting your application. Also, remember that different lenders may have slight variations in the application process, so your prep might differ ever so slightly, depending on who you take the loan from.
Once you’ve got all your papers in check, you’ll have to submit your loan application to the lender. You’ll need to fill out a form with all your personal and professional details, including the required amount of your loan and the required repayment period. If the lender approves your application, they’ll send you a loan offer that outlines the loan amount, interest rate, and repayment schedule.
Before you sign the loan agreement, make sure you go through it with a fine-toothed comb and understand all terms and conditions like the interest rate, repayment period, fees and charges, prepayment options, and default consequences. Ensure that you clarify all doubts with your lender beforehand and then If you're happy with the offer, sign the agreement and provide any additional documents required by the lender. Afterwards, the lender should transfer the loan amount to your bank account.
Summing Up
These are some of the most important points to keep in mind about professional loans in India. Do your research and weigh your options carefully to make the most out of these loans. They can be a big help if you want to grow your business or advance in your career. However, it's important to step into an agreement wisely as they can become financial burdens if you don’t know what clauses and terms they hold. Remember these tips when you're ready to apply for a professional loan so you can apply for a loan without any uncertainty.
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