How To Get A Government Personal Loan And What Are The Eligibility Criteria?

Personal Loans

Central and State Government employees can get a Government Personal loan to cover personal expenses. Whether you need cash for medical emergencies or a child’s higher education, you can avail of this loan as they have lenient eligibility criteria. So, what are the eligibility criteria, documents required and how to apply for a loan for Government employees? Read on to find out!

Government Personal Loan Scheme Eligibility Criteria

Though the requirements differ from one financial institution to another, the general eligibility criteria include age, nationality, occupation, income capacity etc. The following are some of the standard eligibility criteria for loans for Government employees:

• Age limit: 21 years to 60 years
• Nationality: Resident citizen of India
• Employment: Salaried employees at PSUs or departments of Central, State or local bodies.
• Minimum work experience: 2 years (1 year with current employer)
• Minimum salary: Rs. 25,000
• CIBIL score: 750 or above 

Documents Required for Government Personal Loan Scheme

Most financial institutions require the following documents for approving a govt personal loan:

• Proof of identity (Aadhaar card, voter ID card, PAN card, passport, driving licence, etc.)
• Address proof (Aadhaar card, voter ID card, driving licence, passport, etc.)
• Employee ID card
• Bank account statement (last three months)
• Salary slip for last two months 
• Latest Form 16

Interest Rates of Government Personal Loan Scheme

The following are the interest rates on Government personal loans offered by different financial institutions:

Fees and Charges Associated with Government Personal Loan Scheme

The following fees and charges are applicable for personal loans availed by Government employees. Note that these charges may vary from one financial institution to another.

• Processing fee: Financial institutions charge a small percentage of the loan amount for processing the application. This is higher for unsecured loans, typically ranging from 2% to 3% of the disbursed loan amount.
• Foreclosure penalty: Foreclosure penalty is applicable if the loan is being foreclosed or paid in advance within 6 months from the date of disbursal. In such cases, banks can levy a penalty charge. For personal loans, it can range from nil to 5% of the loan amount. 
• Preclosure charges: Some financial institutions charge a penalty of around 2% if a Government employee repays a loan before the completion of the loan tenure. 
• Late fee: If you delay or miss EMI payments, you are liable to pay a late fee or penal interest. This can range from 2% to 4% per month on the missed EMI.

Also Read: How To Apply For Personal Loan For Salaried Employees In India?

How To Apply for a Government Personal Loan Scheme?

To apply for a Government personal loan, follow these steps:

Step 1: Visit the website of a bank that provides a Government personal loan

Step 2: Click on ‘Apply for a Personal Loan’

Step 3: Select EMI by entering the loan amount and tenure

Step 4: Enter your personal details and complete your KYC

Once the KYC is checked and the loan is approved, you will get the loan amount disbursed into your bank account. 

Tips for Government Employees before Availing a Government Personal Loan

• Evaluating your ability to repay the loan: Before applying for a loan, make sure that you are well prepared for its repayment. You can use an EMI calculator to check if your monthly income is enough to pay the monthly instalments on time without financial stress.
• Comparing interest rates: You will want to check the interest rates offered by different lenders to ensure that you are getting the best deal. As personal loans have high-interest rates, even the smallest difference in interest rates will lower your overall cost of borrowing.
• Assess additional expenses: Besides interest, Government personal loans come with additional expenses, such as processing fees, prepayment penalties and late payment fees. You may want to assess all these additional costs to decide whether a loan is affordable.
• Checking eligibility criteria: Before applying for a govt personal loan, make sure that you meet the eligibility criteria set by the financial institution. Generally, you need to have a high credit score and a regular source of income to get a personal loan of high value. 
• Consider your monetary needs: Before taking a govt personal loan, make a list of your monetary needs and requirements for which you are going to finance it. As you will have to bear the burden of monthly instalments, you may want a loan amount that is necessary.

Also Read: 5 Best Ways To Quickly Repay Your Personal Loans

Final Word

Financial institutions offer personal loans for Government employees to solve all their financial problems. So, whether you need funds for a medical emergency, travel, higher education, or purchasing expensive electronics, you can opt for this loan. This collateral-free loan comes with less stringent eligibility criteria and offers enough funds to cover all your needs.

FAQs on Government Personal Loan Scheme

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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.