7 things to know before getting a car loan

Buying a car is a like a dream come true for many people. With the ease of getting car finance, it is very tempting to buy a more expensive car and service it with a car loan.

A car loan is a loan given by lenders to meet the cost of purchasing a car. The car can be a new car or a pre-owned car. The lenders usually hypothecate the car, which means the car is the security provided for the loan. Even though it is simple to apply for an auto loan, it is better to take this decision after due deliberations.

Here are 7 things you must know before getting a car loan:

1. Which cars do lenders give out car loans for:
Most lenders specify the cars they give loans for. Before applying, it is better to find out whether different lenders are giving loans for the car of your choice. It will save hassles while putting in an auto loan application if you know that the lender approves of the particular car model.

2. Which car would you like to buy:
Choosing a car is not an easy decision. Would you like to buy a hatchback or a sedan? Or put in extra funds and buy a utility vehicle? What is the final use for the car? Once the car is decided, there are different variants and models, which need to be decided. Knowing this will help while applying for car finance.

3. Interest rate:
The most important factor that has to be considered in a car loan is the rate of interest on the loan. Depending on the interest rate, the lender can be picked.

4. Whether you have the capability to repay the loan:
It is important to consider whether you have the finances to repay a car loan. If you are already paying a few EMIs, you should wait till you apply for a car loan. Having adequate income and income certainty is also a factor.

5. Whether buying a new car is beneficial or a pre-owned car:
This is one consideration. There is a huge market for pre-owned cars in India. If you want to buy a car but don’t have a large budget, you can consider purchasing a pre-owned car. Banks give car finance for pre-owned cars as well.

6. Other charges on the loan:
Along with interest, there are other charges such as loan processing fees, pre-payment fees. Before applying for auto loan, you should check and compare these rates from different lenders.

7. Down payment on purchase:
Most car dealerships have down payment facility. This reduces the loan amount and the interest repayments.

3 effective ways to use RTGS payment mode

Real Time Gross Settlement or RTGS is a form of electronic fund transfer in which transactions are settled real time. Each transfer is settled individually which means funds are credited immediately to the receiver’s account.

RTGS transfer is usually meant for high value transactions. The minimum transaction limit is Rs. 2 lakhs per transaction. There is no upper limit for the transactions, although individual banks may set limits depending upon the accounts.

RTGS transfers are processed continuously during RTGS business hours. The window for processing such transactions is from 9am to 4:30pm on weekdays and 9am to 2pm on Saturdays for settlement from RBI’s side. However, individual banks are free to set their timings for accepting an RTGS payment.

RTGS transfer is not available at every bank branch. Before opting for an RTGS payment, it is better for the customer to check that his bank branch and the receiver’s bank branch have RTGS facility enabled. A list of bank branches where RTGS is enabled is available on the RBI website.

One important thing to remember about RTGS payment is that RTGS is settled directly in the RBI’s books. This means the transaction is irrevocable and complete. It cannot be reversed.

There are 3 effective ways of using RTGS payment mode:

1. Internet Banking:
2. Before making an RTGS payment it is necessary to add the recipient as a beneficiary. Usually this process takes 30 minutes to register. To register a recipient, the bank account number and the IFSC code has to be input. Most banks send an SMS confirmation when the registration procedure is done. Following the registration, payments can be made. Banks set limits for payments for the first 48 hours after registration, following which there are no such restrictions for RTGS transfers.

Once the beneficiary is added, it is possible to do an RTGS transfer. Some banks send a One Time Password (OTP) as an additional security measure. Once the transaction is verified, the bank processes the RTGS payment.

3. Branch Banking:
In branch banking, the customer has to visit the branch, and fill an RTGS form. The bank checks the details in the RTGS form and then makes the payment.

The information required to make an RTGS payment is:

• Name of beneficiary
• Beneficiary’s bank and branch
• Beneficiary’s account number
• Amount to be remitted
• IFSC code of the branch.

4. Corporate banking:

Many banks have special channels for corporate customers. Corporate banking facilities provide RTGS transfer to corporates along with facilities like cash reporting, payments information etc. RTGS transfer can be done in bulk on these systems.

Best personal loans in India in 2018

In times of extreme cash crunch, or when funds are needed, one way to quickly avail them is through a personal loan. For funds such as for weddings, home improvements, business expansion, or medical emergency, raising funds through a normal route is time consuming. This is when a personal loan comes in handy.

The personal loan market in India is exploding with several lenders offering loans at attractive rates. Choosing the best personal loan depends on several factors, but the most important one is the lender. Finding a personal loan and a lender that matches your needs is a priority while applying for a personal loan.

The best personal loan depends on the eligibility criteria, the interest rate, the other charges related to the loan. These are the comparison points between different lenders, and not all lenders offer the same terms.

Here are some of the best personal loans in India in 2018:

1. State Bank of India personal loan:
SBI offers personal loans with the least pre-payment charges. They have a wide variety of personal loans available even to pensioners under 76 years of age. SBI’s vast network makes it easy to apply for a loan anywhere in the country.

2. HDFC Bank personal loan:
HDFC Bank offers the facility of instant personal loans. Approval for personal loans is quick. The loan amount can go up to Rs. 25 lakhs for salaried employees and Rs. 15 lakhs for self employed persons. HDFC Bank’s loan has zero hidden charges which makes it very transparent. These personal loans can be completely customized for the applicant.

3. ICICI Bank personal loan:
ICICI Bank offers personal loans at interest rates starting from 10.75%. Loans are disbursed within 72 hours of approval and they charge interest on reducing balance system.

4. Kotak Mahindra Bank personal loan:
Kotak Mahindra Bank’s personal loan is instant with approval in less than 72 hours. This instant personal loan offers interest rate benefits for employees from large organizations.

5. Axis Bank personal loan:
Axis Bank offers the best personal loan for people looking to prepay their loans because they do not have any prepayment charges for their personal loan. They also have liberal minimum income requirements.

6. Citibank personal loan:
This loan is the best personal loan for salaried employees. The interest rate starts from 10.99% for employees of reputed companies. Citibank gives out personal loans up to Rs. 30 lakhs.

7. Bajaj Finserv:
These personal loans are offered only to salaried employees. Bajaj Finserv loans are instant personal loans because approval can be given as quickly as 5 minutes. The loan procedure is entirely online.

5 ways how fixed deposits can help you save money

A fixed deposit is an investment option that provides a higher interest rate for keeping your funds blocked for a particular period of time. Fixed deposit schemes are available for as low as 7 days to 7 years, in varying periods of time. Depending upon your fund requirements, you can open multiple fixed deposits that mature at different points of time, and provide you funds with interest.

The amount put in a fixed deposit account is locked in till the time the fixed deposit matures. This means, unlike a savings account where money can be withdrawn at any period of time, the amount that you invest in a fixed deposit is locked in and cannot be accessed till the time it matures. It is possible to break the fixed deposit in case of emergency, but most banks charge a penalty for doing that.

A fixed deposit is crucial because it not only earns interest income but also saves money for the person opening a fixed deposit account.

Here are 3 ways fixed deposits can help you save money:

1. It can be opened for amounts as low as Rs. 1,000:
Fixed deposits command a higher interest rate than savings accounts. This makes it beneficial to park funds in them, even if the amount is low. Since fixed deposits can be opened for amounts as low as Rs. 1,000, you can park funds in multiple fixed deposits of short durations, to earn extra income. Opening a fixed deposit will also help you save money and earn interest income on it, as compared to spending it on discretionary items.

2. Tax deductions:
Investment in certain tax saving fixed deposits gets a deduction under Section 80C of the Income Tax Act. Many banks have tax saver fixed deposit schemes. If you invest in these schemes, you can get a deduction in Income Tax up to Rs. 1.5 lakhs. 

Depending on your investment in other tax saving instruments, such as life insurance, Public Provident Fund, National Savings Certificate, you can invest a suitable amount in tax saving fixed deposits.

3. TDS is deducted only if interest is above Rs. 10,000:
Banks deduct TDS on your fixed deposit account if the yearly interest crosses Rs. 10,000. Till the time this limit is reached, no TDS is deducted. You can open a small fixed deposit and earn interest on it without having tax deducted. However, the interest earned on fixed deposits has to be considered in the total income at the end of the year. That means you have to pay tax on fixed deposit interest income. The only benefit is no tax will be deducted on it in advance.

5 reasons why college students should have a credit card

College students are young adults who are starting their lives. A college student may or may not be studying in his hometown, which is why it is beneficial to have a credit card. There are many different types of credit cards, and depending on the expenses that a college student incurs, the best card can be chosen.

A credit card is a way to spend without immediately paying for it. The money spent is due to be paid monthly to the credit card company. To many people, owning a credit card before they take a job is foolish. But there are benefits of giving a college student a credit card.

Here are 5 reasons why college students should have a credit card:

1. Helps to establish a credit history:
Regular transactions and repayments on credit cards help to establish a credit history with the credit card company. After a period of time, the college student will become eligible for those types of credit cards that will give him better offers, such as cashbacks, easier loans, insurance cover, discounts on bill payments, and the like. Also, these regular transactions build up the student’s credit score, which helps later on in life while applying for loans.

2. Teaches college students about financial prudence:
One of the most important reasons why a college student should be given a credit card is so that they learn how to spend and save. Though it might be tempting for the student to spend the entire credit limit, with proper guidance, the student can learn the importance of spending for the right reasons and saving the rest in case of emergency. Some of the best credit cards in India offer student variations of their cards which are linked to their parents cards.

3. Helps to avail cashback and credit card points:
Regular transactions with credit cards builds up credit card points which can be redeemed for a range of transactions, such as airline miles, reward meals, and other benefits. Some of the best credit cards in India offer upgrades and fee waivers to loyal customers.

4. Helps to provide cash in emergencies:
Having a credit card can help to provide cash in case of emergencies. Cash can also be loaded on the card in case the limit has been reached. This provides security to the college student to spend up to a certain limit in case of problems.

5. Can take loans against credit cards for big purchases:
There are different types of credit cards that offer loans on purchases, especially on consumer durables. These purchases can be converted to EMI so that it can be repaid gradually. This also teaches college students how to save.

Unified Payments Interface – All you need to know

After demonetisation, the focus was on digital payments, especially payments made through your mobile phone. To simplify this process, the National Payments Corporation of India (NPCI) introduced a seamless fund transfer mechanism called Unified Payment Interface (UPI).  Unified Payment Interface allows transfer of money between two bank accounts using the sender and recipient’s smartphone.

The UPI payment system works using the Instant Payment System or IMPS form to debit money directly from the sender’s bank account and deposit money directly into the receiver’s bank account. Transacting via Unified Payment Interface does not require bank account and IFSC code to operate. This makes it simpler to manage payments.

How is it different from other payment methods?

UPI can be used to pay money to individuals and also to merchants who accept UPI payment for their goods and services. Presently, if you want to make a payment to anyone, you need his or her bank account details along with the IFSC code of the branch. This sensitive information has to be given out repeatedly to receive payments. The UPI payment system eliminates need for using a bank account and IFSC code.

Under Unified Payment Interface, you can create a unique ID by linking your email, bank account number and IFSC code. This ID will be unique to you, since it is a combination of your name, and the name of the bank. You can choose the name that will appear in your ID, thus avoiding duplication.

If you want to make payments using UPI, you just have to share your UPI ID with the person. There is no need to share sensitive banking details.

How can I start with UPI:

To begin using Unified Payment Interface, you need to download the BHIM app. Most banks also have their own BHIM apps, for example, HDFC, ICICI, Axis Bank, SBI, etc. have linked to BHIM. There are other apps such as Google’s Tez, PhonePe etc, which also work on the UPI payment system.

To begin using the UPI app, you need to register. While registering, you need to create a unique UPI ID. This ID will be linked to your email account and is editable. You can choose whatever you want this ID to be and it will be linked to your bank.

After this registration is done, you will need to set a UPI pin. This pin will be used to confirm transactions before they are executed.

How do I make a payment?
To make a payment, you click on ‘Make A Payment’ in the app. To make a payment, add the UPI ID of the recipient and confirm with your PIN. The money gets transferred automatically and immediately to the recipient’s account.

Bank loan and its types

A bank loan is one of the most popular ways to raise funds for different needs. Loans are typically of a longer duration and are repaid with interest. It is very common for a borrower to pay back the loan in installments. Each installment comprises of principal and interest and is repaid over a fixed duration.

The types of bank loans in India are:

1. Personal loan:
A personal loan is an unsecured loan. These bank loans are quickly disbursed and have a repayment period up to 5 years. Since these loans are high risk, the rate of interest is higher.

2. Home loan:
A home loan is one of the most popular loans in India. The funds are used to purchase a house. This is a secured loan, i.e. the bank secures the house purchased. The loan amount is given for a pre-decided percentage of the house value.

3. Consumer durable loan:
This bank loan is available for borrowers who want to buy consumer durables. Some banks even give up to 100% financing for purchasing these electronics.

4. Car loan:
This loan is available to people who want to purchase a new car. The new car acts as the security for the loan.

5. Two wheeler loan:
This loan is similar to the car loan, except that the two-wheeler purchased is the security for the loan.

6. Business loan:
These are unsecured loans meant for business expenses and working capital needs.

7. Loan against property:
This bank loan is availed by mortgaging property. The value of the property is assessed based on market rates.

8. Educational loan:
These bank loans are taken for higher education, whether in India or abroad. These loans have a moratorium, which means repayment begins a number of years after taking the loan.

9. Loans for professionals:
These are loans similar to business loans given to professionals like doctors, accountants etc.

10. Overdraft against salary:
This loan is given against salary accounts.

11. Gold loan:
This loan is given out based on the value of gold mortgaged with the bank. These loans don’t have a specified end use for funds.

12. Loan against assets:
These are loans given out against assets such as securities and rental receivables.

13. Government sponsored loans:
These are loans sponsored by different Government schemes. These loans can be availed for Rs. 5,000 too.

14. Rural loans:
These loans are given to farmers to fulfill their requirements.

15. Loan against securities:
These are loans given against shares, or government securities. These funds can be used for any purpose.

16. Loan on credit cards:
This loan provides an option to convert a large credit card purchase into a loan for simpler repayment.