While availing a loan, the hardest part is to decide the type of interest rate one should choose. Ideally, banks/financial institutions provide many types of interest rate including, fixed interest rate, floating rate of interest, resettable fixed rates, partly fixed and partly floating rate of interest. Of all, the most prominent ones are:-
- Fixed Interest Rate: As the name suggests, the fixed rate of interest remains fixed throughout the loan period. However, this rate of interest is generally 1% – 2.5% higher when compared to other types of interest rates. Also, only a few banks offer the fixed rate of interest on loans.
- Floating Rate of Interest: Also known as adjustable, flexible or variable rate of interest. The floating rate of interest fluctuates as per the market or an index. So the borrower applying for this type of loan has to bear the risk of paying higher interest rates when the lending rates climb and can also pay lower interest rates when the lending rates drop by any chance. Loans with floating interest rates are slightly cheaper as compared to loans with a fixed rate of interest.
How is Interest Rate Calculated on a Fixed Rate Loan?
The interest on a fixed rate loan is calculated using the following formula:-
P = (R/1-(1+R)-N)Loan
P is the regular payment you make every period
R is the rate of interest per period
N is the number of periods
Loan is the total loan amount
To calculate R, the rate of interest, take the yearly rate of interest and divide it by the number of payment periods in a year. For instance, if you pay on a monthly basis and your loan interest is 4%, then your interest payment will be (0.04/12) = 0.003333 or 0.3333%.
To calculate N, take the loan term in years and multiply it by the periods in a year. Let’s assume your loan term is of 20 years and you make your payments monthly. In such a case, the N would be 12×20=240. Banks and other money lenders always give borrowers the option to choose between fixed or floating rate loans – as per their requirements.
Those who find this calculation difficult can use EMI Calculator to calculate the interest rate. It is an online tool that helps you to calculate the loan interest rate instantaneously. An EMI calculator has a user-friendly interface and, therefore, is easy to use. To calculate the interest rate, you simply have to provide the required information and get the results directly. You can experiment with the EMI calculator by adjusting the sliders. Apart from providing the exact information, you can change the amount, interest rate and loan term to get an EMI that is most suitable for you. You can recalculate the loan EMI as many times you want by using EMI calculator online.
Why is a Fixed Rate of Interest Loan Better?
As compared to floating interest rate, fixed interest rate loans are always a better option. Firstly, it does not carry any risk or uncertainties. Secondly, it is good for those who want to play it safe and don’t wish to pay more in any circumstances. The fixed rate of interest also means that borrower will not be affected by any increasing rates. However, the fixed rate interest loan is less prominent in India and also comes with a resettable clause.
All in all, loans in India have appeared as a boon for those who are in dire need of money to buy a new car or property, for their son/daughter’s wedding/education and other such requirements. But before getting any loan, one must decide on the type of interest rate, the processing fee and the monthly EMI they want to pay on a regular basis to the lender. Remember, the lower the loan interest rate, the lesser will be the EMI. Therefore, the borrowers who are interested to apply for a loan must choose the loan interest type wisely before borrowing the money from the lender.
What is IFSC Code
Indian Financial System Code or IFSC is a unique 11-character code assigned to a bank’s branch. The IFSC is an alpha-numeric code which consists of three parts – first four alphabetic characters which signify the bank’s name, the fifth character which is always 0 (keeping in mind future expansion) and the last six characters which signify the bank’s branch’s address. The last six characters are usually numerical but can be alphabetical too.
Use of IFSC Code
Online transactions are made safe, secure and easy through the bank’s verification of KYC data of both the sender and the beneficiary. Payer needs to confirm both his/her details and the payee’s details before the transaction is carried out. The beneficiary’s IFSC is verified before the payer is able to transfer money through all of such schemes as National Electronics Fund Transfer (NEFT), Real Time Gross Settlement (RTGS) and Immediate Payment Service (IMPS).
Housing Development Finance Corporation and its branches
HDFC Bank or Housing Development Finance Corporation is a banking and financial services company with headquarters in Mumbai. HDFC Bank also has international presence in areas such as Bahrain, Hong Kong and Dubai. Among India’s largest private sector lenders by assets and the largest bank with market capitalization, HDFC offers many baking and financial services such as retail and wholesale banking, loan and mortgages and credit card services. HDFC has an expansive no. of branches in the country with over 4700 branches and 12,000 ATMs in more than 2500 cities and towns. The bank also has an extensive connectivity to the rural areas of the country. HDFC bank has more than 84,000 employees, a profit of Rs. 12,817 Crore as of 2016 and revenue of Rs. 74,373 Crore as of 2016. As India’s economy goes digital at a rapid pace, banks including HDFC are tasked with a challenging task of reaching out to India’s every corner so that banking goes digital seamlessly.
How to find HDFC IFSC Code
HDFC IFSC code can be found: https://www.paisabazaar.com/ifsc-code/hdfc-bank/
- On the first page of your HDFC cheque book
- On the bottom left side of your cheque book’s leaves
- On the official website of HDFC Bank
- Reserve Bank of India’s website
- Other Third Party websites
Concerning the first two points, to encourage electronic banking, HDFC bank along with many other banks have agreed to RBI’s requirement to print IFSC codes on cheque books and individual cheque leaves of all of their customers.
Concerning the last three points, to find the IFSC of your branch online, you should know the exact name of your branch too. Along with your beneficiary’s bank’s IFSC, you also require other key details of your beneficiary such as Name, Bank Name, Branch Name etc. to send money through the various electronic find transfer modes.
A HDFC IFSC looks like HDFC0000485. It is made up of three parts-the first four alphabetic characters ‘HDFC’ identify the bank’s name, the fifth character is a ‘0’ is for future expansion and the last six characters, ‘000485’ are the ones which represent the bank’s branch’s address and are usually numeric but can be alphabetical too. Also, with HDFC accounts, if let’s say your account’s first four characters are 0720 than in most cases, the IFSC’s last four characters would be HDFC000720. However, it is pertinent to confirm your IFSC before proceeding for a digital transaction.
Tools such as IFSC enable you to make and receive safe, quick and secure payments, in conclusion, saving your time and money while letting you carry out the transaction at your comfort and convenience. Moreover, such transactions are reflected immediately in the sender’s and the receiver’s account. Transactions facilitated by IFSC are much quickly realized than transaction done conventionally through demand drafts and cheques. They are way safer, accurate and transparent too as the beneficiary’s IFSC is verified and only then the transaction is completed by the bank. Moreover, once the transaction is complete, all parties involved are informed through SMS and/or email by their respective banks. Also, digital transactions enabled through this code make it easier for the banks to reconcile and validate their data. In conclusion, digital banking through IFSC is making India a digital and transparent economy and we as a society should all encourage that.
Financial hardships in one form or another are a surety of life and everyone goes through ups and downs during their lifetime. In case there is a financial emergency, you might need to take a loan in order to tide over the hard times. One of the most popular options when seeking financial help in case of these hardships is a personal loan, however, this option does have a few problems such as high interest rates and a borrowing limit depending on your income. Additionally, such loans might be a lot more difficult to avail in case you are a self employed individual or do contractual work that does not have a constant revenue stream. In cases such as these, a gold loan can truly be a rescuer from hard times if you have the precious metal to use as collateral. The following are some of the key reasons why gold loans are preferred by many in order to overcome financial hardships.
Short Processing Times
A gold loan can be availed within as short a period as a few hours and in most cases the same day no matter who your lender is. No other loan currently features as short a processing time and this makes gold loans a popular choice if your own gold jewelry or coins and need to get hold of your money really fast. This processing time also include the time it takes for the in-house valuation expert to determine the value of the ornaments or jewelry to be used as security for the loan.
Another key benefit of the gold loan is the availability of multiple payment options. While most loans have to be paid in EMIs spread over the loan duration, a loan against gold has a unique bullet payment option. In case you avail this option, you only need to service the interest component of the loan during the loan tenure. Towards the end of the tenure, you can choose to make a single large payment and pay off your gold loan in one go.
Zero Pre-Payment Penalties
A loan availed using gold as collateral is one of the few borrowing options that you can hope to pay off without incurring the standard 1% to 3% penalty usually applicable to loan payments made before completion of their tenure. As a result of this, the borrower is in complete control when he/she wants to pay off her loan. This way you can save on interest charges that may be applied in case the borrowing was to run its original tenure. This is one of the key reasons why this secured loan is preferred by many.
Low Interest Rates
Aside from home loans, which incidentally is also a secured loan, a gold loan is probably the cheapest loan an individual can avail in terms of the rate of interest that is charged. This benefit definitely makes this asset-backed loan easy to pay off in a hurry, while the money to be borrowed is readily available in case of an emergency.
In case of most loans, the borrower has to worry about the wide range of documents that they need to submit. In case of a loan against gold, the prospective borrower can rest easy because he/she only needs to furnish the most basic of KYC documents mainly for identity and address verification purposes. Even a valid PAN card is not necessary unless the loan amount being sanctioned is above a certain limit. Also no credit score information needs to be considered by the lender, which further decreases the time to disbursal.
A loan provided using gold as security can have a tenure ranging from a few days to a few years, though in most cases, the maximum limit is fixed at 12 months. This flexibility is perfectly suited for individuals who might need a cash infusion in a hurry and can pay it off within a very short time once they have the money hand to pay the loan off.
In view of the above benefits, there shouldn’t be any reason to doubt how helpful a gold loan can be in case one is going through a temporary financial hardship.
If you have already decided that you will be taking a personal loan, be very clear about the purpose you would be using the funds for. It might be anything from home renovation to debt consolidation. The purpose should be clear because a personal loan is not a cure to all your financial problems but just a financial tool. Here are five things you should know about or rather five questions you should have answers to before taking a personal loan:
1). Where and how should you apply for a personal loan?
There are a number of ways through which you can apply for a personal loan online, offline or by availing doorstep services. You can either directly apply to a bank or financial institution or seek help from a financial marketplace such as Paisabazaar to choose the best possible option. While taking a personal loan make sure that you take it from a registered bank or financial institution and not from any illegal moneylender, doing so may land you in trouble because of their unregulated charges, rates and practices. You can apply for a personal loan in as less a time as 10 seconds, provided you are eligible for the amount required. You can apply online through financial marketplaces, official websites of the bank or through netbanking. For the offline mode you can either opt for doorstep services or visit the branch personally to apply for a personal loan.
2). What is the amount that you can borrow through a personal loan?
The amount offered as personal loan depends upon your income and your liabilities. Before you apply for a loan amount, make sure that your DTI (Debt to Income ratio) is less than 60%. Ensuring this will help you get your loan application approved easily. Depending upon the policies of the bank or the financial institution the loan amount offered may vary from 3-15 times of your monthly income in general.
3). How can you save the payable interest amount on your personal loan?
The interest rate charged on your personal loan primarily depends upon three factors: loan amount, tenure opted for and your credit score. Your relationship with the bank may also fetch you lower rates at times. In order to keep the payable interest minimum, you must compare the schemes offered by various banks and then choose the most suitable option with reasonable interest rates. You must also decide the loan amount and tenure wisely to keep your interest rates to the optimum level.
4). What all documents are required to apply for a personal loan?
The documentation requirement may vary from bank to bank, however, in general the following documents are asked for with a personal loan application.
1). Address proof such as Passport, Aadhar Card, Voter Id card, Utility Bill etc.
2). Id Proof such as Pan Card. Voter Id card, Aadhar Card, Passport etc.
3).Income proof (Latest salary slips or IT returns filed)
4). Last 6 months’ account statement.
5). What impact can a personal loan have on my credit rating?
A personal loan may greatly upgrade or degrade your credit ratings depending upon how you go about your loan repayments. If you pay your loan EMIs on time regularly, it will improve your credit ratings, and any late payments or default will reflect negatively on your credit ratings. Credit ratings or score are important for any type of credit requirement in future and it is therefore important to keep your credit ratings in check even under pressing financial needs.
Once you decide to take a personal loan, make sure that you have proper answers to the 5 questions listed above and you have evaluated your needs and income flow properly before actually applying for the loan.
A majority of salaried individuals tend to get worried when they see the TDS deduction on their pay slip and most wish that taxes were lower. This year the government seems to have heard this vast majority as the lowest income tax rate was effectively halved from the earlier 10% to 5%. But it is easy to forget that it’s not just the salaried individuals that have to worry about paying income tax as even self employed as well as corporations are liable to pay income tax. Through the years, various changes have been introduced in the way taxes are calculated, collected and paid, so let’s see if these changes including paying income tax online have been a boon or a bane for the stakeholders.
Fewer Paper Documents
The pinnacle of achievement for a digital society, according to many thought leaders, is a paperless existence. We in India might not be there yet, but with the introduction of the online income tax payment system, the submission of paper documents has definitely been eliminated to a large extent. In the past, everything required a paper submission and copies of these had to be stored carefully by the tax payer for up to 5 years in case there was an audit requirement. Moreover, when submitting these documents to the Income Tax Department, a prescribed order had to be followed and in case of a mistake, the papers often had to be filed anew. Thankfully these problems are in the past if you have been paying or have started paying your income tax online. The online system does not need any reordering of papers and in case you make a mistake while filling out the form, the error will get marked automatically allowing you to make the changes immediately. Additionally, rectifications and re-submissions too are a breeze as new documents just need to be submitted as scanned copies if required by the IT Department and not otherwise.
When paper documents are submitted, they have to be verified one at a time by hand and this requires a lot of time and effort. The online system uses interlinked databases like TRACES that automatically check the tax payer’s entries by running it through multiple databases simultaneously without any human intervention. The system automatically flags errors/mistakes/mismatching data based on the entries available on the various interlinked databases vs. the forms submitted by the income tax assessee. In case an error is detected by the system and the submission is flagged, the form is checked manually. Thus the system of paying income tax online saves time and there is lesser scope of errors creeping into the process.
Cheaper Cost of Collecting Tax
The old system of collecting taxes often required multiple tax collectors knocking on the tax payer’s door or sending out multiple notices to make errant individuals pay their taxes. Then there was the paperwork that had to be sorted through sometimes more than once to ensure that everything was in order. This required not just time but also an army of clerks, assistants, paper pushers, stenographers and so on. For the government especially the IT department, this was a problem because all these employees had to be paid out of the government’s coffers and thus the efficiency of income tax collection was quite low in the pre-digital age. When a tax assessee pays his/her income tax online, it no longer requires such a large workforce to corroborate these requirements due to the higher levels of automation that the online system provides.
Conclusion: Definitely a Boon
From the above points it is easy to conclude that the introduction of the system that allows individuals to pay income tax online is nothing short of godsend. The system is indeed a boon for both tax payer and the collection agency. Furthermore, the system will work even better as it gets even more streamlined in the future with the introduction of more efficient systems and technologies.