LOAN FACILITIES FROM BANKS

Banks have a lot of loan schemes that help people from all walks of society. The various loan schemes are:
o Personal Loans (also called Consumer Loans): for purchase of consumer durables like refrigerators, furniture, kitchen appliances, etc.
o Vehicle Loans: for purchase of two-wheelers and four-wheelers or any other mode of transport.
o Housing Loans: for purchase of a flat or a house.
o Educational Loans: to meet expenses in connection with children's education - fees, hostel fees, cost of books, etc.

Repayment: All these loans can be repaid in convenient monthly instalments. If you are in a position to repay a part of the loan over and above these instalments, you are permitted to do so and this will reduce the interest amount that you will be paying towards the loan. This facility of prepayment is not extended by most finance companies.

Eligibility criteria: Loans are sanctioned based on the need and the repayment capacity of the borrower. This is ascertained by scrutinising the monthly income, profession and the Income tax return (in case of large loans) and any such documents.

Personal Loans: As mentioned earlier, these loans are granted for purchase of consumer durables. Payment will be made directly to the supplier based on the invoice.

Vehicle Loans: These are generally granted only for purchase of new vehicles. You should possess a valid driving licence. The payment will be made directly to the dealer who will be supplying the vehicle. The vehicle will be registered in your name with the Bank's hypothecation clause mentioned in the R.C. book and in the Insurance policy. Usually, the bank will retain one set of keys to the vehicle till the loan is fully cleared.

Housing Loans: These loans are generally granted for purchase of a flat or a house which is not older than seven or eight years. The documents of title should be clear and the construction should be according to the sanctioned plan. Loans can be availed for purchase of land provided you arrange to construct a house within a specified period according to building regulations. As the amount will be higher than in other loans, the repayment period will also be longer to make the repayment easier. Depending on your age and the length of service remaining in your career, the repayment period can extend upto 180 instalments. The property will have to be mortgaged to the bank and all periodic payments like property tax, water levies, etc., will have to be promptly paid by you.

Educational Loans: These loans can be availed by you for pursuing your higher studies either in India or abroad, in recognised institutions. The student should have an excellent academic record. The loan amount can include all expenses directly connected with the course like, examination fees, hostel fees including mess charges, cost of books and even the cost of a computer if it is essential for the course that is being taken up. When you approach the bank for the loan you should make out a complete list of the total amount you will be requiring for the entire course. For example, if it is a four-semester course, you should include the fees and expenses for all the four semesters. The bank will sanction the loan according to their rules and will disburse the amounts only as and when they fall due. In this manner, you will be paying interest only on the amount of the loan that has been availed. Disbursements will be made directly to the Institution or the book supplier as the case may be. You will need to pay only the interest periodically, usually once in three months and the repayment of the loan will usually start from six months from the completion of the course or from the date of the student securing employment. The idea is that the student will start to repay the loan from his earnings. The number of instalments will also be fixed to make the repayment convenient.