Being a professional in this world is hard, with one expected to toe certain standard guidelines and regulations, aiming to fulfill the duties of a professional with utmost respect and diligence. Most of the world looks up to professionals, with their jobs highly coveted, demanding attention from others. It is, however, not easy to be a professional, with it requiring a high level of skill and commitment, on both the professional and business front, with finances playing a key role in the overall development of a professional.
What are professional loans?
A professional, by definition, is someone who undertakes a duty/job which is the outcome of specialized education/training. Some of the most popular professions in the world are related to medicine (doctors), engineering, architecture, research (scientists), sports, etc. These are activities which involve a tremendous amount of effort and hard work, culminating in years of training and studying. It is this level of expertise which makes professionals sought after, the world over.
Being a professional isn’t easy, with most professional training requiring one to spend a sizable amount of money. Recouping this money can take time, with a number of professionals aiming to establish their own venture to reduce this time and make a bigger name for themselves. A professional loan, as the name implies, is a loan which can be availed only by professionals. This loan amount can be utilized towards the development/skill enhancement or establishing a new venture to boost their profession. This loan is available only to a few select categories, making it a specialized product.
Where can one get a professional loan from?
A professional loan in India can be availed through banks and NBFCs. While almost all banks offer this product, not all NBFCs provide it. Some of the popular products can be availed from Oriental Bank, HDFC Bank, SBI etc.
Who is eligible to take a professional loan?
Professional loans, by definition limit the eligibility to a certain section of the population. This loan can be availed by individuals who are involved in a profession of some sort. One could either be employed with an organisation, either practicing a profession or could be self-employed, with the major criteria being the kind of work one does. Some of the most popular professions which qualify for this loan include doctors (surgeons, general physicians, dietitians, orthopedic, etc.), engineers, architects, lawyers, TV/radio personality, journalist, etc.
While this forms the basic criteria to be eligible, availing the actual loan could mean that one has to fulfil other aspects, primarily related to the following points.
- Age – An applicant should be within a specific age group, typically ranging between 22 and 55 years.
- Experience – A borrower should have sufficient experience in a particular field/profession, with most lenders demanding a minimum of 2 years’ experience.
- Income – A professional who intends to avail this loan should have a sufficient income, ensuring that he/she is in a position to repay the loan.
Individual banks/NBFCs might have certain additional criteria which a borrower is expected to satisfy in order to be eligible for a professional loan.
Features of professional loans
Professional loans come with a host of attractive features, some of which are highlighted below.
- High quantum – Individuals are eligible to loans worth up to Rs. 50 lakhs (and more), with banks and NBFCs willing to provide this high amount on the back of their work experience and growth perspective. One can typically avail a loan which is 10-15 times their net income.
- Guarantors – Most lenders do not insist on having a guarantor before sanctioning a loan. This highlights their trust in borrowers from a particular profession, making it easy for an individual to avail a loan.
- Multiple professions – A professional loan is not limited to individuals belonging to a certain profession, with most banks providing this loan to members who belong to different professions, eliminating discrimination among different types of work.
- Security – Most banks and NBFCs do not insist on collateral or security in order to sanction a professional loan.
- Prepayment – Prepayment of a professional loan is possible in most cases, with lenders typically not enforcing any fine for this prepayment. This enables borrowers to repay the loan amount whenever they have additional funds.
- Interest – These loans can be availed at competitive interest rates, which typically range between 10 and 14% per annum (can vary from bank to bank). These make them more attractive than personal loans, which is a major reason for their popularity.
- Tenure – A professional loan can be availed with a flexible repayment tenure, typically ranging between 1 to 6 years. This provides a borrower sufficient time to repay the loan through planned EMIs.
- Quick processing – Most lenders are quick to process a professional loan application, with it possible for an applicant to receive the loan in a very short period.
- Simple eligibility – Individuals need to satisfy a few basic criteria in order to be eligible for this loan.
- Low processing fee – A professional loan typically attracts a lower processing fee compared to other loans. This can range between 0.5 and 1% of the loan amount, depending on the lender.
Documents required to avail a professional loan
While it is easy to avail a professional loan, eligible applicants will need to submit the following documents before the loan is sanctioned.
- Proof of qualification – This is the highest degree achieved by an applicant (MS, MD, etc.)
- Valid government approved ID proof – PAN card, DL, Passport, etc.
- Valid proof of residence – PAN card, utility bill, Voter Id, DL, passport, etc.
- Latest salary slip
- Proof of tax payment – This should be the latest income tax return filed by an applicant
- Professional certificate – Individuals practicing a particular profession could be required to submit proof of the same. This could be a medical certificate, BAR license, etc.
A bank/NBFC could ask for any additional document it feels is necessary to consider a particular application.
Interest rates on a professional loan
Professional loans come at extremely competitive interest rates, which are generally lower than the interest rates charged on a personal loan. The rates typically range between 10 and 14% per annum, depending on the lender, making a professional loan an ideal source of funds.