Month: December 2016
Home Loan Tips
You visualize your dream home in your mind much before you actually find it. Once you get your dream home there is no looking back, but your finances may not necessarily keep up with your dreams. So, where there is a will there is a way. There are a number of home loans to transform your dreams to reality but you always have to have a few things in your mind while you pick a home loan.
- What you can afford – The best sort of loan is the one that you can afford and is easy on the pocket. Do not take impulsive decisions while you select a property. Your house is a basic necessity so, do not play with your present circumstances and put financial burden on yourself.
- Save for down payment– Save up! It’s best if you can pay as much as you can as down payment. Paying more as down payment and not as loan will be easier for you.
Eventually you have to pay less interest on the money.
- Check with multiple banks-Before you actually go and apply for a loan. You need to do a little bit of survey. Check and compare loan schemes so that you can opt for the best deal. Don’t be impulsive and go through all the terms and conditions of the deal.
- Go for loan consolidation– Nobody likes to pay multiple EMI’s in a month. Be a smart buyer. Loan consolidation, reduces the amount payable per month as you are only paying one EMI. By consolidating loans running simultaneously, you would not only reduce the instalments each month but also the rate of interest which you would be paying on multiple loans otherwise.
- Contingency fund- Having a contingency fund is a must at all times. Prepare yourself well. Suppose you plan for a long vacation and you end up overspending. Now where will you pay your EMI from? This is where your contingency fund will act as your money cushion to fall back upon. Save up money that is equivalent to 3 months of your payment amount even after you have paid off your down payment.
- Do not fall for Schemes- Real estate developers offer a lot of alluring schemes and offer to attract more takers. Though most of the people are well aware of these financial gimmicks but still a few of them end up getting trapped. So, beware.
Hope these home loan tips help you find the right home loan!
Home loan is an instant way to get cash and fulfill financial liabilities such as marriage of a son/daughter, their studies, your much awaited vacation, etc. However there are certain eligibility criteria’s, requirements, paperwork, and formalities that a new loan applicant has to conform to for an easy home loan approval. It is naturally very difficult for the person to get all the things right initially while he/she apply for a home loan. So we have dug deeper into the matter and have put together the list of easily avoidable issues faced by rejected home loan applications.
The top 5 reasons for Home Loan application rejection include:-
- If your home address is in the bank’s loan defaulters list
If you stay at a residence that is on the defaulters list of the bank, there is a high probability of your loan application being rejected. In India, every bank or financial institution has a separate list of defaulters in their database. This means if you live in a house of someone who has earlier skipped paying the loan debts or credit cards dues, you will have to deal with the poor circumstances and constant rejection in your loan application.
- If you have huge pending debts
No bank or lending institution will approve your home loan application, if you already have long standing pending dues accumulated through credit cards, late EMI payments and pending debts. You can overcome this issue by paying up and then applying for a new loan. Also you need to make sure that the CIBIL updates your data before you apply for a loan as poor CIBIL score also leads to home loan application rejection.
- If you have many outstanding dues
You home loan application will also be rejected if you are already juggling with too many debts. This is because, too many debt means more EMIs & the higher ongoing credit repayments and less income in hand. So if another loan will make it difficult for you to repay effectively, then your loan will be rejected.
- If you are a guarantor of a defaulter
You might not even thing twice while becoming someone’s loan guarantor, but this could hamper your loan approval chances significantly if he/she turns out to be a loan defaulter. Thus to avoid getting into such a scenario, it is always good to think twice before becoming someone’s loan guarantor. If they fail to pay the debt, you might have to repay the loan on their behalf or maybe end up getting your housing loan application rejection.
- If you are in the age of retirement
You loan application can also be rejected if you are nearing retirement age. This is mainly because at your older age you will have no repayment capacity after a few years. However there are few banks that may lend you short term loans up to your date of retirement but that would be of no use as huge loan amount will lead to higher EMIs that would overburden you. Hence, banks are most likely to reject housing loan application in such a scenario.
In addition to the above mentioned factors, your housing loan application may also get rejected in case you don’t file your income tax regularly, you have a poor credit score, your loan application has been rejected before or if you are a job hopper. In sufficient funds, inadequate deposits, any sign of instability are other significant factors that may lead to loan application rejection.
Banks reject home loan applications for a variety of reasons that not every customer can navigate. But keeping a tab on the aforementioned factors can significantly help you in your home loan approval. You must also make sure that all your finances are in order before applying for a home loan in any of the bank or financial institution.
SBI or State Bank of India, one of the leading financiers in India, offers special car loan scheme to allow customers to purchase a second-hand car with ease. You can use this loan scheme for the purchase of any second-hand SUVs, MUVs that are not older than 5 years. On top of that SBI Used Car Loan interest rate is comparatively lower and has easy repayment options as well which make this one of the most popular loan schemes of this category.
Features and Benefits of this SBI Loan
This used car loan offers:-
- Easy payment options
- The SBI car loan interest rate is very affordable
- Zero advanced EMI
- Flexibility to pay the EMI anytime in a month
- Mere 2% of pre-payment penalty
- Interest Calculated on Daily Reducing Balance
- Optional SBI Life cover available to applicants
- 7 years of longest repayment tenure
- LTV up to 85% of the car’s on-road price including registration, insurance, and accessory items of up to Rs 25, 000
- Processing fee is also low and equals 0.51% of loan amount sanctioned
Eligibility Criteria for the Scheme
Private and public sector employee
- Gross yearly earnings of the applicant and co-applicant (if any) for SBI car loan should be not less than Rs. 3,00,000/-
- The maximum loan amount should be 48 times of the Net Monthly Income
Self-employed, businessmen, proprietor
- Gross income (taxable) of the applicant should be Rs. 4 lakhs at least (the income of co-applicant cannot be combined).
- The maximum car loan amount sanctioned should be 4 times gross income (taxable) as per ITR after repaying all the existing loans
Person engaged in agricultural and allied activities
- Gross Annual income of the applicant and co-applicant collectively should be not be less than Rs. 4,00,000/-
- The maximum loan amount should be 3 times of Net Annual Income
Documents Required For This Loan
- Bank statement of the previous 6 months
- A copy any Government identity proof is mandatory for car loan
- 2 passport-size photographs
- IT Returns or form 16 of last 2 years
- A copy of Driving License/ Ration card/ Passport / Voters ID card/Telephone Bill/ Electricity bill/Life Insurance policy as an address proof
- Recent salary slips or form 16 as an income proof
- Bank statement of the last 6 months is required for SBI used car loan
- Identity proof – a copy of PAN Card/ Voters ID card/ Passport/ Driving License etc.
- Address proof – a copy of Driving License/ Ration card/Voters ID card/Passport /Telephone Bill/ Electricity bill/Life Insurance policy, etc.)
- 2 passport size photographs
- Income Proof: ITR for last 2 years
- T. Returns or Form 16 for the last 2 years
- Audited Balance sheet, SSI registered certificate / sales tax certificate / shop & establishment act certificate/ a copy of partnership
Person engaged in Agriculture and allied services (Dairy, Poultry, and Plantation)
- Bank statement of the last 6 months
- Identity proof – a copy of Passport/ Voters ID card/ PAN Card/Driving License, etc.
- Address proof – a copy of Ration card/Voter ID card/ Driving License/Telephone or Electricity Bill/Passport /Life Insurance policy, etc.
- 2 passport size photographs
- A proof of direct agricultural activity (crop cultivation) showing a cropping pattern and land holding with a photograph.
- All land should be on an ownership basis and ownership proof to be in the name of the person applying for the car loan.
- Written proof of managed activities.
Repayment: The loan offers the longest repayment period of 84 months to the customer. This means borrowers can enjoy lower EMIs and pay the loan debt without overburdening them.
Processing Fee: SBI charges a flat processing fee on car loans equaling 0.51% of the sanctioned amount in case of second-hand cars.
SBI Used Car Loan Interest rates: The State Bank of India charges 0.45% of over base rate for applicants who are men and for women, the bank charge over the base rate of 0.40% on its used car loans. Interest rates differ widely on loans in case of certified used cars and for loan tenure that exceed 3 years.
Loans are an easy way to fulfill financial liabilities such as your child’s education, their marriage, your much-anticipated vacation and a lot more. However, the banks have segregated the concept of loaning into various types. There are personal loans that you can use to fulfill your personal requirements or monitory contingencies. Moving on to the next loan categories, there are car loans and a home loan that allow one to buy a car and a home respectively without worrying about the expense. Gold loan is yet another significant concept that allows you to get instant money in exchange for your precious gold.
If you are planning to get a loan to fulfill your personal liabilities but are perplexed about which loan scheme to choose, it is advised to choose either a gold loan or a personal Loan. Both can be used to fulfill urgent financial needs but there are certain pros and cons of both that you need to know before filling up the loan application.
What is a personal loan?
A personal loan is one of many types of loans that can be borrowed from banks. It can be used to pay the consolidated debt, house renovation or any other unexpected expenditure. Personal loans are more difficult to get and have strict eligible requirements. To get a personal loan, you must know that:-
- Personal loan is unsecured loans
- A personal loan has fixed loan amount. The better your credit score and higher your income, the more money you can borrow
- The personal loan usually has fixed interest rates based on your credit score. The better your credit score, the lesser interest rate you’ll have to pay and vice versa
- A personal loan may affect your credit score. Therefore paying personal loan EMIs on time is the best way to keep your credit score unaffected
What is Gold loan?
As you might understand from the name, Gold loan is given against the gold. Many private and national banks, as well as other lending firms, offer this loan at attractively low interest rates. Many people get this loan for short term requirements to meet the needs of their children’s education, business expansion, child’s marriage and other emergency expenditures. Popular options include HDFC, Manappuram, Muthoot and SBI Gold Loan. Some key features of Gold loan include:-
- The gold loan does not require any other collateral except Gold. This makes easier for self-employed and unemployed people to get this loan.
- The gold loan involves no/less paperwork. Just an ID proof along with address proof is enough to get this loan.
- The gold loan has lower rate of interest (generally 12-16% per annum). It is far lesser than a personal loan that charges 15-26% interest rate per annum.
- The borrower gets the option of only paying interest during the loan tenure and at the end of the loan tenure, you have the option of paying off the remaining loan amount due in a single shot.
- Gold loan processing time is much shorter than other borrowing options.
- In rural areas Agricultural loan against gold is also available for agriculturist at very low rate of interest (7%-8%). However one needs to provide a proof of agricultural document to get the loan.
Gold loan vs. personal loan: Which is better?
Ideally, Gold loan is better than the personal loan as it offers faster processing, minimal documentation, zero pre-payment fees, and no EMI option. So now if you have a good amount of gold hoarded in your locker and you have immediate requirement of cash for your personal needs, it is good to make use of the gold instead of choosing personal loan option on higher interest rates.