With newspapers and websites flush with advertisements on personal loan availability, one may be under the impression that it is easy to get a loan whenever one requires funds urgently. Personal loans are indeed very convenient and can be used for a variety of purposes whether it is on the personal front or for business purposes.
For high salaried individuals with stellar credit scores, accessing such loans may be a matter of scouring a few websites and getting an online approval in a matter of minutes. But how about those individuals in lower income groups with a monthly salary of Rs 5000-10,000 or the unemployed youth with basic education? On the ground reality check suggests that access to formal credit for such individuals is not all that easy. It gets even more difficult for those who have a bad credit history or worse still do not have a credit record at all or have landed on a loan defaulter list.
So, is it possible for people in lower income groups to get access to finances when they require it the most? The answer is yes. In fact, loans can be a used a tool to alleviate poverty and build a credit record that includes them in the formal credit rating system and builds the path for further access to finances as and when required. Once the unemployed youth of the nation access loans under special subsidised schemes, they can opt for mainstream loans and even access finances at short notice at attractive personal loan interest rates.
The good news is that the central and several state governments have schemes that are specifically designed to assist the poor and unemployed. The most popular among these is the Pradhan Mantri Rozgar Yojana, under which unemployed individuals between the ages of 18-35 years of age, with a basic education of upto the eighth standard, can avail of loans of up to Rs 2-5 lakhs for business and industry sector respectively. Besides, there are states like Tamil Nadu and West Bengal that are trying to assist the unemployed youth population of their respective states.
For instance, unemployed graduates in the state of Tamil Nadu can avail of 25% subsidy on loans under the New Entrepreneur and Enterprise Development Scheme (NEEDS). Similarly, the Government of West Bengal provides a special loan scheme where a cash loan of Rs 50,000 is offered to employed youth between 18-45 years of age to start their own venture.
The need of the hour is however to make an attempt to popularise the availability of these schemes among the rural and semi urban population through the audio visual medium. The top of the line public sector lenders who are associated with such Government initiated schemes should also make an attempt to reach out to the poor with such tailor-made loan products that will provide the unemployed youth of the nation to come forward and set up their own venture and create a financial footprint for them. Chances are that with the proper guidance of loan officials from august lending institutions, they will never land up in the loan defaulter list and indeed be able to beat life poverty.
For those who have a chequered credit history, perhaps because of the lack of knowledge or an emergency that put an abrupt halt to cash flows need not worry either. Rebuilding of credit is not entirely impossible. Although it will be futile to knock at the doors of top lenders with a loan application, there are other non-traditional lenders who are willing to consider borrowers with bad credit history. One such option is a peer-to-peer lending platform or a P2P lender as they are popularly known as.
These are virtual lending marketplaces that connect the borrower directly to a willing lender. If your requirement matches with the eligibility criteria as chalked out by the lender you may be able to access such loans at attractive personal loan interest rates when you are in urgent need of finances due to the unpredictable cash crunch.
However, borrowers opting either for subsidised loan schemes must be made aware of the importance of making timely repayments in order to build up a good credit record. This, in turn, will give them the confidence to carve a niche for themselves and access formal credit from traditional lenders at a later date.