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Things to Check When Taking Out Unsecured Business Loan

When you are thinking of starting a business it can be a daunting task to fund it to expand and develop in a dynamic market. However, you can do this by taking out an unsecured business loan. While these loans are readily available, you need to keep certain factors in mind in order to get approval.

A business loan helps you borrow money from financial institutions. However, you have to repay this amount together with the interest within a certain period of time. Plus, you don’t need to provide collateral to the financial institution when you take out unsecured business loans.

Nitin Mathur, CEO of Tavaga Advisory Services, said, “An unsecured business loan, or popularly known as a business loan, is a loan that is granted with no collateral or security guarantees. Both banks and non-bank finance firms offer borrowers business loans such as working capital loans, start-up loans, bill financing, equipment financing, and overdrafts. “

Ajay Mishra, Head of Business Loans,, said, “As with all loans, those looking to obtain business loans should choose a lender who can provide the desired loan amount at the lowest possible interest rate for a comfortable loan term represents its repayment capacity. Since the processing of corporate loan applications can vary widely from one lender to the next, those looking to obtain unsecured corporate loans should compare the disbursement TAT (lead time) while evaluating unsecured corporate loan options. “

In addition, the loan applicant should also consider the type of business loan facility, such as a term loan or an overdraft / cash facility. For example, loans in overdraft / cash facilities would be appropriate for those who need credit to deal with common cash flow mismatches.

Loan applicants should also keep in mind that when evaluating unsecured corporate loan applications, lenders may consider the type and year of business, credit applicant’s creditworthiness, business turnover, average bank balance, bank turnover, bank statements, outstanding commitments, etc.

Many lenders may not lend money if your business does not have enough cash flow. Lenders usually evaluate the business model before approving the loan amount. Hence, you need to maximize cash flow through efficient cash management.

On the other hand, the likelihood of receiving a loan approval increases if you present a business model with an attractive sales forecast. That being said, you should always be prepared with a blueprint of your business model. It should contain details such as: B. how much money the company needs to start up and how much money is invested in growing the company from time to time, the earnings model, etc.

When taking out a loan, applicants should ideally compare the unsecured business loan options offered by as many lenders as possible. You can do this by visiting online financial marketplaces that offer business loan options from a wide variety of lenders.

Most lenders present a loan amount up to 50 lakh, but some offer up to 1 crore. The term of the loan is 1 to 5 years. Eligibility criteria for a business loan are age, business activity, sales, income tax return, bank statements for the last six months, creditworthiness of the business owner, etc. However, creditworthiness plays a crucial role in the immediate approval of business loans. It defines your ability to repay a loan amount.

“Corporate loans are available to property owners, partnerships, private companies, related companies, and individuals. Corporate loans are best for businesses that are just starting operations and may not provide material assets as collateral, “Mathur said.

“A business loan can be used for any business expansion, equipment purchase, etc. The lowest interest rate on an unsecured business loan is 14%. The interest rate on a corporate loan depends on factors such as the company’s age, profitability, future growth prospects, the company’s creditworthiness (in the case of a self-employed, owner, or partnership), “he added.

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EXCELLENT: BPR raises unsecured loan limit to Rwf | 30 million The new time

Rwandans can now get up to Rwf 30 million unsecured personal loans from Banque Populaire du Rwanda Plc (BPR).

The unsecured personal loan has doubled from Rwf 15 million as the bank wants to make it easier for its customers to access credit.

This means that both existing and new BPR customers with a stable monthly income can access the loan without collateral after fulfilling the conditions.

Maurice Toroitich, the bank’s executive director, said the move was part of the bank’s strategy to make it easier for customers to do business with the bank through ongoing policy adjustments.

“We exist as a bank to enable all of our stakeholders to achieve their goals, and we are always looking for the barriers in policies, processes and systems that make it difficult for our customers in particular to do business with us. They redefine our customers easier and easier to serve. That is why we have reviewed our existing credit eligibility requirements so that we can deliver a compelling value proposition to our customers so they can move forward, ”he said.

The modified credit access conditions for personal bank loans include home loans, personal loans, and home equity and vehicle loans.

The lender announced that monthly home, personal and car loan payments will be up to 50 percent of the customer’s monthly disposable net income, an increase from the 35 percent limit.

The amount that the bank can lend in the form of home equity is up to 70 percent of the estimated market value of the property.

Xavier Shema Mugisha, the bank’s chief business officer, said the development aims to improve the livelihoods of its customers after finding the existing conditions to be challenging for a large number of customers.

“The previous amount limited options for customers who wanted credit to purchase assets like land or a vehicle, but now with the new changes, they have the opportunity to do more and improve their way of life,” Mugisha said.

The lender will also allow a customer with an existing loan that is repayable to top up their current loan balance.

BPR’s journey began in 1975 as a community-based savings and loan program and became a full-fledged commercial bank in 2008 with a focus on retail and SME banking.

In January 2016, Atlas Mara acquired a stake in BPR, which was subsequently merged with Atlas Mara’s existing business, BRD Commercial Bank, making the merged company the second largest bank with retail, SME and corporate activities Banking became.

In August 2021, KCB Group Plc acquired the majority stake in BPR by purchasing all of the shares, making the bank a subsidiary of KCB Group Plc.

KCB Group initially intended to acquire 62.06 percent of the shares in BPR Plc owned by Atlas Mara Group and later in February to acquire 14.61 percent of the issued share capital of BPR held by Arise BV

BPR currently operates across the country through an extensive network of 137 branches, 51 ATMs and 350 bank agents, contributing to Rwanda’s socio-economic transformation.

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According to a new study, small dollar loans are up to 24x cheaper with Oportun

Released one day ago

Submitted by Oportun

SAN CARLOS, Calif., Nov. 2, 2021 / CSRwire / – Today, Oportun (Nasdaq: OPRT), an AI-powered fintech that brings hard-working people access to responsible and affordable credit, released results from the Real cost of a credit analysisconducted by the Financial Health Network. This new report shows the need for less expensive US dollar small loans. One solution is the type of AI-powered underwriting offered by Oportun, which could dramatically reduce the cost of small loans for hard-working people.

The study’s conclusions include that an online installment loan of $ 500 could cost someone with poor or no credit worth more than $ 2,400 in interest and fees over the life of a loan. In comparison, a responsibly structured loan taken out using artificial intelligence (AI) and machine learning would cost only $ 102 in interest and fees, a savings of more than 24x.

The analysis, conducted by the Financial Health Network and commissioned by Oportun, provides an independent look at the lifetime cost of the various small dollar loan options that are most easily available to people with poor credit or no credit history. Importantly, these comparisons are typically not available to consumers looking for credit options and affordability.

“The reality is that the people in need of affordable credit most often pay the highest rates and fees,” said Matt Jenkins, COO and general manager of personal loans at Oportun. “This rigorous examination of realistic credit options for these households shows that credit structure and the use of advanced technology in underwriting are important. We hope these results inspire other vendors to adopt product design and AI best practices to maximize affordability and impact for hardworking individuals. “

In a separate study, the FinHealth Spend Report 2021 found that low- and middle-income families are spending $ 127 billion in interest and fees on alternatives that include the four products used in the True Cost of a Loan analysis: Credit cards, installment loans, payday, and rent. The True Cost of a Loan study used a proprietary model developed by the Financial Health Network to analyze state price data and household incomes to determine how much a typical Oportun customer would pay for $ 500, $ 1,500, and $ 3,500 loans would.

Other important findings are:

  • Online-only installment and payday loans, as well as traditional payday loans, add over $ 3,000 for a $ 1,500 loan, while credit cards and oportun loans are less than $ 500 each.
  • A typical $ 3,500 payday loan is the most expensive at $ 10,775 in interest and fees, while an Oportun loan is the cheapest at $ 1,645.
  • On average, oportun loans were six times cheaper than alternative loans of the same amount.

“Consumers can find it difficult to estimate the cost of credit because credit products vary widely in structure and fees,” said Marisa Walster, VP of Financial Services Solutions, Financial Health Network. “This rigorous analysis shows that responsible credit management combined with competitive interest rates can deliver significant savings for consumers.”

Oportun uses advanced data analytics, proprietary risk assessment, AI, and 15+ year old consumer insights to help low- and middle-income consumers responsibly, affordably, and on a large scale. Unique, this technology enables Oportun to rate 100% of loan applicants with a high level of accuracy.

Oportun’s core product is an easy-to-understand, affordable, unsecured, fully amortizing personal installment loan with fixed rates and fixed rates throughout the life of the loan. Oportun loans have no prepayment penalties or balloon payments, are priced less than 36% APR, and range from $ 300 to $ 10,000 with terms of 12 to 48 months.

Since its inception, Oportun has successfully extended more than 4.3 million loans and $ 10.5 billion in loans, mostly in the form of small loans, saving its customers more than $ 1.9 billion in interest and fees become history when compared to other options that are normally available to people with little or no credit. By reporting repayment performance to major credit bureaus, the company has also helped more than 925,000 people compile a credit history.

Click here to download the report.

About Oportun
Oportun (Nasdaq: OPRT) is a financial services company using its digital platform to provide responsible consumer credit to hardworking people. Using AI-powered models built on 15 years of proprietary customer insights and billions of unique data points, Oportun has extended more than 4 million loans and over $ 10 billion in affordable credit, offering its customers alternatives to payday and auto title loans. Recognizing its responsibly designed products that help consumers build their creditworthiness, Oportun has been certified as a Community Development Financial Institution (CDFI) since 2009.

Media contact
George Gonzalez
[email protected]



Oportun (Nasdaq: OPRT) is a financial services company using its digital platform to provide responsible consumer credit to hardworking people. Using AI-powered models built on 15 years of proprietary customer insights and billions of unique data points, Oportun has extended more than 4 million loans and over $ 10 billion in affordable credit, offering its customers alternatives to payday and auto loans. Recognizing its responsibly designed products that help consumers build their creditworthiness, Oportun has been certified as a Community Development Financial Institution (CDFI) since 2009.

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Best Personal Loans For Fair Loans In October 2021 – Forbes Advisor

Launched in 2017, Upgrade offers accessible online and mobile credit and banking services in all states except Iowa, Vermont, and West Virginia. Since then, the platform has provided more than $ 3 billion in loans to more than 10 million applicants and continues to expand its online and mobile services. Although the maximum APR are on the high end compared to other online lenders, Upgrade does make loans available for those with poor credit ratings.

Loan amounts that start at just $ 1,000 are flexible but capped at $ 35,000 – lower than lenders who focus on more creditworthy borrowers. Three and five year loan periods are available. Upgrade will charge a commitment fee of between 2.9% and 8% of the loan, and borrowers will pay a $ 10 fee if their payment is delayed or missed by more than 15 days; there are no discounts for autopay. However, upgrade borrowers are not subject to prepayment penalties, so if you can prepay it early, you can reduce the total cost of the loan.

In addition to offering accessible personal loans, Upgrade is optimizing the lending process with a mobile app that borrowers can use to view their account balance, make payments and update personal information. Upgrade’s Credit Heath tool also makes it easy for you to keep track of your credit history over the life of your loan.

Eligibility to participate: Prospective borrowers should have a minimum score of 580 to qualify for an upgrade personal loan (the average borrower score is 697), making it an accessible option for those with fair credit. In addition, the lender does not require applicants to meet a minimum income, although borrowers make an average of $ 95,000 per year. Applicants should have a maximum pre-loan debt to income ratio of 45%, excluding their mortgage.

The lender also takes into account each applicant’s free cash flow, which shows their likely ability to make consistent loan payments on time. Ideally, applicants should have a minimum monthly cash flow of $ 800.

Upgrade increases the accessibility of the loan by also allowing co-applicants.

Credit used: As with most other personal loans, Upgrade Loans must be used to pay off credit cards, consolidate other debts, do home improvement, or pay for other large purchases. However, Upgrade stands out from some lenders by allowing borrowers to use personal loan funds to cover business expenses. Additionally, Upgrade pays out third-party lenders directly, making debt consolidation more convenient than some competing lenders.

Apart from the legally prescribed prohibitions on the use of upgrade loans, there are no special prohibitions.

Change of page: Once an upgrade loan is approved, it typically takes up to four business days for a borrower to receive the funds. However, if Upgrade is paying off a borrower’s loan directly to an outside lender, it can take up to two weeks for the funds to clear.

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The Best Low Interest Personal Loans In November 2021 – Forbes Advisor

A US bank personal loan gives you quick access to funds for your one-time financing needs, whether it’s to consolidate your debt or to cover large expenses. US Bank offers existing US bank customers unsecured personal loans between $ 1,000 and $ 25,000. The loan terms are between 12 and 60 months.

The US Bank’s loans have low interest rates of 5.99% to 16.49%, depending on their creditworthiness, which include an autopay discount of 0.50%. Higher credit borrowers are more likely to qualify for interest rates on the lower end of the spectrum. Similar to other top providers, the US Bank does not charge any commitment fees and there is no prepayment penalty, so you can always make loan payments before they are due.

Applying for a US bank loan is easy and can be done online. However, you must be a current US bank customer. Some customers may need to visit a US bank branch if additional information or documentation is required.

Eligibility to participate: The US bank requires applicants to be existing US bank customers. If you’re a current customer, you can qualify for a personal loan with a credit score of at least 680. However, those with a credit score of 680 will not benefit from the lowest interest rates available.

Since you may need to go to a branch to take out your loan, you need to live near a physical location. US Bank has offices in 26 states: Arkansas, Arizona, California, Colorado, Iowa, Idaho, Illinois, Indiana, Kansas, Kentucky, Minnesota, Missouri, Montana, North Carolina, North Dakota, Nebraska, New Mexico, Nevada, Ohio, Oregon , South Dakota, Tennessee, Utah, Washington, Wisconsin, and Wyoming.

Credit used: US Bank personal loans can be used for any purchase or product other than residential or educational expenses. For example, they can cover vacation expenses, home renovations, medical bills, or help consolidate debts like credit cards.

Change of page: An applicant will typically know their loan approval status in less than a minute. If you qualify for the personal loan, you can finance your loan online; However, you may need to visit a branch if a US bank representative needs more information. Once your loan has been completed, the funds will be available to you within one working day.

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The pros and cons of unsecured loans

LOS ANGELES, Oct 27, 2021 (GLOBE NEWSWIRE) – Loan buyers should consider a variety of factors when looking for the right loan for their needs, including whether they will get secured or unsecured loans. Unsecured loans can be a great option for borrowers who have to pay for expenses such as major purchases or medical expenses without the use of collateral, but it is important to weigh the pros and cons before proceeding with one. Here is how unsecured personal loans Work, the pros and cons, and how they compare to secured loans.

What are Unsecured Loans?

Unsecured loans are loans that do not require the borrower to use any asset they own as collateral to secure the loan. Lenders offering this type of loan take into account factors such as the borrower’s creditworthiness, income, employment history, and current debts when deciding whether to approve it.

Some examples of unsecured loans are:

  • Installment Loans

  • Cash withdrawals

  • Credit cards

  • Credit lines

Secured vs. Unsecured Loans

Unlike unsecured loans, secured loans such as mortgages and auto loans require that the borrower leave collateral to secure the loan. If the borrower defaults – meaning they won’t pay back their loan – the lender can repossess and sell the asset to offset their losses.

The benefits of unsecured loans

Simple application process

Many unsecured loans are very easy and quick to apply for. Many online lenders have a short application process that only asks for some basic personal and financial information. In many cases, the borrower can complete the application within minutes and receive their loan either on the day of application or the next banking day.

No danger to personal property

Since no collateral is required for unsecured loans, the borrower does not have to risk any valuable items in order to obtain the loan. This can be helpful when the borrower’s personal property is useful or has sentimental value.

The disadvantages of unsecured loans

Less favorable terms

Lenders can offer better terms on secured loans when the borrower’s collateral is in place as the loan is considered less risky. Borrowers applying for unsecured loans can get higher interest rates, which translates into higher payments.

Additionally, the amount of credit the lender is offering may be less as they have no asset of value to base the amount on. This means that for bad credit borrowers, it may take more time and research to find an unsecured loan with loan terms that are suitable for their situation.

Effects on creditworthiness

Unsecured loans have no collateral, so borrowers who fail to meet their repayment obligations can receive collection notices and have a negative impact on their creditworthiness, making it harder to obtain loans in the future.

The bottom line

Unsecured loans provide borrowers with a quick way to get a loan without using any personal property as collateral. And there are many lenders who have milder credit standards, so borrowers may still be approved with poor or fair credit. Borrowers should research and compare options to find the right loan for their needs.

Note: The information in this article is provided for informational purposes only. Check with your financial advisor about your financial situation.

Contact: [email protected]

This content was published by the Press release distribution service on

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Fintech firms offer on-demand personal loans. Do you have to be careful?

Almost every other day you will receive a message stating that you are eligible for a pre-qualified personal loan, but getting one has not always been easy. That has now changed to a certain extent as fintech firms and platforms come into play.

A personal loan is unsecured, unlike a home loan where the house is the security that secures it. Hence, a person comes with high interest rates of up to 24 percent plus a lot of paperwork. However, with the advent of fintechs, the entire lending process has changed.

“Fintechs have changed the area of ​​finance through improved and convenient access to credit. They use digital lending to deliver personal loans quickly and with a more refined customer experience, ”says Vivek Veda, co-founder and CFO of KreditBee, a personal loan platform, and co-founder of FACE (Fintech Association for Consumer Empowerment).

Better access to personal loans

The fundamental reason traditional lenders are unable to provide loans to borrowers is the lack of data to back them up. “Unlike traditional lenders, fintechs use advanced AI models powered by efficient underwriting algorithms to use alternative data to assess borrowers’ current and future cash flows and more effectively assess their repayment ability,” says Veda.

This has enabled them to offer tailored and more personalized financing products to new customers otherwise underserved by traditional lenders.

Traditional banks look at criteria such as loan duration, debt level, salary, financial history and repayment rate to assess the borrower’s ability to repay the loan. However, this leaves out many potential borrowers with the ability to repay loans due to the lack of standard data researched by these traditional lenders.

“As fintech borrowers analyze alternative data such as borrower’s rent, utilities and auto payments, this information helps lenders weigh the risks of that particular borrower, whether or not the borrower has a creditworthiness,” said Agrees Gaurav Jalan, CEO and founder, mPokket, an app lending platform.

documents required

Traditional lenders often require proof of residence (vacation and license agreement / utility bill (not older than three months) / passport), proof of identity (passport / driver’s license / electoral ID / PAN card) and pay slips for the last two or three months or the bank statement of the Borrower.

Fintech firms don’t always have such borrowers, who often only need a copy of the borrower’s PAN and Aadhar card. In the case of a self-employed person, the borrower may also be asked to provide additional documents such as proof of business or evidence of business continuity, or even the company’s income statement, depending on the lender’s requirements. In some cases, fintechs could also ask for bank statements from the last few months. But that’s not always a prerequisite, ”says Jalan.

The KYC process

Fintechs use the most efficient forms of customer verification processes with digital KYC and video KYC as opposed to traditional personal KYC, ”says Veda. These are paperless processes in which the fintechs check and process live photos and the Aadhaar ID of the borrowers online.

The officially valid documents (OVDs) such as Aadhaar, PAN Card or driver’s license are submitted online without the borrower having to get out and visit a financial institution. Video KYCs saw a boom during the pandemic, with an agent or auditor collecting the details using video-audio capabilities and AI technology.

“Borrowers can complete their KYC digitally using Aadhaar’s OTP-based e-KYC and then video-call the lender’s representative for audio-video-based verification. The video KYC would be conducted through a live video feed with the agent, which would take a photo of the borrower and clear pictures of the documents to be verified, ”says Jalan.

Reasons for rejection

However, personal loans can be turned down by lenders for a number of reasons. Easiest of all, it may be that the borrower has not filled in their personal information correctly or has not provided the lender with the complete information as required. “All borrowers must meet the minimum KYC requirements set by the RBI. Traditional lenders often turn down borrowers when their creditworthiness is low or the borrower has a lot of outstanding credit, ”says Jalan.

Lenders can also decline a personal loan application if a borrower does not have a permanent job or changes jobs frequently. The borrower’s income is also an important consideration when deciding on creditworthiness.

Keep in mind

Personal loans should be kept as the last option when you need money. “Make sure you have the option to repay,” said AK Narayan, CEO of AK Narayan Associates, a financial planning company.

It is also important that you make your family aware of your financial obligations and not take out too many loans at the same time. The idea is not to have too much debt.

Also, before taking out a personal loan, make sure the EMI is suitable to avoid defaults. “The availability of a loan should never be a factor in obtaining such loans,” says Narayan.

Also, you shouldn’t inquire about a personal loan from multiple lenders as it can affect your creditworthiness.

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Why you shouldn’t be in default on credit

Due to Covid-19, retail lenders faced several challenges. On the one hand, the demand for small loans has risen as lockdowns affect livelihoods; on the other hand, the recovery rate has slowed. As a result, the rise in loan defaults has lowered the creditworthiness of borrowers.

“The creamy layer or low-risk borrowers saw their creditworthiness drop by around 5 percent from March 2020 to March 2021,” said Subhrangshu Chattopadhyay, national sales head, CRIF High Mark, a credit bureau recognized by the RBI. A credit score shows your creditworthiness. Because of this, lenders have tightened their credit guidelines. Most loans are only granted to existing customers with good credit ratings. A CIBIL score of 750 or higher is ideal for taking out loans. If your score is below 750, you will find it difficult to get loans from banks and NBFCs. If it’s near 750, you can get loans but at a higher interest rate.

While the trend of increasing loan defaults affects lenders, defaults have serious consequences for borrowers as well. First, it can affect his ability to get a loan in the future. Second, even if such a person is able to take out a loan, it will come at much higher interest rates. A failure that is declared “willful” can also lead to criminal proceedings. Here are the facts about the consequences of a loan default for borrowers.

Trend reversal: small is big

Travel, weddings, home renovations, down payments on a home, used cars, educating children, and paying back loans with higher interest rates were some of the main reasons people took out loans before Covid-19. After the outbreak of Covid-19, the trend shifted towards consumption-related and essential expenses. “Borrowing related to travel has slowed down. People are now borrowing for home renovations, paying off high-interest debt and paying home down payments, ”said Gaurav Chopra, founder of IndiaLends, an online loan aggregator.

According to the RBI’s Financial Stability Report, the industrial sector’s share of bank credit has decreased in recent years, while the share of personal credit has increased. In 2014, personal loans accounted for 16.2 percent of total loan volume. This rose to 26.3 percent in 2021. The share of smaller loans is also increasing. A report by TransUnion CIBIL and Google shows a 23-fold increase in loans to up to Rs 25,000 between 2017 and 2020. The proportion of ‘

The trend is also reflected in the credit card numbers of banks. According to RBI data, the value of transactions via credit cards at ATMs and point-of-sale terminals increased by 23 percent from March 2020 to June this year.

Adhil Shetty, CEO and co-founder of, says easing KYC norms has made it easier for credit card issuers to serve customers in Tier II and Tier III cities. “As a consequence, the demand for credit cards from non-metros continues to peak. The proportion of non-metros in total applications rose to 35 percent in FY21, compared to 24.8 percent in FY20, ”he adds.

Increase in retail NPAs

The downside of the increasing popularity of retail lending has been an increase in non-performing assets (NPAs) at most of the major banks. ICICI Bank, the country’s second largest private lender, added Rs 6.773 billion gross NPAs from retail and commercial banking portfolios in the first quarter of FY22, compared to Rs 4.355 billion in the fourth quarter of FY21. Axis Bank reported Rs 6,518 crore gross slippages compared to Rs 5,285 crore in the fourth quarter of last year. “Axis’ slip-ups were dominated by retail credit,” said a report by ICICI Securities.

Credit Bureau CRIF High Mark Agrees Credit Defaults Have Risen During Covid. The credit platforms have become cautious as a result. A recent report by PwC Equifax says that over 70 percent of credit managers have changed their standards, especially for those with poor credit histories, in an attempt to preserve asset quality. Online lenders are rejecting 45-50 percent loan applications after the pandemic. This is mainly because they are now factoring in additional parameters for underwriting such as recession, unemployment and insurance claims.

As people become more comfortable taking on debt and new lenders increase both online and offline, both borrowers and lenders need to act responsibly to avoid problems later on. Lenders, says Chopra of IndiaLends, have already become cautious when it comes to underwriting. Likewise, borrowers should be responsible and do their best to repay the loan. Failure to do so could result in serious consequences.

Consequences of default

Credit history takes a punch: The lender informs Schufa of the payment status monthly or when the loan installment is due. While a few days delay can be ignored, any payment that is delayed beyond 30 days will be reported to the credit bureau. This can have some impact on the person’s credit profile. However, a delay of 30-60 days will definitely tarnish the borrower’s credit history, while a delay of more than 60 days can severely affect creditworthiness.

A low credit score reduces a person’s ability to borrow in the future. “Today you might have borrowed a phone or a two-wheeler, but next time you will most likely have a bigger need or an emergency. You may be denied the loan due to bad credit, ”says Chopra of IndiaLends.

Online loan platforms that grant small loans are even more conservative. Even a single day late, says Bhavin Patel, co-founder and CEO of LenDenClub, can put the borrower on the list of defaulters. “A defaulting borrower will no longer be able to take out a loan in the future unless he pays back the older loan on our platform.”

Higher interest rate: Lenders today link the interest rate to your creditworthiness. Bad credit increases your borrowing costs and reduces your long-term savings.’s Shetty explains. “On a home loan of Rs 50 lakh for 20 years at a low interest rate of 6.8 percent, the total interest paid would be Rs 41.60 lakh. But if your credit was bad and you had to pay 8.5 percent on the same loan, your interest payment would be Rs 54.13 lakh. So you pay almost 12.53 lakh Rs more. “

For secured credit categories like home loans, the difference will be smaller – 10-200 basis points in most cases. For example, two very large home financiers have a 70 basis point and 125 basis point difference, respectively, between their lowest and highest interest rates, Shetty says. With unsecured categories like personal loans, the difference can be much bigger. “A private bank pays interest on personal loans between 10.5 percent and 19 percent.” You can save this money for other life goals such as investing in retirement or financing your child’s education.

Fintech loan platforms are one step ahead. Their algorithms adjust the interest rates according to the current default rate in order to minimize the impact on your portfolio. For example, in the first quarter of 2020, IndiaLends increased its lending rates by 0.8 percent as the default rate on its platform rose by one percentage point.

Legal implications: Loan defaults are a civil offense. However, the lender may attempt to cash blank checks from the borrower, says Shetty of Failure to cash a check for lack of money is a criminal offense.

If a customer does not pay within 90 days, the case is usually referred to legal action. The lender may, after 180 days of default, bring proceedings against the borrower under Section 138 of the Negotiable Instruments Act of 1881. If the borrower does not pay despite the ability to do so, the RBI can declare him to be “willful default in payment”. However, if he is unable to pay for valid reasons, he can reach an agreement with the lender that gives him more flexibility to pay.

However, to date, most fintech lenders disbursing small loans have not faced such cases. “These are tough and high-level steps. We have not yet seen a case like this. In most cases, when the customer reaches the court, they offer to settle the loan, ”says Bhavin Patel from LenDenClub.

Real estate auction: In the case of secured loans such as a home loan, the lender has the right to auction the property through the judicial process. Likewise, the lender can confiscate the vehicle in the case of car loans. Lenders can also auction the borrower’s gold if the borrower does not repay the loan against the yellow metal. However, it must give the borrower 30 days before taking such a step.

Job loss: Most companies do not hire people to be involved in criminal activities. For certain senior positions, especially in industries like financial services, companies review the candidate’s credit history to see if he or she is trustworthy. “A bad credit history will make it difficult for a defaulting borrower to get a good job,” says Chopra of IndiaLends. Criminal proceedings also have a negative impact on the defaulting person’s passport.

Should you take out one loan to repay another loan?

“If it saves money, it definitely does,” says Chopra. For example, a credit card can have a very high interest rate of around 3.5 percent a month or 42 percent annually. “Taking out a personal loan that starts at 10-12 percent to pay back the credit card debt would be a good strategy,” he says. Most people can get a personal loan at an annual rate of 14-15 percent.

“Even if the intent is to refinance a home loan because it will save the borrower many rupees over the life of the loan, it is a good idea,” says BankBazaar’s Shetty. But if the person’s credit habits stay bad, refinancing may not help, he adds.

The second loan is to be used to repay existing high-interest loans. It shouldn’t add to the debt burden, experts say. Credit must be used wisely. The generally recommended rule is to use 30 percent of your credit limit. “The more you use your credit limit, the greater the impact will be on your score,” says Shetty.

Borrower Rights

First and foremost, borrowers have the right to be treated fairly and politely. “No lender can harass or intimidate borrowers,” says Shetty. Lenders should send notices, messages and emails to the borrower in the event of default. If the loan has become an NPA due to 90 days late payment, the bank or financial institution must issue a 60-day period to repay the contributions.

The defaulting party is also entitled to the difference earned by the lender (through the sale of the confiscated asset) beyond the due date, Shetty says.

The defaulting person is also given the right to due process, which can include a moratorium, restructuring or even a one-off settlement.


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Research by the Elliot Group shows that investors’ money was used to make unsecured loans

Investors have expressed concern about how a property developer has used their deposits to make unsecured loans.

Last week, investors in the Infinity Waters program on Leeds Street shared their guilt, shame and fear after the program collapsed.

The Elliot Group’s Infinity Waters, Aura, and The Residence programs all came under administration last year.

CONTINUE READING:Elliot Lawless Dream Program investors share their pain, shame, and guilt

Liverpool businessman Elliot Lawless, who founded the group, said his arrest in December 2019 on suspicion of conspiracy involving fraud, bribery and corruption led to the collapse of operations.

The police investigation continues, but Mr. Lawless denies any wrongdoing.

Following an investigation by the Elliot Group, Liverpool-based ECHO can now reveal that Mr Lawless used the money from investors to extend large unsecured loans to affiliates in 2019.

The legal documentation filed with Companies House shows that the various intra-group loans were granted before December 2019.

Over £ 4 million has been loaned unsecured from Residence and Infinity to Aura alone.

The Residence Program has loaned the Aura Company £ 3.5 million and Infinity Waters has loaned Aura £ 746,000. The loans were unsecured as they were not secured by debt securities.

Equity Group Limited, a company controlled by Mr Lawless, loaned the Aura company £ 6,415,634 in 2019. However, this loan, which did not include investor funds, was protected by a bond.

Legal documentation filed with Companies House shows that the Infinity company has received £ 28 million from investors who have deposited funds.

Elliot Lawless of the Elliot Group

The website was purchased for around £ 5,050,000 and the fees were around £ 4.67 million. Investors put around £ 27,292,872 in, but it’s not yet clear how much was paid to the Vermont construction company.

Investors received notification in September 2019 that the financial firm was providing funding to Maslow Capital, but it is now clear that Maslow did not grant a loan.

Mr. Lawless also sold a large stake in the Infinity Waters site to a sister company. Land was transferred from Queensland Place to the Elliot Group and from Parliament Place to 1DOM.

An Elliot Group spokesman said, “Mr. Lawless has provided all necessary assistance to the administrators of his various developments, including providing a full business statement for each project showing the allocation of all funds. It remains an ongoing, formal process, and that’s the way he has to deal with requests of this kind. “

Max Murphy, who invested in Infinity Waters, said, “I am concerned to learn that Elliot used investors’ money to make unsecured loans within the group. It now appears that the company had some financial problems prior to Elliot’s arrest . “

A letter from administrators to investors recently revealed that investors face “enormous losses”.

It read: “The failure of the company has caused enormous losses to large numbers of investors, commercial and ordinary creditors. This is not the Joint Administrators’ fault. The failure and the structure of the company are subject to an ongoing The creditors have decided that liquidators should be appointed and that the liquidators continue the investigation “.

Liverpool real estate company Legacie Developments has agreed a deal with administrators David Rubin and Partners to purchase Infinity Waters and The Residence. Both sales must be approved by a court.

Last week, Infinity Waters investors told ECHO troubling stories about the breakdown of the program that hit them.

Mom Jacqui Parker said she bought two units and is planning to move to Liverpool with her son, who has mild learning difficulties. Mrs. Parker from London said the plan seemed perfect for her, but now she was left with nothing.

Speaking to ECHO in 2019, Mr Lawless told ECHO that after starting a building services company in 2010, he started buying land on the city’s waterfront.

He said he was committed to regenerating the city and supporting jobs in the region.

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14 Things You Should Know Before Getting An Unsecured Personal Loan – Forbes Advisor INDIA

There are many occasions when a person is in need of money in the short term. This could include a child’s college education, marriage expenses, medical emergencies, and other scenarios. In such situations, a personal loan is the best and fastest option.

Unsurprisingly, a survey by a consumer finance firm shows that medical emergencies account for 28% of personal loans, while family needs such as wedding expenses, parenting and home renovation account for 25%. Almost 77% of respondents opted for a personal loan in such cases.

Benefits of personal loans

Aside from providing faster payouts, personal loans have another advantage over other loans – they can be used for a variety of purposes with no questions asked. For other loans, the end purpose is well defined, such as home, car, two-wheeler, gold, or education loans, which limits their use.

Pre-approved offers

Since these are unsecured loans, despite the slightly higher interest rates, people prefer personal loans as these are paid out without unnecessary problems. When it comes to offering personal loans to their trusted customers, many lenders give pre-approved offers.

Typically, these borrowers are granted with salary accounts. From time to time, lenders may notify such customers of pre-approved personal loan offers. Although these are readily available, financial experts advise customers to only obtain such loans when they are needed and not because of their ready availability.

Amount and timing

Once the requirement is established, prospective borrowers can check their lender’s mobile banking feature for relevant loan offers. The borrower needs to be aware of two elements before proceeding. First, the amount of funds required. Second, the length of time that the loan is needed.

Importance of the term of office

The other important point is deciding on the term of your loan. Personal loans are granted with terms between one and five years. While a shorter tenure is better because you pay less interest, the EMI is relatively higher. So decide the tenure based on repayment capacity and convenience.

If you only need short-term money and can repay with a higher EMI, a personal loan over a shorter term is preferable. When in doubt, it is safer to choose a longer term.

Compare interest rates

After that, the borrower is advised to compare the interest rates offered by different lenders. While a customer’s credit rating is the same, different lenders may offer different rates to the same person. This is because every lender, traditional or new age, pursues an individual, bespoke risk assessment.

Personal loans are typically given to first class clients at interest rates that range from 15% to 36% per annum. Lenders are likely to charge a higher interest rate if the perceived risks are higher. The risk score is based on creditworthiness, job profile, employer reputation, payment history, relationship with the lender and various other factors.

Secured personal loan

A personal loan can be obtained at a lower interest rate by opting for a secured personal loan. These are backed by securities such as time deposit certificates, vehicle papers, gold, etc. Secured personal loans are easier to come by because the bank can keep the collateral in the event of a default.

Decision on the lender

In addition, depending on the urgency, borrowers can opt for a personal loan from a bank or a fintech lender. In general, it can take a week or more for banks to approve and pay off a personal loan. Digital lenders, on the other hand, can do the same thing in minutes if all of the Getting To Know Your Client (KYC) documents are clear.

The reason banks and other legacy lenders take longer to approve loans is because they have high documentation requirements and the risk assessment process usually also involves many manual steps. Fintech lenders, on the other hand, focus on speed and convenience and evaluate eligibility using online data sources, including social media profiles and credit history.

Therefore, when time is of the essence, fintech lenders are the quickest option. Still, it is important to first make sure that you are eligible for a personal loan according to a particular lender’s standards. In this case, it makes sense to only contact the lender whose eligibility criteria a borrower can meet.

Knowledge of the approval standards

When it comes to eligibility standards, lenders consider the applicant’s current income, current employer, repayment ability, creditworthiness, and monthly payment obligations, among other things. The credit rating is crucial here, as a higher score can improve the chances of admission with more favorable conditions.

Terms and conditions and loan amount

Assuming the prospective applicant is eligible for a loan from both legacy and digital lenders, the next step is to compare their terms, as well as interest rates and fees. It is important to compare the full range of fees and other terms, not just the total interest rate.

The next essential element is the loan amount available. It depends on the lender’s risk tolerance and internal guidelines. While banks can grant personal loans of up to INR 50 lakh, new age lenders are only allowed to grant up to INR 5 lakh. But there may be exceptions to the above.

Verifying the credibility of the lender

Although borrowers typically don’t care about the lender, it makes sense to check the company’s credibility before borrowing to avoid any unwanted complications later. Credibility is not an issue with banks. However, with digital lenders, it is important to check the Reserve Bank of India (RBI) registration status and the lender’s disclosure standards. The reference to the ratings of other users and the rating in the Google Play Store or Apple App Store can also be helpful.

Both positive and negative comments can tell whether a lender was honest and straightforward with customers. One should consider whether the lender will contact borrowers if they have problems and try to resolve them. negatively, you should rethink the credit agency.

Secured gold loan

When applying for a personal loan, keep both your short-term and long-term interests in mind. If an unsecured personal loan solves a short-term problem but creates long-term problems, it is wise to consider another funding method, such as a secured gold loan, to help solve the current problem.

Of course, secured gold loans have their advantages and disadvantages, such as their short term. Hence, people need to carefully weigh all of their options before making the best choice in their current circumstances.

Check the fine print carefully

For this reason, borrowers are always advised to read and reread the fine print. Most people make the mistake of ignoring the terms and conditions completely or just rashly checking them. They later regret it when they cannot fully meet strict repayment conditions.

So take the time to understand the terms. Ask questions if you are unsure about certain standards. Review late payment, prepayment, and loan foreclosure charges. Only when you have clarity on these points should you proceed to sign on the dashed line.

Clear your doubts

Fortunately, all the terms and conditions are posted on their website by organized lenders. So you don’t have to rush to read these standards at the last minute. After reading the terms beforehand, write down your doubts and clarify them before accepting the personal loan.

Creditworthiness and prepayment

Still, customers need to meet minimum KYC requirements and maintain healthy creditworthiness. The latter will help borrowers get loans at a slightly lower interest rate. A credit score greater than 750 is considered good by all lenders.

Borrowers with a credit score less than 750 may still be eligible for personal loans from fintech companies. But interest rates will be higher as lenders have to compensate for the greater risk of such unsecured loans.

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