The loan availed through the property is a secured type of loan. Secured loans are of no or very little risk to banks. If you fail to repay the loan then the bank can sell your collateral to get the loan amount back. Therefore banks offer fewer interest rates and lenient payback tenures as it is a secured type of loan.
A secured type of loan can have a repayment period of up to 10 years or some banks even provide 15 years repayment period. The interest rates are also pretty low from 7% to 8.45% as compared to personal loans.
Although we need to understand not everybody wants to invest in real estate or cars which you can have as security. Some people aren’t fortunate enough to have enough money to invest in such solid assets. Although we all can get two to three credit cards and maintain a good credit score by making payments with the credit card and paying them back on time. They don’t even need to be any over the top purchases; you can borrow a small amount and pay it back on time over a long period. This is called is building your credit score. There are even some companies online who will boost your credit score. They will also suggest best practices to maintain a good credit score.
This way SBI personal loan knows that you are a trustworthy person who will pay back their debts on time and hence you are a worthy customer to avail of a loan. Credit scores range from 300 to 850 where 850 is the highest and 300 is the lowest. Bank generally have a bar of 650 minimum credit score. If your credit score is lower than that then banks will not approve your loan. Also longer and cleaner the credit history the better. If you have already availed of a personal loan and paid it back on time then your credit score will boost by a lot. Banks also provide pre-approved loans for such customers who always have big transactions going on. These customers are also in a place where they can negotiate the interest rates and repayment period also the loan amounts. All of this is done at the discretion of the bank. Make sure that you negotiate this deal to its fullest as getting a pre-approved loan from a good bank is not as easy as it sounds.
A personal loan comes with an origination fee, especially for unsecured loans. This fee can be anywhere from 1% to 4% of the loan amount depending on the bank. Make sure you get your loan from a bank where origination fees are minimal. If your loan amount is huge then the origination fees can be a lot and it might be difficult to pay upfront. Banks can also cut them from your disbursal money or it can be added to the repayment amount but there you will have to pay the interest on that.
Processing fees are lower than origination fees and some banks will not charge processing fees on personal loans which are availed digitally. So, without any added problems you can just get a waiver on your processing fees by applying for the loan online.
Personal loan EMIs are no piece of cake. If you don’t pay them on time then you are risking your credit score. Also, banks charge penal interest rates and some more charges on late payments so make sure you pay them all in time.
Remember even though you are not risking any collateral by getting a personal loan but if you don’t pay your EMIs on time for a longer duration in tenure then banks hold the right to make your credit score very bad and also file a lawsuit against you.
Secured loan EMIs are also not to be taken lightly although you can convince the bank to give you a little bit leniency you are risking the collateral by doing that.
