The situation created by COVID 19 does not have any precedents. There has been a widespread economic impact due to the lockdown. Even after the country has started Unlocking in phases many individuals are in financial distress due to lower or loss of income, especially those who are self-employed.
COVID 19 personal loans are specialized loans introduced by banks in order to help individuals facing financial difficulties due to COVID 19. These loans were introduced to the recommendations of the Finance Minister Ms. Nirmala Sitharaman during her press conference.
As the name goes, these loans are for personal usage and should not be mistaken as a business loan, working capital loan or any other loans like auto loans, etc. These loans are mainly offered by nationalized banks.
Though these loans are like any other personal loan, which means that it can be used for any purpose that you find important. During this time of uncertainty, COVID 19 personal loans can be used for purposes like that of meeting school or college expenses, medical emergencies or even to repay some of the higher interest loans like credit cards.
The best feature of these personal loans is that the interest on the COVID 19 personal loan is much lower than the usual personal loans. The rate of interest on COVID personal loans is in the range of 7 -10% p.a while the regular personal loans carry an interest rate between 12 -24% per annum.
The interest rate on a COVID 19 loan can be a major reason for you to think of applying for the loan. But there a few points that you should be aware of before applying for a personal loan under the special personal loan scheme which are
● These loans are allowed only by the nationalized banks.
● Only those individuals who have savings accounts or salary accounts with the bank are allowed these loans.
● The borrower should have been regular in his/her repayment of existing loans availed from the bank/elsewhere and have a good credit score.
● COVID 19 personal loans are mostly being offered to the home loan customers of the banks.
● These loans are not subject to a processing fee or prepayment penalty.
● Many banks are running this scheme only up to a fixed date.
Many of the nationalized banks are offering COVID 19 personal loans. Some of them are
● State Banks of India
● Bank of Maharashtra
● UCO Bank
● Indian Overseas Bank
● Bank of India
● Punjab National Bank
● Bank of Baroda
● Union Bank of India
The loan amount sanctioned under the COVID 19 scheme can vary between lenders and also based on the personal details of the applicants like credit score, relation with the bank, etc.
For self-employed, the amount could be restricted to 50-60% of the income declared in the last Income Tax Return. Salaried individuals may expect a maximum loan amount restricted to 10 times their monthly salary.
The features of COVI-19 personal loan may look attractive to you, but should you be applying for this loan?
The answer to this question may both yes and no.
The times ahead look quite uncertain. The cases of coronavirus seem to be increasing by the day. In times like this, it may not make much sense to go in for a fresh debt which may increase your financial burden going ahead. However, if you had already planned to avail a loan and are confident of repaying it back without hurting your finances, then you can avail a personal loan under COVID 19 scheme.
If you are facing financial difficulties servicing your existing loans, instead of borrowing money to repay those loans, opting for a moratorium allowed by the RBI may be good. The RBI has extended the moratorium period till the end of August.
However, what could you do if you are in some financial distress and are not eligible for COVID 19 personal loans due to a low credit score or not meeting minimum income requirements set by the bank or if you have a bank relationship with a private bank who is not offering personal loans under the COVID 19 scheme.
The answer to the above question is simple; you could apply for an instant loan from Money View which offers competitive interest rates and is available even for those with a low credit score. Moreover, the loan is disbursed in a matter of 24hrs without even submitting any hard copies of documents.
As with any loan, apply only when you need one and be prompt in your repayment.
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