Frequently Asked Questions
You are on KarloCompare's FAQs page. Find answers to some of the most commonly asked questions about personal loan applications in Pakistan. For additional reference, you may also go to our product guide to personal loans or the credit card glossary
The minimum loan and maximum loan one can avail varies from bank to bank and their respective policies. However, generally speaking, in Pakistan minimum amounts start at PKR 50,000 to a maximum of PKR 2,000,000. The amount you qualify for is determined by the bank whose personal loan you are applying for. The amount that is ultimately approved also depends on your income level, employment status, how much debt you already have, among other criteria's.
Debt burden is a ratio which bank's look at to evaluate how much debt you currently owe to other institutions. The debt burden tells loan providing institutions how much loan you can avail without exhausting your entire income in servicing principal and interest payments. Generally bank's are hesitant to offer loans to individuals who already have many loans or credit facilities. Since these people are already paying high portions of their income towards paying off existing loans that they may have taken on.
Personal loan rates are usually fixed. This means the bank will provide you a rate at the time of approving the loan. Additionally, we find there are a few personal loan providers that price loans on a floating mechanism. This type of pricing effectively means that the bank will link a spread on a base rate. The base rate that is usually used as a reference point is the 12 month Karachi Interbank Offered Rate (KIBOR). So for example let's say that the prevailing KIBOR is 6.35% today and the bank charges 4% spread, the rate that your loan will be priced on is 10.35%. Why? Because the bank will add 4% to the prevailing KIBOR rate of 6.35%.
Banks charge customers a processing fee to cover administrative costs it has to incur to offer this service to you. Generally the processing fee is used to cover cost implications for legal loan agreements, stamp duties, and other administrative costs. When applying for a personal loan you most certainly will be charged a processing fee plus any applicable taxes such as federal excise duty (et al.).
Most personal loans tenures offered in Pakistan range from 1 year up to 5 years. However, there may be some personal loan providers who offer such products for a period up till 7 years.
The main difference between a personal loan or revolving line of credit is, that a personal loan needs to be paid back to the loan provider within a given period of time. Unlike a personal loan revolving line of credit is something that is perpetual, and you only pay the interest portion on what you use. Revolving line of credit is an overdraft account which gives you the ability to withdraw money as and when you require, and pay interest only on the portion that you have withdrawn or used from the bank.
No, personal loan's and revolving line of credit are unsecured forms of lending that banks in Pakistan engage in. You do not have to pledge property, cash or machinery in favour of the bank in order to get a loan. Bank's refer to these products as unsecured loans.
EMI stands for equal monthly installments. This is the monthly payment you have to make to repay your personal loan off.
When your loan is disbursed you are assigned an account where you have to deposit your payment. This account is usually linked to the loan account where the loan was disbursed.
Yes, you can prepay your loan. The loan provider will have some sort of prepayment condition that you will have to fulfill when you are exercising your right to prepay. You can either make partial prepayments, or complete prepayments.
Yes, you have to generally be above 21 and under 65 to qualify for such loans. However, there may exceptions to the rule.
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