Pros And Cons Of Personal Loan For Government Employees

Working for the Indian government has its perks. Getting large personal loans for longer durations is one of them! Banks readily offer personal loans to employees working in government offices or public sector undertakings (PSUs). These loans can be taken out without collateral and can be used for any purpose! 

However, you must meet some eligibility criteria. You must then select the right government personal loan scheme after considering its pros and cons. Sounds complicated? We’ll help you! Keep reading to find out everything there is to know about a personal loan for government employees and how you can make the most of it.

What are personal loans for government employees?

Government employees can get a special personal loan at low interest. The tenure can be up to 72 months. Most major Indian banks offer such loans with interest rates as low as 10% p.a. There are little to no processing charges.

The loan can be for any purpose. These include medical emergencies, higher education, home repairs, or other large purchases. You just need to meet some eligibility criteria. You also need to ensure you can pay the EMIs. You can calculate this using online credit scores and EMI calculators.

Eligibility criteria to get a personal loan for government employees

The criteria used to determine the maximum personal loan amount for government employees are rather lenient. The schemes are also more attractive. Here are the key criteria:

• You must be between the ages of 21 and 60.
• You must be an Indian citizen.
• You should be a salaried employee in a PSU or any government department.
• You must have a job experience of 2 years or more. You should also have at least one year of experience with your current employer.
• You must have a monthly salary of Rs. 25,000 or more.
• You must have a CIBIL score of 750 points or more.

The exact criteria may vary slightly based on the lender. So, you must consider a lender’s terms and offers carefully to ensure your eligibility. 

Documents needed for getting a personal loan for government employees

You must prepare these documents in advance. You can submit them along with your application.

• ID proof
• Address proof
• Salary slips, usually for the last two months
• The bank account statement, usually for the previous three months
• Employee ID card
• Photographs
• Form 16

Benefits of taking a personal loan as a government employee in India

Banks and NBFCs will provide you with personal loans with various benefits if you are a government employee. This is because you are assumed to have a higher income and more stability and reliability.

• Attractive interest rates and no hidden fees

A personal loan for government employees is usually offered at a lower interest rate. It starts at just around 10%. There are no hidden charges. The processing fee is zero or negligible.

• Instant approval

A personal loan for government employees will likely get quick approval with fewer hassles. This ensures quicker disbursals of the borrowed money.

• Larger loans and tenures

Government employees can easily obtain loan approval for up to Rs 30 lakhs. This is usually enough to meet all their funding requirements. Moreover, you can get loans with tenures of up to 72 months as a government employee. Meanwhile, the limit for others is 60 months.

• Minimum documentation and easy verification

You just need a few documents for any personal loan. Also, the verification may be more successful for government employees. This is because lenders tend to trust them more.

• Easy loans without collateral

This is a general benefit offered by all personal loans. But government employees often get quick loan approvals. This is true even if they don’t have large assets to indicate their wealth.

The cons of taking a personal loan as a government employee

Personal loan programmes for government employees have similar risks and limitations as other personal loans. Here are some points about personal loans that you must keep in mind:

• Higher interest rates and processing fees

Personal loans have higher interest rates than other types of loans. This is because lenders take higher risks by giving loans without collateral. The processing fee may also be higher.

• Prepayment penalties

You will usually have to pay penalties to repay a personal loan early. Some loans for government employees may not have such penalties.

• Risky and tough to obtain

Personal loans of any type require you to fulfil multiple criteria. This is to assure lenders that you will pay the EMIs on time. This is because there are no collaterals. Also, missing any payment will damage your credit score. And this makes it tough to get future loans.

A personal loan for government employees can help you reduce these drawbacks. But some expert guidance can help you sail through these issues.

Steps to take a personal loan for a government employee

Ready to benefit from personal loan schemes for government employees? Just follow this simple online process:

• Visit the loan provider’s website.
• Read their terms and choose the best personal loan for government employees.
• Select your mode of employment.
• Fill out your contact information to sign up.
• Choose the amount you would like to borrow.
• Select the repayment tenure.
• Upload scans of the required documents.
• Fill in any other requested details and submit your application. 
• Wait for the lender’s team to contact you to finalise the loan.

Once the process is complete, you should keep checking your specified account. This is because a personal loan for government employees is usually disbursed within a few hours or days.

Summing up

We saw that a personal loan is a great choice to meet your financing needs if you work for the government. However, any personal loan comes with risks. So, you must judge the lender’s terms, your paying capacity, and your adherence to the criteria carefully. This will help you choose the right lender, scheme, and loan tenure.

If all this sounds complicated, you can always consult a renowned financial agency like Piramal Finance to make things easy! This trusted organisation will give you expert guidance. It will also offer the best personal loans for government employees to get you going.