Car loan vs. personal loan: Which is the ideal solution to purchase your dream car?

Need a loan to purchase your dream car? If yes, then you can either opt for a car loan or a personal loan. These are the two most common loans available in the market today. The entire process of obtaining a loan is very easy once you meet the requirements of the lender.

Now that you can opt for a personal loan as well as a car loan for purchasing a car. It is important to differentiate between the two, and then make an informed decision.

Personal loan

A personal loan allows you to borrow funds from an institution for various purposes. A personal loan is an unsecured loan which means it has high interest rates. Unlike a car loan in India, a personal loan is not restricted to motor vehicles. You can also use a personal loan for renovating your home, debt consolidation or taking a holiday.

Car loan

A car loan, as the name suggests, can only be availed to purchase a car. A car loan is secured, where the vehicle serves as the collateral. When you apply for a car loan, you should do a thorough research of all the interest rates and pick the best rate as per your requirement.

Which is better?

A car loan outscores a personal loan on a number of factors. From the perspective of interest rates, a car loan being secured, has a lower interest rate. Your credit score is important when you apply for a personal loan, so a bad credit score may act as a deterrent. Personal loans also carry high processing charges.

The credit score and higher interest rates are factors that tilt the scales in favor of the car loan. The car loan is also easier to obtain, as the dealer whom you purchase your car from can set you up. They usually have tie ups with banks or other NBFCs who offer car loans. A car loan may also require you to pay an upfront amount as down payment for the loan. A personal may also have variable interest rates as it is an unsecured loan.

Irrespective of what you pick, it is important that you carry out a thorough research and make an informed decision with respect to which loan would be more suitable.

Why a personal loan EMI calculator is essential for a strategic loan application

Personal loans are a great resource for small expenses that need to be handled in a rush. Personal loans of small amounts such as a few thousand rupees are often available from banks at interest rates as low as 2-6% per annum and can be taken out against small fixed or recurring deposits.

More conventional personal loans of Rs.50, 000 and above are available at 10-12% per annum interest rates. Most people can be eligible to apply for a personal loan as long as they are salaried employees of government or other reputed establishments or can show proof of income.

When you decide a loan scheme, your EMI is determined by several factors such as your interest rate, your loan amount, etc. It is crucial to know your EMI options beforehand and choose a payment plan that is suitable to your needs. If you end up with a payment plan that takes too large of a chunk out of your monthly income, it might disconcert the point of taking out a loan. Which is why, before you take out a loan, you should use an EMI calculator for personal loans to figure out your possible monthly payment plan.

Purpose of an EMI calculator

When you’re planning on taking out any sort of loan, you should have a rough idea of how you are going to be paying it back and how long of a commitment you are willing to undertake in terms of a payment plan. A personal loan calculator will help you ascertain these specifics and let you plan ahead accordingly. It will let you calculate the EMI on different loan schemes that you are considering as well as different loan amounts that you might need to consider, giving you a well-rounded idea about the situation.

A personal loan EMI calculator can make your job much easier by taking into account various factors instead of letting yourself account for them. Often while taking out a loan, people do not take into consideration, factors such as the time before they have to start paying back the loan and the interest it accumulates. This can lead to people getting frustrated over a longer span of EMI payments.
Strategizing beforehand using an EMI calculator can eliminate such hassles and let you take out your personal loans without worry.

Why the best time to opt for a personal loan is now!

Demonetization and Personal loan

The demonetization of the Rs.500 and Rs.1000 currency notes witnessed uproar in the country. Citizens of the whole nation deposited their cash in banks. There were many banks that slashed the deposit rates, which bought down the lending rates as well. At present, prevailing interest rate is at a six year low. With such low rate of interests, your monthly EMI will also tend to come down. As such, this is the perfect time to opt for a personal loan if you need one.

Benefits of a personal loan

There are several advantages of taking a personal loan now:

I) The interest rate being the lowest since the last six years.

II) You will be able to get loans with less than 12% interest rates.

III) There is little documentation required for acquiring a personal loan.

IV) It takes very little time to apply and as such you receive your loan within 72 hours.

V) It is possible for you to avail the additional tax benefits on the personal loan.

VI) The repayment options are flexible, allowing you to repay the loan as per your convenience.

Applying for a personal loan

1) Firstly, you need to check the interest rates that are available. You can look them up online to compare and get the most suited deal for you. At the same time, you can also look up the additional fees and charges that are levied.

2) You have to decide on the loan requirements and select the amount. You can select the amount up to 25 lakhs. You have to repay it in a span of 12 to 60 months.

3) Once you provide your financial details to the bank or NBFC, you will receive a customized offer. If you want, you can ask for a loan offer that is pre-approved.

4) A CIBIL score will measure your ability of repaying the loan. If you score well, there is a possibility that you will get a good deal.

5) You can either apply for the personal loan online or at the bank branch. You only need to submit all the necessary documents and pay a small processing fee. You need to submit your identity proof, address proof, your latest salary slip and form 16 (Income Tax). The amount will reach your account within 72 hours.

It would be wise to take advantage of the current prevailing market scenario and apply for the personal loan. The easy application process is sure to remove your doubts and fears of debt, allowing you to reach your financial goals.

All you need to know about the FCNR account and loan benefits

What is an FCNR account?

An FCNR (Foreign currency Non- Resident account) is a type of deposit account which can be used by NRIs and PIOs. As the name suggests, you can only deposit foreign currency in this type of account. Only certain foreign currencies are eligible for deposit in the FCNR accounts. The currencies that are allowed are the –
1. US dollar
2. Euro
3. British pound
4. Australian dollar
5. Canadian dollar
6. Japanese Yen

The FCNR account eliminates the risk of fluctuations in currency conversion, and earn a fixed rate of interest.

Features of a FCNR account

1. FCNR accounts can be only opened by NRIs and PIOs.
2. A regular interest amount is paid on the deposit.
3. You can only deposit foreign currency in the account.
4. The deposit should have a maturity period between 1 - 5 years.
5. It offers nomination facilities.
6. You can convert your deposits into a different currency against an implied cost.
7. This scheme does not permit recurring deposits schemes.
8. You can avail loan facility against an FCNR account.
9. The interest earned on this account is not taxable in India.

Requirements for opening a FCNR account are

1. A copy of Visa
2. A copy of passport
3. An updated bank statement of the foreign country
In case of a premature withdrawal from a FCNR account, a penalty charge of 1% is levied on the account.

FCNR loan

A FCNR loan is usually issued to corporates as per the guidelines issued by RBI. Corporates sometimes prefer FCNR loans as they have lower interest costs. This also does not require the borrower to go to international market for raising funds.

Advantages of FCNR loan –

1. FCNR loans come with very low interest rates.
2. You can use it to hedge currency exposure risk.
3. FCNR loans are easy to obtain.

Eligibility for an FCNR loan

These loans are generally only provided to well-established businesses that operate as a limited or a private limited company. The company should have a good track record of loan payment i.e. a good credit score. This loan can be availed for purposes like purchase of capital equipment or working capital requirement. Most banks usually have a minimum loan requirement amount of USD 100,000 for a loan application.

Are you aware of these features of the current account after demonetization?

What is a current bank account?

A current bank account is that type of an account in which a bank states no limit on the number of transactions per day. Most banks do not provide an interest on your balance in this account, in fact some charge a certain fee for the services. Account holders do not use this account for investment purposes. Usually such an account benefits a businessmen as it is a flexible account providing no transaction limits thereby assisting the business with supply of liquid cash. It might be a prerequisite in certain banks to hold a minimum quarterly balance which can range between Rs5000 - Rs10, 000.

Demonetization and Current Account scheme

However, adhering to all the norms specified by the bank and providing them with the prescribed documents is all you need to become a current bank account holder in India. On November 8th the Modi government announced the demonetization of Rs.500 and Rs.1000 notes. In an attempt to curb black money off the economy Indians were dumbstruck by this move as the news was not leaked by anyone to the public before the date. The people were coerced into following new rules which were temporary withdrawal and deposit limits. However, burden on businessmen were reduced as the withdrawal and depositing limit was considerably moderated for all current bank accounts. While there was a sudden cash crunch and people throughout the country felt short of currency notes, the government tried to promote the concept of a digital economy.

Within a week of post-demonetization, the government in an attempt to help the businessmen in the country raised the withdrawal limit to Rs.50, 000 a week. However, it remained Rs.10, 000 a week for savings bank account holders, which was later increased to Rs.13, 500. Between the 10th of November and the 31st of December all cash deposits in a current account of up to Rs.2, 50,000 were not the subject of any questioning from the Indian Income Tax Department, however, any amount above that was. Shaktikanta Das, the secretary of economic affairs, informed the press that the RBI had enough cash and a plan to distribute the notes throughout the country within 3 months. The government would make use of this period to detect unusual activity and at the same time try to help the public, either by easing the cash rules (spending old notes and increasing withdrawal and depositing limits) or by improving flexibility and scope of digital transactions.

How can you benefit from high interest rate savings account?

Why do you need to dishoard liquid cash?

We all must know the dangers of keeping money idle. It may evaporate quickly owing to surging inflation or on days when you feel spendthrift. You can instead invest the idle money in a bank account where you would earn interest on it. Banks offer you various investing schemes like a savings account, a fixed deposit and a recurring deposit to keep your money.
Features of a savings account

A savings account is generally opened by people who have a fixed income. The aim of this scheme is to inculcate a habit of saving money. Some banks even allow you to open a savings account with a minimal deposit of Rs100 with current savings interest rates in India varying from 4% to 6%.

A savings account can be divided into a regular savings account and a high interest savings account. A high interest rate savings account is a variation of the regular savings account that banks offer. Quite naturally, a high interest account earns a higher rate of interest than a regular savings account, in return of which the bank may ask you for a large minimum opening deposit. You may also be charged if your balance falls below the threshold amount required by the bank. The account may also be subject to other conditions depending upon the bank.

The recent launch of differentiated banks in India, has seen interest rates on saving accounts experience aggressive pricing. The newly formed payment banks that only offer savings account schemes offer high interest rates in the range of 6% - 7%.
Currently, the fixed deposit rates are seeing a decline, thus making high interest rate savings schemes more attractive.

Advantages of having a savings account

1. Encourages a habit of saving - For people earning fixed salaries, it encourages a habit of saving money.

2. Earning interest- You earn interest on the amount you have deposited.

3. Making payments - You can make payments or transfer money from your savings account via cheques or online banking.

4. Liquidity- Unlike fixed deposits, savings account schemes ensures that you can access your funds whenever you need.

5. Proof of identity - The savings account passbook gives you a proof of identity.

6. Low risk instrument- Savings account are very low risk instruments, where you do not have to worry about losing your money.

What are the best ways to make an international money transfer?

Understanding international money transfers

The demand for international money transfer services seems to have been on the rise in the recent past. The absence of a universal currency is the reason why sending money across countries is so necessary. Fortunately, there are many financial entities providing such services. Previously, there were many costs associated with this service. Agencies and banks deducted hefty amounts by deceiving customers under the label of “hidden costs”. The frustration of many clients led to the arrival of new institutions providing such services. Consequently, the existing service providers had to improve their services because the new ones were established to curb the inefficiencies of the old.

Means of undertaking international money transfers

Today you have numerous options of transferring your money outside your country. Not only established banks but also can you resort to other means as well. These include:

Agencies assisting money transfer - Bodies such as Western Union, have been in this market for a while. Their services can be relied upon as almost each country in the world has opened its doors to their services. You can transfer the money from an international bank account, where the recipient can encash it without any hassle. The only thing you need to keep in mind is considering the fee they charge and their currency conversion rate. Most of these agencies provide a diurnal rate to clients which have to be adhered to and the transfer happens over the course of a week or maximum two. Limits to such an affair depends on the kind of service you opt for and the country you are sending the money to. Agencies such as Fedex have also been a part of this picture for a while. They usually deliver faster than Western Union. India Post has also started the service in recent times.

Wire Transfer - the conventional method of transferring funds globally. Allot the amount to be transferred and mention the recipient's account details. The bank charges a fee for this service and transfers the funds within a few days, varying from country to country, amount being transferred and the banks involved. The surcharges and hidden costs via this method is what frustrated people and called for new means to transfer money. However, banks have made it convenient by making this procedure more transparent, providing customers with maximum value of their money and other secure features like tracking the funds.

Digital wallets - owning a digital wallet is the new trend in money transferring. It is as easy as having an account on a mobile application and linking it with your bank account or any other entity that provides you with monetary balance. You can use your balance and transfer funds to another person’s digital wallet. There are many digital wallet service providers and they have definitely eased the concept of transferring money, since users can now afford to split restaurant bills to sharing cabs by conveniently transferring money online.

As world economies move towards a digital age, online money transfer is the very basic intricacy that needs to be addressed efficiently. Evaluating the improvement in the service over the past decade or so can lead to the conclusion that we are progressing towards achieving efficient and transparent means of transferring money. This would allow us to make use of the value of money we own and avoid hefty payments to avail such services, which in today’s world is a requirement for most.