Friday, 15 June 2018

What is the Right 'age' to Apply for a Home Loan?

Most people buy a house only once in their lifetime. This is usually because of financial limitations rather than a choice. After all, a house or flat in a good location is quite expensive, and since most people fund their purchase with the help of a loan which has a tenure ranging between 15 years to 25 years, it’s usually not possible to take two home loans.
Now, when comparing your loan options viz. HDFC home loan, SBI home loan, etc. you are likely to consider factors like interest rate, loan term, prepayment charges, etc. However, do you know what’s the right “age” to apply for the loan in the first place?
Home Loan and Age
Believe it or not, your age matters a lot to the banks when you apply for a loan. Although factors like your CIBIL score, repayment history, etc. are important too, your age can also affect your loan application.
The reasoning here is simple- the retirement age of a salaried individual is generally believed to be 60 years, and that of a self-employed/business-owner 65 years. So, if you take a home loan, then its tenure should end before your retirement age (which could be either of the two options depending on your situation). So, getting a loan at a young age is a good idea.
Another reason why applying for a house loan at a young age is beneficial is financial security. This largely has to do with the interest rate.
Here is the thing- the interest rate, whether it’s an HDFC home loan or a PNB home loan, is never impervious to market changes. So, the interest rate fluctuates throughout the tenure. The question is- what are you to do when you are 10 years into a loan and with 10 years still remaining, the interest rate goes up?
When the financial burden of a house loan increases because of a hiked interest rate, then you are usually left with just two options-
·        Increase the EMI so that the tenure remains the same
·        Increase the loan tenure so that the EMI remains the same
Now, while there is nothing wrong with the first option as it does save you money on the interest and helps repay the loan sooner, it’s not always viable. This is because it’s not always possible to bear the increased EMIs. Thus, the second option can come in handy, although this is where your age can pose problems.
Your bank will agree to increase your loan tenure only if they think you are capable of repaying the outstanding balance. For instance, if you are 40 years old and your loan term ends in the 10 years, then the bank may not be comfortable in extending the term by another 5 years. This is because you will be much closer to your retirement age, and your income growth won’t be much either. On the other hand, say, you are in your 30s and have a high CIBIL score, then you can easily increase your loan tenure by 5 years or even more.   
So, what’s the right “age”?
At this point, we have established that getting a home loan when you are young is always better than when you are old. However, what’s the right age really? Unfortunately, there is no exact answer to this question. However, most experts will agree that the right age to get a loan is late 20s or early 30s. In fact, the sooner you repay your debt, the better. Opting for a long-term only increases your financial burden as you end up paying a lot in interest. Plus, there is always the risk of increase MCLR rate, etc.
Bottom Line
Buying a house at a young age certainly has its advantages. However, you should also focus on the other factors, such as inculcating the habit of saving money, improving credit management, maintaining a good credit report, increasing your CIBIL score, etc. These things can greatly reduce your debt burden as you can qualify for a low interest rate loan easily and also enjoy better terms. Even more importantly, the sooner you take responsibility, the better. Good luck!

Wednesday, 6 June 2018

Can I Lower My Education Loan Debt after College?

Education is given huge importance in India. Whether we talk about engineering or medical, business administration or lectureship, every stream has its share of competition here. However, good education isn’t cheap. This is the reason why a number of students apply for education loans, especially when it’s a premier institute such as the MIT, or Oxford, etc.Although an education loan is a debt, in essence, it’s considered a good debt. This is because it’s a debt that increases your value just like a home loan would. So, when you take an education loan, you are not put in a bad light in any manner. The banks treat you as if you have a high creditworthiness unless you make some bad financial decisions that reflect in your credit profile or lead to a low CIBIL score.  That said, repayment can be an issue especially since you aren’t earning yet and it could also be your first loan ever.The following are some tips on how you can lower your debt after finishing college:

1. Look for Provisions
Given the nature of student loans, banks often offer different relaxations to meritorious and financially-weak students such as interest subvention, easier repayment terms, etc. In fact, female students can get a flat 0.5% concession on their interest rate.

2. Don’t Overlook Moratorium Period
Mortarium period is a grace period that the banks offer after you finish your education. During this period, you don’t have to repay the loan. So, you can use the time to find a job and get settled.While you are not required to start paying the EMIs during the moratorium period even if you get a job immediately after finishing college, there is a huge advantage of doing it anyway.Here is the thing- the banks start imposing interest as soon as the student loan funds are disbursed. So, all 3-4 years of your college, this interest gets accumulated which can easily grow so high as to match the principal amount itself. However, if you start repaying it while you are still studying, and during the moratorium period as well, then by the time you get a job and are able to start the repayment with full EMIs, the cost of the EMI will be very low.Many banks offer interest rate concession up to 1% for students who start the repayment during the moratorium period. So, that’s another big advantage.

3. Debt Consolidation
If you have taken another loan apart from the education loan itself, such as a personal loan or car loan, then you can consider applying for debt consolidation.In this, all the loans are merged to form a bigger but single loan. The advantage of this is that repayment becomes simpler and easier. Plus, you can also request for a lower interest rate which is not that difficult unless you have a low CIBIL score.

4. Plan for Rate Fluctuations
If your loan has a floating interest rate, then it means it can go both up and down during the term. Since there is no way of telling what the market conditions are going to be like in the future, it’s best to prepare for the worst-case scenario i.e. a high interest rate. So, make sure you have emergency funds that can be used to pay the EMIs if they grow bigger.

5. Don’t Mind the Work
When you have a student loan on your shoulders, then it should be your top priority to get it cleared. This is because when you start a career, then the income usually isn’t too high. So, unless you try to save every single penny and try to earn money through as many ways as possible, it can take a long time to repay the loan in full.Many students work overtime or work for incentives that increase their average monthly pay which helps clear the debt faster.

In Conclusion
So many students get so caught up in their jobs after finishing college that they don’t think about lowering their debt at all. However, it’s not that difficult. More than that, you absolutely must get rid of it asap so as to maintain a high credit score and low stress.

Thursday, 31 May 2018

What is the age criteria for personal loan?

            Loans have made life easy. Once what you had thought you would buy after a few years, you can buy them all now. What an amazing fact it is to get something what you wanted! But the best things do not come free. Loans come with lot of responsibility. You get to use the credit you wanted once, but also comes the responsibility of paying a little extra. That extra is the percentage of interest you have to pay on the actual loan amount borrowed. The total loan amount what is to be paid consists of the addition of both of these factors.

            While the loans are floating in the market, different loans are acquired for different purposes. Suppose you want to take a loan to study, education loan is the option. If you want to start or grow business, business loan is to be taken. To buy a house, Home loan is taken. To take vehicle, auto loan is taken. For your personal needs like travels, wedding, medical emergencies, personal loan is taken. Personal loan is an unsecured type of revolving loan which can have tenure of upto 5 years. It ranges from the overall payback of 6 months upto the maximum limit.

            Now, let us look at the the conditions which would make you an eligible candidate for a personal loan.

Age: 21+
Income: 3,00,000/anum
DBR: 60:40
Tenure: 6months – 5years
Interest rate: Calculated according to CIBIL Report. (mostly between 105% - 28% excluding the processing fees)

The above mentioned criteria are not the standard once but are majorly checked upon or taken an average at! While we look at the criteria one by one, let’s explore them in detail.

            Age of course is take ans 21 years and a person in general cases would start working at that age. And thats when they start earning. While taking any loan, there are also conditions where the banks check your employment and the steadiness of it. Else it will be a risked profile for them. When the first criteria of age is conquered, then comes the income. Now how can this be calculated?
When the loan is given DBR is checked. DBR is Debt-Burden Ratio. DBR is basically the ratio which is calculated by your income. It is taken as if the loan EMI is 40% of what you earn, only then can one go through any loan. So, as the minimum amount to be considered as 50,000 of a loan with the stretch of 6 months. The EMI comes up to 8,333. if 8,333 is the 40% of your total income, the income would be around 21,000. which makes it a package of 2,52,000. No on this, even the Interest rate is calculated which makes it normally around 3,00,000 per anum.

            If you are dependent on family or the family is dependent on you, the DBR varies. And according to that even the eligibility criteria changes. Whatever you read or come across while planning to buy a loan or gathering information, everything changes from individual to individual. So there is no standard. All what you get is an average or multiple researches one has made. One thing is always to be taken care of is the credit score. The score which is derived by your credit repayment behavior.

            Suppose if we talk about ICICI personal loan, the interest rate varies from 11.5% to 22%. the processing fees counted are different from those of other bank. But if your CIBIL report is good, you have made the payments of your previous credits on time your score will definitely be good! A score which is 750+ is considered a good score. It needs no rocket science to understand what a perfect score costs. Be a responsible payer, do not over do and pay on time. Use the credits only which you can pay regularly and not with over burden. Even when few % interest is less, you save a lot of money which would be a help to you and no one else!

            Any article you read, any advice you take which is for any financial needs of credits, all will surround to only one thing. Use responsibly and pay responsibly. Better the credit score, lesser is the interest rate and which is a relief!

Friday, 25 May 2018

Higher studies on your list? A student loan can help you!

As a parent, you are always thinking about your child’s future, on how it will turn out, what’s good and what’s bad for my child, etc. The best gift parents can give a child is education. Education plays an important role in everyone’s life. It can act as a ladder towards a secure future for your child. But have you ever given a thought, what would be the cost of studies, if your child thinks of pursuing post-graduation or considering studying abroad? You must be thinking I still have a lot of time to think about it and plan on which course my child should opt for and how it will be beneficial, but time flies and in no time you would be banging your head towards the wall on how you will manage your child’s studies in your existing tight budget.
Do not worry; we have the perfect solution for you! Education Loan! An education loan can ease your tension on how your children will pursue their further studies with no complications at all. There are a lot of banks in India who are offering education loan to students for pursuing their higher studies. This type of loan is specially designed for students to supplement their studies.
Now you must be thinking, now that I know there is a product in the financial market which can help me with a loan for the child’s further studies, how do I apply it? Are there any terms associated to the same? Is availing an education loan that easy or is it hard?
We have answers to all the questions you have in regards to education loan and how to avail it,
The basic criterion to get an education loan is that, you must be a citizen of India. You can avail the loan only after you take admission for the desired course. The higher education collages also co-operate with you and help you with the necessary documents required. Once you have applied for the course, then you can start hunting for banks that provide education loans, and the procedure and criteria’s are as follows,
How much should I have to pay?
The bank does not fund your whole term fee; you will have to contribute some amount from your pocket. The bank will only lend you 80% of the fees amount. There are chances if your loan amount is less, the bank may fund the entire fees amount.
Are there any processing charges like other loans?
Absolutely! There are processing charges. The processing charges depends from bank to bank and from amount to amount, there are some banks which would take a lump sum amount as processing charges and some will count on percentage on the loan processed. It is advised to do thorough research on the loan options available in the market.
Do I have to produce collateral to the bank?
It all depends on the loan amount. For instance, there are universities in India who provide courses for a cheaper price on the other hand; if you are thinking of pursuing your education in top tier collages then you will have high fees structure.  For higher loan amounts, you will have to provide security to the bank.
Do I need a guarantor?
If the loan amount is a bit on the higher side but not very high, the bank may ask for a third party guarantor. In such cases, you don’t have to keep security as the guarantor acts as collateral. If in future you default your payment the guarantor has to pay up instead. Just make sure, the third party person has a good credit score, as this will boost your loan process towards early sanction.
What are the payment terms?
The payment terms are easy. The bank will not ask for any EMIs until you have completed your course and also you get some more additional time from the bank to get a job and settle down before you start your monthly installments. Once you start your EMIs, you have maximum 10 years to settle your education debt.
Any type of loan is a huge commitment. It is always suggested to get your homework done before you proceed to avail a loan. This will not only give you a clear picture on what is happening in your current loan market, but will also help you save great bucks in long run.

Friday, 18 May 2018

What Are The Documents Needed For Gold Loan?

If you are looking for a fast and easy way to secure funds to meet your immediate financial needs gold loan is the answer. It is a loan that that requires you to pledge your gold ornaments with the lender in exchange of funds. Many people rely on gold loan for immediate short term needs like children’s education, marriage etc. It enables them to mobilize their assets that are lying idle in the locker to secure funds at a low rate of interest.
Some of the benefits of gold loan over other kind of loans are as follows:
·         A secured loan where the gold ornaments serve as collateral reduces the risk of the lender. The lender can always sell the gold and realize the dues in case of non-payment by the borrower. Hence the gold loan interest rate is much lower than other kinds of loans. For most personal loans the interest varies between 15-25%. But gold loan interest rate ranges between 12-16%.

·         Most banks do not check your income level. So even if you are unemployed you can rely on gold loan to meet your cash requirements. For most other kind of loans, your income level is assessed to judge your repaying capacity. But in case of gold loan where the customer has pledged his valuable asset, the lender is not worried about the repayment ability.

·         Credit scores play an important role in most loans approval process, but not in case of gold loan. Since the loan is fully secure with the collateral, the lender is not at all worried about losing his money. Hence he does not bother to check the financial history of the borrower. So even if you have a low CIBIL score, you can use gold loan to meet your cash requirements.

·         Most banks like ICICI bank, HDFC, SBI, Manappuram Finance, Muthoot Finance offer these loans. Most of these financial institutions do not charge a prepayment penalty.

·         The loan amount can be used for any type of expense. So it gives you the flexibility of use.

·         Easy documentation, less processing time and fast disbursal of funds makes this loan very attractive.

Let’s see what documents are needed to get a gold loan
Unlike other kind of loans, where the paper work is an important part of approval process, gold loans sanctioning doesn’t require you to submit many documents. All the bank needs are simple KYC documents for Identity proof and Address proof along with 2 passport size photographs. Yes, it is as simple as that. For identity proof one can submit copies of passport, driving license, Voter Id card, ration card, Aadhaar Card, ration card etc. For an address proof you can show you electricity or telephone bill or any other utility bill. Besides this you need to submit a signed application form and a signature proof. The bank will verify the purity of the gold and give you an approval. It’s an easy and hassle free process and you get quick approval.
Things to consider before taking a gold loan
·         These loans have a shorter tenure. Be sure of your repayment capacity else you risk losing your valuable asset. A little delay in payment may result in charging extra interest. But non-payment of dues, even after a formal notice is sent to you may lead to the lender auctioning the gold to recover the due amount.

·         The repayment patterns will affect your credit score as well. Make on time payments to ensure a spotless credit profile.

·         The amount of loan that you can get sanctioned is usually 80% of the value of gold pledged.

·         Gold loan interest rate varies from lender to lender. Compare the different offers of banks and private lenders to strike the best deal.

Thursday, 10 May 2018

How Can You Raise 50 Points in 3 Months?

A good credit score can do wonders in your life. It gives you financial freedom like no other. Imagine, with a good credit score you have all the financial products at your disposal; you can opt for one in no time. The lenders and bankers always favor people who have good credit score.
On the other hand, if you have a bad credit score, you are in for a financial mess. It will be hard for you to get a financial product in the market. So what is good credit score?

A good cibil score
There are a lot of credit bureaus available in Indian market but maximum number of lenders relies on CIBIL for credit verification. The credit rating ranges from 300 to 900 points. If you have a score above 800, your report is termed to be excellent. Similarly, if your score lies in the 700-300, you will have to work to improve credit score.
Imagine you are planning to buy your dream house. You’ve been saving to buy this property from a very long time; you are also relying on opting for a home loan. Just to be on a safer side, you check your credit report and find that your cibil score is low. Suddenly you sit shell-shocked and the dream to get the house starts fading away. You try finding answers on how can I improve my cibil score in short span of time so that you can apply for a loan with ease.
We will sight you ways on how you can raise at least 50 points in advance, before applying for a loan.

Check for errors
This is the most basic when it comes to raising points. There are high possibilities, the lender or the credit bureau must have committed a mistake which resulted to your score’s depreciation. Get a free cibil report online and check for any errors. If you have problems understanding technicalities of how the score is calculated, take professional help. Once you have a picture on what went wrong with your report, try getting in touch with the lender and report it. If the mistake is from the bureau’s side, you can raise dispute against the transaction and get it amended. The dispute process will take a lot of time because of the slow process, so the early you know, the faster you can act on the same.

Stop making unwanted purchases
Try purchasing everything for cash. This way you will be utilizing your own money, rather than using a credit card. This practice can help you control your unwanted urge to spend on unwanted things and can lead to a debt free life. This way you will be out of the low cibil score category in no time.

 Opt for automatic payments
There are a lot of banks and credit card vendors who offer this service for free. Go for automatic payments, this will help you make planned expenses and your credit line will be utilized well. Just make the final due payment on time for all the automatic payments you have opted for, you will see a sudden spike in your score in no time.

Keep your old accounts open
Once realized that you need to control your expenses, many of us try closing the account. Do not close your accounts; old open accounts contribute to your credit score passively, it will help you build a good score in long run. 

Get a consumer loan
This is the easiest way to appreciate your credit score in no time. Just go to a consumer durable appliances store and buy a product on loan. It can be a television, a latest mobile, etc. The store will offer you loan options upfront, the EMI will not dig a huge hole in your pocket. Pay these EMIs on time and you will see a hike on your score.
Getting your credit score up is a lengthy process. If you press all the right buttons at the right time, you can achieve your set goal in no time. Make all your payments on time and you will get your score up eventually, which can help you get any loan.

Friday, 27 April 2018

Does Credit Monitoring Hurt The Score?

A credit score has become an important financial number that affects several aspects of one’s life. It is not just helpful for people who are looking to take loans in near future. Everyone must improve credit score as you never know when an emergency situation strikes and you are in need of funds. More and more people are waking up to the importance of keeping their credit in good standing. Checking one’s credit report is an important step in achieving this goal. There are several benefits of monitoring your score and report. It helps one understand the current financial position before applying for a loan or credit card. Checking the score gives you a fair idea of your chances of approval and whether you will be eligible for discounted rates. Monitoring one’s credit also helps uncover fraudulent activities or mistakes or errors in reporting. But many people fear that monitoring the score will itself hurt the score. Is it true?
Not at all! It is a big myth that checking the score is bad for one’s credit. Let’s see how.
Enquiries made regarding your credit do affect your credit score to some extent. 10% of your score is based on the number of enquiries made. But these include only hard enquiries. When you apply for new credit, the checks made by the lenders to see if you qualify for credit are recorded in the history as hard enquiries. A number of such “hard pulls” indicate signs of financial trouble and hence damage your score. Checking your own score is recorded as a soft enquiry. They are not related to your search for new credit. Hence, these are not shared with the lenders and they are not included during credit score calculations.

Hence you can check your score on a regular basis is a sign of good credit management. It will help you in the long run. You can get a free credit report from all the credit bureaus once every year. Make the most of this opportunity to see whether your history is in good standing. If you wish to check more often than this, you can order your report online by paying a fee. You can also subscribe to credit monitoring services. Requests made by them on your behalf will be treated the same way as you make the enquiries. A credit monitoring company keeps checking your credit report on a regular basis. Since these checks are not done for the purpose of applying for a loan, these are considered as soft pulls. Whenever there is a change in the score, the company will alert you. It investigates into any unexplained changes that might occur. These regular updates are also useful if one is trying to increase credit score.

If you do not have sufficient time to monitor the credit yourself, or if you find these numbers too confusing, it is always better to consult a credit monitoring company. After all a good credit score will help you get approved for loans at discounted rates. You will become eligible for the best credit cards. All this will help in saving thousands of rupees in the long run. With a bad credit you will only be eligible for loans for low CIBIL score that charge exceptionally high interest rates.

Identity theft cases have become quite common. Any negative information on fraudulent accounts opened in your name can bring a sharp dip in your score. A credit monitoring company can also help uncover mistakes and fraudulent activities. If it identifies any errors it will even report it to the bureau on your behalf. The bureau will verify the error and correct it if it did a mistake. So monitor your credit without any worries, and stay on top of your financial goals.