How to choose a consumer durable loan

We live in a smart world. A world of smart phones, smart televisions and smart home assistants, that can switch on lights, fans, and televisions on a single verbal command. But many of us struggle with coming up with the finances for such appliances. If you don’t have enough money to purchase these fancy gadgets, you can always opt for a loan. All you have to do is apply for a consumer durable loan by choosing from a range of financers. Also, consider the following factors before applying for the loan.

Consider the available options: You must first decide on the loan amount and the maximum amount you can allocate towards loan repayment before approaching a bank. Since you intend to use the money to purchase consumer products, ensure you opt for a consumer durable loan and not a personal loan, as the later can cost you more. Most durable dealers are tied up with financiers. Remember that financing costs may vary from dealer to dealer.

Criteria for selecting a lender: Before you finalize a lender, you must find, the minimum and maximum duration of the loan, and the down-payment amount. Also read the document t closely to understand the the total cost of the loan, repayment period and interest calculation method.

Effective finance cost: Remember that the effective finance cost differs from the rate of interest. The total cost of the consumer durable loan includes the interest charged along with the upfront service charges, processing fees and pre-payment charges in case you choose to prepay the loan. You may be charged either a flat amount or a percentage of the loan amount for the paperwork, all of which is profited by the financier. E.g. if you take a one-year loan for ₹20,000 at 15 per cent, paying ₹250 as upfront charges, your effective finance cost will be 16.25 per cent if we assume a flat interest charge.

Calculation of interest: Make sure that you are not charged on a flat basis. Most banks allow you to pay only the outstanding balance of the loan, and not on the full amount. Interests are calculated on daily, monthly, quarterly and annual basis. The most beneficial one is the daily reducing balance method since you only pay for days that you actually use the funds.  E.g. if you take a loan on January 25, and have to pay your first instalment on 7 February, in the daily reducing balance you pay interest only for 12 days.

Prepayment policies: If you decide to pre-pay your loan at some point, you are more likely to be penalized, which is why you must think about the loan tenure well in advance. You needn’t lock yourself in a longer tenure unless it is absolutely necessary.

Service quality: Consider important factors like time taken for paper work, processing the papers and getting the cheque, and easy methods of prepayment. Some banks even send over a representative to enhance your service experience, while other can make the entire process tedious, so select wisely when opting for a consumer loan service.

Everything you need to know about RTGS bank transfers

There used to be a time in Indian banking when the entire banking process was a physical exercise. Employers used to pay remunerations in cheques, which took a few days to clear. Plus, one had to run to the bank for every little thing. But ever since internet began dominating the world, banks capitalized on it to ease the entire banking experience by introducing net banking. RTGS is one such money transferring facility, of the many net-banking facilities that has made modern banking convenient and easy.

So what exactly is RTGS?

RTGS or Real Time Gross Settlement is a popular method of transferring funds, through which you can send money to any account without any delays, in ‘real time’. An electronic fund transfer system, RTGS transfer allows the funds sent by the remitter to reach the beneficiary/payee immediately after the transaction is initiated. ‘Gross Settlement is denoted by the fact that the transaction is processed on an individual basis and not batch wise.

How can I send money through RTGS?

Net banking is the only method you can use for sending money through RTGS. To initiate an RTGS payment, you would require a few details of the beneficiary. RTGS is even faster than the NEFT mode of payment. One of the finest features of wiring money through the RTGS system is that you can you can schedule transactions in advance. 

What information do I need about the Payee?

• Name of the payee as in their bank account
• Name of the bank, its IFSC code and its branch
• Payee’s account number
• The amount that must be transferred
Steps for making an RTGS payment
1. Enter your username and password and login to your net-banking account
2. Click on the ‘Funds Transfer’ icon visible on the home page
3. Choose RTGS as the mode of payment and enter the beneficiary details as mentioned above
4. Review the details entered before submitting. The money will be credited to the payees’ account immediately.

What are the features of RTGS transaction?

• RTGS allows the transfer of funds online in a real-time manner i.e. the beneficiary can withdraw the amount as soon as it is transferred.
• Typically designed for transactions of large values, RTGS can be used for transferring funds above a minimum of ₹200,000.
• Backed by the RBI, RTGS transfers are safe and secure and designed for immediate clearing
• Funds are credited on a one-on-one basis and can be scheduled in advance
• Transactions are executed on an individual and gross basis

Fees and Charges

The receiver does not incur any charges; however the sender must pay a small fee based on the amount he transfers. The sender must pay ₹30 per transaction for transfer amounts ranging from ₹200,000 to ₹500,000. He must pay ₹55 for any transaction above ₹500,000.

RTGS Timings

An RTGS transfer can be done from Monday to Saturday between 9:00 a.m. to 4.30 p.m. on weekdays and 9:00 a.m. to 2:00 p.m. on Saturdays.

Types and features of NRI accounts in India

The number of Indians working in foreign countries has shot up tremendously in the last few years. This phenomenon has resulted in Indian banks offering services that cater to such individuals who are earning in higher foreign currencies with the aim to save money and invest in Indian banks. These accounts facilitate fund transfer, investments, savings and earnings of the Non Resident Indian communities across the world. There are three types of NRI accounts which are authorized by financial institutions and banks in which you can maintain Indian and foreign currency earnings.

Non – Resident Ordinary (NRO) Savings Account: NRO accounts are ideal for NRIs who have a constant flow of income in INR, e.g. income earned through renting property, pension income, dividends etc., while they are residing abroad. NRO accounts are perfect for making local payments and other needs in India.

Features:

• Source of funds deposited in NRO account must be from within India, not abroad
• You must adhere to RBI laws before transferring money outside India
• NRO account is maintained only in INR
• The account can be opened jointly with an NRI or Resident Indian
• You can transfer funds to NRO or Resident accounts, but not NRE accounts
• You can submit a letter of authorization if you want a local representative to operate your account
• You must pay 30.9% tax on interest earned on NRO account

Non – Resident External (NRE) Savings Account: The most popular type of NRI bank account, an NRE facilitates an easy transfer of foreign currency to Indian accounts. All foreign exchange deposits which are received for credit in NRE accounts are converted to INR at the banks’ buying rates.

Features:

• You can only deposit foreign currency in this account
• While the money is deposited in foreign currency, the account is maintained in INR
• Since these accounts don't qualify for wealth tax, any interest earned on them is subject to tax exemption
• You can easily transfer money from your NRE account to another NRE account, NRO account or Resident account
• You can open this account jointly with another NRI, but are prohibited from opening it with an Indian Resident

Foreign Currency Non-Resident (FCNR) Fixed Deposit Account: With the FCNR account you can maintain your foreign currency in the same denomination, which helps curtail any losses incurred from currency fluctuations.

Features:

• FCNR accounts are operated in foreign currencies and you can deposit any foreign currency in it, except INR
• Interest earned on FCNR accounts is paid in the same foreign currency as it is being maintained in
• You are not charged any income tax on earnings through these NRI accounts
• You can open FCNR account jointly with another NRI, but are prohibited from opening it with an Indian Resident
• Deposits made in these accounts can last from 1 - 5 years maximum
• You can avail overdraft in your current or savings account against your FCNR FD
• You can maintain your FCNR account in currencies like USD, EUR, GBP, CAD, AUD and JPY

Taxes and NRO accounts

One of the most common causes of confusion among the Non Resident Indian community holding savings accounts in India is regarding tax laws. NRIs are not allowed to hold a normal resident savings account and must choose between either an NRE (Non Resident External) account, or an NRO (Non Resident Ordinary) account. Even though they open either of these accounts, not many are familiar about the tax implications and exemptions with regards to either account. Here’s everything you must know about tax laws for your NRO savings account.

Parking money in NRO accounts

NRO accounts allow you to deposit money in any currency of your choice, whether it is INR or any foreign currency like GBP, EUR or USD. On the other hand, you can only deposit foreign currency in your NRE account.

Tax implications for NRO accounts

If you have funds lying in your NRO account, you do not have to worry about paying taxes. However, the interest you earn on both your NRO savings account and your NRO fixed deposit is taxable under the income tax laws of India. The interest you earn is also eligible for tax deduction at source or TDS. As a result, you are charged taxes at 30.9% including applicable charges.

Consider the following example: If you earned ₹100,000 in the financial year ending 2018-2019 in your NRO account, then your bank will deduct ₹30,900 as interest tax. Furthermore, if the interest earned, either on the fixed deposit or the NRO savings account exceeds ₹1,000,000 (₹10 lacs) in a financial year, you must also pay an additional surcharge of 10%.

Tax Exemption for NRO account

As an NRO account holder, you can seek tax exemption if you are paying taxes in the foreign country in which you are residing. If your country of residence e.g. England, Singapore or USA, has entered into a Double Taxation Avoidance Agreement (DTAA) treaty and you are paying or have already paid the tax on interest earned on your NRO account in that country, you can get a concession on the TDS applied on your earnings. To avail the benefits from DTAA you must submit a tax residency certification (TRC) with a duly filled Form 10F along with your PAN details, without which you cannot avail the TDAA benefit. In case the country you’re residing doesn’t provide the TRC, you must submit
the unique tax reference number with the allotted country identification number. 

Is there an alternative?

Since the rate of taxes on interest is high for NRO savings account, you must try to avoid putting any additional money or amounts in foreign currency in this account and opt for the non-taxable NRE account. The smart thing to do is to use your NRO account only to deposit INR earned from rental income or cash gifts from, parents or other relatives.

Everything you need to know about NRE accounts

Travelling on the job is a reality in the life of a multi-national corporate employee. Some people are transferred abroad on secondments while others use foreign travel opportunities to find a job abroad. Whatever the case may be, such people are confused about maintaining their bank accounts. They also have questions about what happens to their existing savings if they have to move abroad for work, for an extended period of time. If you are one of these people here’s everything you need to know about opening an NRE savings account.

Which account do I need?

Not everyone who travels abroad for work needs to make changes to their existing savings account. If your work takes you to a foreign country and you return to India within 6 months, you do not need to make any changes to your account. However, if you are travelling for work and must be based in a foreign country for more than 6 months in any given calendar year, you must inform your bank immediately and your bank will convert your account into an NRE account or Non-Resident external account. 

Importance of the term

An Indian citizen who spends more than 182 days (or 6 months) abroad in a given financial year, is referred to as an NRI (Non Resident India) purely because he is exempted from paying taxes in India  in that particular year. However, if he spends less than the given 182 abroad, he does not receive tax exemptions and will be treated as an Indian resident. He must pay a tax on his global income as per the Indian tax laws. For an annual income of more than 10 lacs, he must pay taxes at 30% per annum. However, such individuals do have the option of claiming a tax rebate.

Why should you convert your account to NRE?
If you are posted abroad for a long time, chances are that you may receive your salary in foreign currency. If you are on a secondment, you may continue receiving your salary in INR since you would be returning to your homeland at the end of the secondment term. Since you cannot continue holding your resident savings account once you assume NRI status, you can opt to open an NRE savings account in which you can deposit foreign currencies such as USD, EUR, GBP etc. You can continue funding your investments in India from your NRE account.

Why is NRE a better option?
The rate of interest you earn on your NRE account in India is tax-free. For instance if you make a fixed deposit of ₹5 lacs, which doubles to ₹ 10 Lacs in say, 7 years, then you needn’t pay tax on maturity, even if you are an Indian resident at the time of your FD’s maturity. The NRE account allows you to save a lot of money as FD is taxable on both Resident savings as well as NRO accounts.

Top 4 two wheeler insurance policies to consider

Owing a two wheeler is a blessing. This small-sized vehicle comes in handy every single time. It helps you navigate compact traffic conditions, offers great mileage per litre and doesn’t set your bank account behind by lakhs of rupees. Two wheelers especially come in handy in areas which don’t have the best public transportation networks. Most Indians own two-wheelers but make the mistake of not buying the correct two wheeler insurance plan. This insurance comes in handy if your vehicle endures damage in an accident or if it is stolen or lost. In case you are a new bike owner looking for the best bike insurance plans in India, you could consider one of the following.

TATA AIG Insurance

TATA AIG Insurance is known for offering a plethora of benefits to insurers such as

• Free pick up of vehicle in case of accidents. Additional six-month surety in case of accident repair warranty
• Direct option to make the claim online with the aim of settling it within 7 working days
• Covers partial or total loss of your vehicle in case of accidents along with damages incurred by third party
• Benefits on add-on covers such as key replacement, daily allowance, return invoice, depreciation reimbursement, no claim bonus protection etc.
• Covers loss of personal belongings inside the vehicle during an accident
• Benefit of warranty in case of accidental repairs

HDFC Ergo Insurance

HDFC is India's finest and largest company offering two wheeler insurance with premium benefits. The company has the reputation of caring about customer's requirements and makes efforts to ensure customer satisfaction. 

• Receive assured services, comprehensive coverage, and competitive pricing on policies
• Provides policies online which customers may claim instantaneously merely by following instructions provided
• Covers loss or damage of the two wheeler with hassle-free claim settlement
• Any damage caused while driving with a valid license
• Offers repayment for all accidental damages incurred to the vehicle as well as to the insurance holders
• Provides vehicle repair facilities along with accessories
• Allows online filing of claim
• Easy access to customer care helpline in case of any issues

Bajaj Allianz

Bajaj Allianz is a leading insurance provider, offering several different two-wheelers policies with benefits like

• Free services in select garages as well as timely claim settlement
• Resolves all policy related/service issues with instant assistance for policy holders including SMS alerts on claims
• Covers insurance on all accidents; either manmade like riots, terrorist activities, thefts etc., or natural calamities like earthquakes, floods, typhoons, cyclones etc.
• Provides third party liability benefits for accidental injuries, death of an individual or property damage

ICICI Lombard

ICICI is another popular company offering a good two wheeler insurance policy with benefits such as

• Providing repayment services against any damages incurred due to natural/man-made calamities, including accidents and terrorist attacks
• Provides multiple mode of payment for online premium payments
• Third party benefit on accidental damages/permanent injury/death
• 24/7 call centre team for problem resolution in case of claims

4 types of Personal Loans available in India

Even though we may often hear philosophical adages like “money is not everything” or “money can’t buy happiness”, the fact of the matter is that the entire world is run on money. It plays an important role in determining your lifestyle and gives you access to life necessities. Sometimes in life, we need money for things other than every-day expenses. In such times, you can rely on banks like HDFC Bank, ICICI, Axis Bank, SBI and others to offer you money in return for small rates of interest, which means you, can apply for a personal loan.

What is a personal loan?
Simply put, a personal loan is an unsecured loan which means you do not need the backing for any collateral to procure a loan. Such a loan can be used for funding all your immediate and near future needs, from buying a new cell-phone to home appliances or repairs. Personal loans are usually obtained by people who need immediate funds.

Eligibility and application
Since you do not have to provide any collateral against this loan, you can be eligible for such loans depending upon factors such as your salary, credit history, the amount you borrow etc. Instant personal loans can be sanctioned in minutes and many banks have provisions for you to apply for the loan online. All you need is basic documentation such as address proof, identity proof, salary slips etc. Once your loan is disbursed you can repay the amount in monthly instalments as per the defined loan amount, tenure and rate of applicable interest. Usually, a personal loan can be repaid in 12-60 months.

Types of personal loans available in India

Festival loans: Festive loans are usually provided during the peak festive seasons with very low interest rates. Festival loans are short-term loans and are fantastic for people who need to avail a very small amount of money on loan. However, you must repay the loan in a period of up to 12 months. You can obtain a festival loan for as low as ₹5,000.

Consumer durable loans: You can avail loans to purchase consumer durables like televisions, laptops, refrigerators etc. Depending upon the bank from which you borrow this personal loan you may or may not have to give collateral. You can avail a loan of an amount from ₹5,000 to ₹200,000 that must be repaid in a maximum period of 60 months.

Wedding loans: Weddings cost a lot of money and wedding loans can be acquired to meet several majorexpenses like venue booking, catering services, jewellery and clothing shopping, decorations etc. You may however have to pay 10%-20% interest and can repay the loan in 60 months.


Holiday loans: If you wish to travel within or outside the country, you can also apply for a holiday loan. The loan amount sanctioned depends upon your financial conditions and travel purpose. Holiday loans are instant personal loans which allow you manage your travel bills while your savings remain unaffected.