Solve your cash-flow troubles

If you need cash but can wait for some time,go for a personal loan instead of withdrawing money using your credit card ...

Unlike a home loan or a car loan,which is meant for a specific purpose,one can take a personal loan to meet a variety of temporary cash-flow problems. Since these loans are not backed by an asset,the rate of interest on them is high.

If you wish to do research about the best personal loan offers,visit a web site such as apnapaisa.com or bankbazaar.com. First,these sites ask you to fill in a number of details: your gross annual salary and take-home salary; whether you already pay EMIs; the type of house you live in self-owned or rented. The web site then offers the following details: the maximum loan you are eligible for; which banks have the best interest rate offers; the EMI you will have to pay; and the total cost of the loan. You may alter the loan amount and tenure and the web site throws up the corresponding EMI. Another interesting detail they offer is a break-up of the total payout you will make: loan amount,total interest payable,fee,and service tax.

Applying for the loan

To apply for the loan,you have to provide the following information: personal details,residential address,and professional details. You also have to provide a number of documents: proof of age,address,identity,employment,designation,income,bank statement of salary account,and photograph. After filling in these details,you may submit this information at the web site they don8217;t charge any fee from you or at the bank.

Interest rates

Interest rates on personal loans vary widely from 12.25 per cent to as high as 21 per cent. Public sector banks usually offer a lower rate. Many banks categorise your employer into categories A,B and C,charging a lower interest rate if your employer belongs to category A and a higher rate if he belongs to a lower category.

Public or private sector bank?

Public sector banks usually offer lower interest rates and processing charges and their terms regarding pre-payment penalty also tend to be more lenient. The private sector players,on the other hand,tend to be more aggressive in the market. They have call centres from where their executives call you up regularly with personal loan offers. If your salary account is with a private sector bank,depending on your profile,you sometimes become eligible for a certain amount of pre-approved personal loan. Every time you visit the bank8217;s ATM or undertake an Internet-based transaction,their offer pops up before you. And usually they also tend to be faster in processing the application. If you have time in your hands,then try your luck with a public sector bank,but if you need the money quickly you would perhaps be better off trying your luck with a private sector bank.