Loan Singh Explains – What is Prepayment Penalty?

prepayment-penalty

Introduction

As a borrower, an absolutely gutting experience with banks is the rejection of loan pre-closure request. Believe us, it is quite frustrating. It is not just a standalone hassle that confronts us when dealing with banks. The heaps of paperwork, running from one counter to another, getting the long list of documents sorted, arranging copies of documents, spending hours sitting with the agent, filling-up the application forms, etc. – the list is endless. A prepayment penalty hurts badly. You figure a way to clear-off the loan ahead of tenure, and then find out you are not allowed to pre-close the loan. Even if you get the clearance to pre-close the loan, a penalty would be levied. Today, we will discuss Loan Singh’s online personal loan application process, the post approval process and how you can pre-close your personal loan without being penalized.

 

Personal Loan Times

At times of financial emergency, there is no better alternative to availing a personal loan. A personal loan is a type of unsecured credit that is generally availed to meet urgent financial needs. Being an unsecured credit, personal loan requires no collateral or mortgage. The next question you would have is, “With no collateral, how does Loan Singh trust an applicant?

Loan Singh does not meet the applicant face-to-face, like traditional lending solutions. Loan Singh does take a risk when screening applicants for eligibility. Everything, from loan application to amount disbursement, happens online and to mitigate the risk, Loan Singh looks at your credit worthiness. If you have a good credit history, you have a better chance of avoiding a personal loan rejection with Loan Singh. Your credit history tells Loan Singh how prompt you have been with your past loan or credit card related responsibilities. Availing a personal loan via Loan Singh is advantageous because there is minimal paperwork involved and no time is wasted in cross verifying any paperwork. Your employment status and income help determine if you are capable of paying the loan repayment EMIs on time, or not.

The personal loan amount, along with interest rate, is calculated for the entire tenure. In case you want to clear-off the loan before tenure completion, no prepayment penalty  is levied by Loan Singh.

There can be various purposes for availing a personal loan. Some of them are

  • Medical expenses
  • Second hand car
  • House repairs (which offer tax benefits, as well)
  • Online shopping
  • International holiday travel
  • Job relocation
  • Home improvement

And folks, Navratri is here. Whatever happens, Loan Singh is here for you – “Aami Tamane Bhuli Gaya Nathi”. If it’s new clothes to flaunt over Dandiya, sweets to distribute among family or arranging the entire Garba night in your backyard, the funds are available for you. All you need to do is simply apply.

 

Eligibility Criteria

Just like in banks, there is a set of eligibility criteria at Loan Singh, as well; albeit a short one.

Indian and salaried – You must be an Indian citizen and be earning a minimum of Rs.15,000 per month.

Good score and age – Have a good enough credit bureau score to help Loan Singh gauge your repayment capabilities. If you have no credit history, then you must be salaried for at least 3 months. You must be at least 21 years of age.

No collateral means you can apply for a personal loan for the above purposes and more; even if you do not own any assets. No loan guarantor is needed. No storage needed for piles of paperwork.

You are a salaried individual and chances are that your salary will continue to rise in the forthcoming months and years. Use this impetus to plan your repayments to avoid any delay in repayments and defaults.

 

Application Process

The process is simple and completely online. You need your PAN Card and latest 6 months bank statement. The statement has to be in PDF format only. You can apply for the personal loan by going to LoanSingh’s homepage and click on ‘Get Loan Now’.

Get Started Page – Select ‘PERSONAL LOAN’ from the drop-down for ‘Loan Type’ and enter the loan amount with the desired repayment tenure.

Registration page – Add your contact number, personal email ID and corporate email ID

Social Authorization – Connect your Facebook, Google+ and LinkedIn profiles for discounted rates

Profile Page – Fill in your name, gender, father’s name, number of dependents and PAN Details. We use your PAN Card Number to check your Credit Score and as a KYC document.

Address Page – Choose your type of residence; mention your street address, city, state and pin code.

Job Profile Page – Mention your current designation, total work experience, company name, highest qualification, last institution attended and monthly salary.

Financials page – Upload your latest 6 months bank statement from your computer, your GMail account or from your net-banking account.

Auto Debit Page – Provide permissions to your bank name, account number and IFSC code so that Loan Singh can auto debit the EMI amount from your account every month. This way you don’t need to set reminders or miss-out on any loan EMI repayments.

 

What Next?

So, your application for a loan gets accepted and evaluated. What’s next? Well, it’s time to find out if your impatient biting of nails has been rewarded or not!

Fund disbursement

Every borrower, whose personal loan application is ‘Approved’ or ‘Rejected’, gets notified via an email. It is obvious that a digital lending platform, such as Loan Singh, will make use of digital means to inform borrowers about any event. Sometimes, borrowers are found eligible but fall short of an approval due to a missing piece of information or incomplete data. Such borrowers are intimated via an email, SMS and phone call. Just like the US Military slogan ‘never leave a man behind’, Loan Singh also tries everything to get a credit worthy borrower to avail a personal loan.  In case your personal loan is approved, the sanctioned loan amount is transferred to your listed bank account via NEFT/RTGS payment mode. Netbanking is the fastest, secure and most commonly used mode of fund transfer. It is also advisable to provide Loan Singh with your latest bank statement PDF via your netbanking account. The disbursed loan amount is dependent on your income.

Loan Tracking

Loan Singh’s platform allows borrowers to view all of their loan related information at one place. Each borrower can log on to his/her dashboard and keep track of EMIs paid, the balance amount pending, loan tenure and EMI due-dates.

EMI Repayment

Borrowers can make loan EMI repayments via netbanking or NEFT. Net-banking, being swift, is the best method. You wouldn’t want to miss-out on the EMI payment due-date, would you? Providing an NACH mandate to Loan Singh authorizes Loan Singh to deduct the monthly EMI amounts directly from your bank account. This auto debit feature ensures you don’t ever have to miss any EMI. In case you miss out on any EMI, Loan Singh will then levy a penalty.

 

Prepayment Penalty

Loan Singh does not levy any prepayment penalty, in case you want to close your loan before tenure completion. So, what exactly is prepayment penalty and what is its role in offline or traditional banking methods?

A ‘prepayment’ is simply a facility provided by Loan Singh, and lending institutions, to close a loan earlier than the pre-determined tenure. Banks charge penalties for early closure of loans, to protect themselves against the loss of interest that would have been paid by the borrower. The prepayment penalty is added as a way to recoup the cost of loan management.

Borrowers choose to pay-off the loan when the principal amount left is small, and the borrower wants to save whatever interest he/she can save by paying-off the loan early. Banks set-up a lock-in period in their loan contracts. During this time, borrowers cannot pay-off the loan. After this is completed, borrowers can opt for a prepayment. Prepayment is also allowed if the borrower decides to switch banks to gain benefits of a lower interest rate at the other bank. Borrowers switch banks to refinance their loans at a lesser rate of interest, if available.

Post availing a loan, an increase in salary or a windfall received, may lead to an income increase and encourage you to close-off the loan ahead of tenure. Therefore, it is advised to read along the fine print on a bank loan contract. Discuss all points that concern you, including the difference in charges between paying the loan off via the borrower’s own sources and refinancing from another bank. Or, just don’t borrow from a bank and come to Loan Singh.

 

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