Friday, 3 August 2018

How to use the Compare Option to Decide on Best Car Loan

Abhishek wants to buy a new car, this being his first car he is very excited and wants to take the decision after careful consideration. As he began to compare the various brands and models he realized that there are so many factors that require attention. He did not get bogged down and did manage to find what he wanted and also something the fitted within his budget!
Just like buying a car is a decision that requires careful comparison between options, so does choosing the right lender too! You need compare the loan options available before choosing the right one.
Comparing Car Loans to Choose the Right Option:
If you are looking for car loan you would know that there are numerous lenders in the market that can be approached. So how do you decide which is the best option for you? Here are a few factors that can help you make decision:
  • Interest Rates:
Needless to say interest rate is the first and usually the most crucial factor when it comes to choosing a lender for any kind of loan. So do look at the rates at which car loans are offered by various banks/NBFCs before you choose one. Interest rates range from 9-5% to 14% depending on which FI you approach. It is important to mention here that if you have a good credit score then you have an edge. You can approach any lender without being worried about your loan application being rejected due to a low score and you can negotiate a good deal for yourself too if you have a good rating.
  • Processing Charges:
Processing charges as is obvious from the name are charges that are levied by the FI for getting the loan application processed. They are not similar across board, some may charge a flat rate irrespective of the loan amount, and some may charge it as a percentage of the loan amount while other may not charge any fee at all. Obviously you would like to approach the one who does not charge any amount as this fee could burn a hole in your pocket but bear in mind that other aspects also need to be considered when making this decision.
  • Loan to Value Ratio:
Loan to value ratio is the amount of loan that you can get as a proportion of the asset value. This again varies across lenders. LTV defines the maximum loan that you can get as a percentage of the car value, the rest you need to pay from your own pocket. Thus you should have the rest of the amount saved to make as a down payment. If you have a larger amount saved you could opt to take a loan lower than the LTV ratio too, this will reduce your overall interest cost. If you have no savings to make a down payment then there are few FIs that offer 100% finance but you will have to meet the car loan eligibility set by the lender in order to get the loan sanctioned.
  • Prepayment Charges:
Prepayment charge is an amount that may be charged by the lender in case the borrower chooses to pay the loan amount before the term ends. These are mentioned in loan agreement and may be also mentioned in product details. It is a good idea to have clarity about these and compare the charges that would be levied by various lenders before choosing one. While some banks may not charge anything at all for a prepayment, some may not charge anything after some time has elapsed while others may charge an amount as percentage of the outstanding amount.
So buy your dream wheels but before doing that compare the various options available before choosing one.

Friday, 27 July 2018

Can secured cards help in building your score?

Let us go back to time and relive the moment when you first got your driver’s license. We bet, it would be a proud moment for you and you would have a feeling of accomplishment. But before you got your driver’s license, you must have went through a process of obtaining a Learner’s License. You must me thinking why are these people sighting this story to us? The topic clearly is about secured credit cards.

A secured credit card is just like your learner’s license where you are not at risk while using it.
So first of all, what is a secured credit card exactly and how does it work?
A secured credit card is equivalent to a traditional card, unlike a prepaid card or a debt card. Its sole purpose is to help individuals who are in desperate need to improve cibil score. Also help people who do not have a credit history at all. Unlike other debit cards, a secured card has the same terms and conditions as of a normal credit card and you can enjoy the same privileges associated to a normal card.
As the name suggests, a secured card can be availed by depositing a particular amount as security, unlike normal cards which do not need deposits. With some banks, the bank will provide you high limit on your card as compared to the deposit you have made.
Now many people have a perception that if we do not make our payments on time, the bank can deduct money from our security deposit. This is absolutely not the case! As mentioned earlier, a secured card has the same terms as a normal card which compels you to make all your payments on time and avid keeping balances on your card.
The Big question here is how can a secured card help you build your credit score?
Now, if you have a bad cibil score, you probably must be thinking of getting a secured card but is it beneficial? How soon can you expect your score to see inclines?
The Answer to this is there is no quick mantra to improving your credit score in snap time. You will have to work hard on rebuilding your credit score, which eventually will take time. A secured credit card can help you achieve it as the credit bureau will consider your card just like any other financial product on your portfolio.
Tips to use your secured card wisely
Use it for small purchases
Owning a credit card does not mean you can go mayhem on your purchases. You should always remember the purpose to get a secured card on the first place. Make small purchases every month and try to make your payments on time. Only make purchases you can pay of easily without facing much of problem.
Do not go for minimum payment
Going for minimum payment can cause you a lot of damage, as these types of cards is availed on the basis of deposit money. You will have to pay additional penalties and other interests associated to the card. Try making the due payment in full to avoid such charges. You can feel pain interest and penalties for money your money.
Set payment alerts
No one is perfect; there are high possibilities on missing your payment due date. Set payment alerts to stay up-to-date with your payment dates to avoid unnecessary penalties and charges.
The best option is to opt for auto pay option
This is the best option available from every credit card lender these days. Be it a secured one or an unsecured one, you should always opt for auto pay option so that you do not face any problems of not remembering your payment date and the payment is automatically made on time.
A secured card can have some drawbacks of its own, but it can help you in the long run of building your ruined reputation on your credit report. It can help be secure a traditional credit card with an improved credit score.

Thursday, 19 July 2018

Five Points To Ensure That Your Loan Application Is Approved

There are various occasions when one needs an extra financial help. To buy a home, to study further, to start or expand the business, wedding, travel, to buy a car, to buy a bike are few of the examples where an individual might feel a crunch of cash and would want that help. Usually, that help is taken from banks or NBFCs (Non Banking Financial Companies). And that help is called a loan. A loan is basically an amount of money which is borrowed from someone or bank or NBFC that is expected to be returned with the interest decided on it. While one is applying for a loan, there is basic homework that needs to be done. In this digital-era, going through the bank’s website and getting the rough ideas is the best and the easiest way to work on it. One could easily get the basic information about the charges, document requirements, feasibilities and if the loan would be sanctioned or not. So they don’t need to practically go through so many banks and check to it.

Once the homework from the borrowers is done, its time to make sure that one should be well equipped with the things that would matter in getting the loan approved. Here are the five major points which banks see in order to sanction any loan

1. Credit Score / Credit Report
As the very well know the concept, credit score is a three-digit number ranging from 300-900 which comprises of the behavior of the credits one has taken and the repayments did. Any score higher than 700 have high chances of loan getting approved along with the lower interest rates. Credit Report is the detailed summary of all the credits taken and an individual whose score it is. An individual gets one Free Cibil Report every year from the credit bureau as per the RBI rules. Make sure that your credit score is always above 700, and if not go through your credit report and check where are the errors and try to correct them.

2. Repaying Capacity
There is a term called Debt Burden Ratio(DBR). DBR, as the name suggests, is the capacity of the individual to pay the debt against the expenses he/she has. It is usually considered 30:70 where the income should be divided into the 70% of expenses and 30% debt that one would be able to bare. If it fits perfect, the repaying capacity of the person is then considered and the loan amount is decided. Maximum it is compromised to 35-40 % in special cases, which would be the actual repayment capacity of the borrower.

3. Collateral
Except for the personal loan, whichever loan is processed would need the collateral. What is collateral? Collateral is basically any asset or property which is kept against the loan amount taken as a security. If in case, an individual is unable to pay the loan, the banks or the NBFC would acquire their asset to clear out the debt. The collateral value must match the loan amount taken, if it doesn’t, the loan is given only of the value of the collateral.

4. Personal Discussion
There are the representatives of banks or the financial institutions who would do the personal discussion with the borrower to ensure the reason of the loan, the characteristics of the individual, the intent of repayment etc. Based on this personal discussion, the representative decides if the loan amount would not turn to a bad-loan for them. If the cibil score is low, and the borrower is in the process to Improve Cibil Score, these people would understand the behavioral pattern and analyze the character of that individual.

5. Documents
Any loan that is processed, needs the documentation. Starting from the personal identification documents up to the required loan type documents are checked. When planning to apply for a loan or applying for a loan, one should be ready with all these papers to then avoid the delay.

If taken care of these points, and making sure that there is always a progress over these, getting the loan approved is just cake walk. One should always understand the thin line of importance in taking care over the five points mentioned above to missing one of them would make them pay a huge price which would help them achieve and conquer the dreams of better future they have seen.

Friday, 13 July 2018

How to repay Home Loan faster?

Owning a house of your own gives you one of the best feelings, but paying a hefty EMI on a monthly basis does put a strain on one’s finances. When a major portion of the salary goes in repayment of the loan, one is not left with enough money to spend on luxuries. Besides, the longer the tenure of the home loan, the more costly it becomes to own a house. With the high interest rate that one has to pay on home loan, it is always a smart decision to get rid of the loan as fast as possible. That is why repaying the home loan faster becomes a top priority for many people. Here are some simple ways that will help you pay your debt faster and save money in the long run.
  1. Avoid luxuries
You need to motivate yourself to build a corpus that you will use to repay your home loan early. Begin by having a close look at your monthly expenses. Identify where you can cut corners. Avoid spending on luxury items for a few years. You may avoid vacationing on a foreign location and save a lot of money. Let the peace of mind that you will achieve on becoming debt free motivate you to reduce your monthly expenses as far as possible.
  1. Increase the EMI amount as the salary increases
When you take a home loan, the EMI amount is usually fixed at 40%-50% of the monthly salary. Over the years, as your salary increases, the percentage of the salary that goes towards payment of the loan goes down. To repay the home loan faster, you should increase the EMI amount as and when your salary increases. If you maintain the ratio of salary that goes towards EMI you would be able to reduce the loan tenure whenever you get a hike in your salary. For example with a monthly salary of Rs 50,000 your EMI on a DHFL home loan would be fixed at 20,000. If your salary increases to 75,000 you must raise your EMI to 30,000. Maintaining this discipline will help you pay the loan faster.
  1. Pay the principal early
In the initial years of the loan repayment, a major portion of the EMI goes towards payment of interest. The rate at which the principal amount goes down is very less. If you plan to pay a slightly higher EMI, the additional amount goes towards the payment of principal amount. This helps in reducing your loan tenure.
  1. Make partial payments
Whenever you receive a lumsum amount, make it a habit to make a partial payment of the principal amount. You may receive a festival bonus or yearly performance bonus from your company, your fixed deposits may mature or you may get a gift from relatives. Use every such opportunity to divert funds to your loan account. Whenever you make a partial payment, you get the option of either reducing the EMI or the tenure of the loan. Make sure you reduce the tenure and not the EMI. Banks accept an amount as low as Rs 10,000 as partial prepayment of loan. But some banks do have a cap on the number of prepayments that you can make in a year. Check with you bank for details.
  1. Switch to a different lender
Since your home loan is a long term liability, the difference of even a small percentage in rate of interest can help you save a lot of money. If your current lender is charging a higher rate, you may shift to a different home loan provider. You need to consider the processing fee and other charges involved in the transfer to find out whether the shift is really worth it.
The long tenure of the home loan puts a strain on one’s finances. And if you have taken a loan with bad CIBIL score, your rate of interest would be too high. Paying your home loan fast is a smart way of getting in control of your financial life. You may have to make a few compromises, but you will surely save a lot of money in the long run.

Friday, 29 June 2018

If I Have Amex Card, Only Then Can I Get Good Credit Score?

Don’t you dream of a premium life? You open any social media these days and out of ten posts you see, five of them will be on premium lifestyle. These lifestyles influence us to work harder and drive as a motivational factor to achieve our peak.
There are many brands in the market which are termed to be premium. Let us take credit cards as an example here and understand how credit card works and does credit card help you achieve a premium lifestyle. You receive at least ten calls per month from various telesales departments offering you various credit cards. Even if you have a couple of them with you, you will seek some more just to have financial backup. Which is the most premium credit card in the world, you would like to get your hands on? American Express! An American express card itself is a statement of being premium and makes you stand out in the crowd. There are a lots of benefits associated with American express card. It is not the only one of the oldest card lending company but also the most premium card market has to offer. It’s really hard to get your hands at one of these.
So you must be thinking, if the card has such a premium feel to it and also has a lot of benefits, can it also boost my credit score in a short span of time?
The answer to this is unfortunately a NO. Though American Express is an exclusive brand in regards to credit cards the credit rating system remains the same. You cannot expect a premium treatment on the credit front if you hold your American express card and make all your payments on time.
First of all let us understand how a good credit score is built,
Make time to time payments
Every credit card comes with a payment deadline. You need to understand the terms of the card and make your payments on time. This will not only keep your mind at ease but also will help you boost your credit score. If you make your payments on time, you can see a boost of 35% on your score. Before you opt for any financial product, check when you can make all your payments to avoid late charges and additional interest on the balance.
Keep your card accounts open
If one day suddenly, you think of closing all your credit card accounts just because you are tired of it, think twice! Closing such accounts will not only affect your cibil score but will also hamper your score growth. Use your cards wisely and spend only what is necessary. This way you can restrict your limit.
Get rid of bad entries on your report
There are two possibilities here, your report can look bad because of your past late payments or else there could be an error made from the bureau’s end. If you find mistakes from bureau’s end, you can immediately report it to them to amend the mistakes and get your score up. But, on the other hand if your score is bad because of your past late payments, you can contact the lender and explain them why did that happen and you will not do it in the future. The lender making amendments on your report will be on the sole discretion of the lender.
Don’t hunt for new finance products at once
Do not get privileged if a credit card telesales you and offers you a card. It’s their job and they get incentives out of it. But on the other hand, if you give them permission to process your card there is a hard inquiry made on your report which stays on for at least 7 years. This will then result to multiple inquires on your report and your credit score will go for a toss.
Owning a premium card does not mean it will accelerate your cibil rating process. The method used by bureaus remains the same even if you have the basic credit card of all. Just stick to the basics, pay your dues from time to time and you will see a spike on your credit report.

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.

Friday, 20 April 2018

Gold Loan Interest Rates Depends On Credit Score?

Ankita is a housewife who plans to start her own business and for that she is planning on taking a loan. She is faced with a hurdle; she has no credit history since she has no credit cards or loans in her name. She was disappointed but her banker friend suggested that she consider taking a Gold Loan. Ankita heeded to the advice offered to her friend and was able to kick start her business venture.
What are Gold Loans?
A gold loan is a loan that is sanctioned against gold as collateral. Thus the applicant can pledge jewelry; ornaments or gold in any other form and the lender will sanction a loan based on the value of the loan offered as collateral and also the loan to value ratio which has been fixed by the RBI and at 75%. Thus the applicant can get a loan up to 75% of the gold that is given as collateral. Getting a gold loan is fairly easy as documentation for it is simple; disbursal is fairly fast; some lenders may lay down minimum income criteria while others may not. Thus these loans are often simple and quick to procure when compared to other loans and can offer financial assistance in the time of a crisis.
Gold loans and Credit Score: How are they Related?
Often people with no credit history or low credit score prefer to seek a gold loan. Many lenders may agree to sanction a loan to the applicant without seeking their credit report or even if they have a low CIBIL Score.  The reason for this is that liquidating gold (in case the borrower defaults) is much simpler that trying to sell a car or a home in case of a car loan default or home loan default by the borrower. Thus the lender is assured of the safety of their funds and may be willing to lend to those who have no credit score or a low score too!
Often gold loan thus is a choice for those without a credit history or no credit history. Generally interest on loans (mostly) are affected by the credit history, lenders may be willing to offer loans at lower rates to those who have a good credit score as the lender in this case assumes a lower risk and for those who have a low score the interest rates on loans may go up but this is not the case when it comes to gold loans. As stated above most lenders do not even seek the credit report when an applicant applies for a gold loan, which is usually the first step in most other loans. If the lender finds the credit health of the applicant satisfactory then only they go to the next step when scrutinizing applications for home, auto, personal loans and so on.
Interest on gold loans is of course dependent on the market conditions, the lender’s policy and one more factor, the LTV ratio. Though the RBI fixes the upper limit for the LTV ratio lenders can choose to offer loans at a lower ratio too. So when the loan is offered at a lower ratio then the lender may be willing to extend the loan at a lower interest rate as compared to when the LTV ratio is higher. So if the value of the gold offered is Rs. 50,000 then loan value can go up to Rs. 37,500 but if the applicant needs or agrees for a loans of a lower amount, say Rs. 30,000 the lender may be willing to offer a loan at concessional rate. Thus unlike in the case of other loans, gold loan rates or their sanction is not dependent on the credit score but the LTV ratio may impact the interest rate.

Wednesday, 11 April 2018

On What All Properties Can I Get Lap?

LAP or Loan Against Property as the name suggests is a loan sanctioned against property and this makes it a secured loan. While most banks offer LAP, the eligibility conditions and also the product features may vary from one to another. LAPs can often be used as an alternative to personal loan when in need of funds as the interest rates for these loans is much lower than that of personal loan. Approval is quick and documentation required is minimal; however the crucial question that arises is what are the properties against which these loans can be secured?

On What Properties Can You Get LAP?
To put it broadly a loan against property is available for a self occupied residential properties, any plot of land or a commercial property. An important requirement for this loan requires that the applicant (owners) have full control over the property without any restrictions what so ever. In case of joint ownership, all owners have to be co-applicants for the loan which means all owners have to be on board for the idea of taking a loan against that said property.

Most lenders do mention the property type against which they might be willing to give a loan. As per the SBI website the loan is available for “non-encumbered, non-agricultural and SERFAESI compliant residential house/flat in the name of borrowers/guarantors. However, loan under this scheme will not be made available on mortgage of an open plot, commercial/industrial property and under construction property”.  This is a fairly broad definition which reveals that SBI does not offer loans against agricultural land or open loans or under construction property.

Both ICICI and HDFC bank list that the loan can be secured for residential as well as commercial property owned by the applicant. Getting a loan against vacant land can be a challenge as most lenders may not see it as an economically viable option in case of default. A vacant land will not be easy to rent or dispose of in case it is required by the bank to do so. Small or local lenders may agree to do so but it will depend on each lender’s policy. However most lenders would be willing to offer a construction loan if the applicant requires that to build a house on a piece of land owned by him. Eligibility criterion for these (construction) loans, although similar to home loan eligibility criterion varies from lender to lender.
Lender may differ on their policies regarding what is acceptable to them as collateral for a LAP  thus one should check with the individual lender or visit their website before looking at applying for the loan.
Loan Against Property Eligibility Criteria:
Like any loan there are eligibility conditions for getting a LAP sanctioned. Though these may vary from one lender to another but some basic conditions remain same.  So if you want a LAP you should fulfill the following conditions (generally), rest can be checked at the lender’s website.
Ø  Salaried employees who are permanent employees and professionals like architects, doctors, CAs, engineers etc can apply for it.
Ø  Self employed people can also apply for these loans as long as they pay regular income tax.
Ø  A good credit rating is also a must for the loan to be sanctioned, low CIBIL score could be an impediment in getting the loan sanctioned.
Ø  Some lenders may have minimum income eligibility criteria while others may assess the income, current debt and expenditure levels to assess if the borrower will be able to repay the dues.
Ø  Value of property is an important criterion when deciding about LAP.
If you have a property and you are in need of some quick funds then borrowing against it an option worth exploring however one should avoid taking a loan against a property that the live in or the one which is occupied by their family. If this is the only property owned then other options of borrowing should be explored.

Thursday, 5 April 2018

How Much Will A 5 Lakh Car Loan Actually Cost U?

Automobile sales have seen a rapid growth in the past decade. A personal car is the first thing that the young generation of today want as soon as they land a job. Most of the car buyers finance their purchase through a bank loan. While entering into an agreement what most people are concerned about is the monthly instalment. But EMI is not the only thing one should be bothered about. One should take into account the total cost of financing a car and compare it across multiple banks before taking a final decision. Find out the rate of interest charged by the bank and their processing charges. Also determine whether you can arrange for the down payment, since most banks give 85-90% of the car value. If you think you can prepay the loan, find out if the bank levies any prepayment charges. A dealer may offer you ad-ons like extended warranty, insurance, theft protection etc. which may further increase the amount that you need to borrow.
Your EMI amount goes towards the payment of 2 components- Principal and Interest. Principal is the actual loan amount that you borrow i.e the car value minus the down payment. Interest is the amount that the lender charges for taking the risk of lending you money. In the initial part of the tenure, the interest component forms a major portion of the EMI.
The cost of the loan depends majorly on the interest rate. This APR varies from individual to individual depending on several factors like CIBIL score, total tenure and whether the vehicle is old or new. A high CIBIL score and shorter loan tenure will help you get better interest rates. The interest rate on loans for new cars is usually less than those for old cars. If you have a low CIBIL score, your APR on the car loan would be higher and that would translate into a higher EMI amount.
You can use the auto loan calculators available online to estimate your monthly payments that you need to pay towards repayment of the car loan. You will need to provide information relating to the loan amount, interest rate, tenure, processing fee etc. and the calculator will give you a breakup of the payments. You can key in different loan tenures to see how it affects the EMI. Usually a longer tern will lower your monthly outgo, but it will increase the total cost of your loan.
Let’s take an example of an HDFC car loan. The factors that affect the HDFC car loan eligibility include income level, tenure, CIBIL score and prior relationship with the bank. Your CIBIL score plays a crucial role as it helps in determining the HDFC Car loan interest rate.  A high score is an indication of low risk for the banks and helps in getting discounted rates. HDFC offers upto 100% of car loan value for a tenure ranging between 1 to 7 years. One can use the EMI calculator to get an estimate of the EMI. Say the amount is Rs 5 lakh, and the HDFC Car loan interest rate is 9.25% for a new car. One can fill in these details and find out the EMI amount for different tenures.

2 years
3 years
5 years
7 years
EMI on 5 lakhs @9.25%
Rs 22,900
Rs 15,958
Rs 10,440
Rs 8,108
Total amount you pay to the bank
Rs 5,49,600
Rs 5,74,488
Rs 6,26,400
Rs 6,81,072
Total interest payment
Rs 49,600
Rs 74,488
Rs 1,26,400
Rs 1,81,072

The EMI amount is more if you choose a shorter duration. As the loan tenure increases the EMI amount decreases. But with a longer tenure you end up paying a higher interest amount. For a 5 lakh loan you pay Rs 49,600 as interest over a span of 2 years. But with a loan tenure of 7 years the total interest cost comes to Rs 1,81,072. So choose a loan tenure wisely. You will need to strike a balance between EMI affordability and interest expenses.