Friday, 24 May 2019

Getting a business loan for small companies is not easy. Read why

As we have discussed earlier, loans have made many future plans workout today! It is not as difficult as it uses to be earlier but at the same time, the parallel fact is that it is not a cake walk too! Basic small amount of loans are though easier. But a huge amount of loans especially the unsecured once are difficult. There the lender not only checks the credit score and credit report but rest many criteria would be checked! While we would be talking about business loans, let us discuss what kind of business loans are available in the market. SME loans are something that is very popular. They are Small Medium Enterprise loan which is given for the budget of Rs. 1 lakh to Rs. 20 lakhs! Usually, the new startup companies opt for these loans as their initial investments are not that much. There there are little larger company loans than SME. They range from Rs. 20 Lakhs to Rs. 50 Lakhs. These are for big industrial setups or for the companies who want to expand! And then come to the bigger loans for huge organizations, infra projects, big setups and expansion plans which are 50Lakhs and plus. As business loans are unsecured loans, the approval rate is usually much lesser than another kind of loans and especially the once when the collateral is much lesser than the amount approved or is not present only!

When we talk about SME, they are usually start-up. In the current scenario, not all start-ups that starts continues to work. The stakes and risk both are much high for this level companies or enterprises. The chances of small businesses to be successful and work successfully has almost the ratio of 50:50. So, when the entrepreneurs apply for the business loan, there are various checks that are done. First, the business plan and the projection is viewed minutely. From the estimated cost upto the break-even point along with the overheads, profit margins, etc all are studied. Even though small businesses and it’s credits are not very high but still as spoken, the risk is much higher! With the usual ratio of the unsuccessful start-up, any financial lender would definitely not appreciate their money to be blocked or turn to default.

This kind of credits being so difficult to get, many people also opt for personal loans. Now may it be any loan, credit score plays an important role. So as we know CIBIl, Experian, Equifax and CRIF Highmark are the four credit bureaus that are established in India, the commonly known one is CIBIL as it was the first one that gave the score to people. Many people still would refer Personal Loan Without CIBIL Score than saying personal loan without a credit score. A credit score is made or established when a person takes any credit which is in the form of a credit card or a loan and then is repaid. But, a person cannot get a loan or credit if they don’t have a score. So, this becomes a catch 22 situation! So, there are private lenders or NBFCs who offer Personal Loans Without CIBIL score. The interest charged by them is a little higher than the banks, but Atleast you have access to the amount you require and you start building the score and the History.

And once that is done, it is easier to than get loans with banks. However, this always isn’t true! And always won’t work this way. There are normal cases as well where one can apply for a credit card or a personal loan of a minimum amount of say 50,000 Rs and start building the Credit history and then it becomes easier to get credits! But in whichever way, since first of all business loan being an unsecured kind of loan and small businesses are not always promising, the loan applications getting approval is not always possible! So one should always think the alternatives on how can they otherwise plan to start the business of basic business loan is not approved!

Friday, 17 May 2019

High credit score is beneficial for loan approval

If you have heard or read somewhere that your CIBIL score is an all-important factor when it comes to loan approval, you’ve got that right! While scores do vary, remember that a high credit score is crucial when it comes to your financial life because it can be among the top determining factors for loan or credit card approval.

Rajat applied for a personal loan with a low credit score. Owing to this reason, while his loan application was not approved by a prominent bank he did get a loan from a NBFC. However, because of the lower than expected score, the rate of interest that Rajat paid was significantly higher than he would have paid otherwise.

Read on to know why a high credit score is beneficial for loan approval, right here!

What is a credit score?
A credit score is a three-digit number between 300 and 900 that is a representation of your credit report. This is generated by a credit bureau such as CIBIL in India. While there are several factors as to why a loan or credit card application gets rejected, prominent among these is a low credit score, such as one around 600 or 650. Lenders are more likely to look favourably at a person who has a near-perfect score of 750 and above.

Factors that determine the credit score
Let’s take a look at the factors which determine the CIBIL score. Understanding these factors can help you improve your CIBIL score and make sure it is good and stays that way. Remember that there is no quick fix solution to better your score overnight – it takes time and effort to increase and later maintain the score.
  • Length of credit history: It’s pretty simple, really. The longer your credit history, it’s more likely that you’ve been handling credit responsibly and well. Of course, this means that your credit card should have been prudently used, and the older the account, the better it is for your score.

  • Credit utilisation: Every credit card comes with a predetermined limit that you can utilise. While it may be tempting to use close to or even all of it, the right thing to do is go nowhere even close! Experts recommend that 30 percent or less is the ideal limit that you should use. Any more than this, and a lender can view you as a person who relies heavily on debt to manage their finances. This could lead to your loan application being rejected in the future.

  • Types of credit: Don’t just bank upon your credit card to make your credit report look good. Lenders look at the type of credit you have availed of – both secured and unsecured loans – to determine just how well you are able to manage all sorts of debt. A well-balanced mix can go in your favour.

  • Timely payment: Remember that when you receive a credit card bill, it is best paid off in a timely manner, and ideally in full, on or before the due date. Your payment history is what makes up a large chunk of your CIBIL report and is viewed very seriously by a bank or financial institution. Any default here can lead to a rejected loan application.

  • Opening many new accounts: Every time you apply for fresh credit, your CIBIL report takes a hit owing to the ‘hard enquiry’ that is placed. These are considered to be negative aspects of your score and can pull it down, even if temporarily.

  • Negative marks: This could refer to instances such as foreclosed loans, loan defaults or a ‘settled’ or ‘written-off’ status on a previous loan. An account sent to collections – especially if it still remains unpaid – can also impact your score. A negative mark indicates to a lender that you are possibly unable to manage debt adequately and may just ring warning bells when you apply for fresh credit going forward. This can impact your credit score negatively for a long time.

In conclusion
Like we’ve mentioned, you may be able to get a personal loan with a low credit score, but the fact remains that it won’t be on the best possible terms. Further, several aspects of your financial life get impacted by the credit score, which makes it important for you to work on your credit score diligently and ensure it remains high or good.

Your first step is to call for a copy of your credit report from a bureau and ensure that all the information therein is accurate and pertains only to your loan and card accounts. Any errors must be immediately reported to the concerned bureau before it pulls down your credit score.

Now that you know what goes into your score and how a high score is beneficial for you, get started on improving your credit score today!

Thursday, 25 April 2019

Learn Paperless application process to select loans and Credit Cards

We are increasingly gearing towards a paperless world; letters and fliers were replaced by emails, currency notes by digital payment options and credit cards, applications forms by online applications process and so on. Most financial institutions have been instrumental in making this transition as it is not only environmentally good but also saves a lot of cost, time spent in mailing across forms and letters and of course is more user friendly. So it is inevitable that the next step is paperless application for loans and cards.
Why go paperless for loans?
Though we discussed a few aspects above but going paperless is the way forward. Any who has applied for a loan is aware of the complicated forms that need to be filled with those small crosses marked where the applicant needs to sign. Most of us whether filling forms for credit cards or loans, don’t bother to go through the details and just fill out the main aspects and sign at the marked places.
In the past once you decided to get a loan or a credit card you would approach the financial institution of your choice and complete the formalities. Suppose you missed out a document or were not satisfied with the services or product on offer you would have to repeat the entire process at another bank. This severely limited the applicant’s choice and also made the process time consuming.
Now you can complete the process sitting at home, at your convenience after comparing features of products being offered by different FIs. So sitting at home you can choose the loan with the lowest interest and card with best features. What’s more there is no need to make multiple visits to the bank due to a missed document or signature. The applicant does not have to wait at the bank or take a day off to complete the process.
How does paperless loan application process work?
As the name suggests a paperless loan or a credit card is a loan or a card which is approved without the need to fill out physical paper forms; the rest of the process essentially remains same. The applicant still needs to submit the required documents, meet the eligibility criteria and have a healthy credit score.
Whether it is loan or a credit card the applicant will fill the online form. This could be done at the site of one of the aggregators who will connect you to one of the FIs based on your requirements and choice or it could also be done directly on the official website of the FI that you have zeroed on. Once the form is filled you need to scan and upload the required documents. The documents are then scrutinized by the bank and the FI ensures they are as per their requirement. As we said earlier the process for loan approval remains the same, the bank will sanction the loan or the card if the documents submitted are in order, the required KYC guidelines have to be fulfilled, bank statements, IT returns etc as required have to be submitted. The age, income and credit health requirements have to be complied with.
Having said that, it is important that you read and understand all terms and conditions related to the product before applying for the loan or the card. Just because there are no lengthy forms and brochures to go through, it does not mean that you can skip the fine print.
Some paperless credit cards available in India are SBI Simply Click card, HDFC Bank Regalia Card, AXIS Buzz Credit Card, ICICI Bank Coral Contactless Credit Card, Kotak Delight Credit Card and so on. Banks like ICICI, HDFC, IndusInd and FIs like Fullertone and India Infoline offer paperless personal loans. If you are looking for a paperless car loan then you can get one from HDFC or TVS Credit
Paperless or otherwise make sure you understand fully well the details and the fine print about your loan and credit cards.

Thursday, 18 April 2019

Apprehensive About Getting That Education Loan? Read This

It’s not easy to get a seat in the best colleges and universities across the globe. Even if you are able to get admission, the education costs can be too high. This is why many people take student loans at affordable costs.
If you have never taken an education loan before, then it’s natural for you to have doubts and concerns. However, you needn’t worry as hundreds of thousands of students take loans every year. All you need is an understanding of how student loans work and what are some of the things that you should know about. These are:
Credit Score
Most types of loans are approved on the basis of the applicant’s credit rating, and it’s no different with education loans. However, the problem is that most of the students barely have any credit history which is why they don’t have a CIBIL score either. So, the banks ask their parents or guardians to become co-applicants. In this way, the banks can consider the credit score of the parents instead. Plus, they get the option to hold the parents liable for the loan’s repayment in case the student defaults.
Remember, the credit score plays a huge role in a student loan. So, make sure that your parents have a high score. In case it’s below 750, which means that it’s low, then they can take appropriate steps for improvement.
Other Factors
The credit score is the biggest factor that’s considered by the lenders for loans. However, they check other details as well. For instance, if you are applying for a course that can promise a well-paying job, then it’s easier to get a loan. In other words, if you have secured a seat in a medical college or an engineering institute, then you can get a loan easily compared to other courses like BBA, BCA, etc.
Of course, your academic performance can also come in the way of loan approval. This is because if you haven’t done well in school, then the lender may wonder if you will be able to get good grades in college to get a job.
Down Payment and Repayment
In most cases, you will not be able to cover 100% of the expenses for your college education with a loan. If you are studying in India, then you will have to pay around 5% of the tuition fees from your own pocket. Similarly, if you are studying abroad, then you will have to pay 15% of the tuition fees yourself.
In every education loan, the student is offered a moratorium period after they graduate which ranges from 6 to 12 months. This is a grace period during which you don’t have to pay the EMIs and you can focus on finding the best job in the industry. However, you still have the option to start paying the EMIs in this period. In case you do, you can enjoy certain benefits, one of which is a discount on the interest rate.
Interest Rate and Term Length
When comparing your loan options, the most important thing that you need to consider is the interest rate. This is because the higher is the interest rate, the higher is the total amount that you end up paying to the bank. Usually, the rate varies from 9.5% to 13%. However, you can get lower rates if your parents’ CIBIL score is good.
Apart from the interest rate, the term length should be considered as well. You have two options basically- you can either increase the term length and make the EMIs smaller, or you can shorten the term length and pay higher EMIs. In the first option, there is limited financial burden on your shoulders as the small EMIs are easily manageable. However, the total interest paid will be high. Similarly, in the second option, the financial burden is high and you have to keep your expenses under control to pay the EMIs. However, you can get rid of the loan sooner and pay less on the interest overall.
So, there you have it- some of the most important things about education loans that you must know. There is nothing wrong with getting one. However, be sure to do your homework and shop around until you find the perfect deal. Good luck!

Thursday, 4 April 2019

What is a moratorium period for education loans?

With education playing an important role in everyone’s life it is important to stay in pace with the rising education market standards. About a decade ago, a person with a normal degree would be considered as a par educated person. The cost of education at that time also was not that high. But in today’s situation there are MBAs, Engineering courses, etc. not only that, if you are not an MBA from IIM or not an engineer from IIT, you are not considered as a post graduate. If you are looking to get an admission in such reputed collages, you will have to work hard with your academics and get through to various entrance examinations.
Let’s assume that you cleared your exams and got through to a reputed institution, the next step which you need to do is to pay the fees of the same. Now there are two options here, either you ask your family and friends for help or you apply for an education loans. An education loan can be a savior in such situations and can supplement your cause to get higher studies. But is it that easy to get an education loan? You just show up to the bank with an application and the bank processes the loan? What about the moratorium period and how is it important for you in the loan run?
Today, we will understand how important it is to adhere to the moratorium period and how it will benefit you in the long run.
First of all, let us just understand what is moratorium period?
There are two types of interests associated to an education loan. They are simple and compound interest. The interest rates depends on the loan amount availed. In many cases, the lender starts charging you simple interest for the loan amount availed to pay the installment of fees to the collage. In such a case, you are not contributing any amount to your principle component; you are just paying the interest of it. The student can opt for not paying this simple interest, until he/she does not get a job and immediately after getting a job, they can start making payments of their loan.
The space which the lender gives you to start the payment, between your course and your job is called moratorium period.
Benefits of moratorium period
There used to be a time, where the banks used to compel students to pay simple interest while they were studying their course. They had to take up part time jobs and pay their interests. This would make the student’s life difficult and often lack focus on their studies. This has not been the case in recent years, the banks providing this space helps you in many ways. You can completely focus on your studies without having a sword on your neck of repayment and you can take another year of space after you complete your course to find a suitable job and start repaying your EMIs.
In other words, students have the power to choose from their own jobs and they have a year extra to start making the payment on time. Though it is suggested that you make interest payments from day one, which will help you with the cibil score.
You will have to be careful with the repayments of this loan as with your cibil score, you can also hamper your co-borrowers score if the payments are not made on time.
Getting an education loan is really important if you are planning to pursue higher education. What is really important is that you make all your payments on time so that you do not hamper your financial career out of it.

Thursday, 28 March 2019

Learn how the process of getting a car loan works

There used to be time where buying was a dream. You see a car in your colony and you go like one day the same car will be at my door step. Remember the time when someone used to get a car and the whole colony used to celebrate the car hood. These days, you can get a car new or used just like snapping your fingers. The market has opened so much that the customer is king and the king can buy any car they want with easy convenience. There are car companies and car loan lenders throwing themselves towards the customers to buy their cars with easy finance options. Some car companies have their own financial institutions which will help you buy a car on loan with attractive car loan interest rate.
Are you planning to buy your own car? Are you looking for a heads up on how the car buying process goes? Then you are at the right place! We will explain you step by step process of getting a car loan and the terms associated to the same to make your car buying process easy.
Selection of the car
With a wide range of variety available in the market, people often get confused on which car model suits their needs. For some it’s all about luxury and for some it’s more for family and utility. You will have to select which car model you would like to go for and then start hunting for loan options. In some cases, the car brand will have their financing options and you may get a loan without a proper cibil check.
When you apply for a loan, you should make sure that the income you show to the bank is sufficient to buy the car. Not only the income, will you have to make sure that your cibil score is up to the mark for an easy loan process. Then you will have to find the best loan option available in the market which will help you save money in the interest rates.
Documents required
Make sure that all the documents required are intact and ready before you apply for a loan. The main documents are your ID proof, residential proof, income proofs and your income tax returns. The lender will evaluate your file and see if you are eligible for a loan.
Loan amount
Once the documents are verified and the lender decides on processing your loan, you will be notified on the loan amount as in how much the loan is getting sanctioned. Once you know the amount, you will have to make the down payment accordingly.

Understanding the terms and conditions
Car loan is all about making small commitments towards repaying the loan. Once the loan is sanctioned, you will be handed out a booklet of terms and conditions associated to the loan and the charges. Read and understand those charges and penalties. If you have doubts, get back to the lender and ask for clarifications before signing it. This will help you to be up to the mark with the ongoing car loan.
Once everything is set and ready on the lender’s end, the lender will hypothecate your car. This gives power to the lender to seize you vehicle if you fail to make the payments on time. Not only this, the lender has the power to report your failed transactions and get your cibil score down. You can check the same by opting for a free cibil report.
Take delivery
After a long run procedure, you deserve the car of your dreams. Take it for a drive and enjoy the fragrance of a new car.
Buying a car is very simple and easy these days. All you need to do is set your mind on a car model which will help you save money and also enjoy the ownership of the vehicle.

Wednesday, 20 March 2019

5 Questions About Money You Should Ask Before Marrying

Getting married is easily one of the biggest events in your life. However, the idea of spending the rest of your entire life with someone can be both exciting and terrifying.
While there are all kinds of commitments that you have to make when you tie the knot, there are certain aspects of your finances that demand that you perform a reality check as well. On that note, the following are the top 5 questions about money that you must ask before you get hitched:
Q1. How Much Money Do You Make?
For many people, their income is a personal matter and they don’t feel like sharing this information with others. However, when it comes to marriage, then you have to share your personal life with another person which is why there is no shame in asking your partner about their average monthly income.
While you shouldn’t choose a partner on the basis of their income alone, you still need to know about your partner’s income so that you can make your decisions accordingly.
Q2. What’s Your Cibil Score?
Studies have shown that people who have comparable credit score are more likely to have a good married life than those who don’t.
Believe it or not, your credit score can tell a lot about your personality. For instance, someone who has a good score is likely to be a responsible person who takes care of their finances properly. On the other hand, someone who has a poor score can easily be a person who maxes out their credit cards and has a massive debt on their shoulders.
It’s a good idea to ask your partner’s cibil score as it can give you some insight into their personality. You can also compare their score with yours to get some idea of your overall compatibility with them after marriage.
Q3. Do You Have Any Debt?
If you use credit cards, then chances are that you have some debt to repay. In fact, it’s not uncommon for people to owe money to a bank or NBFC. However, when the debt becomes so big that it starts to affect your life on many levels, then it’s certainly a cause for concern. This is why it’s important to ask your partner whether they have any debt. If they do have some, then you should also ask how much is it. You can also ask about their spending habits or how often they use credit cards as this can also tell you a lot about their personality.
Q4. Have You Defaulted on a Loan?
It isn’t right to judge someone on the basis of their financial history. However, if your partner is a defaulter and has their name on a loan defaulter list, then it’s certainly something to think about.
When someone is unable to repay a loan, then the bank sends them a notice as a reminder. However, if they don’t start paying the EMIs even after a certain period has passed, then the lender may tag them as a defaulter. This is a serious offense and may even invite legal action. So, if you are to spend your life with someone then it’s important to know why their name was added to a loan defaulter list.
Q5. How do You Plan to Pay the Bills?
When you get married, then you share your financial obligations with other. For instance, there are utility bills, accommodation rent, traveling expenses, etc. that have to manage. So, it’s important to discuss how you want to split the bills and who pays for what. You also want to inquire about any expectations your partner may have. When both individuals are on the same page, then there is little room for miscommunication and that paves the way for a happy married life.
Marriage Can Only Work if You Do
You don’t have to overcomplicate your marriage. However, that doesn’t mean that you should avoid taking responsibility altogether. So, try to be as open and transparent as possible with your partner which includes your personal matters as well as financial. The more you learn about your partner, the easier it becomes to make the marriage work. Good luck!