Chit Fund Loans

Chit (vs) Bank Loans

Tremendous growth in the banking sector has seen an explosion of personal loans given to young salaried employees in the information technology, BPO and other sectors. This segment has higher disposable income and is willing to spend on cars, motorbikes and the like. Banks/financial institutions charge an interest rate anywhere between 12-24% on personal loans. There is also no guarantee that the loan application will be accepted. The Equated Monthly Installments (EMI’s) are higher due to higher interest costs. If an employee is smart, he can plan his purchase of a car using a chit. The interest cost, paperwork and sureties required are much lesser in comparison with a personal loan