A personal loan is different from other types of loans in terms of flexibility, and longer payback time of almost 5 years. It is also considered cheaper than other types of loans, having less stringent conditions and no collateral requirement.
This guide helps you understand personal loans and includes a list of the top 5 Pakistani banks from which you can get loans. You can also know the process of applying for a personal loan and the potential benefits and limitations.
Understanding Personal Loans
A personal loan is lent by the bank after verifying your income and expenses to confirm if you can pay back the debt. It does not need any collateral and is categorised as an unsecured type of loan.
Different banks offer personal loans on variable interest rates that change over time based on the varying conditions of the market. The loans with variable interest rates have higher rates, but those with fixed rates require you to pay more monthly debt. However, some banks allow you to lower the monthly payback amount by giving extra payments or paying back the loan faster. That’s why you must find an excellent reputed bank for a personal loan.
From Where to Get Personal Loan – Top 5 Banks
The following are the top five banks from where you can get a personal loan:
Habib Bank Limited (HBL)
Habib Bank Limited (HBL) has a long history of almost 60 years, with 111 branches in Pakistan, facilitating its customers with easy access to banking facilities and personal loans. The bank requires the applicant to provide all the documents related to income verification and personal details to get a personal loan.
The HBL charges processing fees for personal loans according to the SOBC (Schedule of Bank Charges), and early termination charges also apply. The LPC (Late Payment Charges) are also applied if the customer cannot pay the instalment within 9 days.
JS Bank
JS Bank requires you to put down almost 20% to 25% upfront to secure a personal loan with an APR (Annual Percentage Rate) of almost 16.7% and a flat rate of 9% for all loan amounts. The bank also charges a 0.5% processing fee and a 3% government tax on your personal loan amount. However, if you repay the loan within 6 months, there is no processing fee.
Muslim Commercial Bank (MCB)
The Muslim Commercial Bank (MCB) has various options, with personal loan amounts ranging from PKR 500,000 to PKR 100 million. They have responsive customer service with easy-to-understand repayment plans and flexible payment periods. The annual interest rates in the bank vary between 12% and 24% based on your payment history and credit score, offering personal loans at an interest rate of 19%.
The loan length ranges from 12 to 36 months, with flexible repayment schedules that work out for most people. The process of applying for a personal loan is also quite simple, requiring you to submit your income details and other necessary information. The staff at MCB ensures safe handling of your documents and other information during the entire process.
National Bank of Pakistan (NBP)
The National Bank of Pakistan (NBP) provides the option to apply for personal loans online, offering convenience and the best customer service. You can enjoy several benefits along with acquiring a personal loan from the bank as it offers lower interest rates with longer and flexible loan payback durations.
The bank offers personal loans at an interest rate starting at 16.3% with a payback time of 1 to 5 years. You can get as much as PKR 1,000,000 loan amount from the bank. However, you need a checking account in any of the NBP’s branches or in one of its tied-up banks. Moreover, the bank also assesses your credit score, employment status, and repayment history before loan approval.
State Bank of Pakistan (SBP)
State Bank of Pakistan (SBP) is one of the largest banks in Pakistan, with 54 ATMs, 39 branches, and almost 1,200 service outlets across the country. Personal loans are offered by the bank with an average processing time of 3 days and annual interest rates from 15% to 19%. You need to have an SBP card to be eligible for the personal loan.
The State Bank of Pakistan provides no-frills personal loans, and you can quickly get your money from the bank after getting approval. You are eligible to get a loan from SBP if you are an adult and have Pakistani citizenship. Moreover, you should also have been living in Pakistan for at least 3 years before you apply for a personal loan and should have a clear credit history.
The Process to Get a Personal Loan
You can get a personal loan from a bank in the following steps:
- Determine the amount you need for a personal loan depending on your needs.
- Check the eligibility criterion of the bank before applying there.
- Process the information to determine the estimated amounts of monthly instalments you need to pay after getting the loan.
- Apply for a personal loan with the bank of your choice.
- Submit all required documents, including bank statements, salary slips, or IT returns as income, address, and ID proof.
- Get funds in your account after the bank approves the personal loan.
Potential Benefits and Limitations
You can get a personal loan to invest in your future, pay off student loans, or make home improvements. It can be availed quickly as the banks require only 3 to 7 days as processing time. You can get high loan amounts at low-interest rates and easy accessibility.
On the other hand, there are various costs associated with a personal loan if you acquire it from a bank, such as application fees, interest rates, and monthly payments, which add up significantly. Moreover, there is a risk of penalties if repayment requirements are not fulfilled timely.
Wrap Up
You should compare your short and long-term expenses against your financial objectives before taking a personal loan from any bank to ensure it is indeed worth it. You should also read all the contract details carefully and make everything clear before signing the agreement.
