Here’s All You Need To Know About Availing of an NRI Personal Loan

December 31, 2021 Mutual Fund

A personal loan is the most popular type of short-term loan as it can be availed without too much of a hassle. You can quickly and easily get a personal loan for any of your requirements, such as wedding, education, travel, medical treatment, debt consolidation, home renovation, starting or expanding the business, etc., without having to borrow from your friends and family. Personal loans are preferred by salaried individuals as well as business persons due to the convenience of quick disbursement, little to no paperwork, flexible loan tenure, and pocket-friendly monthly instalments. A personal loan is also ideal for Non-Resident Indians (NRIs) who work and live in foreign countries and require immediate funds for various requirements. Read on to know all the details about NRI personal loans.

What is an NRI Personal Loan?

NRI Personal Loan is a short-term unsecured loan offered by banks and Non-Banking Financial Companies (NBFCs) to Non-Resident Indians based on criteria like their income, employment history, repayment capacity, credit history, and credit score.

What could be the end-use of the loan amount?

Similar to a regular personal loan, there is no restriction on the end-use of the NRI Personal Loan as long as it is used for a legitimate purpose. Here are two scenarios of why a non-resident individual might require a personal loan.

• As an NRI, any unforeseen financial expenses, such as medical emergency, debt consolidation, etc., can arise when you are abroad. The money borrowed as NRI personal loan can help you cope with such challenging situations in a foreign land.

• Or, you may require funds to meet the financial requirements in your home country, such as medical treatment of a family member, family function, home renovation, etc.

What are the features and benefits of an NRI Personal Loan?

• Simple Process:

  The NRI Personal Loan application process of all the leading banks and NBFCs is quick and easy. Most lenders let you apply online through internet banking, mobile banking, official website, etc., or collect the required documents from your home, making the whole process a lot convenient and enhancing the user experience.

• Collateral:

  Since an NRI Personal Loan is an unsecured loan, you do not have to provide any security or collateral to avail of the loan. That said, you should know that the loan is approved based on criteria like income, repayment capacity, credit score, etc.

• Loan Amount:

  The loan amount of an NRI Personal Loan depends on your income and repayment capacity. However, most banks and NBFCs typically offer up to Rs 10 Lakhs as NRI Personal Loan.

• Rate of Interest:

  Considering the fact that the NRI loans are riskier than regular resident loans, the rate of interest on such loans is higher than regular personal loans. Depending upon the lender, it can range from 12% p.a. to 28% p.a.

• Co-applicant:

  Co-applicant is a mandatory requirement by all the leading lenders for NRI Personal Loan. Co-applicant can be any earning or non-earning close relatives like a parent or spouse living in India. Unfortunately, the chances of loan approval are very low if you do not have any close relatives in India.

• Processing Time:

  Since these loans do not require collateral, the loan processing and disbursement are faster than secured loans. Once your documents are verified, and a credit score check is done, the lender quickly approves your loan application. The processing time of NRI Personal Loans can be anywhere from 24 hours to 7 days, depending on your application and the lender. Hence, to get your loan application approved quickly, you should not miss submitting any required documents as it will lead to delayed processing of your loan application.

• Easy Communication:

  If you have any doubts or need any information about your loan when you are abroad, you can communicate with your banker or NBFC representative over the phone. Any official communication or request can be made through your registered email ID.

• Currency Preference:

  The NRI Personal Loan can be credited in your preferred currency (either in INR or the currency of a country you live in).

• Loan Tenure:

  Most banks and NBFC offer short-term NRI Personal Loan for a loan tenure of up to 36 to 60 months.

What are the eligibility criteria for an NRI Personal Loan?

The eligibility criteria for NRI Personal Loan differs from lender to lender. Hence, before applying for a loan, it is advisable to check the eligibility criteria with your preferred financial institutions. The general criteria are as follows:

For Salaried Individuals:

• An applicant should be a Non-Resident Indian.

• The minimum age requirement is 21 years to 23 years (which differs from financial institutions).

• The maximum age is typically 58 to 60 years.

• Minimum work experience of 1 year with the same organisation and total work experience of at least 2 years.

• Income criteria vary from one lender to another.

• A co-applicant is mandatory.

For Businesspersons or Self-Employed Professionals:

• An applicant should be a Non-Resident Indian.

• The minimum age requirement is 25 to 28 years (differs with financial institutions).

• The maximum age is typically 60 to 68 years.

• Minimum 2 years of experience in the same business.

• Income criteria vary from one lender to another.

• A co-applicant is mandatory.

What are the documents required for an NRI Personal Loan?

• Identity Proof of the applicant and co-applicant (such as PAN Card, Aadhar Card, etc.)

• Address Proof of the applicant and co-applicant (such as Aadhar Card, Passport, etc.)

• Copy of valid Visa and Passport

• Income Proof of the applicant and co-applicant (domestic and international bank account statements for last 6 months, Salary Certificate or last 6 months Salary Slips (in English and inclusive of necessary details, such as name, date of joining, remuneration, etc.), Financials (for businesspersons and self-employed professionals)

• Employment Proof for salaried individuals, such as Appointment Letter, Job Contract, Official email ID or HR's email ID, Labour Card, Identity Card, CDC (as applicable)

• Passport size photographs

How to apply for an NRI Personal Loan?

If you are in India, you can apply for an NRI Personal Loan by visiting the nearest bank branch or through an internet bank or mobile banking or official website (provided the bank offers the facility). However, if you are abroad, you can apply by contacting the lender’s NRI help desk or through online portals.

What are the things you need to consider while applying for an NRI Personal Loan?

• Before applying for a loan, make sure you make a comparison of the offers of different banks and NBFCs. Since the interest rate on personal loans is usually very high, even a small difference can save a considerable interest outgo. Moreover, the comparison will also help you choose the best features and benefits offered by several lenders.

• It is essential to calculate the total cost of your loan, which will help you plan the repayment easily. Therefore, while applying for a loan, apart from the rate of interest, you should also check for the processing fee, foreclosure charges, prepayment charges, and any other hidden fees and charges.

• You should have contact numbers and email IDs of all the concerned officials of the bank/ NBFC, which you might require in the future when you are out of the country.

• Remember that a personal loan is ideal for those with a good credit score as they can get the best offer on a rate of interest and processing fee. If your credit score is not good, it is advisable to improve it first by timely paying your existing EMIs and credit card dues.

• Many individuals avail of personal loans or opt for higher loan amount than required simply because they are eligible for the loan. However, it creates an unnecessary debt burden on you, and hence, it is advisable to borrow only the required amount.

This article first appeared on PersonalFN here