Wednesday, 31 January 2018

Can I Get A Personal Loan Of Rs 50000?

Are you falling short of funds to meet your current financial needs? A personal loan is the best solution for your immediate cash requirements. The funds can be used for any purpose be it travelling, medical emergency, education, wedding, home renovation etc. These loans are mostly unsecured and do not require you to provide any collateral. But to ensure the safety of the investments banks usually, go through the applicant’s credit report and check their score. They approve the loans of only those applicants whose CIBIL score is more than their set benchmark.
The eligibility criteria for personal loan varies from bank to bank, but in most cases, it includes your age, income, occupation and capacity to repay your loan. Whether you are a salaried individual or self-employed you must have a regular income source along with a good credit history in order to secure a loan. The loan tenure usually ranges between 1-5 years. The maximum loan amount that one is eligible for is based on the income; such that the EMI should not go beyond 50% of your monthly salary. Most banks also set a minimum loan amount that one can borrow. For most banks, this ranges between 1 lakh to 1.5 lakhs.
So it will be difficult to find a bank who offers a personal loan of Rs 50,000 or less. A good alternate option is to ask your friends and family to help you out. If you are in good terms with them, they would lend you such small amounts if they find your problem genuine. Such funds are usually interest free.
You can also contact small private lenders who offer loans of a lesser value. Private lenders are non-institutional lenders who lend money to others. Apart from the fact that you can approach them for smaller loan amounts, there are several other benefits of borrowing from them.
1.      With banks and financial institutions, you cannot dream of getting a loan without a credit report check. They have very strict lending practices. If your credit score doesn’t match the bank’s requirement, or if you do not have a past credit history your application will most likely be rejected. Private lenders do not have very stringent eligibility criteria. They usually do not base their decisions strictly on credit score. They consider many other factors for lending.
2.      Banks usually have a time consuming application process. With private lenders, you can be assured of quick disbursal of funds. When you are in need of funds in case of an emergency, contacting private lenders will be a quicker option. If you meet the requirements, you can get cash in a day.
3.      With private lenders, less paper work is required than the banks.
4.      There are usually no prepayment or processing charges.

But there is a flipside too.
1.      Private lenders often charge a high personal loan interest rate. There is no regulatory authority that monitors their activity. So they make their own rules. The rate of interest may be as high as 40% depending on the tenure. A personal loan from these lenders would turn out to be a costlier option than the banks.
2.      Direct lenders want a faster return on their investment. Hence the repayment tenure is not very long. They expect the money back within weeks or months. This results in higher monthly payments.
3.      High personal loan interest rates usually make it difficult for the borrower to repay the amount as agreed. Failure to repay the amount within the agreed tenure, may result in taking over of your property or other valuable belongings like jewellery; even unethically.
4.      Many illegal lenders create forged documents to transfer the borrower’s property in their own name when they fail to repay the amount.

Hence though private lenders can be approached for smaller loan amounts one must exercise caution while dealing with them. One must carefully consider the risks associated with borrowing from these lenders before proceeding. One must deal only with licenced lenders and borrow money from them only if one is sure of one’s ability to repay the amount back.

Thursday, 25 January 2018

I Always Pay My Full Credit Card Bills: Will That Help?

With the growth in the Indian loan market, people are waking up to the importance of maintaining a good CIBIL score. They are working on their credit habits to ensure that they have a good CIBIL rating. After all, a good credit score not only helps in getting loan approvals, it also helps in bargaining for lower interest rates.
While everyone knows that paying loan instalments and credit card bills on time is a must if you wish to maintain a good CIBIL score. There is a lot of confusion on the correct usage of credit cards that will bring positive results.
One such confusion relates to the amount paid against the credit card bill. Making the minimum payment will take care of the “Payment history”; factor that affects the credit score. Your payments will be recorded as “on time”. But should one carry some balance on the credit card in order to demonstrate that one can handle credit responsibly or should one pay the entire bill amount? Well, it is a myth that one should carry some balance to yield positive results for your score. Carrying a balance will not only add to your interest costs but also increase your utilization ratio.
Credit utilization ratio has a major influence on one’s credit score. The credit scoring models look at the balance on your revolving accounts and compare them with your credit limit. The percentage of available credit that you use should not go beyond 30%, if you are aiming for an excellent CIBIL score. A high utilization signifies over dependence on credit. Paying off the entire balance in full each month frees up your limit and helps in keeping the utilization level low. In fact it is a very good practice to charge small monthly expenses on the card each month and pay off the entire balance. This way you avoid paying interest, establish a strong payment history and demonstrate that you can manage credit card debts well. It leaves your credit limit open for new purchases.
So, by now you must have realized that paying the credit card balance in full each month will help your credit score, but is that all you need to do to ensure a good rating. Well, there is a catch. The credit utilization levels will remain low in the credit report only if the issuer reports the balance to the bureau after you have made the payment. Many issuers report the balance at the end of the billing cycle when the statement is generated and before the payment is made.
In such a case if you have spent Rs 80,000 on your card which has a limit of Rs 1 lakh, then your utilization levels on the credit report will show 80% even if you pay the amount in full at the end of the billing cycle. So it’s not just a high outstanding balance that you carry over on your card month after month that makes you a risky borrower, high credit card usage can also be responsible for a low CIBIL score.
So is there a way to get around this situation? Yes, if you heavily depend on credit cards for all your purchases and payments, make it a habit to pay twice a month. This way the balance reported by the issuer to the bureau will be less, and your credit utilization ratio will be low too. One thing to take care here is not to pay the entire balance before the end of the billing cycle. Because then your utilization will be 0% which will not be good for your score either. You need to have some balance reported on your statement to demonstrate that you can use credit effectively.
So pay the credit card balance in full each month, but if you utilize more than 30% of your available credit, then consider making the payment every 15 days to keep utilization levels low.

Friday, 19 January 2018

Which Gold Loan Is Best?

Gold loans are a quick fix solution when you are in need of money. Like personal loan they can come in handy in various situations and can solve the cash crunch. Most NBFCs and commercial banks offer loan against gold so if you are looking at seeking money against gold then you will have multiple options but which is the best option and how do you choose the lender.
Gold Loan Basics:
Loan can be sought against gold jewelry and coins too and one could choose to borrow from a NBFC or a commercial bank. The bank gives a proportion of the market value of the gold as loan; this is known as the loan to value ratio.
Earlier there was no uniformity in the LTV ratio for a gold loan but RBI has now laid down norms for this. Thus all lenders can now sanction loan up to 75% of the market value of the gold. This levels the playing field for all borrowers and now the borrower will not choose a lender based on this factor but will focus on other factors when deciding where to take a gold loan from.
Choosing the Right Gold Scheme:
As we are well aware that the same product is offered by different lenders, it is important that we choose the right lender as per our requirements. Thus it is not so much as what the lender offers but what meets our requirements decides who to take the loan from. The factors that impact the decision making are:
Ø  Interest Rate: Whenever you take a loan, interest rate is a crucial factor for decision making. Nobody wants to pay high interest, but this is not the sole factor on which decisions will be based. Thus if other requirements are met then you would like to choose the lender that offers the lowest interest.
Ø  Processing Fee: Lenders charge processing fee for all loans, thus is in an important cost that must be considered when making a decision. Some lenders may have a flat processing fee while others may charge it as a percentage of the loan amount. Mannapuram finance charges the lowest processing fee but that factor will not make it the best gold lender.
Ø  Prepayment Charges: Sometimes the borrower may want to repay a loan earlier than the tenure gets over; they may be dissuaded from doing so due to a prepayment charge that may be levied by some lenders. Again this may vary from nil to a percentage of the loan amount.
Ø  Loan Tenure: Lenders may sanction loans for time duration ranging from a day to years. If you want a loan for a very short duration like a few days you may want to consider borrowing from Muthoot Finance or Mannapuram Finance while if you want a longer duration loan then SBI or HDFC could be a good choice.
Below is a table that gives a comparison between a few gold loan providers:

Interest Rate
Processing Fee
Prepayment Charges
Loan Tenure
Muthoot Finance
12% to 24%
0.25% to 1% of loan amt
1 day to 15 months.
Mannapuram Finance
14% to 26%
Rs. 10 (to be paid at time of settlement)
1 day to 3 months.
SBI Gold Loan
0.51 to 1.01% of the loan amount subject to a maximum of Rs. 1022.
3 to 30 months.
10.50% to 15.95%
0.25% to 1.00% of loan amount
Range from Nil to 1%
6 to 48 months.
10.50% to 16.50%
1% of the sanctioned loan amount
Range from Nil to 1%
6 to 12 months.

So as we said earlier the best gold loan will depend on what you require. Other factors that must be taken into consideration include the maximum and minimum amount available as loan and also the documentary requirements of the lender. Gold loans unlike other loans do not require any credit score requirement. Thus you can be saved from the compulsion of taking a bad credit personal loan for an exigency and you can unlock the power of your gold to help you in need. 

Thursday, 11 January 2018

8 Ways to rebuild the score

Imagine you think of buying a car and you decide to take a car loan. You go to the car dealership choose the model you want to buy, complete all the formalities which is required to purchase a car and submit all your documents for a loan. The next day you get a call from your dealer stating the loan is been denied due to a low credit score. Suddenly every financial mistake you have done in the past flashes in front of your eyes and you sit devastated thinking, why didn’t you take necessary steps to improve cibil score when you had the opportunity.
Why is a credit score so important? How can you improve your cibil score? These are the common question which arises, whenever you are denied a loan.
A cibil score is a compilation of your payment patterns associated with your ongoing loans and credit cards. A lender, before granting you any type of a loan will consider your credit score to determine the loan amount, interest rates and other factors associated with it. There are different types of loans associated with different needs and a loan can help you in many ways. Similarly, a good cibil score can help you score a loan in no time.
Many of us check our credit report only if we are applying for a loan. It later comes into our notice that the cibil score is bad and we need to rebuild it before applying for a loan.
Here are some steps to take to rebuild your credit :
Pay all Bills on Time
This one the most basic, from which you can improve your credit score gradually. Just make sure you are making all your payments on time so that your score rises gradually. It’s a lengthy process but your credit score will stay healthy.
Pay off any missed payments.
If by chance you have missed on any payment, not only you will land up on a loan defaulter list but also your score will get hampered every time the lender sends payment report to the bureau. Consult your lender on the missed payment and try paying it off, this way you can look after you cibil score. 
Put Credit Cards at ease
Majority of people who are suffering due to a bad credit report is because of credit cards. Make sure you do not overspend your limit and make time to time payments to the credit card lender. One default payment can hamper your credit score very deep, as this is one type of unsecured loan.
Take a small consumer durable loan
There are a lot of options available these days in terms of consumer loan. Take a small consumer loan and pay its EMIs on time, this will help you improve your cibil score.
Keep Good Accounts Open
If you have any unused credit cards, or an open loan account which you are not using for time being, make sure it stays open. Closing such accounts can result to a dip in your cibil score. Make sure to do small transactions on a frequent basis to keep a healthy score.
Keep Separate Accounts
It is suggested to keep separate accounts from your spouse or parents as a single default payment can also lead to your score destruction.
Stop the Inquiries
It is okay to check you cibil scores, just to understand how your scores are adding up. Do not make this a habit as this can lead to a lot of inquiries made on your account, which will then lead to a bad cibil score.
Fix errors on your credit report
There are a lot of times, where the credit bureaus make mistakes while making the entries. If you encounter such thing on your report, you can raise a dispute with the bureau and make sure to correct it.

There are many ways, you can fix your credit score but it takes a lot of time and determination to do it. if you start today, you will be able to fix your score within no time and in financial emergencies, you can get a quick loan with ease. After all “easy” should be a life’s definition. 

Tuesday, 2 January 2018

Can the Approval of a Credit Card Improve CIBIL Score?

A credit card can be used for a lot of things. From making utility bill payments to booking plane tickets, and from purchasing expensive goods on EMI basis to meeting urgent money requirements, it can be helpful in many ways. However, there is another thing that it can be used for, which is credit score improvement.
Credit Card and CIBIL Score
A lot of times, when people apply for a personal loan, education loan, etc. they come to know that they don’t have a credit score at all. This usually happens because you need to have a history of credit repayment, which again doesn’t exist because it’s your first loan application ever. So, it’s a textbook catch 22 situation.
Banks are often reluctant to approve a loan when the applicant has no credit score. This is where credit cards can be an ideal solution as they can be easily obtained even when you don’t have a credit report.
So, you can use a credit card for creating a good repayment history and a good score easily.
Even If you have a low CIBIL score, a credit card can help you bring it to a good level.
Is Credit Card a Sure-shot Method for Score Improvement?
A credit card can be of great help when you need to improve your score, but is it a foolproof solution? Not really.
A card will get the desired results only when used properly. In fact, if you are not careful, it can actually damage your score further.
The following are some of the most important things to keep in mind when using credit cards if you want to avoid credit score damage and seek improvement:
1. Repayment of Bills
Give utmost attention to how you pay your card bills. This is because the repayment history alone will be one of the most important contributing factors to your score.
So, if you will pay your bills on time, then you can easily observe some improvement. On the other hand, if you miss even a single payment, then it can lead to adverse results.
Repayment history is also important because it shows the banks how good you are with money management and whether you are responsible or not.
2. Credit Utilization Ratio
Many people think that the more frequently they use their credit cards, the faster they can improve CIBIL score. This is not true and may, in fact, do more harm than good.
In every kind of credit score calculation, the credit utilization ratio, which is the ratio of your card limit to the amount of your average monthly spending, plays a big role.
If it’s higher than a certain limit, then it can lead to a poor score. So, you may want to use your card for a limited number of expenses only.
3. Credit Card Debt
Did you know that if you pay only minimum payments against your card bills, then the balance gets transferred to the next month and is collected as debt?
Minimum payments should only be opted for when you are simply not able to pay the full bill. This is because although these save you from fines and other charges, they lead to debt accumulation which is harmful to your credit score.
4. Age of Account
When you start using a card, at one point or another you are likely to get another card option that offers more benefits.
While may feel inclined to replace your old card with the new one, that’s actually where you could go wrong.
Your oldest accounts have a huge impact on your score. This is because they contribute to your credit history, which is directly proportional to your score. So, you must never close the old accounts.
If you really want a new card, then you can get it but without closing the old one. At the same time, you might want to recalculate the credit utilization ratio.
Credit cards can be quite useful when you want to build a credit score. However, it’s important to be cautious still.