Farming comers under the self-employed sector when applying for a personal loan. The bank tries to find out if you can pay back the loan borrowed or not. Hence you are required to submit profit proofs or GST returns of your business. Farming is a sector that is subsidized by the government and they don't need to pay taxes and rightly so because their business does not have a steady income and it is heavily reliant on nature for making profits.
A lot of low-income farmers don't maintain profits proofs as the income is not so much that they can put in a bank and have some interest over it. Other high-income farmers seldom maintain their income proofs as it is not a habitual practice for farmers in general.
If you don't have profits proofs and tax returns it can be difficult to get an unsecured loan from the bank. Keeping your agricultural land for a mortgage might not be a great idea as their livelihoods are dependant on that very agricultural land.
A personal loan is given to you on a credit score. But, some banks have made some schemes especially for farmers where they provide loans for farmers at a subsidized rate. Farmers are a very important part of our society and they are very much deserving of a subsidized loan. Especially in a country where people consume multiple servings of vegetables daily and the economy is dependant on the farming sector to 80% of its capacity. farmers also get comfortable tenure to pay back the loan. Their interest rates can be as low as 7% and some farmers don’t even have to pay the processing fee under some circumstances. Although for others it ranges from 1 to 4% of the loan amount.
SBI personal loan interest rate is 7.25%.
IDBI gives 7%.
ICICI gives 9%.
Kasur Vyasa bank gives 8%.
Origination fees are also to be paid when availing of a personal loan. If you need the same amount of your loan then at the time of availing a loan pay all these fees in advance.
When taking personal loans for consolidating debt pay close attention to every credit card’s interest rate and personal loans interest rate. Keep in mind consolidation only helps if it has a lower interest rate or else your debt just looks different than it was.
The biggest advantage of a personal loan is that it can be used for any expense that you want to make. So, if you are going to have big recurring expenses rather than getting two different loans just take one consolidated loan as the second loan might not get approved because of the first loan. They are the most helpful to people with no collateral to keep for the loan hence their interest rates can be higher than a car loan or home loan. Although for people with a good credit score will be able to secure lower interest rates which can be beneficial as you are not risking any collateral property that you own.
On failure to pay EMIs of your loan, banks charge some fee or penal interest rate for that month. Personal loans EMIs are very rigid and failure to pay them on time can lead to some problems. Penal interest rate is the worst nightmare as you have to pay more interest rate on top of the interest rate that you are paying. Extra fees are also not low in a personal loan. This can also go on your credit score and harm it. Only take a personal loan when you know you will be able to pay the EMIs on time in the fixed tenure. All loans come with a risk associated with them and you are in charge of deciding whether it is a good idea according to your finances to avail of a loan or not.
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