In this post, we will discuss a personal loan product from State Bank of India, SBI Xpress Power loan (formerly known as SBI Xpress Bandhan). By the way, this is not the first time I am writing about a personal loan product from SBI stable. In my earlier posts, I have discussed two personal loan products from State Bank of India, SBI Xpress Credit Personal Loan and SBI Pension Loan in great detail. SBI Pension Loan, as the name suggests is available only to pensioners who receive their pensions in SBI accounts. SBI Xpress Credit Loan is available only to those who maintain salary account with SBI. So, if you don’t have a salary account with SBI, you won’t be able to avail SBI Xpress Credit Loan.
What do you do if you don’t have a salary account with SBI? In fact, many employers may not even offer you a choice to receive salary in an SBI savings account. Salary accounts are all about corporate tie-ups. Well, you can always go to another bank. However, if you want to stick with SBI, you can apply for SBI Xpress Power Loan. Let’s find out more about the SBI Xpress Power loan scheme.
SBI Xpress Power Loan: Salient Features
- Available as a term loan or an overdraft facility
- Minimum Term loan amount: Rs 25,000, Maximum Term loan amount: 24 times net monthly income subject to a maximum of Rs 15 lacs
- Minimum Overdraft facility: Rs 5 lacs, Maximum: 24 times net monthly income (NMI) subject to a maximum of Rs 15 lacs
- Processing fee: 1% of the loan amount + taxes
- Repayment tenure: Up to 60 months or remainder of service, whichever is lower
- No information on the website about prepayment penalty
SBI Xpress Power Loan: Eligibility
- No requirement of maintaining salary account with State Bank of India.
- As I understand, the loan facility is available only to salaried employees. Self-employed cannot apply for this loan product.
- Employees from Central/State Governments, Defence Establishments, Quasi Government Bodies, PSUs, Reputed Educational Institutes and select rated corporates can apply. No relaxation on this front (as compared to Xpress Credit Loan).
- Minimum Gross Monthly Income of Rs 50,000 (Xpress Credit Loan does not have this restriction)
- EMI/NMI cannot exceed 50%. This will limit your borrowing ability. For this purpose, EMIs for loans across financial services industry will be considered. SBI Xpress Credit Loan also has this capping.
What Are the Interest Rates for SBI Xpress Power Personal Loan?
The loan is offered at a spread over 2 year MCLR. The loan spread (effectively the loan interest rate) depends on the following factors:
- Gender (females get slightly better rates, up to 15 bps)
- Type of facility (term loan or overdraft)
- Check off facility (Under Check off facility, employer makes deductions from salary towards loan repayment and pays to the lender directly). You have to give irrevocable letter of authority to employer to settle bank dues before making salary payment to you)
- External Credit rating of your employer. There are two categories A- and above & BBB+ and below.
- In sharp contrast to SBI Xpress Credit personal loan, there is no explicit linkage to your credit score. Under Xpress Credit personal loan, the loan interest rate depended on your credit score too. Higher the credit score, lower the rate of interest. However, do note your credit score will still be considered at the time of sanction. A poor credit score may well get your loan application rejected. It is quite possible that SBI offers Power loans to only those applicants with a high credit score.
You can check the latest loan interest on SBI website. As I see, the interest rate of Xpress Credit loan is marginally better than the interest rate for Xpress Power Loan.
How Does SBI Xpress Power Loan Differ from SBI Xpress Credit Loan?
- In terms of eligibility, you need not have a salary account with SBI to apply for Xpress Power Loan. SBI salary account is a must for Xpress Credit Loan.
- Xpress Power Loan has an additional requirement of minimum gross monthly income of Rs 50,000. No such requirement for Xpress Credit Loan.
- Since Xpress Credit Loan is offered to SBI salary account holders, you can expect better features under Xpress Credit Loan.
- SBI Xpress Credit Personal Loan allows you to avail a second loan under the same product (while the first loan is still being repaid). Such a feature can be useful if you need additional funds after a portion of your loan has been repaid. This feature can also be useful if the interest rates have gone down considerably since you first took the loan. Additionally, there is no prepayment penalty if you use the proceeds from the second loan to prepay the first loan (otherwise pre-payment penalty is 3% of the outstanding amount). No second loan facility under SBI Xpress Power Loan.
- The loan interest rates are slightly better for Xpress Credit loan (as compared to Xpress Power loan).
What Should You Do?
Nothing special about SBI Xpress Power loan product except that it comes from SBI stable. As for any other kind of loan, find out about the offers from other banks too and make an informed decision. And yes, do not just focus on the interest rates. Do approach the bank where you have your salary account. Your existing relationship with the bank may get you a better deal.