Mudra Loans – Answering some of the most common FAQs

In April 2015, the Government of India launched a special scheme in collaboration with the ‘Make in India’ campaign launched in 2014. This scheme was named the Pradhan Mantri Mudra Loan Yojana. Under this scheme, start up owners, entrepreneurs and other micro and small business owners across India can apply for loans to fund their business, purchase raw material and equipment and so on. The objective behind this scheme is to provide the necessary funding to small businesses so that they can keep their businesses running. Here are some of the most common FAQs regarding Mudra Loans.

FAQ 1: Under what categories can I avail a loan under the Mudra scheme?

Under the Mudra scheme, you can apply for a loan if you belong to certain specific categories. These include loans for traders and shopkeepers, loans to purchase transport vehicles, loans for agriculture and other allied activities, loans under the food production sector, loans under the textile production sector, loans to purchase the necessary machinery and/or equipment and loans for personal service, community, and social activities among other things. 

FAQ 2: Where can I get the loan and what is the interest rate and tenure of repayment?

You can apply for a Pradhan Mantri Mudra Loan by visiting any leading bank in India. These loans can be obtained at low interest rates. Prominent public sector banks such as Bank of India and Bank of Baroda are offering these loans at interest rates starting at 8.35% and 8.40% respectively, while you may have to pay a higher interest rate if you choose a private sector bank for the loan. The loan repayment tenure differs from one lender to another and the maximum repayment tenure is generally 3 to 5 years.

FAQ 3: What is the maximum loan amount I can get under this scheme?

The maximum loan amount you can get under the Mudra Loan Scheme depends upon the stage under which the loan is availed. There are three stages in which you can obtain the loan. They are as under:

·         The Shishu stage: Under this stage you can get a maximum loan of ₹50,000.

·         The Kishor Stage: Under this stage you can get a maximum loan of ₹500,000. 

·         The Tarun Stage: Under this stage you can get a maximum loan of ₹1,000,000.

FAQ 4: What are the basic criteria to be eligible for this loan?

To be eligible for a loan under the PM Mudra Loan scheme, you need to be a resident Indian belonging to the age group of 23 to 28 years. You should be able to show a minimum monthly income of approximately ₹17,000 or more and own a business making a minimum annual turnover of ₹1,500,000. You also need to show a work-experience of 2 years at minimum if you are a salaried individual or 5 years if you are a self-employed professional. 

FAQ 6: What documents do I need to submit in order to avail this loan?

You need to provide basic documents such as a government recognised identity proof and address proof document. You should also provide 2 recent passport size photographs, income proof documents, business proof and registration documents and other miscellaneous documents as mentioned in the Mudra Loan Yojana application form.

FAQ 6: How can I apply for a loan under this scheme?

There are two ways in which you can apply for a loan. You can visit your nearest bank or preferably a bank with which you have an existing banking relationship or you can apply for Pradhan Mantri Mudra Yojana Loan Online directly through the lender’s website.

4 Reasons why you need to use a loan EMI calculator before applying for a bike loan

A two-wheeler loan is a great product offered by banks and NBFCs that can help you bring you’re your favorite two-wheeler – whether it is a scooter or a bike. Often touted as the cheapest loan you can get, it can be repaid in easy and budget-friendly equated monthly installments (EMIs) in tenures lasting over 3 to 5 years, depending upon the lender you choose. But as a practice, it is better to use a loan EMI calculator and understand the exact EMI payable before you approach a lender. Here are 4 reasons why you need to use a bike loan EMI calculator before applying for the loan.

You can compare interest rates offered by different lenders

Every lender provides the loan EMI calculator on their website. You can shortlist a few lenders and use the EMI calculators on their website to understand the EMI payable against the principal loan amount needed and the various interest rates and tenures. You can note down these figures in a separate Excel sheet by listing the EMI payable in one column and the lender in the other and compare which bike loan deals works out the best for you. You can also create an advanced sheet in which you can enter the EMI payable against different interest rates and tenures, offered by the same lenders as well.

You can get accurate and immediate results

The EMI calculator computes the payable EMI against various interest rates and tenures to the last, accurate decimal point. Moreover, since these are electronic calculators, the calculation is done in a fraction of a second. You just need to know how to calculate two-wheeler loan EMI using the calculator. Basically, you just need to enter the principal amount you wish to borrow, the interest rate you can afford to pay and the tenure (in months), in which you can repay the loan and the calculator will instantly compute the payable EMI with 100% accuracy. 

It prepares you before you approach a lender

Another good reason to use the two-wheeler loan EMI calculator is that it prepares you before you approach a lender. Since you are already aware of what the loan will cost, you would approach a lender only when you are prepared to repay the loan. This research also eliminates any chances of your loan getting rejected and your credit rating falling. Moreover, there would be no surprises or any reason that causes disappointment if you use the calculator before approaching a lender, because you can calculate the loan processing fees and other basic charges while calculating the monthly payable EMI amount. 

It eliminates the scope of manual errors

Although you can use manual EMI calculators too, there is a good chance that manually calculating the payable two-wheeler loan EMI can result in various manual errors. These mistakes in calculation can prove risky and even result in your loan being rejected, which can further have a negative impact on your credit scores. Not to mention, the manual calculation method is long, tedious and time-consuming and may not always provide accurate results. As such, it makes more sense to use the electronic EMI calculator as opposed to a manual one.

Bike loan EMI calculators are freely available on the website of all lenders. You do not have to pay anything to use the calculator and you can use it unlimited times until you arrive at an EMI amount you can afford. If the EMI amount does not fit into your budget, you can simply click on the reset button to use the calculator again.

Step by step guide to using a two-wheeler loan eligibility calculator

Riding a two-wheeler is the most freeing feeling. It is perhaps the only motorized vehicle, which you can use to navigate through rush-hour traffic. Whether it is a geared bike or a gearless one; two-wheeler are especially popular in cities where the means of public transportation are sub-standard. Today, you can apply for online two wheeler loans and bring home your dream bike. But before you do, you need to check if you are eligible for the loan. You can do this with the help of a bike loan eligibility calculator. Here’s what it is and how it works

What is a loan eligibility calculator?

A loan eligibility calculator is an online tool that you can find on the website of all lenders, offering various kinds of loans. These calculators are designed considering the type of loan you need. So, if you wish to buy a two-wheeler by taking out a loan, you need to use a two-wheeler loan eligibility calculator. As the name suggests, this calculator can helps you understand the exact loan amount you are eligible for, to purchase a two-wheeler. The calculator factors in your age and income among other things to determine the maximum loan amount you can get.

How to use a loan eligibility calculator

Using the bike loan eligibility calculator is rather simple. You need to follow the below mentioned 5 steps to check the maximum loan amount you are eligible. 

Chose a lender for your loan and visit their website

The first thing you need to do is decide the lender you would be approaching to get your loan sanctioned. This decision should be based on factors such as interest rate charged against two-wheeler loans by different lenders and flexible loan repayment tenures among other things. Upon finalising a lender, you need to visit their website and find the bike loan section. 

Find the loan eligibility calculator

Once you’re in the loan section, you need to find the tab that says ‘check your bike loan eligibility’. This tab is generally the first tab you will find on all lender websites. You should not apply for a loan before checking whether or not you are eligible for it.

Enter your date of birth

Once the calculator appears on your screen, you need to first enter your date of birth. This tab is important because lenders generally check eligibility for two wheeler loans on the basis of your age. You need to be older than 21 years and up-to 65 years of age to be eligible for the loan. 

Enter the details of the city you live in

In the next tab of the calculator, you must fill in the details of the city and state you live in. This tab is essential because the road-taxes applicable for riding a two-wheeler are different in every city. 

Enter your monthly income

Your monthly income also helps lenders calculate your 2 wheeler loan eligibility. To be eligible for a loan, you need to be able to show an annual income of ₹72,000 and ₹84,000 if you are a self-employed professional or a salaried individual respectively

Click on Enter

Once you have entered the above mentioned details, you can click on the enter button to check the exact loan amount you are eligible for.

Final word: Along with using a bike loan eligibility calculator, you should also use a bike loan EMI calculator to understand the exact loan EMI you would be paying against your loan for bikes. Using both calculators can improve your chances of getting your loan approved instantly.