|A Personal Term Finance is an installment based finance in which you are given the entire loan at day 1 and you are required to pay equal installment every month.|
|A Personal Running Finance is a line of credit in which the bank approves an amount and you are only charged markup when you utilize it.|
Sometimes you can’t prepare for every possible need that arises; an emergency medical treatment, tuition fee for your children, your child’s wedding ceremony or home renovation. Your financial needs maybe immediate / short term or they may be long term, and in either case picking the correct Personal Loans product will ensure you have a cost effective way to meet your needs. Before taking the extreme measure of selling any asset you or your family may own or borrowing funds from friends and family, you should understand what options you have with the banking industry in our country.
Personal Loan is a product offered by almost all banks in Pakistan. Through this product you can secure a loan without submitting any collateral against the borrowed amount.
Personal Loans can be classified into two broad categories:
This is a term loan that is offered for a fixed duration ranging from 1 year to 5 years. The loan amount can range from Rs. 25,000 up to Rs. 2 million. No collateral is required and the loan is paid back in equal monthly installments.
This is a personal loan which is offered with no fixed tenure ranging from Rs. 25,000 up to Rs. 2 million. This type of Personal Loan also does not require any collateral but is very different from Personal Loan / Term Loan. With running finance the bank approves you for an amount of money that is deposited in an account you control. As long as you do not withdraw any amount of money from your account you are not charged any interest; you are only required to payback what you withdrew and interest is charged on the amount withdrawn and the duration you use the amount.
For instance you received a running finance of Rs. 1 million, and you took out only Rs. 100,000 for a period of 25 days. You will only be charged interest on the Rs. 100,000 for 25 days only.This is a convenient way to meet immediate / short time financing needs, since you do not get locked into a fixed duration and amount.
We would generally recommend that you use Running Finance for immediate financial needs that would not last for a long time, whereas Personal Loan / Term Financing should be used for planned, scheduled long term needs
Eligibility for Personal Finance varies from one bank to the other. However a basic framework of eligibility is as follows:
Every bank has their own set of internal policies which govern what documentation is required for Personal Financing, below are a few items common to all banks:
Comparebanks.com provides a simple, quick and reliable way to compare offerings of multiple banks for your Personal Loan needs. You can quickly identify which banks are offering the best rates and easily compare different service fee and terms and conditions.
Comparebanks.com Pro Tip: Pay close attention to interest / mark up rate. This is the rate that impacts you throughout the tenure of your Personal Loan versus other fees. Processing charges are a one-time cost while late fee charge is an item you can directly control; however, you can’tcontrol the mark up rate.
Various banks offer loans ranging from Rs. 20,000 to Rs. 2 Million. This depends on your income and repayment capacity as evaluated by the bank.
Most banks offer a repayment period ranging from 12 to 60 months.
There is a processing fee that is charged for processing of your loan application.
The time taken varies from bank to bank. Generally 10 – 20 working days are required. You can speed this up by making sure you provide all documentation required as shared in this section and avoid unnecessary delays.
No, you can get a Personal Loan with no security, collateral or guarantors.
You repay the loan by depositing your monthly payments into the account your bank instructs.
Yes, however banks will charge you an early settlement fee to avail this facility.
You are only required to pay the amount you withdraw / use plus the pre agreed interest the bank will charge only for the duration you withdrew the money for.
Get the Credit Card that’s right for you, find out all you need to know about Home Financing and get instant quotesFind out more...
Sometimes in running your business you have a cash crunch, I found a cost effective running finance facility using compare banks, it’s been a great help in managing my businesses financesFind out more...