Personal Loan for Government Employees

This personal loan takes care of the needs of the ones who take care of the needs of others. You figured it right; it’s our government employees. A personal loan for government employees offers financial assistance for the applicant’s obligations. The loan can be availed by central as well as state government employees. Be it a long-due family vacation, welcoming a new car into the family, renovating the nooks and corners of one’s house or financing your kid’s higher education, a government employee personal loan easily takes care of one’s financial necessities. Money won’t be one of the many problems of a government employee’s life!

Comparison of Personal Loan Offerings for Government Employees

Almost all the leading banks in India offer personal loans for government officials. Amidst a host of offers available in the market, a comparative guide can help you secure the loan which is just right for you.

Eligibility Criteria

Banks specify certain basic criteria for granting personal loans to an applicant. Applicants can easily check their eligibility using a bank’s online Eligibility Calculator on its website. 

A list of basic criteria for applying for a personal loan can be found below.

• Minimum Salary: The minimum salary requirements to apply for a civil servant loan differs from bank to bank and ranges from Rs.18,000 to Rs. 30,000 a month.
• Age: The age criteria for government personnel financing from banks varies from a minimum of 18 years to a maximum of 60 years.
• Educational Qualification: An applicant must hold a graduation degree to be eligible for emergency loans for government employees.
• Work Experience: Most banks demand at least 1 year of prior work experience and a month of stable employment at their current place of work.
• Employment Status: An applicant must be a permanent, full-time government employee to qualify for the loan.
• Indian Citizenship:  Loan providers offer government staff loans to Indian Citizens only.
• Credit Score: A credit score of 685 or higher is considered a strong credit rating to get a Government Employee’s Personal Loan sanctioned successfully.

Required Documents

Apart from a completed Application Form provided by the bank, the following documents are needed for quick loans for government employees.

• PAN Card
• Identity Proof – Driving License/Passport/Voter ID/Aadhar card
• Address Proof – Driving License/Passport/Aadhar Card/ Electricity Bill/ Water Bill
• Income Proof – Last six months’ bank /salary statements and/or ITR filed for the previous two years
• Employment Proof – Employee ID card/ any other certificate verifying continuous employment 
• Passport size photographs 

A photocopy of these documents is generally accepted. However, you can also carry the original documents with you to be on the safer side. 

Charges for Personal Loans for Government Employees

Banks charge certain fees for approving and sanctioning low-interest loans for government employees. While these charges vary from bank to bank, some prominent ones are listed below.

• Processing Fee: The processing fee ranges from 1%-3% of the loan amount. Banks charge a processing fee to recover administrative costs incurred on processing and sanctioning the loan. While applying for the loan, you must check with your bank whether the processing fee is deducted from the loan amount or needs to be paid separately.
• GST: Banks charge a GST of 18% on all bank services. It is important to note that the GST is not charged on the interest but on the processing fee, prepayment or foreclosure fee and other such services. 
• Pre-payment/Foreclosure charges: The bank may charge the borrower a 2%-4% pre-payment charge if the loan is repaid in full or part before the maturity date.
• Penal charges: Penal charge is a form of penalty imposed by the bank if the borrower fails to deliver one or more EMIs per the loan repayment schedule. Early repayment of loans minimises the bank’s income, which it would’ve otherwise earned from interest payments. These charges vary as per the terms and conditions of the loan provider.
• Cheque Bounce Charges: If the cheque submitted by a borrower for loan repayment purposes gets bounced due to inadequacy of funds in the borrower’s account, the bank may levy an additional charge per bounce. Usually, Bounce Charge ranges from Rs. 500 – Rs. 600 per bounce.  
• Duplicate Statement Fee: The banks provide the loan repayment schedule to the applicant and the welcome letter. In case the repayment schedule gets misplaced and the customer wants a duplicate copy of the same, the banks may charge a fee for its provision.
• Stamp Duty: Banks must comply with the State’s Stamp Act to extend legal validity to a loan agreement. Stamp duty charges for government employee loans are 0.1% over loan amounts less than ten lakh rupees and 0.2% for every ten thousand rupees after that.

Features and Benefits of Personal Loans for Government Employees

Personal Loans for Government Workers are designed for government servants, keeping their needs and concerns in mind. Hence, it offers several benefits which government employees can avail. Listed below are some of the highlighting features and benefits of this loan.   

• Easily accessible: Salary-based loans for government employees are issued against an employee’s salary and not any collateral. Since government jobs lend high security and credibility to the employee’s income, accessing government staff loans becomes easy.
• No-End Use Restriction: These loans are also called Multi-Purpose Loans. The loan amount can cover a wide range of personal expenses without restriction on its final use. 
• Loan Amount: An amount of up to Rs. 50 lakhs can be raised for a time period of up to 8 years from lenders for government personnel financing, depending upon its terms and conditions. The interest rates levied on these loans also vary from 9.99% to 35%. Hence, personal loans can sufficiently meet a government employee’s monetary needs.  
• Online Application: Banks offer online application facilities and door-step document verification services to loan applicants. It eliminates any need for the customer to visit the bank branch, providing ease and comfort to the applicant. You can also track your loan application online to stay updated regarding the status of your loan request.
• Repayment Flexibility: Loans can be comfortably repaid through EMI, prepayment and foreclosure facilities provided by the banks. The repayment tenure generally varies from 12-60 months. Thus, providing a sufficient amount of time for the borrowers to settle the loan comfortably. 
• Collateral Free: Civil servant loans do not require any collateral or security submission on the applicant’s part. However, some banks may require the borrower’s spouse to appear as a co-applicant. In cases of single/widowed/divorced applicants, banks may ask for a personal guarantee from one of the applicant’s colleagues. 

How to Apply for a Personal Loan for Government Employees?

A government employee can use offline and online application modes to apply for a personal loan.

NBFCs

If one fails to meet their bank’s eligibility criteria, they can approach any Non-Banking Financial Company (NBFC) to seek a Low-interest Loan for Government Employees. Like banks, NBFCs offer collateral-free personal loans with minimal documentation and quick disbursals.

While applying for a personal loan through NBFCs, one must remember to obtain the key fact statement from the loan provider. The NBFC company’s digital privacy policies and additional charges must be carefully noted before applying for the loan. TATA Capital, Poonawala Fincorp, and Bajaj Finance Limited are some of the top NBFCs which offer emergency loans for government employees. 

Tips for Choosing the Right Personal Loan for Government Employees

Below are some practical tips for being an aware customer and choosing the best Personal Loan for Government Employees.

• Check the hidden costs: Apart from the fees and charges listed in the blog, the banks may impose additional charges without bringing them to your notice. Keeping track of any hidden or additional costs obliges the bank to be fully transparent with you.
• Check Eligibility: The loan amount the bank offers and the interest charged on it is determined by the candidate’s eligibility. Banks offer online loan eligibility calculators that are easy to use and can guide you in selecting the right personal loan.
• Pre-Approved Loans: Banks offer Pre-approved loans to their existing customers with a solid credit history. Pre-approved loans minimise the documentation process as the banks already have the applicant’s verified information in their database.
• Waive-off prepayment charges: Some loan providers offer pre-payment/foreclosure charge waivers if certain specified criteria are met. You may check with your bank if these charges can be waived to save you some money.
• Keeping the documents handy: Keeping all the required documents in one place can avoid misplacement or skipping any essential certificate.
• Digital Loan Management: Personal loans for government officials can be easily monitored and managed using digital loan management facilities provided by the bank. Checking with your bank for these facilities can save you time and effort.
• Avail Discounts: Banks extend discounts and offers to those loan applicants with a salary account with the concerned bank. If you meet the requirements, you can avail interesting discounts and get a good deal.

Conclusion

A Personal Loan for Government Employees comes to the rescue when any financial requirement knocks at your door. Government staff loans can help an employee raise as much as Rs. 50 lakhs with zero collateral requirements and easy repayment options. Government jobs offer high security to employees; thus, a salary-based loan for government employees can be easily obtained.

A government servant can apply for a personal loan by visiting the bank’s nearest branch or using the bank’s online services. The loan offers plenty of time and flexible choices for repayment. The applicant can easily settle the loan account through EMIs, prepayment and foreclosure services. From family ceremonies to new purchases, a civil servant loan can fulfil all their dreams without burdening the employee with any restrictions.