4 Steps to Follow before Applying for a Personal Loan

loans for youFinancial institutions provide credit to individuals to help them meet fund requirements, such as medical emergency, wedding, or a dream holiday. These loans are offered based on their credit history. The Credit Information Bureau (India) Limited (CIBIL) collects information from financial institutions to maintain credit scores for individuals across the country.

Availing of personal finance loans allows individuals to overcome any liquidity crises. However, before applying for the loan, it will be beneficial to know the procedure and the pros and cons of such credit facilities.

Understanding the loan application process

Most financial institutions in the country offer personal loans to individuals. However, the procedure may vary from one lender to another. Understanding the process and the rules and regulations of the institutions before making the choice is recommended. It is advisable to review the loan application form to comprehend the terms and conditions in order to make an accurate decision.

Here are four steps to follow before applying for a loan.

1. Check the interest rates

Each lender levies different rate of interest. Some institutions may offer fixed rates while others may offer reducing balance rate of interest. In the latter calculation, the interest is charged on monthly reducing balance determined after decreasing the Equated Monthly Installment (EMI). However, with a fixed rate, the interest remains the same during the entire loan tenure.

2. Determine the Equated Monthly Installment (EMI)

Lenders determine the loan amount based on the income of the applicants and their credit score. It is important to choose an EMI that may be repaid without facing financial constraints. It is advisable that all the EMIs do not exceed 50% of the borrower’s monthly income to prevent a liquidity crisis.

3. Understand the documentation

Some of the commonly required documents include an identity, age, and residence proof along with the duly filled application form. Furthermore, applicants may need to provide details of their income and bank accounts to the lenders.

4. Confirm the loan eligibility

Applicants must use a personal loan online calculator to determine their eligibility before applying for a loan. Any individual aged between 21 years and 58 years may apply for such loans. The minimum net monthly income must be at least INR 25,000 with two years of work experience. An online calculator will help borrowers to know the approximate amount they may procure as a loan.

Having understood the loan application procedure, here are three benefits of applying for such loans.

1. Collateral not required

Unlike other credit facilities like home or auto loans, personal loans are unsecured. This means borrowers do not need to provide any personal asset as collateral against the loan. In case an individual fails to make timely repayments, the risk of losing the asset is eliminated with these loans.

2. Quick approval

These loans require applicants to submit some basic documents for receiving approval. Furthermore, these are unsecured credit facilities that make it easier for lenders to sanction the loans. Since the loan approval is primarily based on the credit history of the applicant, an easy personal loan is disbursed within a short period of time.

3. Affordability

Contrary to belief, these loans are available at competitive interest rates. Furthermore, the processing fees and other charges are nominal, which makes it affordable for individuals to avail of these credit facilities.

Personal finance may be used for any legal purpose. This provides flexibility to the borrowers without limiting the use of these funds. Several financial institutions offer these loans and provide loan-related information on their websites.Individuals must conduct extensive research and review these details in order to land the best deal.

5 Simple and Effective Tips For Budgeting in The New Year

budgeting tips for new yearWell, we made it. We’re past the tumultuous year that was 2016 and now 2017 is upon us. What can we expect from this year? It’s hard to say, but one thing we can all afford to do a little better, is budgeting our finances.

That’s why today we’re going to look at 5 awesome tips for budgeting yourself in 2017, and ultimately leading yourself to a more successful year than the one that just ended.

5 Strategies For Improving Your Budget in 2017

The overall concept of a budget can be scary, but if you break it down into simple strategies, it becomes a lot easier to see how everything fits together. Here are five ways you can get your budget back under control in 2017:

1. Drop Unneeded Subscriptions

We all have things like a Netflix subscription, and possibly a few others, including that gym membership you keep saying you’ll use. When you look at these monthly spendings, they suddenly add up to a lot more than you would expect. Just a few $20 monthly subscriptions can add another $500 or more to your yearly budget.

If you have more than one video subscription, why not narrow it down to one you can’t live without? As far as the gym goes, you don’t need to pay someone to exercise. Take a walk around your neighborhood, go to the park, heck, even do pushups in your living room. Don’t let me money disappear from your budget on things you don’t use or need.

2. Create Alerts on Your Phone

I am one of those people who gets very forgetful with all the stress of daily life. Simple things like credit card payments would slip by if I didn’t have some kind of reminder in place. Life is complicated, so don’t depend on yourself to simply remember things like these. Set up alerts on your phone that give you a heads up when something is due, so you can take care of it before it becomes late.

Late payments can be detrimental to your credit score, and for some people, they can’t afford to lose any more points off their credit. Thankfully, you can utilize credit repair if you need to with this resource: www.debtsteps.com credit repair companies list.

Either way, keeping yourself on track to pay everything on time will help you budget better in the long run.

3. Break it Down Week-by-Week

If you break your budget down into weekly limits on your spending, you’ll have a better grasp of where you stand on any given day or time in the month. This also allows you to be more in tune with how much you have to spare, if any, on weeks where you might need to take a break and go out one night to reset.

This is why it’s also important to set realistic goals. You can’t completely cut yourself off from the possibility of going out to dinner one night or renting a movie when you’re bored. Financial health is important, but you also have to think about your mental well-being.

4. Make a List (and Stick to It)

Anytime you’re going out shopping for things you need or even things you want, keep yourself in budget by creating a list. For example, let’s say you’re going to the grocery store. You’ll probably be tempted to pick up a few things that are nice, but not completely necessary. We’re all guilty of it, but it can bring up a grocery bill pretty fast.

If you make a list and stick to it, you’ll stay within your budget by a reasonable degree. Most grocery stores also offer the ability to clip digital coupons and use them with your phone number at the register. Take advantage of programs like this to save even more money when you’re shopping.

5. Keep Track of Everything

Our final tip is one that comes straight from my own strategies. I like to keep track of everything in my budget using an online spreadsheet that I customize myself. It allows me to write down all my bills and expenses in one place and keep track of the due dates. When it comes time to pay something, I just utilize the miracle of mobile banking to get it done.

I marked the bills as paid in my sheet and I can refer to it at any time of the month to see where I stand on budgeting. It’s an optional, but very helpful way of keeping track.

Final Thoughts

We’re in a new year, full of new possibilities. It’s time to think about how you can restructure your budget and make this year better than the last. How do you plan on improving your budget this year? Let us know in the comments!

Important Points for a Successful Home Loan Closure

home loan closureHome loan closure brings relief and increases financial standing since you no longer have to pay a large chunk of money as EMI. But when closing a home loan, you should complete all relevant formalities to keep the procedure smooth and hassle-free. You must keep in mind that paying the last EMI does not close your home loan. You have to get a formal letter from your lender stating that your loan is officially closed. Below are some pointers that will help you closing your home loan successfully.

Collect all your original property papers

Around the time of loan disbursal, after you apply for a home loan, your lender asks you to submit a number of documents that generally vary from one lender to another with some documents being common. When closing the loan, make sure the lender returns all your original documents. Usually all banks submit the following papers:

● Power of Attorney
● Sale deed
● Conveyance deed
● Builder buyer agreement
● Possession letter
● Payment receipts
● Transfer permission
● Tri partite agreement

Get security cheques

Most lenders take security cheques at the time of loan disbursal just in case the borrower defaults on EMIs. Once you close your loan, ensure that you get the security cheques, if any, back and when you do, destroy them for good.

Obtain No Objection Certificate (NOC)

Ask your lender to provide with an NOC as a proof of full and final repayment as well as closure of your home loan. The NOC comes handy for lien removal and also in case, you sell off your property.

Get the lien removed

You can simply go to the registrar office with the NOC from your lender to get the lien removed if your lender delays in doing so. Removing the lien means that lender can no longer keep the possession of property any more.

Update CIBIL

You should request your lender to update your CIBIL information as a successful home loan closure. Without a CIBIL updation, you may face issues if or when you need to avail credit from any financial institution.

Avail other documents

Other than the documents you submitted to the lender at the time of home loan disbursal, you should also ask for other important documents like a complete loan account statement, principal certificate and interest certificate, which are important for filing Income tax returns.

How to Get Home Loan with a Low CIBIL Score

understanding bad credit scoreThe biggest nuisance with applying for a home loan is getting the application rejected. While there are many reasons that lead to a loan disapproval, having a low CIBIL score is a major factor, which makes getting a loan seem impossible. However, there are several ways around the CIBIL score that can get your home loan approved. Here are some alternate ways that may help you to get your home loan approved, irrespective of your CIBIL score.

Consider your income

If your source of income is good enabling you to repay your home loan on time without adding any financial burden on you, you can get your application approved even if your CIBIL score is lower than the required number.

Check your family’s CIBIL score

If you have a bad CIBIL score, you should consider the score of your spouse, either one of your parents and other family members. With a good CIBIL score in the family, you can request them to get your home loan application approved by simply becoming a joint loan holder.

Turn to lenders that offer loans with low CIBIL scores

There are certain NBFCs and HFCs that offer home loans to even individuals with a low credit score. But you may get stuck with comparatively high interest rates on the loan.

Go for loan against collateral

To get a home loan with low CIBIL score, you can even go for collateral security, which includes FDs, shares, assets, etc.. For such loans, lenders don’t bother about the CIBIL score of the applicant.

Getting a low-interest home loan with a CIBIL score of 0 or -1

A CIBIL score of 0 or -1 means you have no credit history that a lender can go through to determine the status of your loan application. You can simply talk to your lender about your creditworthiness and ask for help to get the ball rolling. Show your income proofs, credit appraisals, employer and employment details, etc. to the lender to negotiate the rate of interest.

Once you have secured your home loan with 0 or -1 CIBIL score, make sure that you pay it off on time to get this recorded in your CIBIL report for future reference. Also, keep in mind that foreclosure and arriving at a settlement with the lender is bad for your CIBIL score.

Government Employees Can Choose Their NPS Fund Managers

pension plansThe National Pension System (NPS) is a defined contribution retirement plan offered by the government. The plan is regulated by the Pension Fund Regulatory and Development Authority (PFRDA).

Subscribers must avail their Tier 1 NPS accounts with one of the PFRDA-appointed Point of Presence (POP). The contributions may be invested in 3 asset classes’ viz. equities, government securities, and corporate bonds. These funds are managed by professional fund managers designated by the regulator.

NPS is compulsory for government employees except the armed forces. The plan is optional for the private sector personnel. An increasing number of private sector employees are choosing NPS to take advantage of the various tax benefits available under the Income Tax (IT) Act.

Here is how government employees may choose fund managers

Permanent Retirement Account Number (PRAN)

Applicants are updated about their PRAN application status through an email or SMS. This number is unique for each subscriber, which makes the NPS account completely portable. The applicants may check the status with the POP or the regulator’s website in case the PRAN card is not received.

Choosing the fund manager

Government employees did not have the liberty of choosing their fund manager as available under the All Citizen Model. The state or the central government had the responsibility of choosing the fund managers. However, recently, PFRDA announced that public sector employees will now be at par and may choose their preferred fund manager to handletheir NPS contributions.

Being able to choose their preferred fund manager provides the subscribers an opportunity to assume higher risks and enjoy better NPS interest rate. The returns on NPS contributions depend on the percentage that is invested in the different asset classes. Therefore, by investing the maximum permissible amount (50% of the total annual contribution) in equities offers investors the chance to earn higher returns.

Changing the fund manager

The private sector personnel also have the option of changing the fund manager in case they are unsatisfied with the services. The proposed modification by the regulator also makes the option of changing the fund manager available for the government employees.

Opportunity to earn higher returns

The public sector employer matches the annual contribution made by the employees to the NPS. Having the option to choose their preferred fund manager allows the subscribers to take advantage of investing more in equities, which may potentially increase their returns.

The NPS corpus may be withdrawn on maturity. Investors may withdraw 60% of this amount as a lump sum. The balance must be compulsorily converted to an annuity plan. Subscribers may use a pension plan calculator to estimate the potential returns on their investments.

The revised norms for government subscribers make NPS beneficial for the investors. They may now choose the fund manager and the investment breakdown to maximize their returns.However, the existing system of the government choosing the fund manager will also continue for those subscribers who do not want to make their own choice.