Many people struggle to find a loan that best suits their needs. Customers often call us saying "Nanage sāla bēku" or "mujhe loan chahiye", but rarely with any clarity on what kind of loan. When hit with a liquidity requirement, personal loans are a catch-all for any use case, but often not the most cost effective or easy to access solution.
Whilst secured loans are more affordable, most customers we speak with are not aware of all the options available to them and how to navigate this decision. Whether faced with an unexpected medical emergency, a home renovation,unplanned travel or bills or just need financial flexibility, Mera Kal's Sahi Secured Low-Interest Loan Tool helps you discover loan options given the assets you hold.
Let’s dive deep into what the Sahi Secured Loan Tool offers, based on your unique needs, and how it empowers you to make better financial decisions.
How Does the Sahi Secured Loan Tool Work?
Ever been confused by the huge number of loan options available? Gold loan, loan against property, loan against life insurance, loan against mutual funds, loan against PF, loan against PPF, loan against FD…. where should you focus?
The Sahi Secured Loan Tool allows you to discover loans that are best suited to your needs based on the type of assets you own, the quantum of loan required and the urgency or amount of time you're willing to wait to get the loan. Whether you're looking to access funds within hours or over a few days, this tool will surface options that ensure you get the best deal given your circumstances.
Loan Options by Asset
The Sahi Secured Loan Tool offers a variety of options for those looking to secure a loan using different types of assets. Here's a breakdown of the loan options, rates, and key considerations based on the asset type and other factors:
1. Gold Loan
- Loan to Value Ratio: Up to 70% of the gold's market value
- Processing Time: 1-2 days
- Interest Rates: 9%-26% per annum
- Key Considerations: Gold loans are based on the purity and weight of the gold. The design or craftsmanship of the jewelry is not taken into consideration. Physical gold must be handed over to the bank, either at the branch or via home pickup.
If you have gold jewellery, this is one of the fastest ways to get cash. With quick processing and affordable interest rates, this loan is an excellent choice for urgent financial needs.
However, remember that loan amount varies based on the purity of the gold (22-Karat, 28-Karat), not the ornament's aesthetic value. Also note, if taking a loan from a local pawn shop rather than an RBI regulated Bank or NBFC, your activity is “off the radar” and your repayments are not counted towards building your credit score for the future.
2. Loan against Property (Self-Owned)
- Loan to Value Ratio: Up to 60% of the property's market value
- Processing Time: 1-4 weeks
- Interest Rates: 8%-18% per annum
- Key Considerations: Loans against property require document verification and a property valuation certificate. A legal verification of ownership is mandatory, and the property may require an inspection. You can enjoy extended repayment terms, up to 15 years.
For those who own a house, a building, or a shop, property loans offer a great opportunity to access significant funds. These loans are ideal for home renovations, business investments, or even large personal expenses. The processing time might take a few weeks, but the long repayment tenure could make it worth the wait.
3. Employee Provident Fund (EPF) & Voluntary Provident Fund (VPF) Withdrawal
- Loan to Value Ratio: Up to 50% of your contribution
- Processing Time: 2-4 weeks
- Interest Rates: 0% as it’s considered an early withdrawal
- Key Considerations: You can withdraw funds from your EPF/VPF if you’ve completed 5-7 years of service, depending on the purpose. Proof-of-use for medical emergencies, house purchase, higher education, or marriage must be provided. Funds withdrawn will lose any interest accrued during the loan term.
For salaried employees, this is a great option to access funds for significant life events - the 0% interest rate makes it an extremely affordable option. This is not a great option for emergencies, however, given it takes a few weeks to process.
4. Public Provident Fund (PPF) Loan
- Loan to Value Ratio: Up to 25% of the PPF balance from 2 years ago
- Processing Time: 2-4 weeks
- Interest Rates: You will forfeit the PPF account interest, plus 1% p.a. on the amount utilized.
- Key Considerations: Loans can only be availed between the 3rd and 5th years of investment. After the 5th year, withdrawals are permitted instead of loans.
PPF loans are an excellent option if you need to access funds before maturity. You will lose the interest earned during the loan term, but the low interest rates and the flexibility of withdrawal make it a viable option for those with time to plan their for their fund requirements.
5. Loan against Mutual Funds and Shares (LAMF and LAS)
- Loan to Value Ratio: 45%-60% for equity and 75% for debt
- Processing Time: 1 day
- Interest Rates: 10%-18%
- Key Considerations: You need to provide margin money for market fluctuations. If the value of your fund assets falls below a set margin, you will be required to pledge more units or allow the lender to sell some mutual fund units to maintain the margin.
If you have investments in mutual funds or shares, this loan allows you to leverage these assets quickly. The same-day processing makes this option perfect for people who need fast access to funds.
6. Loans against Life Insurance Policy or Policy Loans
- Loan to Value Ratio: Up to 90% of the surrender value
- Processing Time: 2-3 days
- Interest Rates: 10%-18%
- Key Considerations: The loan depends on your life insurance policy's accumulated surrender value. You need to ensure that premium payments are up to date and that the policy can be assigned either in-branch or online.
For policyholders, a life insurance loan is a straightforward option. The relatively quick processing and high loan-to-value ratio make it a great choice for people who need funding whilst retaining the benefits of their life insurance policy.
Additional Key Considerations
It’s important to note that every loan has some additional fees
- Processing fees apply across all loans (except in the case of EPF),
- Stamp duty applies to property loans, life insurance policy loans, and post office savings loans.
Ensure that you account for these costs before applying for a loan. Every loan type also comes with specific documentation requirements, such as ownership proof, property inspection, and professional valuation reports. Additionally, for gold loans, the weight and purity of the gold are crucial, while for mutual fund loans, market fluctuations may impact the loan amount.
With Mera Kal’s Sahi Secured Loan Tool, you can discover a loan that best fits your financial needs, whether it’s for an immediate emergency, a major life investment, or a business expansion. This tool ensures that you can access the right loan based on your asset type, loan-to-value ratio, and processing time.