Friday, 15 March 2019

Paying off Student Loan Too Challenging? Read Tips

It’s not easy to build a good career. While studying hard to get a seat in a top university is certainly an important part of the process, you also have to arrange the money for tuition fees, accommodation, and food (if the institute is not in your hometown), etc.
A large number of students who can’t afford higher education take loans. However, repaying an education loan can be quite challenging at times. If you yourself are troubled by this problem, then you have come to the right place.
The following are some of the best tips on repaying student loans:
Avail Tax Benefits
If you are not saving money when you are paying taxes and have a student loan, then that’s the money you are wasting. Section 80E of the Income Tax Act allows you to claim the interest paid on education loan as a deduction. However, there are certain conditions involved, which are:
  • You can’t avail the tax benefits if you belong to the HUF category.
  • Only those individuals who are paying interest on the education loan can enjoy the tax benefits.
  • You can’t deduct the principal amount of the EMIs from your taxable income
Create a Budget
Always remember that a loan is a big financial responsibility. You can’t afford to be careless as it can lead to massive debt and even loan default which is a serious offense. So, until your loan has been repaid in full, you should try to lower your expenses and do away with luxuries that you can easily live without.
One of the most effective things that you can do to save money is creating a budget. It’s quite easy to do if you use an app. However, it can be of great help as you can track all your expenses to identify the areas where you can easily save money. You can even set up alerts when you are about to reach your expenditure threshold for a particular month.
Start Paying More
If you want to get rid of your debt as soon as possible and save money at the same time, then you should consider increasing the EMI amount gradually. This is because when the loan’s term is longer, then you end up paying more money in the form of interest. While increasing the EMI cost has its challenges, it’s a smart move that can help you in the long run. Plus, increase the EMIs by 5% to 10% every few months or so is viable and quite reasonable.
Note: Some banks charge a fine for prepayment (when you repay a loan sooner). So, make sure that you ask your bank about the same before deciding anything.
Set up Automatic Payments
If you use credit cards and also repaying another loan already, then it’s possible for you to forget about your student loan payment dates at times. However, this can incur a fine and may even lead to a low cibil score. To prevent his from happening, you can set up automatic payment by connecting your bank account with the loan account. This way, when it’s time to pay another EMI, your bank can deduct the appropriate amount from your account on its own.
If you think that your current interest rate too high or the repayment terms too harsh, then you can consider the option of refinancing. In this, you can repay your loan with another loan that offers a better interest rate and/or additional perks. If your financial records are good and you don’t have a low cibil score, then it’s possible that your own bank may refinance the loan so that you can repay the debt easily. All you have to do is talk to your bank and explain your situation.
For the sake of your career and your life, you have to make several sacrifices. When you are repaying a student loan, remember that it’s only a short-term hassle that can lead to massive financial gains in the long-term. So, try to be patient and save money whenever possible. Until the loan has been paid, nothing else should be your priority as far as your financial activities are concerned.

Friday, 8 March 2019

Costs associated with buying a home in addition to its price

One of the major things we want to achieve in life is buying a home we always wanted to. Something that we have visualizing for a very long time. A home, it’s bedrooms, the color, the decor, the furniture, the windows and what not about it. And that’s not even wrong as they say “A person who stops dreaming, stops living”. And hence one should always dream of that “The House” they want to build. Now, looking at the parallel fact, and the inflation, it is not a really an easy task to built or buy a house you always thought of. Over the years, things have become really expensive and hence taking a loan sometimes acts as a great option because you can live your dream of 10 years or 20 years down the line today! If suppose, we take an example of someone aged 30, with a decent income, still buying a flat for a self-made person with only his/her money may be difficult and hence if they apply for loan, which may have tenure of say 15 or 20 years and with a downpayment of 30% - 40% of the house price, which they must have saved, it’s the perfect option one can opt for!
Nothing comes for free and effortless is as they say! When buying a home, maybe with all payment done or with a Home Loan, it is not always just the cost of the home that you pay and you are done. There are more costs to just buying a home at addition to it’s price! Let us look at the other costs that almost everyone has to shade in order to get that security and freedom of having their own house.
1. Parking Space
If you are someone, who wants the parking space along with the home you bought for yourself, parking spaces cost a bomb! If you buy a home in the city and proper new constructions, it may go up to 10 lakhs just for that one four wheeler parking space allocated to you.
2. Interior Costs
A home when bought, will just those four walls, and sometimes done with basic kitchen platform and bathrooms. You will have interests to decor the house with the color of your choice, sofas, wardrobes, windows, curtains, furniture, electronics and much more. This is one of the high costs associated while buying a home.
3. Registration Fees
With buying a house for yourself, along with the what it costs is the registration fee. What is basically a registration fee? Stamp duty is usually 7% - 9% of the total cost of the house to transfer it to your name along with 1% - 2% of stamp duty to get the name on that nameplate!
4. Processing fees
When the home is taken on loan, along with the interest paid, the down payment etc, there are processing fees that banks charge when applied for a home loan. It varies from 0.5% to 2% or sometimes even more at various banks and the amount taken as the loan. Once the loan is sanctioned, this cost is added in the first EMI that is charged. Also, the cibil score has some role to play here. Loans For Low CIBIL Score may have to pay slightly more of the processing fees as compared to a loan taken by a person with a good score as it is a security that banks need in order to rest assured if the money landed is in better shape.
5. Other costs
With all these essential costs that you would have to conquer, the brokerage fees if you have sealed the deal via a broker, moving cost of movers and packers, the location where you have chosen the house, are few of the factors that add up to your actual cost!
But, all of these, there is this immense sense of achievement that you must have felt while buying a home you can say your paradise and would spend the rest of your life at!

Friday, 1 March 2019

Planning for a Car Loan? Here is top 5 FAQ’s you must read

One day you just open your newspaper and there it is! Your dream car is available at a cheaper price. Out of mere excitement, you go to your spouse and parents, tell them about this advert and that being your lucky day, they agree to buy this car for the family. You are on seventh heaven, going gaga over it and dress up immediately to head towards the car dealership. You start from your place out of pure excitement and reach the dealership; you meet the sales guy and start with understanding the car, its models and its features. Apparently this is how it works. You decide on a model and you start for the main thing, the price. The price is higher than you expected, your dreams start to shatter slowly and you are n stage of a mental break down that you will be losing on your dream car because the car budget is overshooting.
You come back home with a sad face and your family starts inquiring what exactly happened and you tell them the reason. Suddenly your spouse pops up a great suggestion, which you think can be worked out for fulfilling your car dream. She suggests if there are any pre-approved car loans towards your account and if you can apply for one? You immediately start inquiring and see that you have a pre-approved loan ready for you which you can avail with an excellent car loan interest rate.
Do you think this is the only thing which is important to consider while taking a vehicle loan? There are a lot of key factors which are to be considered while applying for a loan to purchase a car.
Today, we will sight you the top five FAQs which you should consider while making a car purchase,
How do I get an Auto loan?
Today, customer is the king. Right from selecting the car model you want to avail the loan, everything is like a cake walk for you. There are ample numbers of options available for you, if you decide on which car you want to purchase. There are lenders who have this gun called pre-approved loans which is ready to aim and fire at your will for a car purchase.
How much loan can I get?
Well it really depends on which car model you going for and what are your incomes and gains. If your income is good and the car model you are going for is moderate, you can even get 100% funding on your vehicle. With the current market trends and scenario depending on your income, you can easily expect up to 85% funding on your on road car price.
Do I need to give collateral to get this loan?
No, you do not have to keep additional collateral to avail an auto loan. The vehicle you are purchasing is considered to be collateral itself. If you fail to make your payments on time, the lender will take your car and can sell it at auction.
Do I need a co-borrower to avail this loan?
If you have adequate income to show for the car loan you are going for, no co-borrower is needed.
Is my Credit score important?
This is one of the deciding factors when it comes to availing any type of loan. Before you apply for one, get your free credit score and understand where you stand as far as credit worthiness goes. You can still get a car loan with a low cibil score, the interest rate and the processing fees will be higher than expected.
The idea of owning a car is quite exciting; you need to understand a few basics of owning a car and the terms associated to it. This understanding will make your life easy and relaxed.

Thursday, 21 February 2019

Why you should stop from maxing out all of your credit cards?

Abhishek has two credit cards which he uses frequently; almost all his transactions are done on credit cards. His cards are always maxed out but he manages to always pay his dues on time. Since he has always paid on time and never faltered on his payments Abhishek assumed that this could never be a problem, till he required a loan which was rejected due to a low score.
Do you also like Abhishek feel that as long as you are paying your dues on time, how much of the card limit you utilize is not important? If yes then you need to reconsider your spending pattern and go through the discussion below.
Impact of credit card usage on credit rating:
All credit cards have a sanctioned limit; this is the limit till which you can use your card without having to pay your old dues. As long as the car holder spends within the sanctioned limit and pay his dues on time he/she does not have to pay any extra charges to the card company. This prompts the card holder to assume that since the card company is not collecting any extra charges or fines, the proportion of card limit they use has no relevance whatsoever. While this may be true from the perspective of card issuer; card usage impacts the credit rating of the user.
Let’s see how Abhishek uses his cards. He has two cards, the first with a limit of Rs. 100,000 and the second with a limit of Rs. 75,000. His average usage on the first card is around Rs. 80,000 to 85,000 and on the second card around Rs. 60,000 to 65,0000. This means that he uses almost 80% to 85% of his sanctioned limit on each card and his overall card usage of both cards combined is also 80% to 85%.
Credit score is a statistical tool that helps in assessing the creditworthiness of an individual. These scores are calculated based on five parameters which are as follows; repayment history, card utilization, loan tenure, credit mix and credit enquiries.
As is evident from the chart alongside credit utilization has a big impact on the overall score calculation. In fact it is the second most important factor in the overall score calculation after repayment history which has a 35% weightage in the overall score calculation.
So when someone overuses their credit card regularly and has a tendency to max on the cards then it could lead to a low CIBIL score even if they do manage to pay on time. Credit rating companies look at card utilization ratio in order to assess credit discipline and also judge the risk level associated with an individual.
High credit utilization is an indicator of overdependence on credit; it also means that there is higher risk of default associated with the person in case he/she losses the running source of income. High credit utilization also indicates poor financial planning. Ideally the credit utilization should be less than 35% to ensure a good credit score.
How to deal with overuse of credit card?
In case your cards are also maxed out then it is time to evaluate your card usage and figure out a way to reduce the card utilization ratio. The most obvious way to deal with a situation like this is to reduce your card usage and use other options for financial transactions. You may find it difficult to do so for two three cycles as you will need to pay the dues which can reduce your liquidity.
Another option is to get a bigger card limit if you are eligible for it. A bigger card limit will reduce the credit utilization ratio without the need to reduce the card usage. One can also opt for another card so that the overall card limit increases and the card usage is spread across all cards.
However it is important to remember that a new card and increased card limit should not be an excuse to increase the card usage further as it could lead you to a situation where you fall into a debt trap or find it difficult to repay your dues at the end of the cycle.

Thursday, 14 February 2019

Home loan with higher tenure with low EMI OR lower tenure with a high EMI?

You can certainly be sure about a lot of things in life and plan things according to the same. But, there are lot many factors which are not under your control and you tend to skip it or not bother about it, these are the two sides of the coin which regulates your life. On the contrary, there are some things which are always on the grey side and you are always confused about them. There are times you seek help from your loved ones or seek help professionally to solve such issues or at least get a fair idea on what should be done.
Same goes with a home loan. It starts being complicated right from the start when you think of applying for one. the very first thing you are supposed to do is to find a lender who will match your loan needs with the best possible options out there, like for example ICICI home loan gives you the best home loan deal in the market. The next thing you need to do is to check your credit history, if you are eligible for a loan and if yes, how much? You are not done here, then you go through the bank procedures day in day out to get your loan sanctioned and get it disbursed to the developer’s account. If by any chance, there is a problem in the bank’s procedure in the future, you will have to deal with it on your own and if you run out of luck you will have to go through the same procedure again to avail the loan.
After you get the loan sanctioned and you are paying all your dues on time and you receive a good bonus from your company as a gift to you as performance. You take suggestions from your family member and ask them what the funds should be used for? They suggest you to make partial payment towards your loan account and you agree to their suggestion. You check your free cibil report and see you are good to go. The next question which pops up in your mind is that, should I keep the high tenure and lower the EMI by paying the money or propose a lower tenure and keep the EMI high.
If you are on the same page, we are here to help!
Well, it all depends on your power and ability to make the payment of home loan. When you apply for a loan, you must have done all the planning for a long period and would have thought of sticking to it. Home loan is a long commitment and every decision you make towards it can either save you a lot of money or else take you to the grounds with you. If you can manage high EMIs with a low tenure the obviously you will be saving on a lot of interest money and if you are keeping low EMI for high tenure you will have some savings for yourself but you will be paying a lot to the bank as interest. It is simple math and you should consider all the possibilities when it comes to taking this kind of decision towards a home loan. As a slight mistake can not only cost you good money but will also cost you mental peace and you can see your credit score going down.
Long term loans always come with a lot of burden with it. Do a proper analysis, have few backup plans before you proceed further. If you dive into the long term loan pool and run out of money oxygen, you will hardly get any money support to survive.

Thursday, 7 February 2019

Can I apply for a personal loan if I have home loan?

We are bounded to have many type of loans in our lifetime. At starting phase of our life, to avail a bike you will have to opt for a bike loan and when the time proceed our need takes a different level and if we are planning to buy a car we take a car loan. Similarly your spouse asks you for an expensive mobile to be gifted, you will take a take a consumer durable loan which will help you to buy that phone. We are bounded around loans and no matter how many plans you make thinking you will not avail a loan in your lifetime, you will have to avail one.
Let’s take an example here, you are a good earner and on the basis of the same, you apply for a home loan and your purchase a home property. Seven months down the line when you are paying all your dues on time and when you think that life is sorted this way, a house emergency arrives and it demands a good amount of funds. You seek help from family and friends and learn that it is end of the year and they cannot help you. You then think of applying for a loan and the best option which lies in front of you is to avail a personal loan. Now you are in a fix, will you be provided a personal loan because you already have a home loan running? You start your research and find that you have ample number of personal loan options available in the market and axis personal loan is the best out of them. You are in two state minds if you should apply for one or not.
If you have the same question in your mind, you are at the right place.
The answer to this question is a yes! You can apply for a personal loan while having a home loan running already. There are a lot of criteria’s attached to it and if you fulfill all those criteria, you can definitely avail a loan with ease.
The criteria’s are as follows,
Income to debt ratio
Even if you have a home loan running, the EMI ratio should be less than your income and savings. For example, if you apply for a personal loan where your income is 50,000 rupees and your existing home loan EMI is 20,000 then the loan lender will consider giving you a loan on the basis of 30,000 only, he will not consider the other 20,000 which is the home loan emi.
Job stability
One of the main criteria when applying for any loan is that you must be in the same company at least for a year or two depending on what amount of loan your are availing. If you do not have a stable job and you are a job hopper, the bank will consider you instable and will not sanction you a loan.

Credit score
This can be the decider if you are eligible to get a loan or not. No matter how good you are on papers with high salary, stable job etc, if you have a low cibil score, you can kiss goodbye to your chances of getting a loan. This is the most important criteria of getting a loan and you should know your cibil score before applying for a loan so that you don’t have any surprises in the future.
You can definitely avail a loan with existing pool of loans and credit cards, but you will have to be very sure before availing one because multiple loans can lead you to bankruptcy and financial depression.

Friday, 1 February 2019

Is it advisable to take credit cards for your regular use?

We have always been told that credit cards are bad. Imagine you getting out of a collage and joined your first job, the company provides you a salary account with a reputed bank, which comes with its own privileges. Understanding your incomes and gains, the bank offers you a credit card with good limit. Now you are in a fix, if you should get the credit card or not as it’s always been a negative topic of our lives. We have often heard that these cards will ruin your life and they are not safe at all. Are you in the same situation as the above story?
As every coin has two sides, the same goes with everything you do in life. You will know the same when you are in the urge of getting a card. Credit card can help you in many ways and also can ruin your financial status if not adhered properly. Getting any line of credit is never a problem, but how you adhere is what defines you and your financial well being.
Talking about these cards, we will sight you some good things and also bad things of how a credit card can help you and also take you down if not adhered properly,
Source of emergency funds
This can be the ultimate tool when you are in desperate need of funds and you have nowhere to go. It can help you sort quick funds without any hassles and can get you out of quick trouble. This does not mean you will keep swiping your card every now and then in case of emergencies. It is always suggested to have some funds with you in savings so that it can help you, when in need.
That’s right! You can reward points to spend money. Who does that? Credit card companies have different norms when it comes to providing reward points. It depends from lender to lender and from type of card you hold. For every spent you make, you get reward points which you can later redeem to buy gifts from their website or even sometimes they give you option to en cash it. This way you save a lot of money while you are spending through the card.
Short term loans
Depending on your payment patterns, the card lender always opens prospect to small loans and keep it pre-approved for you. These are just pre-approved offers which you can avail in times of urgent situations and you short with cash. This loan amount does not block your credit limit, it is a different account all together and the EMIs are added towards your statement which you need to pay on the credit card due date. This is the privilege you get only if you pay all your dues on time.
Build credit history
It can be the best tool o build or rebuild your credit history. Credit card payments contribute more to your cibil score than any other loan as this is one type of an unsecured loan. If you happened to be in a low cibil score bracket, this can be a savior for you and can help you build your credit score in no time. Having a good credit history can not only help you get a quick loan in the future, but also can help you get through to many life problems.
Owning a credit card has its pros and cons, but if you know what the cons are, you can easily manage your card and can live a good financial plan. As we all know, we should understand the terms first when we are getting into something. The same principle goes in this and you can get the best out of these cards.