Unsecured personal loan
The wife complains to her husband, Why not make a badminton court in our Lobby
*Badminton court! Are you crazy- remarked the husband.
*Yes, there is so much of vacant space, and we do not have furniture to place. It looks like a playground, so let us make it a badminton court.
*Look honey, this leased house is a perquisite enjoyed by me from my employer. Furnishing is my own responsibility. I dont have enough money to buy the furniture. Wait for some time, slowly, we will manage in a couple of months
*You mean to say, till that time, we should not have friends and guest in our house. I feel embarrassed.
This is just a small conversation of hundreds and thousands of families all over the globe. It could be for one or the other reason. The target could be different, but the cause and the reason is same - Short of funds.
How to overcome this embarrassment. How to keep your life running smooth without such arguments Well, one solution would be increase in earnings, resulting in savings and spare funds for fulfillment secured personal loan of your requirement. But, such kind of saving can not be accumulated over night. It would require months, unless you are lucky enough to have a jackpot.
Disturbed over the problem, the husband goes to the office. Looking at his state, his friend and colleague ask him about his problem.
Oh! Well you have the same problem as I have. It has become a cause of disturbance in family relations. We must look for a solution.
After brain storming, they came to a conclusion of borrowing the money.
*We have to look to get loan from somewhere, which will be easy to get and also easy to repay.
*I think, we should ask our well off friends to lend us money
*But why would they- They would expect us to repay the whole money in a time bound period. This may spoil our friendship and relations.
*Then lets find out who is into the business of lending money on interest.
Thinking of getting a loan is very painful. The first thought which comes to mind is that you are tied in ropes of the money lender, and doing slavery for him. There are quite a few persons into money lending business privately, charging heavy rate of interest. They exploit the needs and ignorance of such persons. Getting such loans is of very personal nature. As such, these are termed as Personal loans. Since the purpose of these loans are not specific, and can be used in and for any purpose, there can not be any specific hypothecation or charge. The nature thus is Unsecured, and can be termed as Unsecured personal loans.
Unsecured personal loan are limited to certain amounts as upper limit. Because the requirement of higher amounts means specific and not personal. The requirement of Personal loans or in short PL can be met from Private sources or Banks. Private sources can be in organized or unorganized sector. Individuals running business of money-lending in unorganized sector normally lend only to persons whom they identify and know.
They do not go in for numerous formalities, but disburse immediately. This seems convenient. But this convenience is at a very exorbitant cost. The whole economics works on Demand and Supply. Those who get caught in the net of these private money lenders either lack the knowledge of the organized sector, or are deficient in meeting the requirement of producing the various documents, or are in emergency for immediate requirement. Once, they get caught in this net, never get out of this. The terms stipulated by the money lenders are so stringent. The interest is taken in advance, and one never gets out of it and just paying Unsecured personal loan interest only. The repayment of principal becomes a dream.
Another private source is in organized sector but is not governed completely by the Central credit regulatory and controlling authority. These are termed as Non Banking Financial Companies or in short NBFC. They are cheaper than the private money lenders, but tend to make the product of your requirement which seems attractive but has number of hidden cost. One has to be intelligent and calculative enough to find out these hidden costs. There is always a scope of negotiating the rate, terms and conditions with the NBFC. There method of appraisal and verification is same as that of Banks. They ask for proper documents viz. proof of employment and earnings, proof of address, Bank statement, and over an above, Post dated cheques for repayment. Keeping PDC of customers gives great sense of security, as non-payment of cheque amounts to criminal offense and leads to prosecution.
Bank is the most comfortable zone to take personal loan. Banks are governed and regulated by the Central Bank of the country. They have fixed rates of interest and terms, which have no room for negotiations. And these rates are very economical. They calculate Equated Monthly Instalment (EMI), which covers a portion of Principal and a portion of interest. They also provide flexibility to repay in EMI*s of 12 month to 60 month. One can choose for the loan period keeping in view the availability of the surplus of earning over expenditure every month.
The Banks however require formalities to be completed. The proof of earnings and residence is attached to the application form. Thereafter these are verified by Bank executives visiting the residence and the place of work. Once they are satisfied, the executive attach the report of verification and the file moves on to the Manager. The managers at various levels are empowered to sanction X amount. In case it exceeds their sanction limit, they forward with their remarks to the Higher authority till it reaches the competent authority empowered to sanction the Z amount. During this process, the executives or Managers may require further information or documents to satisfy their queries. The file is then moved back for disbursement to the disbursing authority with the sanction. The disbursing officer gets the loan documents executed before finally disbursing the loan. Normally the Banks prefer to sanction loan to person who is an account holder with their Bank. Else they insist to open an account. The EMI is thus debited to the account directly every month. But they are not very strict on this. Alternatively, they too take PDC for the entire period of loan.
The only drawback in taking loan from Bank or an NBFC is the time of about 4 to 7 days for final disbursement. But considering the various advantage on cost and repayment, that is negligible and ignorable.
*Darling please come home in time, I have invited few friends for dinner. Please invite your colleague too. The wife calls the husband.
The husband asks his friend, who informs that his wife too has invited few guest for dinner.
Can you guess, why the change in the conversation. Yes, you got it right, they took Unsecured Personal Loan from Bank and got their house furnished tastefully. Oh! I am getting late. I am also invited for that dinner. Bye, if you have some requirement, get the Unsecured personal loan from Bank, but be careful, no over burden on your earning. Else you will be looking for invitations for dinner everyday.
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