Festival season is started and if you need funds for purchasing big-ticket items in the festivals you can avail festival loan. Festival loan offers includes reduced EMI, zero down payment and fee waiver facility. Most of the lending institutions and banks offer festival loans with attractive benefits. In this post, I will share complete information of festival loans, features, and comparison.
What is Festival Loan?
The loan offered by a bank or lending institute during festival season at a cheaper or discounted rate is known as festival loan. These types of loans are offered to lure customers for increasing their spending. You can use this loan amount to meet any type of festival-related expenses.
Festival loan is one type of personal loan with a few additional benefits. Festival loans are more economical compared to a personal loan. The festival loan is offered only if you meet the eligibility criterion set by the bank or financial institute. These types of loans are also known as short term personal loans. Key features and factors to consider while opting for festival loans are given below.
Also Read – Best Business Loans in India for Small Businesses
Features and factors to consider while opting for festival loans
Amount
The first thing to consider is the amount of loan offered by a bank or financial institution. Festival loans are given with amount as low as Rs.5000. The maximum amount of loan offered under this scheme is Rs.50000 or 4 times of your Net Monthly Income.
Loan Tenure
Loan Tenure is the next factor to check while opting for the this loan. The tenure of the loan is generally restricted to 12 months. No Prepayment charges are applicable for this loan.
Additional Festival Benefits
Few banks offer additional festival benefits such as additional discount and cashback benefits. You will also get an additional benefit of a lucky draw, where you can win exciting prizes.
Processing Fees
The next factor to consider while opting for a festival loan is a processing fee. In general, the processing fee of these types of loan is as low as 1% of loan amount.
Interest Rates
Interest rate is the next important factor to consider before availing a loan. The interest rate of the festival loan is lower compared to a personal loan. In general, you can get this loan with an interest rate 13-15%.
Documents required
You will need the following documents for availing a loan.
- Application Form
- Passport size photograph
- Residence Proof
- Salary Certificate / Slip from employer
- Form No.16 (Latest)
- Form No.135 of the bank, duly filed in by borrower and guarantor
Popular Festival Loans in India
#1 SBI Festival Loan
SBI Festival Loan is a unique facility that helps you to meet all types of festival expenses. The minimum loan amount is Rs.5000 and the maximum loan amount is Rs.50000. No marginal money required to avail a loan. Eligibility conditions for SBI Festival Loan are given below.
- Government or PSU employee with minimum of 2 years of service.
- Self-employed with 3 years of experience.
- Net monthly income should be Rs.3000 or above.
- Your spouse income can also be considered in calculating loan amount.
The interest rate is lower and processing fee is 1% of loan amount + GST.
#2 HDFC Festive Treats
HDFC Festive Treats consist of multiple loan offers for various purposes. This includes personal and car loan, Two-wheeler loan, Gold Loan, Business growth loan, digital loan against mutual fund and loan against property.
- Major discount is offered on the multiple products.
- Cashback offer up to Rs.7000 is offered on selected products.
- Instant discount up to 15% is offered on certain electronic products.
- Up to 50% off on processing fee of business loans.
- This offer is provided for the limited period of time festival season.
#3 Bank of Baroda Happy Life Festival
Bank of Baroda has come up with Happy Life Festival this season. Under this scheme, BOB will offer attractive loan offers and benefits on home loans, car loans and debit cards, credit cards. BOB is offering a loan on the discounted interest rate as a part of the Happy Life Festival. The loan offered by Bank of Baroda is for a specific product such as home, car etc.
Should you opt for festival loan?
There are multiple options to withstand credit crunch in the festival season such as credit card, zero-percent loan, personal loan, Easy EMI option etc.
Festival loan is a lucrative option compared to personal loan and other alternatives. The processing fee for this loan is low. The documentation required is minimum & no security required for this loan. Even no prepayment penalty applicable to this loan.
Let’s compare festival loans with a personal loan and credit card EMI.
| Features | Festival Loans | Personal Loan | Credit Card EMI |
| Amount | Up to Rs.50000 | 15 to 20 Lakh | Up to Credit Card Limit |
| Tenure | 12 Months | Up to 5 Years | Up to 3 years |
| Penalty | Prepayment Penalty | Prepayment Penalty | No Prepayment Penalty |
| Processing | Faster Processing | Slow Processing | Faster Processing |
| Margin Money | No Marginal Amount | Marginal Amount | No Marginal Amount |
| Interest Rate | 13-15% | 15-18% | 30-40% |
From the above comparison, one can easily say that festival loan is the best option concerning interest rates and other features. However, the loan amount is limited to Rs.50000.
Festival loans are designed to attract you to go for impulsive purchases. You can get instant fulfillment at the initial stage, however, you need to pay an interest rate on the loan amount. This will cost you additional money. You should go for this option if it is absolutely necessary.