FAQs

Repo Rate Linked Lending is the rate of lending linked to the RBI’s repo rate. Repo rate-linked lending is used by banks to calculate the retail interest rate on loans. It is an external benchmark used by commercial banks and is revised every 3 months. The volatility of interest rates linked to repo rate-linked lending is relatively lower.

MCLR is Marginal Cost of funds-based Lending Rate wherein the lender calculates the rate of interest based on the loan tenure. This is a fixed interest rate.

TBLR refers to Treasury bill Benchmark-linked Lending Rate. The interest rate is calculated basis the Treasury bill Benchmark Rate published every three months. This is a floating interest rate.

A co-applicant for a Loan is generally a Family Member or a Co–Property Owner.

The following co-applicant combinations in case of a family are the most accepted by the Lenders:

A son or daughter can co-sign a loan for their parents

A pair of brothers can co-sign a loan

A married couple can co-sign a loan

A minor or a friend, who is not a joint property holder cannot be a co-applicant.

Fixed rate of interest is when the interest rate is agreed prior to the loan being extended. Floating interest rates are subject to change every quarter and are linked to Repo Rates announced by the RBI every quarter.

The general consensus is that floating ROI falls cheaper for the borrower than fixed ROI, but every borrower should decide for himself as rates can be increased too in a floating plan. The EMI amount does not fluctuate for floating ROI loans; instead it is the loan tenure that gets adjusted.

However, incase of Individual Borrower & funds availed for personal use, your lender cannot charge any pre-closure or prepayment penalties on floating ROI loans.

In general, it is a wise decision to insure one’s property. However, there are no laws or regulations that mandate or make it compulsory for the property to be insured when applying for a home loan or using it as loan collateral.

The borrower needs to be at least 21 years of age in order to avail of a loan as per the law. However, some lenders might prefer to lend to borrowers older than 23 years.

For education loans, applications are accepted for students who are a minimum of 18 years old.

Do note that age is not the only criteria for loan eligibility. Credit score, income and assets count for home loans, for example. For an education plan, one should have obtained admission and often, past grades of the student are also taken into consideration.

Creditworthiness is the measure of the borrower’s trustworthiness with credit. It is the foremost critical criteria for the Lending Institution in assessing your eligibility for the loan applied for.

You can request your Relationship Manager assigned to you to help you update the details in the bank. You can call / send email to the customer care ID of the Bank / NBFC.

EMI payments on most loans can be made via auto-debit from your bank account, via NEFT or IMPS, through an online transfer, using payment wallets, using a cheque in some cases.

You can get your property papers – and any other documents pertaining to loan collateral – returned to you within 10 to 15 working days after the payment for the outstanding amount is credited to the lender.

Loan Refers to monetary debt obtained by the borrower ,i.e an individual or any other legal entity from the lender, i.e bank, NBFC ,Government body .This loan is taken for a specified period of time and the total amount plus interest is repaid in instalments or in lumpsum.

In general, loans can be categorized as secured and unsecured loans. Secured loans refer to the loans in which the borrower is required to provide some form of collateral/ asset. Unsecured loans are typically disbursed without any collateral requirements by the lending institution.

There are many types of secured loans being provided by Banks, NBFCs and other financial institutions. Some of them have been listed below:

  • Automobile/vehicle loans
  • Home loans
  • Loans on fixed deposits / Loan against Shares
  • Loans against property
  • Working Capital Loans
  • Loan against rentals

However, this is not an exhaustive list and there are many other types of secured loans.

Banks, NBFCs, government departments and other financial institutions provide a wide variety of unsecured loans/ funding. The most prominent among them are as follows:

  • Business Loans
  • Personal Loans
    • Loans for vacations
    • Loans for marriages
    • Home renovation/ repair loans
    • Vacation/ Holiday loans
    • Education loans

Please note that these loans might be known by different names depending on the institution providing them and the above list is indicative and not exhaustive.

In case a borrower has some outstanding amount of money left to be repaid from an existing loan, they can opt to transfer the loan to a different bank or financial institution. It is done to get a better rate of interest and reduce the amount being paid in the remaining EMIs. However, not all banks, NBFCs and financial institutions offer this facility. Moreover, whether or not you can avail balance transfer of loan also depends on the type of loan. Hence, it is always advisable to find out the policies of your existing as well as prospective lender before you plan for balance transfer of loans.

No, presence of a co-applicant is not mandatory in most types of loans. However, having a co-applicant in some cases not only increases your chances of loan approval but also allows you to become eligible for loans of a higher value.

Depending on the norms and policies of different banks, NBFCs and financial institutions, the eligibility for co-applicants differs. In general, most of these institutions do not allow minors, declared insolvents, and otherwise ineligible persons to become co-applicants. Mostly, business partners, father-son, husband-wife and other persons are allowed to become co-applicants for different types & categories of loans.

EMI is the abbreviated form of Equated Monthly instalments. It refers to the amount of money that is to be paid towards repayment of different kinds of loan on a monthly basis. EMIs for loans vary depending on the principal sum, rate of interest, tenure of the loan and the Moratorium period for payment (if any).

EMI payments on most loans can be made via auto-debit from your bank account, via NEFT or IMPS, through an online transfer, using payment wallets, using a cheque in some cases.

At times, borrowers avail a part of the total approved amount of loan. In these cases, the lenders charge interest only on the part that has been borrowed from the total approved amount till the full disbursal of loan. This refers to the pre-EMI interest and borrowers are usually required to pay the same on a monthly basis till full and final disbursal of the approved loan is made.

Different lending institutions have their specific set of rules, terms and conditions for assessing the loan eligibility of individuals. In general, the creditworthiness of individuals is assessed and calculated based on these factors:

  • Credit Score
  • Annual/ Monthly income (in case of salaried persons)
  • Audited Financials of the Company along with the projected figures. (in case of business owners)
  • Bank statements of the firm and individuals in order to assess cash flows

However, this is for informational purposes only and lenders can take into account other factors to assess your creditworthiness/ loan eligibility.

The document generally required for taking a loan are:

  1. Duly Filled application form with Photograph of the applicant.
  2. KYC of the Applicant. In case there is more than one Applicant; KYC would be required for all the Applicants who will be part of the loan.
  3. Proof of Residence
  4. Documents supporting the Income proofs.
  5. Incase; the loan is taken against a property; complete back chain of the property is required.
  6. Sanction Letters and the repayment schedule of the Loan / Limit, if any.

The KYC documents are required in the following categories:

  1. Proof of Identity / DOB Proof: It has to be Photo Identification proof. Aadhar, Pan Card
  2. Address proof: it can either be in the form of a Utility Bill / PSU bank Passbook / Property ownership proof.

In case, a Company is a part of the Loan, KYC for the Company/ Firm needs to be provided:

  1. Business Entity Proof: Incorporation Certificate, Articles of Association (AOA), Business Establishment Certificate, Partnership Deed depending on the Type of company / Firm.
  2. PAN Cards: that of the business entity as well as the partners/proprietors/directors/promoters.
  3. Address Proof: residence place and business premises.

In case of a Salaried Person applying for loan, the Income documents are:

  1. Last six months / 1 year salary slip depending on the Lender’s requirement.
  2. Last six months / 1 year Bank Statement reflecting the Credit in the account.
  3. Salary Certificate
  4. Form 16
  5. ITR for last for one year, two years or three years depending on the Lender requirement.

 

In case of a Self Employed Individual; the following documents are required:

  1. Last two / three years (depending on the Lender’s requirement) Complete audited Financials with ITR & Computation of Income
  2. Last one year’s Current Account Statements.
  3. Individual Bank Account Statement of the Partners / Directors, depending on the Company.

 

In case of Self Employed Professional; the documents required are:

  1. If the borrower is an Individual, last two / three years ITR with Computation of Income for the applicants
  2. If the borrower is a company; last two / three years Audited Financials with Profit & Loss account and Balance Sheet with annexures of the firm / company
  3. Bank Account Statement of the Individuals / Current Account of the firm / company.

Collateral is an asset – most commonly referred to as a property or other investments such as gold / bonds / Shares – that a borrower uses to assure the lender that the debt will be paid back and settled. A Bank / NBFC gives a Secured Loan against a collateral.

Prepayment of a Loan is a facility wherein the Borrower can repay their loan in parts or in full before the actual repayment tenure as per the loan documents. When the pre-payment is done in full, it is referred to as Foreclosure of the Loan Account.

The process for foreclosure is simple.

Step 1: Apply for loan foreclosure at the Lending Institution where your loan is running. This can either be done online on the website of the Lender or one can go to the Branch assigned / chosen by you at the time of the loan

Step 2: The lender will respond with the Principal outstanding amount, taking into consideration the interest paid so far and the foreclosure date in relation to the remaining tenure.

Step 3: Make the prepayment of the Loan

Step 4: The lender will send you a No Dues Certificate and return any original documents linked to loan collateral, such as property deeds etc.

You can also reach out to us and we can help you facilitate this with your Bank. This process can sometimes be time taking and cumbersome, at OneNDF we take this tedious process in our hands so that our customers can feel at ease.