Covid-19 personal loans: Important things to know

New kind of bank offeringGetty Images
New kind of bank offering
In the ongoing covid crisis, it seems like banks have been keenly 'lending' a helping hand. Against the backdrop of the economic crisis driven by covid-19, which took many of us in its clutches by either impacting health and/or wealth, some lenders have introduced a new category of personal loans, namely 'covid personal loans'. The motive behind this offering is to assist people in dealing with the varying degrees of financial crises they may have been facing.

For example, public sector lender, Bank of Baroda, has launched 'Baroda Personal Loan COVID 19' for its existing retail loan customers, where those who already have a home/auto loan or a loan against property from the bank, can avail of the personal loan. Bank of India launched the 'Bank of India COVID-19 Personal Loan for Individuals', among many other launches by many banks. Given below are 5 important features of these products.
​Objective behind such loansGetty Images
​Objective behind such loans
A covid personal loan is a type of personal loan offered by banks and NBFCs for the specific purpose of tiding over the liquidity crunch during the time of the Covid pandemic. Such a situation could arise out of a lay off, salary cut, unforeseen income shortfall etc.
​Who can avail?ThinkStock Photos
​Who can avail?
These loans are being offered to existing salary account holders and home loan customers with a high credit score, in other words, good borrowing history and record.
​Loan amountThinkStock Photos
​Loan amount
Maximum amount offered for this loan is Rs 2.5-5 lakh depending upon the monthly salary of the client and existing loan value. For example, in case of Bank of Baroda's personal loan, a customer can approach their existing branches to avail this personal loan up to a maximum limit Rs 5 lakh.
​Rate of interest, other chargesThinkStock Photos
​Rate of interest, other charges
The interest rate on these loans are lower than personal loans and vary from 8%-15% per annum. The loan term also ranges from 6 months to 5 years. For example, Punjab National Bank's 'SAHYOG COVID 19 Personal Loan Scheme for Individuals' has an interest rate of 8.05%. The relatively lower rates can be seen as some additional relief in the trying times. No prepayment fee are being levied on such loans. Moreover, no or low processing fees are charged.
​How you can applyGetty Images
​How you can apply
As of now you cannot apply for a COVID-19 personal loan online. The banks offering these loans are doing so offline. Thus, you need to contact your bank directly to know the details of the COVID-19 emergency loan application process.
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