What is consumer durable loan?

Loans may be the best way of coming out of a financial pickle. Home loans and education loans can help with the purchase of your dream home and pursuing higher education, respectively. However, a new form of loan has become popular in the last few years, which is known as consumer durable loan. These loans are taken in order to buy household products and consumer items which can help improve the quality of life.

Here is a look at all you need to know about a consumer durable loan and what you can use it for.

1. What can you take the loan for?
The loan is mainly taken to finance electronics used in most households. For instance, the loan money can be used to purchase a refrigerator, washing machine, air conditioner, microwave oven, laptop, desktop, smartphone, TV and a cooking range. In case of desktops and laptops, the lender may set a limit for the amount of money sanctioned.

2. What is the maximum sum that you can borrow?
There is no set limit for the amount of money that you can borrow. Usually, a consumer durable loan may be anywhere between a few thousands and Lakhs, depending on the product that you are looking to purchase. Before taking the loan, you would need to disclose the reason for the loan to the money lender.

 3. Tenure for repayment of the loan
For a consumer loan service, there can be a varied tenure for repayment of the borrowed money along with the interest on the sum. Usually, the tenure may range from anywhere between 8 months and 3 years. The time allowed for the repayment varies from one lender to the next. It may also depend on the amount of money borrowed.

4. Interest charged for the loan
The interest rate charged on a consumer loan service also varies from one lender to the next. However, in India, it is generally around 15 to 22 percent. The rate depends on whether you are a salaried individual or a self-employed person. The rate is always higher for self-employed people, when compared to salaried individuals.

5. Eligibility criteria for the loan
Consumer durable loan is only available to people aged between 21 and 60. Apart from a valid identity proof, loan applicants will also need to provide a proof of income, so that the lender can ensure that he/she is capable of paying back the borrowed money along with the interest.

RTGS Transfer: Factors you need to know

Real Time Gross Settlement or RTGS is a form of electronic money transfer where the money is transacted in real time. It is often considered a better option than other similar forms of payment such as NEFT and IMPS. Here are some of the factors of RTGS money transfer that you should be aware of.

1. Minimum and maximum value of transfer
RTGS transfer is used in case of large transactions. This is because, the mode can only be used in case of transferring more than Rs. 2 Lakh at a time. However, the maximum limit of transfer at once is set at Rs. 10 Lakh. So, if you want to transfer money within this range, ensure you choose the RTGS method.

2. Type of settlement
The money is transferred on a one-on-one basis which is always convenient. In NEFT method, the payment occurs in batches, which means that there is a delay when it comes to the transfer. Furthermore, the settlement occurs immediately in case of RTGS payment and not hourly, as in the case of NEFT transfers.

3. Timing for RTGS  
RTGS transfer is not available at all times. For instance, during weekdays the available time for RTGS payment is from 8:00 am till 4:00 pm. On Saturday, the timing is from 9:00 am to 4:30 pm. However, the same form of transfer is not available on Sundays and public holidays. It is important for you to know the timings if you want to conduct RTGS transactions.

4. Cost of RTGS transactions
The fee for RTGS transaction depends on the amount that is being transferred. If the amount is between Rs 2 Lakhs and Rs. 5 Lakhs, the transaction cost will be Rs. 25. If the amount is greater than Rs. 5 Lakh, the transaction cost is Rs. 50. Therefore, the cost for RTGS is quite reasonable and easy to afford.

5. Online and offline transaction
The most convenient factor for an RTGS transfer is that it can be conducted both online and offline. So, you can simply visit the bank’s website or open the bank's app to initiate a transaction. From there you can easily conduct the transfer by providing the necessary details of the beneficiary’s account. This will help you save money and avoid any hassle that may crop up in the offline process.

Now that you know all the basic but important details concerning RTGS transfers, keep them in mind to initiate and conduct such a transaction smoothly.

NRI Accounts 101: 5 money managing tips you need to be aware of

People planning to take up a job abroad or moving to a different country for some other reason will need to take some steps in order to manage their finances in a foreign country. These steps will help in making the transition smoother, while also ensuring that the person does not lose any of the savings. Here are the 5 money management tips that the NRIs can follow to handle their finances.

1. Convert your savings account to NRE/NRO accounts
India does not allow non-residents to maintain a standard savings account. For such people, NRE and NRO accounts are available, which act as savings accounts. You can convert foreign currencies into INR and save them into the accounts. NRE accounts are non-taxable; the interest earned on your savings in India will not be liable for TDS deductions. However, government taxes such as income tax, gift tax, wealth tax and others are applicable to the interest earned on NRO accounts. 

2. Invest through FCNR accounts
An FCNR account is a fixed deposit account specially for NRIs. It is a safer option for people looking to invest in India without having to face the risk of volatility in the market. This will not only help you maintain your finances but may also allow you to grow your wealth.

3. Clearing outstanding loans
Before leaving the country, you need to clear off any loan that you may have taken. A good way of doing so is by taking a loan from the foreign country, if the interest rates there are lower than that in India. Use the money from this second loan to clear off the debt from the first one. In this manner, you will have to pay off a much lower debt at the end of the day.

4. Understand the way that taxes work
Maintaining and remitting money from India to a foreign nation can result in major taxation. For instance, maintaining an NRO savings account means that the interest you earn on the savings will have tax deductions. On the other hand, maintaining an NRE savings account would result in tax-free interest in India. However, apart from the taxation in India’s NRI bank accounts, your money may even be eligible for tax deductions in the country where you currently reside. So, make sure you know all pertinent details about taxes and then go ahead with the option that aligns with your needs and goals.  

5. Determine how to proceed
The last thing that you need to consider is whether you want to settle abroad forever or want to return to India sometime in the future. If you plan on returning, you should extensively invest in the Indian market through NRI accounts. This will leave you with a secure future when you do come back to the nation.

There are a number of nri accounts that will allow you to carry on with all your financial requirements in India even after you have moved to a different country. All the accounts have different features that you must go through carefully and opt for the one that suits your financial requirements the best.

Reasons why you need to invest in an FCNR account when earning abroad?

The FCNR accounts or Foreign Currency Non-Resident accounts are fixed deposit accounts for non-residential Indians (NRIs). Such an account is useful if an NRI is looking to invest money in India while limiting the risk of market volatility at the same time.

Here is a look at some of the features of the FCNR account, which is a great tool for an NRI investing in India.

1. Deposits can be made in any currency
If you are an NRI, it means that most of your income will be in the official currency of the country you are residing in. The FCNR account allows you to invest in a term plan in India with any foreign currency, without having to convert your funds into INR. This is why the FCNR is also known as a foreign currency account.

This further reduces your risk of being susceptible to
 market volatility and the rise and fall of the Indian currency with regards to other denominations.

2. Flexible term for investment
With any investment, the tenure or term is one of the most important factors, which determine the overall return. For FCNR account, you are eligible to invest for as little as a single year. You can also decide to invest for a maximum of five years, which will likely increase your overall return. Moreover, only 1 percent of the interest will be penalized if such an account is closed prematurely.

3. No taxation on the interest
The interest garnered through an FCNR account is not taxable in India. This is a major advantage that will help you maximize the return on investment. However, taxation may occur on the interest in the country of your residence. It is better if you do a thorough research regarding the taxes before you decide to invest.

4. Freely repatriable fund
If you decide to invest in a FCNR account, you would be able to repatriate the sum from your Indian account to your overseas bank account, without any restriction or limitation. Furthermore, there is no charge for such a remittance.

5. FCNR accounts can be used to make local payments
The funds that you earn through an FCNR account can be used to make any payment locally in India. This is useful if you need to make transactions in India, but do not have either an NRE or an NRO savings account.

Thus, FCNR accounts are good Indian investment vehicles for NRIs. Consider all the advantages that an FCNR account poses and proceed accordingly.

What are the pros and cons of telegraphic transfers?

Telegraphic transfer is a method of transferring money from one country to another. This service is offered by most international banks and is the simplest way to remit money from a foreign nation to India. The denomination of the fund does not pose a problem and all currencies of the world are eligible for telegraphic transfers. This method is also known as Telex transfer or TT and wire transfer.

How is money transferred using TT?

The funds transferred are not in the form of literal paper money, but as digital money. This digital form of the fund is transferred from one bank to the credit union and subsequently is sent out to the beneficiary bank account. This type of transaction occurs using the SWIFT or Fedwire system.

In order to initiate a wire transfer, you would need to communicate the same to your bank. You would also need to provide the details of the beneficiary’s account. The entire process of money  wire transfer can be conducted offline by filling up a form at the bank. However, some banks may also offer online options for conducting such a transfer.

In order to receive money via telegraphic transfer, you would need to provide your bank details to the money sender. You should also ask your bank about incoming wire transfers; the transaction usually takes a couple of days to be completed.

Advantages of telegraphic transfer

Money wire transfer is generally the best solution in case of emergency remittance of money. Since the transaction occurs via the banks, you have to pay a very limited amount of money for the transfer itself.
Furthermore, remittance through an agency or outside business is always a risky affair. The company that you choose may scam you out of the money and you would have no way of getting it back. A telegraphic transfer involves two banks, which means you can rest easy knowing that you are not about to be duped.

Disadvantages of telegraphic transfer

The telegraphic transfer is a time-consuming process, where it may take anywhere between 2-3 days for the money to reach the beneficiary’s account. This can be a problematic feature and can be considered a con by a person in need of emergency wire transfers.
Since, the transfer occurs from one country to another, the processing can take even longer due to different time zones, holidays and weekends.
Like every other thing in life, telegraphic transfers have their shares of advantages and disadvantages. So, it would be wise of you to go through the terms and conditions of your preferred NRO savings account so as to make an informed decision.

What are the benefits you can gain from the NRO savings account?

When you leave India and settle down abroad, you would need to re-designate your savings account into either an NRE or an NRO account. The NRO account is also known as the Non-Residential Ordinary account and lets you handle anything you earned in India in the form of dividends, rent, pension etc. Here is a look at some of the advantages of an NRO savings account.

1. Savings in foreign currency
An NRO savings account will allow you to keep money both in INR and other currencies. This is advantageous, since you no longer need to convert the foreign currency into INR in order to store the funds. This way, you can choose to convert the currency when you get a favourable exchange rate, instead of converting it prior to depositing it into the account.

2. Essential for making payments in India 
The NRO saving account is very handy in case you have certain expenses to cover in India, even while you live abroad. For instance, you may have taken a loan prior to leaving the country and now you need to repay the same. The easiest way to do this is to open an NRO savings account, so that the lender can get the EMI each month from this account.

3. Helps to maintain income in India
If you have a source of income in India, an NRO saving account will help you handle the transactions with that source. For instance, you may have some money coming in from rent or a business every month. With an NRO account, the income will be safely stored in India and it will be easier for you to manage these funds.

4. Joint Holding
According to the mandate from the Reserve Bank of India (RBI), you can jointly hold an NRO savings account with an Indian resident which will make it more convenient for you to regulate the account. You can choose to open an NRO account with a fellow NRI as well.

However, there are some drawbacks to the NRO account, which may cause you to rethink about your decision of opening such an account. For instance, the interest generated on the sum present in the NRO account is taxable. In fact, the government charges 30 percent tax on the interest garnered from such an account. Government taxes such as income tax, gift tax, wealth tax, are applicable to the NRO savings accounts.

NRO accounts have both advantages and disadvantages to them. So, evaluate you needs carefully and decide whether an NRO account is suitable for you or not.

What are the features of the NRE savings account you need to be aware of?

An Indian national who holds an Indian passport and resides overseas is known as a non-residential Indian. For such a person, it is impossible to operate an ordinary savings account in India. A specialized account, known as NRE account, acts as the savings account for NRIs and is the most hassle-free way in which you can utilize your foreign earnings in your country.

Such an account differs from a normal savings account in its features. Take a look at the salient features of an NRE savings account.

1. Single or joint accounts
A NRE saving account can be opened in the name of a single person, while two people may also open it jointly. So, you and your spouse do not need to maintain separate accounts in India, when you reside abroad.

2. Documents required
In order to open the NRE savings account, you will need to fill out a form and submit it along with the copy of your passport, visa, two passport sized photographs and the money that you want to keep in the account initially.

3. Currency of the savings
The savings in the account will be maintained in INR and not under any foreign currency. So, when you remit money from abroad, the fund will first be converted into INR and then stored into the NRE saving account.

4. Repatriable account
NRE accounts allow you to freely repatriate the savings abroad. This means that you can transfer the money that you have saved in such an account to your bank accounts abroad. This is quite helpful, in case of emergency requirement of money.

5. No Taxation
The money that you save in an NRE account will not have any tax levied on it, which will help you in saving more. Even in the case of repatriation, TDS will not be levied on the money in question.

6. Payments through NRE account 
You can use the account to make payments in either INR or in a foreign currency. In case of foreign currency payment, the money will first be converted from INR to the currency of your choice at the prevailing exchange rates.

The features of the NRE account may differ from one bank to the next. So, it is essential for you to check the interest rate and the terms related to the NRE account for a particular banking institution and then you can choose to open an account in the bank, the terms and conditions of which align with your requirements.