Advocates or lawyers are considered self-employed professionals, and can technically avail loans from any bank or financial institution under this category. But it is often seen that unsecured loan applications by lawyers is rejected by private banks because they are probably afraid that advocates cannot be fooled by terms and conditions and could take the legal route if the banks try underhand recovery methods or change terms mid-tenure. Nationalised banks, on the other hand, are generally reported to be lawyer-friendly. However, prejudices aside, advocates can apply for loans as a self-employed professional, and no bank can reject an application that is genuine and properly executed.
Let us look at some loan products that lawyers can take advantage of:
Bank of Baroda’s loans for self-employed professionals helps lawyers who are practising independently to fund their operational needs. This loan is of the secured variety and can be taken for purposes such as:
The maximum loan that can be availed is Rs.5 lakh, out of which the working capital should not be more than Rs.1 lakh. You need to submit to the bank a demand promissory note, and a letter of hypothecation of equipment and the mortgage of the business premises. The interest rates are based on the bank’s MCLR, and ranges from 9.55% to 15%, depending on your loan amount and loan purpose.
Karur Vysya Bank’s Professional Loan is a secured loan that can be obtained by advocates to buy the required equipment and business tools, as well as for funding foreign trips and seminars related to their profession. Lawyers practising their trade for at least 3 years and making profits for a minimum of 2 years can apply for this loan. The loan tenure is up to 5 years, with a holiday period of 6 months. The loan amount can be negotiated as per your needs. The interest rate currently is 13.25% – which is MCLR plus 3.35%. You need to hypothecate to the bank the equipment bought through the loan. You may also be asked to submit collateral security such as insurance policies, fixed deposits or land and building. If the bank seeks a guarantor, you can get personal guarantee of family, friends, partners, or title holders of collateral securities.
ICICI offers Business Instalment Loans to self-employed professionals for all business-related money requirements. You can take up to Rs.40 lakh as unsecured loan for a period of up to 5 years. The loan amount, tenure and interest rate depends on the purpose of your loan and the amount of loan you want.
HDFC Bank offers unsecured loans for advocates, wherein you don’t need to provide any collateral security or guarantor. The bank allows you to take loans not only for business purposes such as business expansion and formation of working capital, but also for personal needs like child’s education and home renovation. You can also take a professional loan based on the repayment of credit cards, housing finance and vehicle loans. The loan amount is generally up to Rs.20 lakh, but in some cities, you can get up to Rs.50 lakh. You can choose a repayment period of 1 to 5 years. HDFC also offers you a Credit Protect Insurance Plan for a small premium along with this loan to prevent your family from being burdened with your debts in case of your death. The interest rate ranges from 14.5% to 15.5%.
So if you are a lawyer and are looking for loans for your personal or business needs, check for loans offered for self-employed professionals. Almost all banks offer such loans, though you may not be able to find out all the required information until you check with the bank executives personally. You could also visit your bank and check what loan options they have for you. If your relationship with your bank is strong, you can get the best interest rates and terms. Having a good credit score will also help you in getting good deals on professional loans.