Personal Loans From P2P Marketplace: RupeeCircle Borrowing Explained

Personal loan is an unsecured loan and hence banks and non-banking financial companies have several review processes in place before disbursing the loan amount. Parameters such as credit score, employment history, repayment capacity, etc. are some of the parameters on which the borrowers are evaluated. The interest rates on personal loans are higher than home loans or car loans because the borrowers do not put up a collateral against the loan.

A vital parameter used by financial institutions to gauge a borrower’s credit worthiness is his or her CIBIL score. (A CIBIL score is a financial identity of an individual or an organization. This 3-digit figure presents the loan repayment ability and/or intention of the borrower. Scores below 750 are considered low and risky, and the lender can either reject the loan request or charge a higher interest rate).

The unbanked or underbanked people of India usually do not have a CIBIL rating or have low scores. Even the loan applications of those who have a bank account get rejected due to low CIBIL scores or other reasons.

Alternative Personal Loans

People whose personal loan applications get rejected by financial institutions can apply at alternative personal loan providers. However, many of these providers impose high interest rates or collaterals in lieu of the loan amount.

RupeeCircle is an alternative personal loan provider that brings together borrowers and lenders to its P2P marketplace. Applying for a personal loan at RupeeCircle is simple and swift because the KYC is done online and the borrower does not need to pledge any collaterals.

How RupeeCircle works

RupeeCircle is an RBI licenced online platform that brings together the borrower and the lender, thereby cutting out the middlemen or an agency. This brings down the huge service or operational charges on both the lender and the borrower. The borrower has to register on the P2P platform and upload his/her KYC documents.

Registration Fee for Borrowers

At the time of registration each borrower is charged with a one-time non-refundable fee. This charge is levied on the borrower for risk assessment of his/her profile by the RupeeCircle team.

Who Can Apply for a Personal Loan at RupeeCircle?

Anyone who fulfils the RupeeCircle borrower eligibility can apply for a personal loan at RupeeCircle regardless of the below factors: –

• No credit history
• No previous loan history (first time loan appliers)
• Loan application rejected by other financial institutions
• No collateral/property to mortgage

RupeeCircle Borrower Eligibility

The following people are eligible for loan application: –

• An individual who is an Indian resident
• At least 18 years of age
• Have a valid Govt. issued ID proof (PAN card, Aadhar card, Passport)
• Have a valid Indian bank account
• Salaried or Self-employed

Personal Loan Interest Rates at RupeeCircle

RupeeCircle accesses more than 250 data points of the borrower including his/her social, financial and educational background before computing their interest rates. After a detailed analysis of the borrower the underwriting team assigns them into risk grades of A (strongest credit profile) to F (weakest credit profile). Borrowers in the A grade are most likely to repay the loan amount and hence the interest rate in this grade is less. The interest rate in the F grade is high so as to compensate the lender on the risk they take while lending money. The interest rates at RupeeCircle ranges from 12% to 30%. The minimum interest rate on personal loan available at RupeeCircle is lesser than the minimum rates offered by several banks and NBFCs (as seen in the below chart).

Types of loans at RupeeCircle

• Auto Loan
• Education Loan
• Small Business Loan
• Home Improvement loan
• Debt Consolidation Loan

(View the list of all the loans available at RupeeCircle here)

Loan repayment process at RupeeCircle

Borrowers can repay their EMIs through the following mediums: –

• IMPS
• NEFT
• Demand draft
• Post-dated cheques (issued in investor’s name)
• Auto debit

RupeeCircle prefers the auto-debit mode of payment where every month the fixed EMI is debited from the borrower’s account and deposited to the investor’s escrow account. The received amount is split between the investors who invested in the loan and transferred to their respective bank accounts.

Prepayment option at RupeeCircle

RupeeCircle offers its borrowers the option for prepayment of the entire loan amount at no additional charge. The borrower can prepay the whole loan amount (Balance principal + Interest rate for the month) as long as they have paid the EMIs for the previous 3 months.