Saturday, 31 December 2016

Learn How EMI is Calculated

An EMI(Equated Monthly Instalment) is a fixed amount of payment you have to make when you take a loan. It contains both the principal amount as well as the interest amount.
You need to calculate EMIs for a particular loan in advance so that you can manage your future expenses accordingly.
How is an EMI calculated?
Here is the basic formula for calculating an EMI:
[P x R x (1+R)^N]/[(1+R)^N-1]
Here P is the loan amount or the Principal, R is the rate of interest per month, and N the number of instalments.
To understand the formula better, consider the following example:
Let the loan amount be Rs. 6,00,000, rate of interest be 10%, and tenure duration be 10 years (or 120 months). Comparing with the formula we have:
P= 6,00,000, R= 10/(12X100)= 0.0083, and N= 120
So, EMI = [6,00,000 X 0.0083 X(1+0.0083)120]/[(1+0.0083)120-1]
EMI= [6,00,000 X 0.0083 X 2.696] / [2.674]
EMI=  Rs. 5020.97
Calculating an EMI using the formula above can be time-consuming, especially if you have several different loans to compare. Thus, using an EMI calculator is a better solution.
What is a loan EMI Calculator?
An EMI calculator is a special tool designed specifically for calculating EMIs. It can save you a lot of time which you would otherwise have to waste by calculating the EMIs for a particular loan using a standard calculator.
How EMI Calculators are Helpful
What is first step you take when you have to take a home loan, or a car loan? Do you start applying for the same right away? Of course not. You have to do some planning first. So, you sit down and do some calculations. You decide how much amount you would need to borrow, and then take the interest rate into account to calculate the approximate EMIs. If the EMI's are high then you will need to either find a bank who can offer lower interest rate, or have to increase the tenure of the loan itself, so that EMIs becomes smaller.
Using conventional EMI calculation methods is a tedious process as it is, but when you have to adjust certain factors such as  the tenure, or the rate of interest, when it becomes an even bigger problem. An EMI calculator is the perfect solution for this problem. Most online EMI calculators are really simple to use. You can get different EMI results almost instantly when you change different factors in the formula. This makes finding the most suitable loan structure easy and quick.
Advantages of EMI calculators
There are many advantages of using EMI calculators, the best of which are as follows:
·        Different Calculators for Different Loans: One of the best things about EMI calculators is that they are specific to different types of loans. For instance, if you want a home loan then you can use a home loan EMI calculator, and if you want a personal loan you can use a personal loan EMI calculator. Since the EMIs of different types of loans have to be calculated differently, an EMI calculator can be used for the calculation of accurate EMIs.
·        Detailed Information: When you calculate EMIs using a pen and paper, or with a calculator, all you get is a final number. However, with an EMI calculator you get a lot more than that. Most EMI calculators give your results in the form of charts and tables which show exactly how much will you be paying every month, along with the reducing principal and interest amount.
·        Accuracy: Even if you are a math genius, you have admit that with pen and paper there is always a margin for errors. When you have do a lot of calculations with different interest rates, principal amounts, and loan tenures, then the risk of making an error is high. An EMI calculator, however is quite accurate.

Whether you are looking for instant personal loans, or distance education loans you have to calculate EMIs for different loan options. If you want accurate results be sure to use an EMI calculator. It will save you a lot of time. 

Friday, 23 December 2016

5 Hacks to Clear Your Debts Fast

No one wants to be burdened with huge debts. However, in today's expensive world, most of us have to take a loan at one point or the other, and with that debt becomes inevitable. If your debt has been accumulating greatly then it is important that you clear it up as soon as possible. Increasing debt can lead to a poor CIBIL score, and damage your creditworthiness. Since there is no instant solution that can work as a bad credit fix, you must take several measures. Only then you can get rid of  your debt and improve CIBIL score. Here are some of them:
1. Debt Consolidation
When your debt situation is getting out of hand, a great hack could be debt consolidation. This is particularly useful if you have multiple loans. In debt consolidation all your individual loans are combined into one, and the final sole interest rate is lower than what you have been paying currently. Thus, debt consolidation helps you in two ways:
·        Since your loans are merged into one, managing expenses becomes easier. You can track your payments easily, and have better control on your money.
·        With a lower interest rate you can save money every month, and pay your debts sooner.
If you want your debts to be consolidated you can simply discuss the same with your bank officials. You have the right to bargain on the interest rate, and you must. If you have been a loyal customer to your bank you stand a good chance of getting an attractive interest rate.
2. Refinancing Your Mortgage
One of the benefits of a mortgage is that you can refinance it to get a better deal. Say you got a mortgage loan at an interest rate of 14%, but after few years the government caps the mortgage interest rate at 13% for all private and public finance institutions. If bank doesn't agree on lowering your interest rate, you can approach another bank who is willing to have your mortgage transferred to them, and let you repay it at a lower rate.
3.Getting A Second Job
Desperate situations sometimes call for desperate measures. If you are really inclined towards getting rid of your debt, then by taking a second job you can drastically shorten the repayment duration. It can be difficult to manage two jobs simultaneously, but once you have fully repaid your personal loan or home loan, you can certainly enjoy the fruits of your hard work. Besides, there are many easy ways to make extra money. If you are good at something, such as coding, or writing, then you can take on freelance based assignments, and make decent money. You can also check if you can make more money by working overtime at your office.
4. Paying More Than Minimum
Most people are unaware of the toll minimum credit card payments take on their accounts. When you make minimum payments, you are not charged any penalties, but the remaining balance is carried over to the next month, and accumulates interest. If you have been sticking to minimum payments since a long time, then it is possible you have been causing your debt to increase without even your knowing it. Thus, to avoid this from happening make sure you pay your credit card payments in full.
5. Getting Help From a Debt Counsellor
Sometimes it is wise to accept your own limitations and take help from someone who has experience with something more than you. You can always consult a credit or debt expert to look into your situation and offer most viable solutions to tackle it. For instance, Credit Sudhaar is one of the leading credit and debt counselling firms in India which can help you with your debt related problems. With the help of someone who has a lot of experience with assorted debt related problems you can certainly get rid of your own debt sooner than expected.
Accumulating debts can put high pressure on you, and affect your life greatly. However, if you are willing to take bold steps then you can certainly tackle the situation. You are also of course free to take external help. A guided approach will certainly facilitate the entire process and make things a lot easier.

Friday, 16 December 2016

It is A Good Idea to Take a Personal loan for an Overseas Trip?

People in India take loans for education, home renovation, medical emergencies, and even for vacations. However, a personal loan for an overseas trip (which can be usually quite expensive) can rarely be a good idea.
Why Does a Personal Loan for an Overseas Trip a Bad Idea?
Most personal loans can be obtained without collateral. You are free to use the loan for anything, and that is a big advantage. However, this advantage comes with a catch- huge interest fees. After all, the lender is granting you a loan collateral-free, thus taking a risk. This is why you have to pay high interest rate for the same.
It is important to understand the difference between good loans and bad loans. Among all possible reasons for taking a personal loan, an overseas trip(especially the one that is purely for fun and leisure) is probably the worst. The reason is simple- the loan you take for an overseas trip/vacation that lasts for 4-10 days have to be paid back with a hefty interest of 14-24% over an year of so. This is an absolutely extravagant transaction that can be easily avoided.
Another reason why a personal loan for a foreign trip should be avoided in because such a loan won't be an appreciated investment. For instance, a home loan, or a car loan are appreciated investments, which gain value over time, and hence improve your credit worth. A personal loan puts you in bad light, especially if you are taking it for an overseas trip. While you are entitled to spend the loan however you like, it may have consequences on your credit report.
 Risks Involved
Even if you are a great planner, and have spend a lot of time planning your trip, you can never predict the future. If you are overseas and your expenses cross your budget you may end up turning to your credit card for help. Since you already have a personal loan to take care of, the credit card bills (which can be quite high when the card is used in another country) can add to the financial pressure.
Another risk that comes with using a credit card overseas, is that if you have reached your borrowing limit, then you can't use the card for paying the personal loan EMI if need be. You can end up in huge debt, which can further make situation worse as it will continue to collect interest. Your credit score will be damaged, and you could end up making it to the CIBIL defaulters list.
The Verdict
If you have to take an overseas trip for a vacation then you should absolutely avoid taking a loan of any kind for the same. However, in some cases taking a personal loan can be fine. For instance, if the loan is of small amount, or the trip begs emergency, then you can take a personal loan. But still, it is best to avoid taking a personal loan at all costs. If possible, you can use your credit card for the same.
If you absolutely have to take a personal loan for a trip overseas, then make sure you take care of the following:
·         Planning: Make sure you get your numbers right before taking the trip. Calculate how much will the trip costs, including a margin for unexpected expenses.
·         Credit Card: Do carry your credit card with you, but make sure you only use it if absolutely necessary. It is easy to be swayed in the spirit of enjoyment in a different country, and you may want to spend on luxuries on a whim. Such ideas need to be controlled, for you will have a debt waiting for you to be taken care by back at your home.
·         Loan Comparison: Do spend your time in comparing all possible options for personal loans. Online lenders generally offer low interest rates on personal loans.

Loans should always be taken for emergencies, or for necessities. If you are taking it for a luxury then you can end up with troubling financial issues. Thus, use them wisely.

Friday, 9 December 2016

What are the Major Credit Reporting Agencies in India?

There are four major credit reporting agencies in India that are recognized nationally. All these agencies collect information of the credit users, calculate credit ratings on that basis, and sell the credit reports for profit. These four agencies are- CIBIL, Experian, High Mark, and Equifax.
Although the primary job of all the major credit reporting agencies is the same, their operation, prices, and systems are slightly different from each other.
Not only CIBIL is the oldest credit information bureau of India, it is also the most popular. It was established in 2000, and has been the most preferred credit agencies by the financial institutions ever since.
CIBIL assigns a score ranging from 300 to 900 to every credit user. The higher is the score, the higher is the creditworthiness of the individual.
To obtain a one-time cibil report and score from CIBIL you have to pay a fee of Rs. 550. However, you can also purchase a subscription for receiving the report 2 to 4 times a year. If you are only interested in your credit report, and not the score, then you can apply for the same for a fee of Rs. 159. You can receive your CIBIL report via email, or you can also get a physical copy at your residence. It depends on the answers given by your when you apply for the report on CIBIL's website.
If there is a CIBIL dispute between a customer and the lender, then the agency offers the facility for a resolution. You just need to fill out a form on their website and mention the details of the dispute.
Equifax obtained its licence for operation in 2010, and is one of the most widely known credit information bureaus of India.
The credit score range followed by Equifax is also 300 to 900. A score higher than 750 is deemed good, and lower than 500 is considered poor. You can get a detailed credit report from Equifax for a fee of Rs. 400. You can also choose to get only the basic report, for which you have to pay Rs. 138. Typically, it takes about a week or so for Equifax to verify your documents and send the report.
If you want to resolve a dispute, you can download the dispute resolution form from Equifax's website and submit it with a few documents.
High Mark
High Mark was founded in 2007, and received a Certificate of Registration from The RBI to operate as a Credit Information Bureau in India in 2010.
The score range followed by High Mark is the standard 300-900. You can obtain your credit report that contains the score as well for Rs. 399. To raise a dispute regarding your score or report you can contact CRIF by filling out a form on their website.
High Mark is a product of CRIF, which is leading global company in the industry of credit reporting and business information. It is operating in 4 countries, and supporting more than 3,000 banks and 44,000 companies.
Experian is also a global information services company that provides data and analytical tools for businesses across the world.
Unlike other credit information companies of India, Experian has a functional score range of 300 to 999. You can obtain your report by paying Rs. 138 either through DD or NEFT transfer. If you want both the report and the score then you have to pay Rs. 399.
To raise a dispute with Experian you can fill out an application form on their website and submit certain documents for verification.
Although there are multiple credit information companies in India, they are essentially the same. However, since most banks and other financial institutions rely on CIBIL score only, that's the one you should generally refer to. It is the most prominent credit bureau of India, and its processing of applications is also really fast.
No matter which credit bureau your lender prefers, having a high score is a must if you want a loan, or a credit card. If you want to improve CIBIL score fast, by either taking a home loan, education loan, etc. then you can always take professional help from an reputed agency such as Credit Sudhaar. 

Thursday, 1 December 2016

How do I Assess my Creditworthiness?

If you are going to apply for a SBI car loan, icici personal loan, or rather any kind of loan then your creditworthiness will be a crucial factor in the approval or rejection of your application. Almost all lenders base their judgement on the applicant's credit history, and other factors that sum up the creditworthiness.
Even though different lenders have different standards for measuring creditworthiness, almost all will take 3 C's into consideration. You can use these to assess your creditworthiness.
Capital: This refers to the capital you possess, or in other words- the balance in your accounts. Lenders also check your monthly earnings to understand your creditworthiness. If you are making a decent income, which is consistent, then you are likely to have high creditworthiness.
Collateral: Capital alone is not sufficient in determining how reliable you are credit-wise.  If you have any property that can be pledged for security then the lender can get comfort in the same, and feel safe with sanctioning your loan. However, if the property is already pledged against some other loan, then they can't use it for security, and may want to wait until the loan has been paid off.
Character: Believe it or not, your character can make a huge difference in your creditworthiness. Have you ever declared bankruptcy in the past? Has your name ever been on loan defaulters list? Does your credit report reflects poor money management? By answering these questions you can learn a lot about your credit-related actions, which actually affect your loan applications.
For personal loans that are to be used for business investments, lenders also take some additional factors into account for assessing the applicant's creditworthiness.  These are:
Conditions: Economic and industrial events may occur during the tenure that may affect your business. For instance, rise in the prices of raw materials that your business is dependent on, or employee strikes, etc. can damage your business, and pose a risk for the lender as you can have difficulty repaying the loan.
Inventories: The inventories that you own also affect your creditworthiness. However, unlike most people believe, a large inventory doesn't pass for collateral that the lender may take as a backup for security. In most cases lenders don't expect any business to make enough money selling off inventories for repaying their loan, especially in a short period. What they consider a good sign though- is how fast you rotate your inventory. This shows how efficient or successful your business is.
Other than the factors above there is one major aspect that is the most important for reflecting reliance to your lenders- CIBIL rating.
Your CIBIL score and CIBIL report will determine how likely you are to get a loan or credit card approved in the future. To get a personal loan for low CIBIL score is almost impossible in today's economy. Banks have become more stringent than ever. Thus, if you want to truly assess your creditworthiness, make sure you check your credit score first.
How to Check Your Credit Score?
There are a few major credit bureaus in India that provide credit reports for individuals and businesses. However, the one that's most recognized all over India is CIBIL (Credit Information Bureau India Limited). Thus, you can check your CIBIL score to get an idea of where you stand with your credit usage. Fortunately, obtaining a report is simple. All you have to do is go to their website and fill out a form, and upload a few mandatory documents. If all goes well, you can get your report within a few days, either via email or at your home via snail mail.
A CIBIL score ranges from 300 to 900 for everyone. Generally, a score that is greater than 750 is considered decent. If yours is lower than that, you can start paying your EMI's timely, and use your debt wisely to improve it. If your score is lower than 500 then it will be tagged as "poor". You will need to make a lot of changes in your credit spending habits to improve the score.