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Theft Protection: How to protect yourself from Identity Theft
What is ‘Identity Theft’?
When someone steals your private information and uses it without your permission against you it's termed ‘Identity Theft’.
The advancement of technology and therefore the internet always has exposed a great threat to your private information. One must carefully monitor before the damage is beyond repair. Different high-tech methods are used by thieves to access corporate databases to hack customer information. Once identity thieves obtain the knowledge , they will ruin a person’s credit rating and other personal information, credit finances, thereby damaging a person’s reputation. Often the private information like Aadhar Card details, PAN Card details, Bank account number, credit card information, etc. is used to make a new account, commit fraud, make a purchase, or for the other reason.
The modern methods used by identity thieves involve the utilization of computer technology. Fraudsters commit the crime of identity theft by:
• Searching hard drives of stolen or discarded computers
• Hacking into computers or computer servers
• Gaining access to computer-maintained public records
• Phishing and spam attacks
• Unsecure browsing social networking sites
• Using malicious Malware software
• Hacking wi-fi system
There are many kinds of identity theft that inter alia include
• Financial Identity Theft
In Financial Identity theft, another person’s identity is used by somebody else to get goods, services, credit, or other benefits.
Medical Identity Theft
In Medical Identity theft, someone else poses to be another person just to get the medical benefits for free.
• Child Identity theft
The identity of the kid is stolen and used for various sorts of personal gain to obtain residence. The misuse can also be done for many purposes, which include finding employment, procuring loans, and, in some cases, avoiding arrest on warrants issued against him. It's observed that in these cases the fraudster is usually a family member, a loved one or belongs to the friends' circle of the family. Sometimes even a deceased person’s information is stolen and put to use for various gains.
• Synthetic Identity theft
When a criminal combines the real and fake information to make a distinct identity which is used to open fake accounts and make fraudulent purchases. In Synthetic theft, it's easy for a criminal to steal money from any credit card company or lender.
• Criminal Identity theft
In Criminal Identity theft, the criminal poses as a different person to avoid summons, arrest, conviction record, or prevent warrant being issued in their real name.
Once the thief manages to access your personal information, they will do many things with it like opening fraudulent credit cards, file fake insurance claims, use the bank or credit card account to make unauthorized purchases, selling that information to other thieves, file a fraudulent tax returns, claim money off your tax refunds, accessing financial accounts, stealing money, etc.
These, obviously end in immediate financial loss, credit damage, and emotional torture. Depending upon the intensity of the crime, it's going to take a few of days to months to resolve the difficulty . It may even take a few years to resolve the difficulty in extreme cases.
The victim may lose account access and perhaps during a dire need of professional assistance to disentangle.
Among many sorts of identity theft, the foremost common is ‘Financial Identity Theft’.
Unfortunately, victims realize this much later once they begin to receive a call from creditors or are turned down a loan because of poor credit scores.
How to Recognize Signs of ‘Identity Theft’?
One has got to be alert and keep a periodic check on all the documents and reports necessary to detect something mysterious or fishy. Here are some red flags to recognize ‘Identity theft’ of your personal information.
1. Unusual changes in credit score:
When your identity is used by the thief to approve a loan or purchase in your name, it might affect your credit score. If you notice any unusual change in the credit score even you're not involved in it, that's a warning bell of identity theft.
2. Billed for strange medical expenses:
When the thief misuses the identity to make fraudulent insurance claims, you'll receive insurance statements for medical treatment, healthcare procedures, and conditions that you simply haven’t even applied for. One must be on the lookout to detect any such medical expenses for the services they never hired.
3. Dubious activity on financial records:
If you happen to seek out out a strange loan application on your credit report, it's time to get on high alert. If you encounter any purchases or transactions, you never made, in the credit report, you'll be a victim. The financial providers must be contacted immediately if some of the statements on financial records are fishy or have an element of surprise in the transactions.
4. Tax Refund Denied:
You will have one more reason to doubt if your tax refunds are denied. That's because the thief may need claimed your money and tax paperwork has already been filed by using your identity. You need to take this matter to a higher authority.
5. Health coverage denied:
When identity theft infiltrates along with your records to commit fraud, your medical reports show the payment for health issues you never had. If your medical records mention a condition that you simply never experienced, there's an enormous possibility of identity theft. If you're being rejected despite having a legitimate claim, the reason could also be infiltration along with your records to commit fraud.
6. Denial for a credit/Loan:
If you're denied a loan or credit despite being worthy, eligible, and qualified, there's room for doubt about ‘Identity Theft’. However, this needs a proper check as identity theft might not be the only reason for the denial of credit or loan. Before arriving at this conclusion, confirm that each one other possibilities are ruled out.
7. Harassment by debt collectors:
If debt collectors and collection agencies start calling you, visiting you for demanding to return their money for the loan you haven’t availed of, you recognize why! it's the identity thief that's using your credit card and you're the one left answerable to make payments. The debt collectors expect you to settle their debts. It's a wake-up call!!
8. Login alerts:
At times, when your account is being accessed employing a different device, websites and apps may send you notifications regarding an equivalent . Once you know that you just aren't the one accessing it and an unfamiliar source is at play, your name and password must are hacked. This is often a red flag that you simply are in danger .
9. Inability to access your Apple ID:
In these times, Apple ID Phishing scams are on the rise. Your account has all the private information which inter alia includes, contact details, payment details, information of service access security, etc. If you get a mail, text message, or phone call, it's time to be alert.
10. Falling off a prospective job opportunity:
When your career opportunity is denied by the employer after running a credit check on you and has decided to not make an offer, which may be a warning bell for you.
The identity thieve may cause havoc in your life and it's not just restricted to a new credit card in your name.
Once you discover your data exposed to a threat, you must, without further ado, report the identity theft. The steps must be taken to change all of your account passwords and cancel or block credit and bank cards. These are the primary defense against any identity fraud committed in your name.
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Business Loans: Things you should consider before applying for a business loan
Introduction
A loan is an amount borrowed with the promise to pay off on the monthly basis along with a particular amount of interest. A loan that's specifically applied for business purposes is a business loan. When business owners find themselves unable to pay off expenses using their available resources, they require financial assistance and approach lenders for the same.
A loan creates a debt for the borrower. Any business has a lot of loan options to settle on from. Normally, funds are raised from members of family and shut friends circle by most of the people but many chose to use for bank loans, business cash advances, equipment financing, invoice financing, working capital loan, loan against property, credit cards, etc.
Traditionally, banks are the foremost widely preferred source of business finance. However, securing a loan from a bank requires the execution of the many procedural formalities.
A business loan are often obtained for various sorts of reasons like paying basic operating expenses, purchasing land, paying salaries, updating machinery, meeting working capital requirements, purchasing new machinery, purchasing new assets, etc.
A borrower is obliged to know terms and conditions before applying for business loans, which, among many others, include the tenure of repayment, the interest charged, and therefore the collateral offered by the borrower on the business loan procured. It's expected from a borrower to understand how business loans work. Just in case of any doubt, clear communication between a lender and borrower is important, during this regard to avoid future complications.
A lender always needs collateral just in case a business isn't ready to pay the timely repayment. A lender makes sure that the interest is charged on loans because the price paid for borrowing the money. Interest is either fixed or variable. A fixed interest remains fixed throughout the tenure of repayment. A variable rate of interest fluctuates and depends upon many factors.
There are many types of business loans. Term loan, for instance, may be a quite common kind and may be secured or unsecured. It’s taken for a selected purpose, say, capital expenditure. During this kind, the lender approves the payment amount. The tenure of secured loans is different from unsecured loans.
Whereas, a working capital loan may be a small business loan taken to hide shortages of day-to-day expenses. The shortage of off-season is roofed with the help of a working capital loan. At times, there's an excess demand from customers during peak seasons, which may be met using working capital loans and is usually applied by manufacturers, retailers, wholesalers, import-export businesses, etc.
A business loan are often obtained by mortgaging the litigation-free residential property or commercial property to obtain funds. Lender ensures that such property is free from any encumbrance. This is often the type of loan typically applied for if the loan amount exceeding Rs.50 Lacs. The tenure for such loans is between 15-20 years.
An overdraft facility is sanctioned after taking into consideration the credit history of the borrower, business cash flow, repayment history, and overall relationship history with the financial organization. Here buyer pays interest only on the amount utilized and withdraw the amount only to the extent required. The funds are utilized in this manner as long because the principal amount including an interest is repaid timely.
The government of India has come up with various initiatives to encourage women in starting small to medium-sized businesses. To uplift women, a reduction on the standard interest rates is obtainable on a flexible loan amount. Procuring loans is faster due to the faster loan process.
Business credit cards are very useful for procuring funds on an instant basis. A business owner requires fast cash and needs to earn rewards on the payments done for the debt, then a business credit card is an appropriate choice to use.
Facts a Borrower Must Know before applying for a business loan
1. Know your purpose
Every business is goal-oriented. Goals are often short-term and long-term. They must align with the vision of the corporate. The management can take strategic or tactical decisions based on the situation, which can confirm that the business goes within the right direction.
There are various purposes that a business loan could also be availed which inter alia include, starting a replacement business, expansion of existing one, hiring more staff, buying more inventory and raw materials, incurring the value of advertising, to extend the efficiency through updating, etc.
It’s very crucial to ‘Know your why’. The business loan application must be made as long as it's getting to help the business grow. It's the right of the lender to understand the rationale for the business loan application.
2. Determine the Business Loan help
The second step is to work out the entire amount of business loans required. Knowing what proportion money the business is falling in need of, helps to apply for a business loan accordingly. Borrowing in excess puts a burden on the borrower. Borrowing less than needed will compel the borrower to arrange funds from other sources.
The skill here is to calculate the precise amount of monetary assistance needed. A borrower may overestimate or underestimate. The wise thing to do is to make a business loan application for a bit higher amount than required to satisfy unseen, unpredicted, or contingent expenses which will incur.
It’s prudent to not take an excessive amount of risk. The simplest way to do it is to arrange for less business loan amount, therefore the burden of paying huge interest are often reduced.
3. Shortlist Your Options for Applying for a Loan
Presently, there are numerous options available from where business loans are often availed. While some choose to seek assistance from their family or friends, the most common way is to approach Banks.
4. Financial track record
Maintaining books of accounts is a necessity. These include Balance sheets, Profits, and Loss Account, Cash flow statements, Audit reports, and any other prescribed. The lender wants to ensure the timely repayment of the loan and may ask for current business performance, in case the collateral is not provided.
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Home loan: Which Is The Best For A Home Loan Bank Or Hfc
Introduction of Home Loan
There is a steep jump in the prices of real estate, off lately and many can fulfill their dream of having a desired home by availing a financial assistance in form of Home Loan.
Home loans are provided to applicants on completion of all formalities on the stipulation that property in question must be mortgaged with the lender.
The borrower agrees to pay a certain fixed amount, commonly known as Equated Monthly Instalments (EMIs). This is subject to tax deduction.
The loan availed for the construction of the property, acquiring land, expansion of the property, improvement of the property also falls the category of ‘Home Loans’.
Introduction of HFCs
As per the Companies Act, a Non-Banking Financial Corporation (NBFC) is the one that is registered under the Companies Act, 1956 or 2013 and whose principal business is concerned with Loans, Advances, Acquisition of stocks, equities, debt etc. that are issued by the government or any local authority or any other marketable securities.
Section 45-I(c) of the Reserve Bank of India Act, 1934, states that any Non-banking Company that carries a business that of similar to a financial institution will be treated as a Non-Banking Financial Corporation (NBFC).
There are certain NBFCs that are exempted from being registered under the Reserve Bank of India Act, 1934.
Any NBFC becomes eligible to operate as a Housing Finance Companies (HFCs) on fulfilling conditions as prescribed under the Companies Act, 2013. It is mandatory for any HFCs to get registered under the Companies Act, 2013.
HFCs come to rescue those potential house owners, by providing financial assistance. Their emergence has definitely relieved middle class and upper middle class.
Difference between Availing Home loans from HFCs and Banks:
If the aspiring borrower is looking for a greater transparency in loan interest benchmark, then Banks are the obvious choice. Similarly if the credit score is greater than 750, then it is advisable to go for Banks. Banks have authority to charge a high rate of interest, when the credit score is less than 750, as the risk of non-payment is involved here. Female loan applicants or loan applicants with credit card payments are qualified for cheap bank loan rates. When the borrower approaches banks, he must be prepared for a detailed scrutiny and tedious procedures that comprise of strict and rigid formalities. Banks facilitate transfer of lower interest rates to borrowers.
HFCs, on the other hand, are not as rigid as banks and rather flexible with respect to income, points to the credit, margin money and period of payment etc. of the borrower. They are a bit tension free as compared to banks due to flexibility they provide for loan adjustments. As far as interest rates, processing fees and penalties are concerned, HFCs are definitely more expensive than banks.
But recently due to changes in the interest gap between interest rates offered by banks and HFCs, market situation is changing slowly. HFCs take a long time to transfer discounted profits, if any. Further they tend to differ from banks in the context of high lending rates, where banks prefer to go for repo rate.
Advantages of availing Home Loans from Banks:
1. Fastest Transfer of Interest Rates:
Banks, at present, adhere to follow regulations as stipulated by the Reserve Bank of India, which has made it mandatory for Banks to connect a nexus between home loans and marginal cost of their borrowing across tenures. The marginal cost of fund-based lending rate (MCLR) Model is presently applied by Bank.
The reason why Banks pass on the interest rate charges to borrowers at a faster pace as compared to the HFCs is because of the nexus between MCLR and interest rates. In case of HFCs, however, benchmark prime lending rates are linked with interest rates.
Each time a borrower takes a home loan under the MCLR Model, Banks make sure that interest rates charged on existing loans are reset. Banks have predetermined reset dates. It can be six months or even annual. This date is notified to the borrower at the time of approval of home loans and stays applicable till the next reset date.
2. Overdraft Facility
Another benefit of availing home loans from the Banks is the overdraft facility they provide to borrowers. This facility is linked to a home loan borrower’s bank account and excess funds can be stored in that account. Any surplus funds in excess of Equated Monthly Instalments (EMIs) must be considered as advance payments towards home loans taken. This results in reduction of the overall liability, which in turn, saves interest payments.
The best part is, when in crisis, the borrower can withdraw the surplus. The overdraft facility is an exclusive feature of Banks. HFCs don’t offer such facility to aspiring borrowers.
3. Banks Offer Attractive Rates of Interest
It is a well-known fact that procedural formalities of Banks are a bit rigid and strict. Further, the good credit score is always insisted upon by them. Banks conduct greater scrutiny before sanctioning loans. The better the credit scores, the easy it is to attract a home loan with lower interest rates. This, in fact, can act as a motivation for the borrowers to maintain a good credit scores. One more thing to be noted here is that Interest rates charged by public sector banks are slightly higher as compared to private sector banks.
Disadvantages of availing loans from Banks:
1. Banks have stringent procedural formalities and documentation rules. These take longer time than usual to process a home loan application. The process is a bit dull and time-consuming.
2. A good credit score makes borrower’s position favourable to banks. A good credit score is an indicator of strong repayment ability. Hence, those who don’t have good credit score may have hard time availing home loan from banks.
3. Normally banks tend to exclude stamp duty and registration cost while offering home loans on the value of the property in question.
If a borrower is not satisfied with existing lender, switching to another lender is always an option. But rather than paying the cost in the process and avoid difficulties, it is always advisable to choose the lender carefully.
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#home loan#home loan application#home loan from bank#housing finance companies#credit bazaar#credit bazaar in mumbai
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Credit Score: What Factors Can Negatively Affect Credit Scores
What is credit Score?
Basically, a credit score is a three digit number that ranges from 300-900 and is one of the most important yardsticks to measure the creditworthiness of the potential borrowers that seek to approach financial institutions for financial assistance. The borrower’s position is considered better, if the credit score is high and vice versa. There are a number of factors that determine credit score, which, inter alia include, history of repayment, number of open accounts, total debt among many other factors. Lenders are dependent upon the credit score of the potential buyers to find out about their ability to repay the loan in a prompt and timely manner.
The credit Score of borrowers above 750 is regarded as excellent and looks good to the lender.
Good credit scores provide an assurance to lending institutions about the borrower’s ability to make timely payments thereby enabling them to charge lower interest rates on the loans to borrowers. Borrowers are benefits by the same as they have to pay a lower rate of interest throughout the span of this transaction. The credit score above 800 is considered far beyond excellent.
Whereas the Credit score between 300-579 is considered poor. Lending institutions would normally charge borrowers with higher rate of interest on such credit considering the probable risk of non-payment. Some lending institutions mandatorily specify a shorter repayment term and a co-signer for the borrowers that have a low or a poor credit score as the risk involved is too high.
Factors taken into consideration while calculating Credit Score:
1. The Type of Industry
2. The Credit History and Length of Credit:
The length of borrower’s credit history is another factor taken into account while calculating the credit Score. The longer the credit history, the better is the credit score. The good score is not possible when the borrower doesn’t have any credit history.
3. The Payment History:
Payment history of borrowers gives a complete picture of accurate and timely payments. It also shows delayed, missed payments and makes it easy to trace any irregularity in repayments in past transactions. The more the timely payments, the more is the credit score and vice versa. Lenders wants to make sure that borrowers have a capacity of making repayments before considering to avail them of the credit facility.
4. Credit Available to the Party as Opposed to Used So Far By the Borrower:
Another essential factor is the ‘Credit Utilization’ so far. The more the credit available, the better the chances of good credit score.
The credit Utilization ratio means the total amount of credit used by the borrower in proportion to the total credit limit available to him. Dividing the overall outstanding balance by the total credit limit is how it is calculated.
5. How Much Debt is Owed by the Borrower:
While calculating credit scores the entire amount owed, types of account borrower has and the amount available to the credit can never be ignored. For instance, huge debt balance owed by the borrower will bring low credit scores as opposed to the lesser balance and borrowers efforts to make timely payments.
6. Type of accounts used:
Having of mixed account such as retail loans, credit cards, home loans always makes an impact on credit score.
What factors negatively affect credit score?
1. Payment History
Payment history represents borrower’s record of all payments so far. It shows all payments delayed, missed and also all timely payments and plays a pivotal role in calculation of the overall credit score. Unpaid bills and delayed payments naturally don’t look good to lending institutions. Any default or irregularity in payments automatically puts the borrower in a negative light which results in poor credit score, in turn and vice versa.
2. Debt Consumption
Debt consumption, is yet another significant determinant of the credit score. When any aspiring borrower applies for a mortgage, for instance, the lenders thoroughly examine and analyse all the debt obligations pending and debts consumption so far in order to determine the further affordability of repayment of loans/debts by the borrower who has approached lenders for further mortgage.
3. Credit Age and History
The length of credit history is taken into account here. Approximately 15 per cent of the Credit Score is concerned with history. Credit age simply means how long you have been holding credit accounts. Factors that matter here are age of the oldest credit accounts, the age of new credit accounts opened and average of all accounts opened so far by the potential borrower.
Opening new accounts unnecessarily gives the impression that the borrower is shopaholic. Lending institutions often see this as inability to make prompt repayments on the part of the aspiring borrower.
4. Consolidation of Debt and Account Types
Debt consolidation is combining diversified several debts into a single one, preferably with a low interest rate and quick payoff. When there are fewer payments to pay, the focus becomes clear. Low interest rates ensure faster payments of debts.
This process can either improve or hurt the credit score depending upon the method used for consolidation and the prudence of the borrower. The more responsible the borrower is with respect to the repayment, the better the credit score.
Debt consolidation is very helpful to those who have a long list of lenders to pay and wish to reduce the number of the same as well as those who have increasing debt.
5. Credit Inquiry
When a borrower approaches lending institutions, they send a credit inquiry request to credit reporting agency to avail credit report information. Not just financial institutions but other institutions may need credit inquiries for numerous reasons, although on a large, they are requested by Financial Institutions and are broadly categorized under ‘Hard Inquiry’ and ‘Soft Inquiry’.
In a nutshell, the credit score can either save your hard earned money or can cost you a lot. An excellent credit score assures lesser rates of interest, which simply means that the borrowers are required to pay less for any credit availed. The responsible borrower always makes sure that his credit stays strong. The stronger the credit score, the better opportunities it attracts!
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Credit score: the perfect score to get a home loan
Introduction
Home loans are a long-term commitment, lasting more than 20 years. There are two parts of home loans – the principal amount and the interest. Indeed, even a little decrease in financing costs can prompt a huge decrease in the complete credit over the long run. Contrary to popular opinion, interest rates on home loans are not determined by the individual. Home loan interest rates are linked to external banks.
In the past, banks used to bring up loan fees on contracts on Marginal Cost-based Lending Rates. In October 2019, the national bank gave a roundabout requesting that loan specialist utilize new home loan seats. While the RBI offers a number of options, most lenders have chosen a repo value as a sign of a home loan. The model is known as Repo Rate Linked Lending Rate or RLLR.
The repo rate has indirectly affected home loan fees under the MCLR-based loaning program, as the extra monetary expenses incorporate acquiring cost, Under the RLLR type, any change in repo money has a direct effect on interest rates on home loan. The RBI has decreased its repo esteem by 115 premises focuses since February. The decrease came after a cut of 135 focuses last year. Decreasing the three-digit repo rate has prompted a decrease in contract rates, making home ownership less expensive. Lower loan costs combined with discouraged costs have made the Covid-19 plague an incredible chance to purchase your fantasy home.
What is a good Credit Score?
Exceptional Credit Score: 800 to 850
Purchasers with a score of 740 to 850 are viewed as capable at whatever point it comes to dealing with their credit and are quick to get low loan fees. In any case, the best scores are somewhere in the range of 800 and 850.
Individuals with these focuses have a long history of zero late installment and low adjusts on charge cards. Consumers with good credit scores can earn lower interest rates on credit cards, credit cards, loans, and credit lines because they are considered less likely to fail on their contracts. Having a decent FICO assessment particularly helps in meeting all requirements for an individual credit, as it frequently surpasses the presentation of a home loan advance.
Very Good Credit Score: 740 to 799
Obligation focuses somewhere in the range of 740 and 799 show that the shopper is normally monetarily answerable for monetary and credit in the board. The vast majority of their installments, including advances, Master cards, utilities, and rental installments, are made on schedule. Charge card adjusts are low contrasted with their credit account limits.
Good Credit Score: 670 to 739
Having an obligation of somewhere in the range of 670 and 739 puts the borrower closer to or somewhat over the US shopper normal, as the FICO public normal is 711 from October 2020. While they can in any case get serious loan costs, they are less inclined to charge the right costs for those in the classes. Two high, and it very well may be hard for them to get some sort of obligation. For instance, if a borrower needs an unstable advance through some monetary foundation, it is significant that they look around to track down the right alternatives for their requirements with not very many issues.
Fair Credit Score: 580 to 669
Borrowers with credit scores ranging from 580 to 669 are considered to be in the “fair” category. They may have some food in their credit history, but there is no major crime. They may be given credit by lenders, but not at very competitive prices. Although their options are limited, borrowers that require cash can still get strong personal loan options.
Poor Credit Score: Under 580
A person with a score of between 300 and 579 has a
very bad credit history
. This can be the result of a lot of automation on different credit products from several lenders. However, negative points can also be the result of a collapse, which will stay on the credit record for seven years or more.
What is home Loan
A home loan, also known as a mortgage, is the amount of money a person borrows, usually from banks and lenders. The borrower must repay interest on the Easy Monthly Installments or EMIs for a period that may vary between 10-30 years depending on the type of loan. When you do a home loan, a bank or financial institution accepts the goods you are buying as collateral. This means that it retains the legal right to the property in case it is not paid.
A bank or monetary foundation charges revenue in return for its loaning administrations. The financing cost relies upon the measure of the head and the time you will reimburse the advance. Interest charged on a home loan is tax-deductible, which means you can claim the cost if you file income tax.
What is the credit score to get a home loan
A good CIBIL score for home loan normally starts from 700 upwards. However, the closer you are to 900, the more faith the credit institution will have in your capacity to repay the home loan. With a good credit score for home loan and along with fulfillment of other criteria as decided by the bank, you can get financing up to 85% of the total cost of the property.
CIBIL scores play a major role in processing home loan applications. In fact, it is a major criterion based on which a bank decides whether to process a home loan application or not. When you submit your filled home loan application, the bank will first check your credit score and credit history. If you have Low credit score, and you have a bad credit history, it will most likely reject your application. However, if you have a good CIBIL score, your home loan application will be processed quicker. While there is no universal score, every bank has a minimum CIBIL score, which acts as a cut-off or indicator to accept or reject applications. In general, 750 and above is considered a good score, 350 -750 an average score or maybe unacceptable and below 350 would be considered poor.
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Business loan: Its types and benefits
What is Business Loan
Working together isn't simple, nor is it useful in the event that you can't stand to pay and purchase on schedule. That is the reason business loaning has become a significant device for the present business visionary. Being able to take a business loan allows you to continue running a business when you need short-term financing.
The amount of business loan you are qualified to get relies upon your normal benefit and the size of your business. The lender will want to ensure that your business is able to repay the loan. A business loan is basically the amount of money used to invest in a new or existing business. Whether small or medium enterprises (SMEs) or large businesses, it is very important to understand how these loans work.
Motivations to get a business loan
1. Grow your business
In the event that you have experienced childhood in your old shoes, it's a good idea to increment in size, and the equivalent is valid in the feeling of business. On the off chance that you have a great deal of representatives who are focused on one room, or maybe your café is packed, these are old signs that the time has come to grow. For this you may need a business loan.
2. To add to your inventory
It frequently happens that you should purchase stock before you can see a profit from speculation. This is particularly valid for organizations in the season or in sluggish occasions when a Commercial Vehicles Loan, might be the most ideal alternative.
3. Hiring and hiring new skilled workers
When you first start or run a small business, the word ‘do more’ will have a whole new meaning. You will reach a moment where you realize that expanding your website, dealing with customers, trying to put yourself on the map, all the while bookkeeping can be very difficult. A business loan can help you with a financial edge to start your business.
4. Improve the cash flow of your business
When obstacles stand in the way of meeting your business objectives, you will need business loan options to keep money flowing which will allow you to continue marketing, increase conversions and seek new customers to make money.
5. Moving your business to a new location
The number of inhabitants in your space is probably going to change enough that there are better freedoms somewhere else. Clearly, that accompanies a great deal of expenses, including leasing transporters, the expense of new space, administrative work for substitution, etc. This is the place where a business advance can truly help. This is where a business loan can really help.
6. Improving and expanding your marketing strategy
Advertising assumes a significant part in the creation of numerous organizations and in building up a notable brand that will draw in more individuals through your specialties.
7. Renew and upgrade your business equipment
Keeping your business completely operational regularly relies upon having the right gear. Be that as it may, regardless of whether your gear is ready to rock 'n roll, the level at which the work is finished, and if the total effectiveness of the equivalent is reached or not is significant.
Types of Business Loan
Here are 10 different types of business loans available to business people in India.
1. Time Loan
One of the most common types of business finances is term loans. Loans could be secured or not naturally protected. Revenue is based on the credit history of the business. The period of stay is suspended, ranging from between 1 and 5 years if unprotected, or up to 15 – 20 years of secured business loans.
2. Small business loan
Loans to start new businesses. Applicants for such loans may not have a good credit history with their company due to the lack of vintage business. Therefore, to determine the creditworthiness of a business loan, the lender will take into account the credit profile of the borrower and that of the company. Current interest and other financial figures are also considered in determining the amount of the loan, ownership, and applicable interest rate.
3. Performance loan
Operating loans are the types of small business loans that are taken to conquer the shortage to maintain the business consistently. It's anything but an equilibrium in the income expected to maintain a business. These advances likewise help to manage deficiencies during the end time frame or to satisfy need during the pinnacle year.
4. Loan Representative of SME Assets
Fullerton India offers secured SME loans for business assets with loan requirements in excess of Rs. 50 lakhs. Here, the candidate should contract his property to acquire assets for business purposes. The borrower may apply for account in regard of private or business property.
5. Invoice Fees
Receipt support is otherwise called receipt rebate or receipt accommodation. This sort of account is mostly for private ventures that experience a brief timeframe between creating solicitations and getting installment from clients. The monetary establishment gives reserves contrasted with the sum got on the receipt.
6. Financial resources
For manufacturing enterprises, they often choose mechanical financing or equipment loans. Production units need more expensive equipment to run their business. And to buy equipment, for all types of business loans, resource money is the ideal choice for business owners.
7. Business Loans for Women
Some financial institutions have special business loan programs for women entrepreneurs. Even the Indian government has programs in place to encourage women to start small and medium-sized businesses.
8. Overpayment
The excessive charge structure is accommodated in security or protections, particularly on account of a fixed sum in a monetary establishment. The moneylender examines the borrower's financial record, relationship with the organization, business pay and installment history prior to supporting a specific overdraft limit.
9. Merchant Cash Advance
Here, the monetary establishment gives monetary improvement in the space of daily bank card or Visa deals. The borrower should reimburse ahead of time the part of the everyday deal. The borrower should make sure that he has sufficient cash to deal with the installments.
10. Business Credit Card
While a business charge card isn't the principal alternative entrepreneurs can decide to pay for their necessities, If a business owner needs a quick cash loan to earn rewards for a payment made on credit, then a business credit card is a good option.
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Home loan: Its benefits and how to apply for one during covid
What are home Loans
A home loan, also known as a mortgage, is the amount of money a person borrows, usually from banks and lenders. The borrower must repay interest on the Easy Monthly Installments or EMIs for a period that may vary between 10-30 years depending on the type of loan. When you do a home loan, a bank or financial institution accepts the goods you are buying as collateral. This means that it retains the legal right to the property in case it is not paid.
A bank or financial institution charges interest in exchange for its lending services. The interest rate depends on the amount of the principal and the time you will repay the loan. Interest charged on a home loan is tax-deductible, which means you can claim the cost if you file income tax.
How to get a home loan during covid 19
The Covid-19 epidemic has hit the world economy on an unprecedented scale. As the number of Covid cases continues to rise steadily, India is also on the decline due to the effects of the epidemic. Household income has been hit by low business activity. Would it be wise to apply for a mortgage during a crisis? Every dark cloud has silver objects and the current situation is no different.
The government and the central bank have taken a number of steps to reduce the impact of the epidemic since the national closure in March. Among other things, the Reserve Bank of India has significantly reduced its repo value. The fall in prices has been a hidden blessing for potential home buyers.
Having a home is a basic need for most Indians. Most homes are affordable, especially those offered by banks and real estate finance companies. Home loans are very different from other types of credit facilities such as car loans and personal loans, mainly because of their longevity.
Home loans are a long-term commitment, lasting more than 20 years. There are two types of home loans – the principal amount and half the interest. Even a small reduction in interest rates can lead to a significant reduction in the total loan over time. Contrary to popular opinion, interest rates on home loans are not determined by the individual. Home loan interest rates are linked to external banks.
Previous lenders used to point out interest rates on mortgages on Marginal Cost-based Lending Rates. In October 2019, the central bank issued a circular asking lender to use new mortgage benches. While the RBI offers a number of options, most lenders have chosen a repo value as a sign of a home loan. The model is known as Repo Rate Linked Lending Rate or RLLR.
The repo rate has had an indirect effect on mortgage interest rates under the MCLR-based lending program as the extra financial costs include borrowing costs. Under the RLLR type, any change in repo currency has a direct effect on interest rates on home loans. The RBI has reduced its repo value by 115 basis points since February. The reduction came after a cut of 135 points last year. Reducing the three-digit repo rate has led to a reduction in mortgage rates, making home ownership cheaper. Lower interest rates coupled with depressed prices have made the Covid-19 epidemic a great time to buy your dream home.
How to apply for a home loan during COVID-19
Consolidate your financial statements – Having accurate answers to your home loan application questions can prevent surprises if the lending process continues. If you provide the loan documents with the relevant assets in advance, you may have a smooth experience of the collateral.
Know the basic requirements for a mortgage loan – In the world of lending, minimum mortgage requirements are based on a “three C” note – the amount, collateral and credit reputation. In simple terms, they refer to your debt-to-income (DTI) rate, your credit score, and assets. If you do not know how to apply for a home loan, knowing the following guidelines will help you better understand how lenders evaluate your application.
Choose the right type of loan – The loan authority reviews your loan application to see if it meets the loan requirements for various programs.
Think of the things that are not in the mortgage – When you apply for a home loan, you are committing to one of the biggest loans you can take out of your life. These tips can keep you applying for more loans than your budget can pay you and can help you look at home ownership costs in addition to your monthly mortgage.
Decide on your “comfort level of payment.” Just because lenders allow you to borrow up to 43% of your total income (or more, in some cases) does not mean that you should use that money. Lenders do not take into account your lifestyle or daily expenses, so when choosing a monthly payment, make sure you leave the area: Health care costs, child care costs, educational goals, resources, stores, savings goals
Choose the right type of lender – Make a list of mortgage companies and get loan rates from at least three to five lenders. Or use a rate comparison tool so that lenders can contact you before completing an asset loan application. Fortunately, you will not be short of options, including:
Mortgage bankers. Mortgage banks offer a variety of services, and the entire lending process is handled internally. This could translate into faster closures and more flexible working with borrowers with different backgrounds.
Consumer buyers. Loan lenders work with multiple lenders to offer more options than a single collateral bank. However, lenders often rely on banks to approve and finance your loans and have no say in whether your loan is approved or rejected.
Institutional banks. Your local bank may offer a lower interest rate if you have a higher deposit balance. Depending on the bank, however, loans can be limited.
Complete the mortgage application – Once you have completed the above steps, the actual application process should be quick and easy – you just need to decide how you want to apply. Each lender is required to provide a loan rate (LE) within three business days after receiving your loan application. Keep copies of each rate you receive to negotiate your interest rate and later closing costs.
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Credit score: What is a good credit score and how can you achieve it
What’s the credit score range
The credit score is three numbers, usually in the range of 300 to 850, which measures how much is possible to repay the loan and repay the debt.
Credit card companies add details from your credit reports to mathematical formulas that generate your credit scores. A low credit rating may not limit you to a credit agreement, but you may have to pay higher interest rates or deposit money into a deposit. You may need to pay extra for car insurance or deposit deposits on the services. Homeowners can use your points to determine if they want you as a tenant.
Higher credit points can give you access to more credit products – and lower interest rates. Borrowers with a score of 750 points or more often have multiple options, including the ability to earn 0% of cash on cars and credit cards with an initial interest rate of 0%.
When lenders or credit card issuers “check your credit,” they may check your credit report, credit score, or both. You can check your credit score – it doesn’t hurt your points – and know what the lender might see you.
The most widely used goal-scoring models have a credit range of 300 to 850. Lenders set limits on which schools they will accept, but here are some common guidelines:
What credit score range is good
Exceptional Credit Score: 800 to 850
Consumers with a score of 740 to 850 are considered to be responsible whenever it comes to managing their credit and are the first to receive low interest rates. However, the best scores are between 800 and 850.
People with these points have a long history of zero late payment and low balances on credit cards. Consumers with good credit scores can earn lower interest rates on credit cards, credit cards, loans, and credit lines because they are considered less likely to fail on their contracts. Having a good credit rating especially helps in qualifying for a personal loan, as it often exceeds the performance of a mortgage loan.
Very Good Credit Score: 740 to 799
Debt points between 740 and 799 indicate that the consumer is usually financially responsible for financial and credit management. Most of their payments, including loans, credit cards, utilities, and rental payments, are made on time. Credit card balances are low compared to their credit account limits.
Good Credit Score: 670 to 739
Having a debt of between 670 and 739 puts the borrower closer to or slightly above the US consumer average, as the FICO national average is 711 from October 2020. While they can still get competitive interest rates, they are less likely to charge the right prices for those in the categories. Two high, and it can be difficult for them to get some kind of debt. For example, if a borrower wants an unsecured loan through some financial instituion, it is important that they shop around to find the right options for their needs with very few issues.
Fair Credit Score: 580 to 669
Borrowers with credit scores ranging from 580 to 669 are considered to be in the “fair” category. They may have some food in their credit history, but there is no major crime. They may be given credit by lenders but not at very competitive prices. Although their options are limited, borrowers that require cash can still get strong personal loan options.
Poor Credit Score: Under 580
A person with a score of between 300 and 579 has a very bad credit history.
This can be the result of a lot of automation on different credit products from several lenders. However, negative points can also be the result of a collapse, which will stay on the credit record for seven years or more.
Borrowers who fall into debt are less likely to get a new loan. Additionally, as long as you are able to pay your monthly bills, one of the leading debt repair companies can get bad marks out of your mortgage. If you are trying to get a safe loan through this school, be sure to compare every thoughtful lender to determine the riskiest options.
How to get a credit score report
A credit report is like credit card information on how you manage your credit according to various factors. It is a detailed statement of where your record was on payment of credit, how much debt you spent, timely payment of EMIs, and the length of your credit history.
Credit bureaus or consumer reporting agencies collect and store information about your credit sent to credit card companies, lenders, banks, NBFCs, or other financial institutions. This information helps your lender decide to give you a loan again.
Your Credit Report is divided into three sections:
Personal details: Your name, address, employers.
Accounts: Payment history, current and outstanding credit card record, mortgage loans, and all other credit accounts.
Inquiries: Companies that have access to your Credit Report
Your Credit Report contains your credit score and applicable credit account details. Here’s how to read your Credit Report:
Credit Points: You can check your score and your school’s relevance. Credit determines your eligibility for loans and grades from 300-900.
Report Summary: In the report summary, you can view the number of credit accounts, the number of current balances, and the summary of the credit query.
Credit Account Summary: In this section, you can view a summary of all of your credit accounts available in the credit bureau database such as the number of credit accounts remaining, the type of loan, and the opening date.
Credit Account Details: In this section, you can read the details of your active loan or credit card accounts provided by your partner banks or financial institutions. Detailed information will contain personal information, account details, payment history. You can check for any late, missed, or overdue payments reported in your payment history. If there are any incorrect details, contact your bank as this information may affect your credit score.
Credit Questions: For credit inquiries, you can check the name of the credit bureau that has applied for a loan or loan application for you. Each credit query hurts your credit score. The high number of credit inquiries and short-term reactions is considered a major risk factor for the lender.
Missed Credit Questions: You can check authentication requests and request your Experian credit score and Credit Report in the non-credit inquiries section.
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Covid 19 crisis: How to use your credit cards
How credit cards help your finances in a covid crisis?
The coronavirus pandemic has shaken the economy of the world from the core, and economists are still not sure about the recovery time. With people being engrossed in making a living, a crisis like this has made everyone question their physical, mental as well as financial health. Especially people with little financial knowledge have been shaken by that sudden slap on their face during a joyful dance.
Amid people getting burnt with layoffs, salary cuts, and businesses shutting down, we all still have to figure out a way to put food on the table. A credit card gives you the convenience of making a purchase now and repaying dues later either with o or low interest depending on the time taken to repay the amount. Therefore, we have some tips for you to use your credit cards efficiently during covid times that will also hike up your credit score:
· Review your credit card statements
Keeping track of your credit card statements puts you in a better place than you can foresee. By just analyzing it, you can pick if any higher credit card charges are being imposed, or maybe due to some technical error you have been charged higher interest.
· Pay your dues on time
Credit cards if not used responsibly can become an issue of concern. Thus, it is recommended to make payment of credit card dues on time. To do so, one can either opt for an autopay facility or set a reminder for all their credit card due dates and can avoid that hit on their credit score.
· Make full or maximum payment
It might seem convenient and an easy way out to pay minimum credit card dues just to avoid those penalties. Little did you know, it will only increase your debt burden because of the higher interest rate on the outstanding balance. And it is something one should take seriously to manage their finances.
· Use credit cards with higher limits
If you are planning to use one during a pandemic, try to use a card with higher spending value and be prudent with its use. Using less credit on higher value card put you in good books of credit bureau companies that boost your credit score.
· Good time to use those reward points
There is no better time than now to use those highly praised credit card rewards or loyalty points. Apart from this, depending on the variant of the card, you get discounts on movies, restaurants, affiliated websites, electronics, and more.
However, don’t forget that the financial benefit given by credit cards doesn’t make you entitled to spend it like your own money. It is like a short time loan that has to be paid back in a given period. Therefore, if you are someone who doesn’t have the funds to afford your lifestyle, credit cards might not be the best option for you to rely on.
Should you use credit cards to pay your house rent?
During times like these when financial instability has become a new normal, people have started relying more on their credit cards for buying as trivial things as chips to as substantial things as paying their house rent. Several companies like housing.com, CRED, RentPay, and many more allow tenants to pay their rent using a credit card and the amount gets transferred to the landlord’s account. Nevertheless, you are required to submit a rental agreement if the amount is more than Rs 50,000 per month.
But have you ever wondered that is it good for your financial health? Is it that blessing in disguise or a curse you can’t see? Well, to take the decision wisely of paying your rent let’s understand it in more depth. If you are someone who is already facing a cash crunch due to the covid19 crisis then this should not be your primary option to pay rent. Rather you should begin with talking to your landlord about the challenges and request a grace period for a couple of months. If that option doesn’t work out then pull out your savings or try to borrow money from your friends or relatives to pay the rent.
But if nothing works out and paying your rent through credit card is the only option left, then you need to know that it will only resolve the prevailing issue for the short term. How so? For someone who already has disruptive cash flow, this step would only make things worse as you will have to repay the credit card bills after a month or so. And if you fail to do so on time, you will end up getting back in the same cycle. However, this time you will have the double financial burden of paying your credit dues along with additional late payment fees that will negatively affect your credit score. Also, the interest rate on credit cards can go up to 30 percent per annum which doesn’t make it a beneficial deal.
Now coming back to the companies that provide you this service, some of them do not take any registration fees but do take a commission when you make a transaction using their website or app. As you go for the registration they ask for your landlord’s details like PAN number, bank details, etc. which your landlord might not be comfortable sharing with you. So, before you jump to any decision just outweigh all the available options.
How to use your credit card judiciously?
With every privilege comes great responsibility, and the same philosophy applies to credit cards. Plastic money can either be your best friend or your worst enemy; it all depends on how wisely you use this tool. It gives you that financial freedom in times of need but if exploited can become your biggest nightmare. Thus, we have some excellent tips that can be used to take full advantage of your credit cards and not getting soaked in debts.
· Timely payments
The fundamental rule of using your credit card responsibly is to pay credit card bills on time. That one default might not seem like a big deal to you but it will cost you a penalty and plunge your credit score. The best way to be more disciplined about your bill payments is by setting a reminder or using auto payments.
· Low Credit Utilization Ratio
To maintain a stellar financial scorecard, the credit utilization ratio (the credit you are using divided by the credit limit you have) should be kept less than 30 percent. As the ratio will increases, your credit score will dip.
· Maximum repayment
Ideally, if you can then you should make full payment of your credit dues to avoid penalties and high-interest rates. However, if that is not possible then at least make maximum payment to save that credit score from getting adversely impacted.
· Select your ideal card
As simple as it may sound but it is significant to know which credit card fits you best to get the maximum benefit out of it. There are several options in the market with different pros and cons. So, decide what you are looking for and choose the right fit.
· Withdrawal of cash using credit card
Yes! You read it right; some credit cards allow customers to withdraw cash through ATMs. Though what you might not be aware of is that the credit card companies take high fixed charges, and from day one of the withdrawal the interest is levied which is around 2-4% per month. It is an expensive affair therefore should be shunned at all cost.
· Drop addiction for reward points
Are you someone who gets excited by reward points and ends up spending more than required? If so, then you need to take a break, and think if spending money just to earn loyalty points which will lose its value with time is worth it? Also, a quick tip for those reward hoarders, use it within a year or so before it expires.
· Avoid closing your credit card suddenly
This is a substantial point to achieve a blooming credit score because if you randomly close any of your credit cards, it shoots up the credit utilization ratio. And as we already know higher credit utilization ratio means a lower credit score, thus your creditworthiness comes into question.
What to watch out for while using credit cards?
Along with all the benefits that come with credit cards, each one of us also has the risk of becoming a victim of fraud. There are multiple credit card frauds prevailing in the world and with each passing year, the number is only escalating. Therefore, we must do whatever we can to protect ourselves from such nuisance:
· Be careful while you are making payment using a credit card at the point of sale device. The fraudsters attach a device that extracts all your necessary card details as soon as you swipe it. To be sure that no such device is attached to the POS machine, you can shake it before making any purchase.
· No matter how close that person is to you or how urgent the matter seems to be, don’t share your credit card details with anyone. If you ever receive any calls from customer care asking for confidential information, never share it as banks do not ask their customers for that information.
· As the number of websites is increasing rapidly that doesn’t mean you can trust all of them and carelessly use your credit card details to make an online payment. Allow yourself to use your credit card only on trusted websites. Also, restrict yourself from clicking on links that ask for bank details. This is a common type of fraud where the fraudster obtains sensitive information and then misuses it.
· Check your credit card statement every month to see that everything is in place and there are no hidden charges. Also, if there has been any transaction that was not initiated by you, then inform the credit card company immediately.
· If your credit card ever gets lost or stolen, immediately report it to avoid any uncalled fraudulent charges on your name. To be prepared for situations like these, always have your credit card companies’ numbers stored in your mobile.
A credit card is an extremely wonderful tool if used with responsibility and all measures are taken to safeguard ourselves from frauds. Never forget that your credit card usage and credit score go hand in hand. Thus, pay your bills on time, avoid entirely utilizing your credit limit, don’t spend for the rewards, be aware of all the perks your card provides, and more. Lastly only spend using your credit card when you know you can clear the dues on time or else with all the penalties and interest rates, in no time it can become an expensive debt.
How credit bazaar can help you with your credit cards?
If you are having sleepless nights because you are unable to make credit card payments on time and because of that you have a huge dent in your credit score. Well, you can take help from the credit bazaar to get expert advice on the challenges you are facing. Once you sign up, the credit bazaar sends you a monthly credit report and CIBIL scores in your inbox. They also mark the red flags and you can speak to their experts when confusion arises.
Not just that, Credit Bazaar is in association with multiple credit lenders across the county and when the time comes and you need a loan, you can easily avail of one from their portal.
Can you withdraw cash using a credit card?
Yes! You read it right; some credit cards allow customers to withdraw cash through ATMs. Though what you might not be aware of is that the credit card companies take high fixed charges, and from day one of the withdrawal the interest is levied which is around 2-4% per month. It is an expensive affair therefore should be shunned at all cost.
What is the use of reward points earned on credit cards?
Are you someone who gets excited by reward points and ends up spending more than required? If so, then you need to take a break, and think if spending money just to earn loyalty points which will lose its value with time is worth it? Also, a quick tip for those reward hoarders, use it within a year or so before it expires.
Why should you maintain a Low Credit Utilization Ratio?
To maintain a stellar financial scorecard, the credit utilization ratio (the credit you are using divided by the credit limit you have) should be kept less than 30 percent. As the ratio will increases, your credit score will dip.
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COVID-19 Personal Loan: All you need to know
What is the Objective behind COVID-19 Personal Loan loans?
The worldwide COVID-19 spread which prompted the lockdown for businesses and organizations has affected our economy radically. The day-by-day wage laborers and the working class are the most noticeably hit segments of the population as many have lost their positions while many are going through pay cuts. Individuals have gone through their year's reserve funds they have hung on for survival during the toughest and uncertain year of recent times.
Thinking about each one of these financial difficulties, RBI and the government have taken different estimates like the cut on the repo rate, offering moratorium, and giving special COVID-19 loans. All these actions have been taken to help individuals who are enduring financial issues because of the Covid pandemic. These means won't just decrease their monetary burden but also give them cash to survive further monetary crunches. The COVID-19 personal loan guarantees liquidity of assets in the possession of the average person.
On the off chance that you have a savings account or a loan for which you have not missed any of the monthly scheduled payments i.e. EMIs in a public sector bank (PSB), you might have the option to benefit from another blessing of a product called the Coronavirus Personal Loan. Evaluated a lot lower than normal loans, this one is aimed to help existing bank clients with some emergency cash because of the impacts of the Coronavirus pandemic.
Some of the banks offering Coronavirus personal loans: Bank of Baroda, Punjab National Bank, Union Bank of India, Bank of India, and others.
Coronavirus personal loans can end up being helpful for individuals who are going through monetary deficits. The credit offers the greatest relief on the cost as the loan cost at which this loan is offered is very low than the normal rate. It begins @ 7% and can go up to 10%, contingent upon the borrower's credit report, pay, and reimbursement limit.
Who can avail of COVID-19 Personal Loan?
Coming to who can avail of these loans or the eligibility of personal loans, let us tell you that these kinds of loans are restricted to a select set of depositors, majorly the existing borrowers of the concerned bank. The no banking customers or the ones with a lending relationship with such banks may apply for personal loans. To ease the situation, some banks have also come up with new schemes like instant digital personal loans for existing account holders.
Extending a helping hand towards credit card holders, banks have now allowed them to apply for pre-approved loans against their credit cards. Generally, only the cardholders with a good repayment track record with their respective banks are eligible for these loans. Although the interest rates of these loans are comparatively higher than the regular loans, you can get the money disbursed within the same day of making an application. So the high-interest rates wouldn’t hurt you much.
There’s a good deal of existing home loan borrowers too. Generally, they get an option to avail of top-up home loans. But even here they don't have to bear an end-usage restriction rather they get a longer processing time compared to the regular personal loans. Since there’s a shortage of staff and most banks are working with limited employees, availing of this loan has become quite challenging.
However, due to this new normal, some banks have introduced a new scheme of instant top-up home loan schemes with guaranteed fast disbursals. The interest rates of these loans are significantly lower than those of personal loans. And the tenures of these loans are decided based on the residual tenures of the original home loan.
Note that the eligibility criteria for each of these loans differ from regular personal loans. So be careful while choosing a deal for you.
For example, the Bank of India is offering such loans only to the consumers who have a record of drawing salaries through the bank for at least a year, or to those who are already having a loan. Punjab National Bank (PNB), which has named this scheme as Sahyog covid-19, is also giving such loans to its existing account holders who draw their salary through PNB.
On the other hand, the United Bank of India is providing such loans to only those consumers who boast a salary account or have already taken other loans, such as housing, vehicle, personal, pension, etc., from the bank. UBI is offering a loan amount of six times the last credited salary or the pension of the loan applicant. More or less, UBI is offering a floating rate personal loan, which means the interest rate would change when the RBI will revise the repo rate. The bank is offering a moratorium for the first few months of the pandemic, till June-end as per the reports. The bank will add the interest accrued during the moratorium to the principal amount. And the applicant has to repay the loan within 57 EMIs.
Similarly, the Bank of Baroda ( BoB), is offering these loans to applicants who have an existing home, mortgage, or car loan with the bank. The loan amount for the COVID-19 loans will be decided based on the EMI of their previous loans. An applicant can only take 10% of the amount in the case of an existing home loan and 20% in the case of an existing car loan. This means an applicant who is already paying an EMI of ₹40,000 on the existing housing loan, can avail of the covid-19 loan in a manner that translates the monthly EMI into ₹4,000 (10%).
No matter whether the applicant is a self-employed or salaried employee, he should be BoB’s loan customer for at least six or more months and should have a record of paying the last three EMIs consecutively.
What is the amount of loan you can avail of?
For Salaried Individuals -10 times the amount of latest monthly gross salary income to a loan limit of ₹ 5 lakhs.
For Non- Salaried Individuals - 60 % of their last annual income based on ITR, which can go up to a maximum of ₹ 5 lakhs.
The loan limit in most banks ranges from ₹3 lakh-5 lakh, with no processing fee. With the bank chosen the minimum ticket size varies. For example, at the Bank of Baroda (BoB) the minimum sanction amount is ₹25,000. These loans are given to people who sought a moratorium on their ongoing loans.
This was launched about a month back and the initial response to BoB’s product was encouraging. Within six to seven days of launch, the bank had sanctioned 3,500 loans. UBI had disbursed around ₹26 crores in the initial days of the launch in early April.
However, the average ticket size varies from bank to bank. It is expected to be ₹1.5 lakh at BoB, on the other hand, UBI offers an average ticket size of ₹3 lakh.
What is the Rate of interest and other charges?
There is an interest rate of 7% p.a. and 10% p.a. for a covid-19 personal loan, interests for such loans are quite low. The interest rate on these loans is much lower compared to personal loans which vary from 8%-15% per annum. The tenure of the loan varies from 6 months to 5 years. For instance, under the 'SAHYOG COVID 19, Personal Loan Scheme for Individuals' at Punjab National Bank's the interest rate is only 8.05%. These rates are relatively lower and can be seen as some additional relief in the hard times. The prepayment fees are being waved off on such loans. Moreover, they also have low processing fees or sometimes you may not pay any fees too.
How can you apply for Covid-19 Personal loans?
Generally, availing of a personal loan would require several face-to-face meetings, documentation, verification, several processes, and formalities but right now everything is digitalized. Here you can easily do everything with no human contact. Yes, you heard it right, a completely contactless system.
The current economic status and Health emergencies have influenced the banking sector in our country incorporating new technologies which have led to the emergence of digital solutions and services.
Applying for a personal loan has become much easier and the processing at a faster rate by just having an account with the bank. Many banks also provide instant approvals of loans online and disburse funds anytime from a few minutes to a couple of days.
All you need to do walk into the nearest branch of the bank you wish to apply for. Meet the relationship manager and ask for an application for a personal loan.
If you are tech-savvy, the online application process and so much improvised software the process has become much faster, and just simply scan and upload the documents to speed up the action. Use the Net Banking facility of the bank, you can log in and apply directly at the bank you have an account. Banks allow you to check eligibility and other necessary things online.
No worries in case you don’t have an account with the bank. Just visit the bank's website, check the entire procedure and fill in an application form online. Many banks also allow you to request an application via email or through phone banking. After checking your application and eligibility, bank executives will call you if you're found eligible.
The most important document is the Income proof, it is a crucial requirement while applying for a personal loan. Submission of latest salary slip or recent income tax returns. Every bank has a different procedure and each of them requires different documents for personal loans but income proof is mandatory for a personal loan in every bank.
Other proofs that banks also require are address proof and identity proofs which can be submitted in the form of PAN Card, Driving Licence, Aadhaar Card, passport, utility bills among others. At times banks also ask for proof of employment, educational qualification, and license in case of self-employed businesspersons.
How credit bazaar can help you with loans?
Thanks to technology, nowadays, applying for a personal loan online has become quite simple and quick. There is a various online platform that provides an easy loan application system. One can use Credit Bazaar for applying for an online personal loan in a few simple steps. Here’s a quick guide for a personal loan online.
Visit Credit Bazaar, go to the loans menu, click personal loan and you’ll land on the following page.
On this page, you need to provide your basic personal details including your name, contact details, residential address, and so on. Here you also need to give information about the desired amount of the loan, the payback duration, your monthly income, and other installments that you’re paying presently. You’ll also need to provide details about your past loans if you have taken any. Now, hit the submit button.
After this, you’ll reach the following page. Here you’ll get to see a detailed comparison provided by different lenders. Here you need to mindfully compare the various available options of some important parameters such as ratings, interest rate, processing charges, pre-payment, etc. Take the one that goes well with your requirements.
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