6 things to consider before taking a personal loan

Personal loans are one of the most popular kinds of loans in the market currently. It comes to your aid when you face a financial crisis, and so you must know about all the important aspects of a personal loan before you choose to buy one. Listed below are some of the things you should consider before selecting a personal loan:

1. The motive for taking the personal loan- Before taking a personal loan, you must understand why you need the loan as in, what is your intention. This is because personal loans are offered for genuine requirements such as hospitalization, marriage or education. However, if you are planning to take a personal loan because you want to invest it in shares and stocks with the motive of getting higher monetary returns, then it is strongly discouraged.

2. Penalty charges- You must know that, if you forget to pay your personal loan on time then you will have to incur a huge penalty charge. Talk to your bank manager or loan provider about this and get to know everything about the penalty cause, so that you know what you are getting into. Ensuring that your personal loan is an affordable one is of utmost importance.


3. The rate of interest- Since you do not have to maintain any asset as collateral when it comes to personal loans, the rate of interest turns out to be very high. This is one of the biggest reasons why personal loans are tougher to acquire than any other kind of loan. If you are planning to get a personal loan, you can apply either for a variable rate or for a fixed rate when it comes to choosing one.

4. Explore for the best option- Select a personal loan after substantial research, so that you end up with one that is best suited for your needs and requirements. Try to go for a loan with the lowest interest rate, so that you would have to borrow less money from your lender. In addition, choose a loan that will allow you the flexibility to pay your EMI for a longer duration.


5. Credit history- Before you decide to apply for personal loan, make sure that you have an impressive credit score, as it will determine whether you will get the loan in the first place or not. Moreover, if you have any credit card dues, then pay them off as soon as you can, as it will reflect on your credit history when your application will be processed.

6. Evaluate your ability- Getting a personal loan may seem like a convenient option sometimes. However, before actually getting one, make sure that you are able to pay it off when the time comes. If you are unable to pay off your loan on time, then you will have to pay a huge amount of money as your penalty charge and your credit score will also reflect poorly in the future. Therefore, make sure that your income is enough for you to purchase the personal loan you want.

Even though you need to keep all the above-mentioned points in mind, before you apply for personal loan, do not think that it is a huge challenge or a struggle. Keeping the above pointers in mind will just ensure that your loan is approved, and you are able to make the most of it.

Checklist to go through before buying an auto loan

Most of us aspire to get our dream car, but quite a few have the funds to make that dream come true. Car finance bridge this gap by helping you to finance your dream car by paying a fraction of its cost. As compared to earlier times, purchasing a vehicle of your choice is rather easy these days, all credit goes to the various financing schemes offered by banks and financial institutions.

If you are planning to apply for a car loan, consider this checklist to go through before buying a car loan.

1) Comparison:
Car loan interest rates vary as per your car model, repayment capacity, employer, etc.  Few banks also offer preferential interest rates to their existing customers. Hence, first check with your existing bank for such offers and then visit online lending marketplaces to compare them with the prices offered by other lenders.

2) Check your affordability:
Loan amount and the tenure of loan decides the EMI amount, in addition to the rate of interest payable. You can check your EMI affordability by deducting the necessary monthly expenses, existing EMIs, insurance premiums and SIP contribution from your monthly income. Lenders usually prefer total loan EMIs to be within 40 per cent of your net monthly income. While a higher EMI will surely lead to lower interest cost, don’t do it at the expense of your emergency fund or your investments. When you apply for a car loan online, try to calculate your EMI amount on the digital calculators.

3) Loan tenures:
The shorter loan tenure is always better for car loans. Most banks provide car loan duration for up to seven years. You can try to opt for a shorter tenure as it will reduce your interest cost. However, know that a shorter tenure will lead to higher EMIs. Before accepting the auto loan,  ensure that your tenure does not cost your overall contributions to various life goals.

4) Credit score:
Generally, lenders consider your credit score while approving your car finance application. Typically, those with credit scores of 750 and above have a greater probability of loan approval. So get your free credit report from online lending marketplaces or credit bureaus before filing a loan application. It will let you know your credit score beforehand and help you take corrective steps to improve it. Additionally, you may also receive pre-approved car loan offers based on your credit score and other eligibility parameters.

All that you must know about Mudra loans

Introduction:

Launched by Prime Minister of India in April’15, Pradhan Mantri Mudra Yojana was initiated to provide loans up to Rs.10 lakhs to the non-corporate, micro/small enterprises. Their loans are classified as MUDRA loans under the scheme.

Micro Units Development & Refinance Agency Ltd. (MUDRA) is an institution set up by the Government of India to provide funding to micro enterprises which help achieve economic success and financial stability. Mudra loans are given by commercial banks, small finance banks, cooperative banks, and NBFCs. The borrower may approach any of the lending institutions or can apply through online portals.

Under MUDRA scheme, they offer three products, i.e. 'Shishu', 'Kishore' and ‘Tarun’ as per the stage of growth and funding requirements of the beneficiary micro unit. These schemes cover loan amounts as below:

• Shishu scheme covers loans up to Rs 50,000
• Kishor scheme comprises loans above Rs 50,000 and up to Rs 5 lakh
• Tarun scheme comprises loans above Rs 5 lakh and up to Rs 10 lakh

Mudra loan eligibility:

Loans are given to all non-farm income generating enterprises in manufacturing, trading and services whose credit needs are below Rs 10 lakh.

Documents required for the Mudra loan:

• Valid photo identity proof
• Current address proof
• Proof of income - Latest ITR Financial Docs of Income
• Last six months Bank statement
• Loan application form
• Ownership proof of residence/office
• Evidence of continuity of business
• Trade references

An application form is available at the lending institutions for the scheme. It needs to be submitted along with the documents for the approval of the loan. Banks cannot ask for collateral but the repayment period for the loan is of 5 years.

Mudra Card:
Mudra loans provide working capital facility as a cash credit agreement. MUDRA card is a debit card issued against the loan account. The account holder can make use of MUDRA card in many withdrawal and credit facilities, to manage the working capital limit effectively and keep the mudra loan interest rates burden a minimum. MUDRA card will also help in digitalisation of MUDRA transactions and will create a credit history for the borrower. MUDRA card is like a RuPay card that can be functioned across the country for withdrawal of cash from any ATM/micro-ATM.

Conclusion:
MUDRA .is a government financing scheme to provide a business loan to new small businesses in India. To get a business Mudra loan under PPMY, the candidate has to contact the nearest public/ private sector bank. The interest rate will be fixed by the institutions time to time-based on guidelines from the RBI.

An FAQ summary on NRI banking

If you are an Indian employed abroad or has a business overseas, you still have the option to park money in India through safe instruments like fixed/term deposits. Most Indian banks, as well as multinational financial institutions, provide NRO and NRI banking services. This facility allows you to make safer investments and also earn revenues.

What is an NRI account?

An NRI can open two kinds of bank accounts in India- NRO & NRE accounts. The major difference between these two accounts is that in you can only credit an NRE (Non-Resident External) account in foreign currencies whereas in NRO (Non-Resident Ordinary) is for earnings in India like rent earned from a pension, property, etc.

What are the benefits of NRI banking:

• You can open a fixed deposit or recurring deposit account with any Indian bank.
• You can make investments in mutual funds in India.
• NRI’s can avail tax benefits in India on the interest earned through the account.
• Principal amount plus interest is fully repatriable. You can exchange your foreign currency into Indian rupees to make any purchases or investments in India.
• Funds from this can be shifted to another NRE account or a resident Indian account. You can also make payments for any family member living in India in Indian rupees.

What are the documents required to start an NRI account?

• Passport
• Photographs
• Valid Visa
• Address proof of India if you have a different address posted in your passport
• Overseas address proof
To avail the NRI services, you will have to get these documents attested from the Indian Consulate or overseas bank or be notarised by a foreign notary as per your chosen bank's requirements.

How to open an NRI account?

Most private, public, and foreign banks with operations in India have flexible online facilities to open an NRI account. Some private banks even send officials for a free doorstep service to pick up documents. There are also entirely paperless services provided by some of these private banks in certain jurisdictions. HDFC Bank has drop box facilities in the USA, the UK, Singapore, Canada and the UAE, where one can drop their completed downloaded forms along with required documents.

Banks in India provide a comprehensive array of NRI banking services. A secure online gateway supports their services, and this proven technology facilitates seamless banking. From opening a savings accounts to enabling premium banking services and from deposits to investments in mutual funds, insurance or portfolio management services; banks offer NRI banking solutions under one roof.

A guide to buying health insurance in India

There is no doubt in the phrase saying ‘health is wealth.’ And it is highly significant to insure your health to fight all the unforeseen medical emergencies. Investing in health insurance plans guarantees to beat costly medical treatments. There are three ground rules while selecting a health insurance policy- Don’t buy in a hurry; don’t purchase based on a friend’s or agent’s recommendation; and lastly, don’t buy based on cost.

Here is a checklist to go through before selecting medical insurance in India.

1) Adequate coverage:
The first thing to check is that the policy offers sufficient coverage for you and your family. Do not compromise cover to save money on premium. For the same sum assured, premiums may vary across different insurance companies. Instead of merely going for the cheapest plan, compare features. By paying a little extra amount, you may be able to get higher benefits.

2) Pre-existing diseases:
According to the Insurance Regulatory and Development Authority (IRDA), a pre-existing illness is an ailment for which one had signs or symptoms, was diagnosed, or received medical advice or treatment within 48 months before the purchase of the health insurance plan. The waiting period for protecting pre-existing diseases differs from one insurer to another and ranges from two to four years. Make sure you are well versed about the waiting period guidelines of your health insurance company before purchasing the plan.

3) Cashless facility:
It is a wiser option to hold health insurance in India that offers the cashless facility. It is a critical feature that saves the applicant to pay the hospitals from his own pocket. Here, the health insurance company will directly fund the hospital. It also involves limited paperwork and hassle than the reimbursement facility.

4) Health cover for senior citizens:
Some insurance companies provide the best health insurance plans specifically designed and catering to the senior citizens. These policies usually cover both hospitalisation and domiciliary hospitalisation (critical ailments where the patient is bedridden but not hospitalised). If the applicant has bought the policy before 55years of age, companies offer insurance policies renewable up to the age of 75 years.

5) Medical examination:
For a person aged above 45 years need to go through a medical check-up before insurance companies offer health insurance plan. If your medical report is unfavourable, the insurance company may turn you down. The age limit at which a medical examination becomes compulsory varies from company to company.

Things you must know before buying a forex card

Are you a travel bug and are always on the go? Planning for abroad usually involves finding the best airline tickets, cheap hotel bookings and places to visit and see. However, you must also give utmost importance to thinking about how to carry money for your trip abroad.

When you are travelling abroad, foreign exchange rates are the first thing to notice. Plastic money like international debit or credit cards are quite popular among travellers, but they have few drawbacks as well. Hence, you must buy a forex card which is the most and inexpensive way to carry money abroad.

Know the forex card benefits:

• Allows you to carry multiple foreign currencies
• Universally accepted mode of payment
• Cheaper than using credits cards abroad
• Better exchange rates than currency

A forex card is a prepaid travel card that allows users to load single foreign currency or multiple currencies. Much like other financial products, forex card also comes with a set of terms and conditions. Here are a few points to remember while travelling with the forex card.

1)  Understand the fees and charges:
Before buying your forex card consider inquiring about the fees and charges associated with the card. These charges may include:
• Card issuance fee
• Balance Enquiry Charges
• Replacement Card Fee
• Statement Request Charges
• Cross Currency Mark-up Charges
• International SMS Alert Charges
• Charge Slip Retrieval Charges
• Inactivity Fees

2) Swipe in the same currency as loaded:
When you are swiping your multi-currency travel card at a store, make sure that the payment is made in the same money format as you have loaded. For example, if you have loaded your card with Euro currency but the payment is made in Indian Rupee, then you will incur significant cross-currency charges.

3) Safety:
International fraud in cards is a known issue. Cloning of cards is the biggest threat for forex cards while travelling. Hence, it is essential to keep your card safe from such activities. Make sure you do not hand over your card to anyone else for swiping. Before you buy the forex cards, compare and choose a card with the safest facilities.

4) Check your insurance on forex card:
Like credit cards, most forex cards also offer some insurance cover. There can be insurance protection for you against personal accident, loss of checked baggage at the airport and against credit card fraud. You must confirm these insurance plans your bank about what type of insurance cover is being offered on your card.

Factors that determine your chances of getting a business loan

Business loans serve as a backbone for an organisation. With them, you can efficiently manage your cash flow, upgrade business equipment and grow the business. It is specifically intended for business opportunities and should be repaid with added interest.

When you purchase a business loan in India from banks, it may be either secured or unsecured. In secured loans, banks will ask for collateral, which will be lost if repayments are not made. The bank will possibly wish to see the business’s balance sheet, accounts and business plan, as well as studying the principals' credit histories.

Following factors play a significant role in determining how easy or difficult your loan raising process would be.

1) Stage of your business:
This factor is similar to an individual getting a loan. If your business is at an early stage and has been in existence for a short period, banks may hesitate to lend. You might need to apply for new business loans. However, a business that has been around for some time with a proven track record of operation is likely to find the loan raising process much simpler.

2) Competition:
The nature of competition that your business faces impact the decision for lending institutions. Bank may look at your competition to figure out where you stand among your peers. If you are at par or do better in the market, getting money becomes easier and vice-versa. If the competition is intense, applying for business loans will be tad difficult, because banks may not be to gauge your repayment capacity.

3) The amount you need:
If the amount you need is relatively modest, it may be easier to get a loan. However, for higher loan amounts banks may ask for additional details and set provisions that may make the loan processing tougher. Small amounts that are in sync with your earnings or cash flow may be easier to raise, but anything that goes beyond your financial position may make a bank think twice.

4) Relationship with the lending institution:
It is always easier to raise a business loan in India if you have good relations with the bank. Choose a bank or bank that have greater visibility of your business, a good understanding of the state of your finance and may have already extended a loan previously. It gives better comfort to your bank in arriving at a lending decision and may make your loan processing easier.