COVID-19 has affected our lives to a great extent. Be it following social distancing, working from home, or the coronavirus aimed nationwide lockdown which has ruined our economy.
It is a tough time for everybody where pay cuts and layoff has become normal. As borrowers, it is an even more difficult time as for the ongoing loans one needs to serve EMI regularly causing them temporary cash crunches. The pain is even deeper for the non-salaried individual who doesn’t have a regular income. Considering the situation Banks and NBFCs are offering Covid-19 personal loans. These loans can be a temporary solution for cash crunches and can add extra money to boost your cash flow. But before you apply for this loan, it becomes important to understand whether these are available to everybody and what benefits they offer.
Banks Providing COVID-19 Loans in India
- Punjab National Bank (PNB)
- Indian Overseas Bank (IOB)
- Bank of Maharashtra
- Indian Bank
- Bank of Baroda (BoB)
- Union Bank of India
- UCO Bank
- State Bank of India (SBI)
- Bank of India
What Is A COVID-19 Personal Loan?
COVID-19 personal loans are offered by some public-sector banks in order to maintain liquid funds among the people who are facing cash crunches due to the coronavirus pandemic. These loans are generally priced lower than regular Personal Loans. To avail these loans it’s important for the applicants to be the existing customer of the bank with whom they are applying.
The Interest Rate for the COVID-19 Personal Loan
The interest rate for COVID-19 personal loans ranges from 7.2% to 10.5%. This rate is lower than the interest rate charged for the regular personal loan which ranges from 9% to 24% per annum. Hence availing a COVID-19 personal loan can be a relief for those who are looking for financial help through loans.
The maximum loan amount offered for this loan ranges from ₹ 2.5 lakhs to 5 lakhs depending upon the monthly salary of the borrower and existing loan value.
The loan tenure for these loans varies from 6 months to 5 years.
These loans carry no prepayment fees and have zero to low processing fee.
The Eligibility Criteria
The eligibility criteria for a COVID-19 personal loan differs from that of a regular Personal Loan. As only existing customers, who hold a loan, or who have a pension or salary account with the bank, are eligible to apply for a COVID-19 loan. If you want to avail this loan with your bank you need to check whether they are offering this loan or not as only a few banks are providing this facility.
In view of COVID-19 pandemic, banks have already given a lifeline to existing borrowers at the behest of RBI by offering a three-month EMI moratorium for the outstanding loans. This includes home loans, educational, personal and car loans. The interest will still accrue during the moratorium and will be added to the outstanding loan amount. So in a way, the total interest cost of the loan will increase if you opt for this moratorium period.
The same is true with the Covid-19 personal loans. Since the loans are available at reduced rates it does not mean that one should opt for it without requirement. Loans still have to be repaid along with the interest and we don’t know what will be our condition in the future. We don’t know how long this crisis will continue.
Yes, if the requirement is unavoidable or urgent one can go for this loan but keeping both requirement and repayment capacity in mind.