Understanding Personal Loans
Unlike credit cards, personal loans are term finance usually given for 1-5 years. Upon maturity of credit cards market in the country, personal loan is playing pivotal role in generating huge revenues for the banks. Personal loans are relatively riskier than SME lending but huge spreads are covering  up for default cases. Non Performing Loans (NPL) in personal loans in the industry is around 7% which is acceptable to any organization. Studies are being done to squeeze the rate the of NPL by adopting even more careful approach in lending policies. Understanding personal Loans, banks providing personal loan

Eligibility Criteria
The understate are by and large conditions applied by different banks to evaluate the prospective customer

• Resident of Pakistan

• Minimum verifiable income of PKR 15,000/- usually verified by bank statement

• Six Months bank statement

• 21 years of age with CNIC (Computerized National Identity Card)

• Two references

• One landline number

Personal Loan Limit
According to different PR of consumer lending, an individual can borrow upto PKR 500,000/- clean financing from one single product of the bank.

Pay Back
Once approved the banks sends the limit letter along with cheque book in which loan has been disbursed. Different banks have different billing dates and if paid within the due date, interest expense would be nil.

Payment Options
Payment can be made through cash at the branch counter of issuing banking, but usually borrower's account is opened with the bank  from which monthly Equal Monthly Installments (EMI) are deducted using Auto Debit Authority

Interest Expense/Mark Up
Interest expense ratio is prefixed at the time of approval of the loan. Usually, personal loans are given at the rat of 17-25%p.a in which first half of the tenure is covered in markup

Interest Calculation Method
Equal Monthly Installments are calculated on the bases on IRR (Internal Rate of Return) Percentage Rate)

Precautions
Please do enquire regarding the following points before opting for personal loans from some banks

• Earlier settlement charges

• Float or fixed rate

• Late payment Charges

Banks Providing Personal Loans

1. Citi Bank (Master+Visa)

2. RBS Bank Limited (Master)

3. Allied Bank (Master)

4. Askari Bank (Master)

5. Standard Chartered (Amex+Visa)

6. MCB Bank (Visa)

7. KASB