If you are looking forward to purchasing a car, it has to be done in the right time or else you may miss the opportunity. It may not be solely possible to contribute the whole amount for the car in the first go but if you have some money and know that you can manage to pay the rest in installments, you should definitely go for car loan. This is easy to apply for and get and there are quite less hassles compared to other loans one may think of.
There are few tips that will help you manage a car loan better and make payment easy.
- While applying for the car loan, make sure to pay as much money as possible in the form of down payment. Down payment will reduce the remaining balance and your total interest will be lower. If you don’t have much, pay as much as possible. It is not a good idea to pay more installments and less as down payment. You can even reduce the number of years required for payment in case you make good down payment. Monthly burden for a long time is not going to give you any relief.
- Keep the loan term short as that will help you stay worry free. If you are taking a loan for four years instead of five years, you can have a year free of worries. The car will depreciate in value with each passing year and after five years it may not be as good as you want it. You may think of buying a new car at that point of time but if you have the loan going on, you will lose interest and may have to continue with the old one with quite less advantages.
- Take insurance for your vehicle but don’t get swayed by the add-ons. Add-ons definitely have some advantages but they increase the amount of premium. While some add-ons are beneficial, some are not. You shall not go for any such extra benefits without judging how frequently they are used. This is mandatory for every insurance holder.
- Choosing your car smartly will reduce your burden. There are some cars that are more prone to damage while some are not quite vulnerable. It is important to do proper market study before making the purchase. This will cause lesser depreciation and you will have lesser trouble while paying the car loan. Don’t just go for a luxurious car without thinking of the cost of maintenance and the high EMI. Take a car within your reach.
- Make a proper schedule for the EMIs to be paid. Automatic transfer from the bank is the best thing that you can do as that will make sure that the EMIs are paid every month without fail. The date shall be just 2 to 3 days after your payday. This will make sure that the installment is paid and you don’t have any impact on your credit score.
- It is very important to manage your expenses well if you have a loan to pay off. You have to make sure that you don’t use it for occasions you can do without them. You shall also take care of its maintenance so that you don’t have to pay much on the damage.
In spite of the changing trends and modernization, gold continues to be the most popular precious metal in India. It is not only popular for making ornaments, but also as a means of investment. Many people who still believe in the traditional methods of investment, opt for this precious metal. However, there seem to be heavy fluctuations in the price of gold in India nowadays and there are several factors which are responsible for these fluctuations. Let us study these factors in detail.
- International price of gold: One of the main factors behind the movement in gold prices in India is the international price of gold. Most of the domestic demand for gold in India is met by gold imports. Hence when the international prices rise, there is also a rise in the price of gold in India.
- Dollar value: When the dollar loses value, the price of gold rises and vice versa. This is because dollar is the most stable currency and when there is any turbulence global or domestic turbulence that can affect dollar’s strength, people’s investment in gold increases.
- Gold ETFs: There are other factors as well which affect the international price of gold. One such factor is the Gold Exchange-Traded Funds or ETFs. People invest in gold EFTs electronically and if there is a large redemption in these funds then it tends to affect the international price of gold, pushing the price lower.
- Demand for gold: Apart from these, the price of gold also depends on demand for the yellow metal from large consumption countries such as China and India. With most countries having high demand and lean seasons, gold prices also vary.
- Duties and other policy decisions: Any adverse policy decisions of government like imposing import duty on gold can affect the price of gold. Such duties make gold costlier in India which in turn affects consumption.
All these factors affect the price of gold in the international market and subsequently in India.
Rupee and the price of gold
The other important factor that affects the price of gold in the country is the movement of the rupee. When the rupee drops against the dollar in interbank trading, it causes an increase in the price of gold. This is the reason that it is necessary to keep an eye on the international price of gold along with the movement of the rupee against the dollar. If the price is steady for both then the price of gold will also be steady in the country.
The other factor affecting the price of gold is inflation rate. In the last few years there has been a high inflation rate in the country due to which the rate of gold has risen. This is not just true for gold but also for other commodities including food products. A rise in inflation causes a natural rise in the price of gold in the country.
Higher domestic gold inventories
India was the highest consumer of gold in the year 2014 and was second biggest after China in the first quarter of the current year. Due to the high domestic gold inventories, there was a drop in the demand for gold in the current times leading to a drop in the price of gold.
Concerns over monsoon
Farmers are the main factor leading to the demand of gold in the country. Due to a weak monsoon the farmers face financial difficulties leading to the sluggish demand for gold in the country. It is true that almost two thirds of the country’s demand for gold comes from rural areas. This is because jewelry is the traditional means of storing wealth for many rural Indians who do not have access to or faith in the formal banking system. This is the reason that when the monsoon is weak the demand for gold in the rural areas decreases and hence the price of gold falls.
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.
Personal loans may come as an easy option to fulfill immediate financial needs such as the wedding of a son/daughter, medical disbursals, etc., but paying the loan debt can become a niggling situation for the borrower, esp. if the amount is huge. If you also find it difficult to repay your loans, you must follow the listed below strategies to manage your debt situation without stressing your wallet.
- Pay costly loans first: Personal loans have higher interest rates, so it is good to pay off this first to reduce your interest burden going forward. Start by paying the maximum amount you can afford without jeopardizing the repayment of the other loans. Once you have cleared the most expensive loan debt, start paying the next big loan.
- Pay higher EMI’s with increased income: Instead of paying fixed EMI’s every month till retirement, it is good to pay higher EMI’s whenever there is extra income flowing in to close the personal loan debt as soon as possible. Do not splurge on the latest mobile phone or newest range of the car. Use the money to pay down your personal debt aggressively. Extra cash flows such as maturity incomes from life insurance policies and income tax refunds can be used to pay off these loans.
- Don’t forget to save: It is good to pay higher EMI’s on a regular basis even though your personal loan interest rate may be low. But don’t forget to save some amount for future as well even when you are dealing with ill fate such as unemployment, sudden hospitalization, increased medical expenses, etc.
- Use current investments to repay debt: If your personal loan interest rate has increased significantly, you can liquidate your current investments to make the payment. You can borrow money from your life insurance policy or pay off your personal loan debt using your PPF balance. The PPF allows the depositor to take a loan against the balance from the third financial year of investment, and the same can be repaid within three years. The maximum loan one can take from PPF is up to 25% of the balance at the end of the previous year.
- Cut down expense on dinners and movies: When it comes to paying off the loan debt on time, making little amendments in your life can work wonders in keeping your finances in check. While we have so far discussed different ways with which you can reduce your loan burden, you also need to make some changes in your lifestyle to save money and pay higher EMIs. By making lifestyle changes we mean cutting down expenses on movie shows, dinner dates, weekend getaways, excess shopping, etc. You can also avoid using a credit card and instead make purchases with cash. This will automatically help you save big and pay the loan without much hassle. This change in lifestyle is needed until the time all the loan debts are paid.
- Lower your spending limit: You can also talk to your credit card company representative to lower down you spending limit. You must also avoid taking new loans until the time you repay the previous loan. If possible, try to automatically debit your repayment dues to your bank account. In this way, the loan amount will be deducted automatically on the due date and you will not be left with extra money to spend unnecessarily. Remember, making late payment impacts your credit score negatively and you are required to pay a late fee as well which means more money disbursal from your end.
- Get advice from debt counseling centers: If all the aforementioned ways fail to work in your favor, approach a debt counseling center. These centers offer free advice and effective ways to help borrowers pay off the personal loan debt.
These are numerous ways to manage your personal loan interest burden. In addition to this, you can even liquidate your assets such as jewelry, property, etc. and pay the loan.