Personal Loans
Content
MONEY AND BANKING
Personal Loans
Table of Content
Topic Introduction Structure of personal loans Documentation Features Comparison in Grid form Conclusion Recommendations Bibliography Page
INTRODUCTION
Personal Loans: The loans given for personal, family or household use are known as personal loans. They are different from loans for business. Personal loans are usually unsecured, although in some situations a guarantor maybe required.
Features
The typical features of personal loans are given below: 1. Easier and quicker to obtain: There is less paperwork involved in applying for personal loans compared to other loans like mortgages and home equity loans. It is easier to apply for and its processing is also faster. 2. No collateral: Collaterals are not usually required for personal loans. To qualify for the loan, the bank will usually analyze a person’s credit rating, current income, debt load and other issues that may affect your ability to repay the loan. 3. Fixed Interest rate: Some loans have interest rates that keep changing over the period of the loan. Personal loans have fixed interest rate that cannot be changed and both interest rate and repayment amount remains the same for the duration of the loan. 4. Flexible repayment period: Banks give choices of repayment periods and the borrower can choose repayment plan that is most suitable for him/her. 5. No hidden costs: The repayment amount is decided from before and therefore there are no hidden costs attached to personal loans.
Documentation
General documents required when applying for personal loans are: • • • • Copy of CNIC Salary Slip Bank Statements Application form
Grid: Bank Loan amount
PKR 50,000 to PKR 1,000,000
Repayme Interest Eligibility nt period rate
Up to 5 years. (12 to 60 months repayment) • Permanent Pakistani Resident • Age between 2160 years • HSBC Premier/Status account holder
Rs 25,000 to Rs. 500,000
12-60 months
• Age: 21-60 years • Minimum Income
requirement Rs. 12,000
Uses of Personal Loans:
Personal loans are obtained for a variety of reasons. Some common uses are given below: 1. Education: Sometimes individuals do not qualify for financial aid and they can get personal loan for this purpose as it is easier and faster to obtain and requires less paper work. 2. Medical bills and emergency surgery: Medical bills can be paid off by the help of personal loans. 3. Down payment on a home/ down payment on a home: Personal loans can be used to make down payment on a home. Also, it can be used for home renovation and improvements. 4. Wedding: Wedding expenditure can be easily financed by personal loans. 5. Vacation: Personal loans can be used to finance a vacation trip to those who otherwise would not be able to afford it. 6. Purchase an older vehicle: Banks do not finance the purchase of second hand cars so individuals can choose to take personal loans to finance such a purchase. 7. Consolidate other debt: Interest paid on personal loans is a less than credit cards which is very high. Paying off the interest on credit cards could be consuming a large portion of disposable income. Therefore individuals can opt for personal loans instead.
Bibliography
1. http://www.lendingtree.com/personal-loans/advice/personal-loan-basics/uses-forpersonal-loans/ 2. http://www.mcb.com.pk/ 3. http://www.hsbc.com.pk/1/2/home 4. https://www.ubl.com.pk/consumer/cashline/ 5. http://www.standardchartered.com/pk/personal/loans-mortgages/en/lmlanding.html 6. http://www.citibank.com/pakistan/consumer/products/pl/plhmecc.htm 7.
Personal Loans
Table of Content
Topic Introduction Structure of personal loans Documentation Features Comparison in Grid form Conclusion Recommendations Bibliography Page
INTRODUCTION
Personal Loans: The loans given for personal, family or household use are known as personal loans. They are different from loans for business. Personal loans are usually unsecured, although in some situations a guarantor maybe required.
Features
The typical features of personal loans are given below: 1. Easier and quicker to obtain: There is less paperwork involved in applying for personal loans compared to other loans like mortgages and home equity loans. It is easier to apply for and its processing is also faster. 2. No collateral: Collaterals are not usually required for personal loans. To qualify for the loan, the bank will usually analyze a person’s credit rating, current income, debt load and other issues that may affect your ability to repay the loan. 3. Fixed Interest rate: Some loans have interest rates that keep changing over the period of the loan. Personal loans have fixed interest rate that cannot be changed and both interest rate and repayment amount remains the same for the duration of the loan. 4. Flexible repayment period: Banks give choices of repayment periods and the borrower can choose repayment plan that is most suitable for him/her. 5. No hidden costs: The repayment amount is decided from before and therefore there are no hidden costs attached to personal loans.
Documentation
General documents required when applying for personal loans are: • • • • Copy of CNIC Salary Slip Bank Statements Application form
Grid: Bank Loan amount
PKR 50,000 to PKR 1,000,000
Repayme Interest Eligibility nt period rate
Up to 5 years. (12 to 60 months repayment) • Permanent Pakistani Resident • Age between 2160 years • HSBC Premier/Status account holder
Rs 25,000 to Rs. 500,000
12-60 months
• Age: 21-60 years • Minimum Income
requirement Rs. 12,000
Uses of Personal Loans:
Personal loans are obtained for a variety of reasons. Some common uses are given below: 1. Education: Sometimes individuals do not qualify for financial aid and they can get personal loan for this purpose as it is easier and faster to obtain and requires less paper work. 2. Medical bills and emergency surgery: Medical bills can be paid off by the help of personal loans. 3. Down payment on a home/ down payment on a home: Personal loans can be used to make down payment on a home. Also, it can be used for home renovation and improvements. 4. Wedding: Wedding expenditure can be easily financed by personal loans. 5. Vacation: Personal loans can be used to finance a vacation trip to those who otherwise would not be able to afford it. 6. Purchase an older vehicle: Banks do not finance the purchase of second hand cars so individuals can choose to take personal loans to finance such a purchase. 7. Consolidate other debt: Interest paid on personal loans is a less than credit cards which is very high. Paying off the interest on credit cards could be consuming a large portion of disposable income. Therefore individuals can opt for personal loans instead.
Bibliography
1. http://www.lendingtree.com/personal-loans/advice/personal-loan-basics/uses-forpersonal-loans/ 2. http://www.mcb.com.pk/ 3. http://www.hsbc.com.pk/1/2/home 4. https://www.ubl.com.pk/consumer/cashline/ 5. http://www.standardchartered.com/pk/personal/loans-mortgages/en/lmlanding.html 6. http://www.citibank.com/pakistan/consumer/products/pl/plhmecc.htm 7.
