Why cooperative society loans are India's best-kept secret
What's the story
Cooperative societies in India provide a range of loan products to address the financial needs of their members. These loans are attractive due to their lower interest rates and more flexible repayment options compared to traditional banking loans. This article delves into the different types of cooperative society loans available in India, shedding light on their functioning and benefits for members.
Loan types
Types of co-operative society loans
Cooperative societies in India provide four key types of loans: personal, home, education, and agricultural. Personal loans address diverse needs like medical emergencies or weddings. Home loans help in buying or building dream homes. Education loans aim to fund higher education for promising students. And, agricultural loans support farmers with their crop production and other farming necessities.
Eligibility
Eligibility criteria
In order to apply for a loan from a cooperative society, you need to first become a member of it by buying shares. The eligibility criteria can differ based on the type of loan and the particular cooperative society's regulations. Typically, applicants are required to show proof of their capability to repay the loan through steady income sources and possess a positive credit history.
Interest rates
Interest rates and repayment terms
Interest rates for cooperative society loans are generally more favorable compared to commercial banks, ranging from 8% to 12%. These competitive rates reflect the cooperative movement's aim to extend financial support to its members at the lowest possible cost. Repayment terms depend on the type of loan but are typically flexible to suit members' financial circumstances.
Applying
Application process
The process of applying for a loan from a cooperative society requires you to submit necessary documents like identity proof, address proof, income statements, and collateral if applicable. The approval process can take a couple of weeks as it involves rigorous checks to ensure the applicant's creditworthiness and ability to repay the loan.
Borrower tips
Tips for borrowers
Before applying for a loan from a cooperative society, members should carefully compare the interest rates and terms offered by different societies. Members should also realistically evaluate their repayment ability to prevent financial stress in the future. Interacting with society officials will help clear any doubts about eligibility criteria or required documentation.