Delhi:If you have a salary account or an ongoing loan for which you haven’t missed a single EMI in a public sector bank, you may be able to avail a new personal loan product called covid-19 personal loans.
Priced lower than most other personal loans, it aims to help you tide over any temporary crash crunch you may be facing due to the pandemic. Some of the banks offering covid-19 personal loans include Bank of Baroda, Punjab National Bank, Bank of Maharashtra and Bank of India. This lockdown status may create some temporary liquidity mismatch and to overcome the same, the bank has launched a new personal loan scheme for its existing quality retail asset customers with relaxed assessment norms and a lower rate of interest.
This scheme will help tackle the present critical situation, according to Bank of Baroda website, Since these personal loans are for a specific purpose, most banks are offering an interest rate of up to 15% on these loans; typically, personal loans have an interest rate of 18%, which can go as high as 24%. But here are certain conditions to consider before you opt for the loan.
What are the conditions?
As these loans are meant only to help customers tide the liquidity crunch due to the covid-19 outbreak, they come with certain conditions. Bank Of India for example, is giving loans to customers who are drawing salaries through the bank for at least a year, or to those who have an existing home or personal loan. Punjab National Bank, which has named the product Sahyog covid-19, is offering it to existing customers who are drawing their salaries through the bank. Even those who had a salaried account with United Bank of India and Oriental Bank of Commerce, which are now merged with PNB, are eligible for the loan. Similarly, BoM is giving it to home loan customers, and Bank Of India is offering it to existing borrowers who have home loans, or loan against property, or auto loans with the bank.
Most banks are offering a loan up to ₹3 lakh-5 lakh and are not charging a processing fee. You need a credit score of at least 650 points to be eligible for this loan.
Should you go for it?
The attractive interest rate is the biggest draw on these loans but financial planners advise against taking any additional loan liability at this time. “No one knows how the covid-19 situation will pan out. It’s best to refrain from taking additional liability,” said Malhar Majumder, a Kolkata-based financial planner and partner, Positive Vibes Consulting and Advisory.
Taking a loan can give you a false sense of liquidity and make you spend more, he added. If you are facing a cash crunch, dig into your emergency funds or the money lying in your bank account instead of taking a loan. “Since the lockdown, the expenses of most individuals would be down as there’s no travelling, eating out, and only essential items are being sold. Most individuals would have some money in their bank account due to lower expenses. Use that diligently,” said Majumder.
If the situation is dire, liquidate your investments before opting for a loan, unless the loan is at a lower rate than the returns on your investments.
Comments are closed.