Why Should You Go For Covid-19 Personal Loans?
To help people tide over any cash crunch during the COVID-19 pandemic, banks and non-banking finance companies (NBFCs) have rolled out personal loan schemes with relaxed norms for their customers. Yes, banks such as Bank of Baroda, Punjab National Bank, Bank of Maharashtra and Bank of India have launched new personal loan schemes for existing customers. These special loans come with relaxed norms for customers like zero or minimal processing fee, attractive interest rates, etc. So, should you then opt for these Covid-19 personal loans to ease your short-term financial pain? If yes, what are the conditions that banks have laid out? And, if not, how you can tackle the liquidity issues with your existing investments and savings.
What are the Covid-19 Personal Loans?
Covid-19 personal loans are a type of personal loan which are especially designed to meet your immediate cash crunch needs during Covid-19 pandemic. These loans are available to the existing customers only having a cibil score of above 650. This loan comes with an attractive interest rate, minimal processing fee and repayment period of up to 3 months.
Which Lenders Offer Covid-19 Personal Loans?
|Name of the Lender
|Name of the Scheme
|Bank of Baroda
|Baroda Personal Loan COVID-19
|Existing retail loan customers
|10.25% per annum
|Up to 3 Months
|Bank of Maharashtra
|Personal Loan COVID-19
|Existing housing loan customers of the bank
|9.20% per annum
|Up to 3,00,000
|Up to 36 months
|Punjab National Bank
|PNB Sahyog COVID-19
|Existing bank customers and housing loan customers
|8.05% per annum
|Up to 3,00,000
|Up to 36 months
|Bank of India
|COVID-19 Personal Loan
|Existing salary account holders and housing loan customers of the bank
|3 times of last drawn gross salary OR Up to Rs.5,00,000
Who Can Avail These Loans?
COVID-19 specific loans are primarily offered to existing customers requiring emergency funds to tackle cash flow disruptions, according to experts.
Consumers facing liquidity related issues due to the lockdown can consider them.
What are the Interest Rates Being Offered on These Loans?
These loans come with lower interest rates than regular personal loans and may also come with a limited version of moratorium. Banks, on an average, are offering an interest rate of up to 15% on these loans.
Typically, personal loans have an interest rate of 18 percent, which can go as high as 24%. Hence, these types of loans may ease out the liquidity crunch in the short run.
How Easily These Loans Will Be Processed?
Most lenders are currently working with limited staff for very limited working hours, which means availing these COVID-19 specific personal loans would anyways depend on the capacity of the lender to process and disburse these loans during the lockdown. But you can apply for them online and send your application, the bank officials will get in You.
What are the Conditions for Availing Covid-19 Personal Loan
Bank of Maharashtra: Offers the loan only to its existing housing loan customers. If you are a salaried person, the loan amount allowed will be 10 times your latest gross monthly salary. In case you are self-employed, then you will get a loan of up to 60 per cent of your latest annual income based on the latest tax filings. The maximum loan amount is capped at Rs 3 lakh for both salaried and self-employed home loan customers.
Bank of Baroda: Offers its own version of COVID-19 personal loan to its home, car, personal, education and other loan customers. Borrowers should have a minimum of six months’ relationship with the bank. And the existing loan amount should have been fully disbursed to the borrower before applying for the COVID-19 product. If the original loan has a moratorium, then the moratorium period should also have been completed. And, at least three installments of the original loan must have been paid before the borrower applies for the COVID-19 loan. A good past track record in repaying loans is crucial to be eligible with you shortly.
Punjab National Bank: The lender is offering COVID-19 specific loans to existing customers who are drawing their salaries through the bank. Also, those who had a salaried account with United Bank of India and Oriental Bank of Commerce, which are now merged with PNB, are also eligible for the loan.
Bank of India: The bank is offering COVID-19 personal loan to only existing salary account holders and housing loan customers of the bank. If you have a salary account in the bank or if your housing loan is already running with the lender, only you are eligible to apply for this special personal loan to meet your financial crisis.
What Works for You?
Interest rates on COVID-19 loans are lower than on the usual personal loans; they start at around 7.25% yearly and go up to as high as 14% annually. Regular personal loans come at interest rates of 14-24% depending on your credit score and income. These schemes are offered purposely at low-interest rates to help many customers whose cash flows may have got impacted due to the lockdown imposed by the government.
The COVID-19 personal loan schemes are only offered to existing customers of banks. In fact, some banks offer it only to their home loan customers. Some have extended it to other bank customers as well.
Banks will mainly lend only to customers who have a decent track record of repayments and good credit score. Also, there are various terms and conditions for eligibility and the disbursal amount in the scheme as explained above.
Banks have linked the interest rate of this loan scheme to repo rates of the Reserve Bank of India (RBI). So, when the repo-rate is increased by the RBI the monthly installment for the borrower will also increase, effective from the subsequent reset date of the bank during the tenure of the loan.
Some of the banks are offering a moratorium of three to six months in this loan scheme. It means a borrower doesn’t have to repay any installment during the moratorium period. During the moratorium, interest is charged and is added to the repayment costs of the borrower. However, there are penalty charges of 2% for non-payment or delayed payment on the outstanding amount. This will be an additional cost if you are unable to repay by the due date.
Should You Go for It?
- A personal loan should be your last resort. If you are in a tight financial situation, first try and tap your emergency corpus if you have one. If you don’t, then liquidate your existing investments or even your gold holdings.
- Do not opt for these loans just because they are easily available online and carry low-interest rates compared to regular personal loan schemes.
- Taking on an additional loan to pay off your existing loan can lead to a financial disaster, especially in these times of salary and job cuts.
- According to experts, at this time, be frugal and control your expenses. No one knows how long this contagion is going to last and what shape it will take. Only if it’s a dire emergency should you opt for this loan?