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Showing posts with label Credit. Show all posts

Personal Loan - Tips To Get The Best Loan For You

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Whether it is to buy the latest model of smart phone, modify the house to accommodate additions to the family, to fund weddings or need to go on a vacation for which kids have been asking you for long or at all to deal with an unexpected emergency- there are times when we all need to have a large amount of extra cash. And when you are short of this extra cash to get those things, personal loans are one of the methods of making it possible. All personal expenses you want to make can be made by availing a personal loan.

Personal Loan - Tips To Get The Best Loan For You

Personal loan is an amount which you can borrow from banks, money landing agencies, credit card companies or from any other authorized or unauthorized organizations on certain decided conditions and interest rates. But it's hugely important to make sure you get the personal loan that's right for you to avoid problems in the future.

Personal loans are one of the most expensive forms of loan available in the market. Choose carefully after conducting due research and understanding of the cost & the benefits involved. So 

What are the tips and check points before you go for a personal loan ?


Opt for the minimum required loans

The golden rule of personal loan is that one should take out the smallest loan which you can and arrange to pay it off as quickly as possible. If there is any delay in payment of loan instalments, the loan amount would get compounded along with interest and could create problems in the long term.

Choose a reputed bank or lending agency

While applying for any personal, ensure that you opt for a reputed bank or a lending agency which are customer friendly and do not indulge in malpractices. There have been instances of people who have been burdened by the unfair charges being levied by the unscrupulous organizations. Avoid money lenders for taking personal loan as it can become quite cumbersome to repay the hefty amount of interest.

Know the interest rates in advance before signing the loan agreement

The most important tip for you to get personal loan is the check before hand the interest rate being charged to you. Also ensure that the interest rate mentioned in the loan agreement is the same as discussed with you. Also insist on getting the copy of the loan agreement for the interest rates and the terms and conditions of the loan.

Check the expenses involved

There are usually 2 types of charges that are levied when applying for a personal loan. First, at the time of application which can typically vary between 2-3% of the Loan amount?   And secondly, when you prepay your loan i.e., if you pay-up the loan before the loan tenure then, there is a prepayment charge varying from 2-3%.

Check whether loan is subject to any collateral securities?

If the bank or the lending agency is offering you a low rate loan on the basis of any collateral securities like your house or car, the low rate of loan may sound good but if you happen to default on payments, the bank can take over your security, putting you in difficult situation. Therefore avoid any loan subject to collateral and go for pure loan based on your repaying capacity only.

Impact on credit rating in case of any defaults

While applying for a Personal Loan, make sure you borrow within your means or else the repayment will become a long and tedious process which could affect your credit history and credit score if you have outstanding payments. If your credit rating is affected due to defaults in payments, then you may not be eligible to avail necessary loans like home loan or car loans if required.

These are some of the tips for you before opting for a personal loan. Though personal loans are easy to get but if they are not handled properly, these can create an uncomfortable situation for you. Therefore choose your personal loan carefully after conducting due research and understanding of the cost & the benefits involved.

How to Save Interest On Your Credit Cards Balance?

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Tips to Save Interest On Credit Cards Balance
You have received the credit card bill for the smartphone purchased last month and the payment of the bill has become due. If you are not having enough money to pay, you are given an option to make payment of minimum amount due instead of the total bill by the card provider. Most of the buyers who use credit card to purchase high priced goods face this situation once in a while.

If you prefer to live on credit cards spending and don’t know the ins and out of credit cards, you are more likely to jeopardise your financial planning as the higher rate of interest charged for the unsecured credit card debt is going to cost you dearly. 

There is no doubt that Credit card is an easy alternative of carrying cash for shopping as well as for emergency purpose, but if you do not use your credit card wisely and falter on timely payments, it can spoil your personal credit reports. 

Tips to Save Interest On Credit Cards Balance


Credit card interest can become very costly burden, so knowing how to avoid it is important. Whether you’re new to credit cards or an experienced one, these tips can help you save money :

Use Interest Free Periods


Most credit cards offer interest free periods on purchases from the date of purchase to pay your bill. This can be a great way of saving money on interest if you are buying an expensive item. The grace period usually varies between 45 to 55 days depending on the card you have. To avail this, you need to check the billing cycle i.e. the period of your bill. The interest free period will usually start on the first day of the new billing period and if effectively used it can give a benefit of interest free payment upto 55 day on your purchases.

Pay Off Your Balance Debt


If you wish to save money on credit card interest, most important thing to remember is to pay off your balance in full at the end of each month. While it can be easy to only pay the minimum amount payment, you will only be paying off the interest and not your actual debt. Most credit card companies are charging hefty interest rates from 24% to 36% annually on the balance debt in your card. When you pay off your balance, you won’t have to worry about interest accumulating – and your credit card will be all the more healthy and improving your personal credit history. 

Always Make Your Payments On Time


It is always advisable to make payment of your credit card bill on time and at least two days before your payment due date in order to get your payment cleared. By this way you can do lot of savings on credit card balance as all the credit card issuers charge interest on balance as well as late payment fees which is usually quite high. You should know that credit card companies are not gaining from those customers who are paying on time but those who miss their payment due dates.

Pay Off the Highest Interest Rate First


In addition to making minimum payments on all cards, pay more on the card with the highest interest rate, so you pay off the total amount on that card first. Then work your way through your other cards. This will save you the most money.

Pay Off the Smallest Debt First


Keep making minimum payments on all cards, and pay more on the card with the smallest debt, so you pay off the total amount on that card first and make it debt free.

Balance Transfer Credit Cards


If you are having a couple of cards and are not comfortable of paying the credit card debt in one go, one way to start on paying off your credit card debt is with a balance transfer credit card. These days almost all the credit card issuers are offering balance transfer facility to the existing card holders. By transferring the balance of your existing credit card with a new balance transfer card, you will pay less interest, and can start paying off more of your debt and increase savings. Try to choose a balance transfer card that offers the lowest interest rate for the longest period of time. 

Attractive Offers


There is a wide range of introductory offers available on many credit cards for purchase of expensive consumer items. If you want to save money on interest, check out intro offers on purchases. With this type of offers on card, you will pay low or no interest on purchases for a certain period of time. As with balance transfer offers, be sure to pay off your debt before the offer period ends.

Choose Low Interest Credit Cards


Always try to find the cards which have no frills attached to it such as rewards points and complimentary insurances. They are usually a cheaper way of getting credit especially if you tend to carry forward your balance month-to-month. 

Close multiple Cards


Finally, stop using all of your credit cards except one, and try to only use it for emergencies. Keeping many cards may tempt you to make purchases on impulse which you may not need and add to your debt. Dispose off the card by cutting it up and close the account by contacting your card provider. This is important because if you just cut up the card , you may still have to pay fees, even if you are no longer using the card.

By using above tips, you can do a lot of savings on your interest payment and increase your personal credit report to improve your personal credit history for your future financial transactions. 

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Credit Card Finance Charges- What You Need to Know

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A finance charge is the monthly fee that a creditor charges credit card holders for outstanding balances. It’s the price you pay for carrying a balance on your card, and if you avoid them, you’ll reduce the cost of having a credit card.
Credit cards are convenient especially in case of emergencies. They’re also necessary to complete certain transactions, such as making a hotel reservation. John boldly paid for the the medical urgency of his old ailing mother by using his credit card, however, later he realized that after paying off the credit card dues, his finances were in a mess as he had paid lot of money as finance charges for installment and late payments..

These credit card benefits of emergency or compulsory usage come with a high price attached if you’re not careful. Creditors apply finance charges to your monthly statement for any outstanding balances from the previous month. Those fees add up and can easily get out of control if your card has a high interest rate and/or you make only the minimum payment every month.

Finance charges can get out of hand, but if you accelerate your monthly payments you can reduce their impact on your finances.

What are Finance Charges?


A finance charge is the monthly fee that a creditor charges credit card holders for outstanding balances. It’s the price you pay for carrying a balance on your card, and if you avoid them, you’ll reduce the cost of having a credit card.

The grace period – the time you have to repay the balance without finance charges- varies from 30 days to the timing of your credit card statement. Once the purchases appear on your statement, you should pay off the balance in full to avoid finance charges.

Finance Charges You Can’t Avoid


You cannot avoid finance charges if you carried a balance at the start of the billing cycle. Most creditors only extend a grace period if you paid your previous balance in full.

Cash advances and balance transfers do not have grace periods, so finance charges are calculated from the moment the transaction is processed on your card. The only way to avoid these charges is to stay away from them completely. The only exception is when you’re using your card during a 0% interest rate period. You can carry a balance during that period and avoid interest charges, but you must pay off the balance in full to avoid finance charges.

How to Avoid a Finance Charge?


Choose cards with no annual fees: 
There are so many cards that do not charge an annual fee that there’s no reason not to get one. It’s the only way to avoid service fees if you do not use the card.

Read the terms and conditions: 
Go through the fine print thoroughly before you activate the card. Find out how the interest rate and finance charges are calculated. Stay away from the card if the lender has a habit of raising the interest rates.

Look for the universal default clause: 
This clause gives creditors the right to raise your interest rate if you pay your bill late. The higher your interest rate, the more finance charges you’ll pay if you don’t pay off the balance. It’s critical that you pay your bills on time if your card has the universal clause.

Pay off your credit card dues in full every month: 
Find out what the grace period on your card is – if you have one. Grace periods typically run from 20-25 days, which gives you some time to pay off your debt and avoid finance charges.

Review the balance transfer fees: 
Before you cash in the balance transfer check that came with your statement, examine the terms because balance transfers are subject to higher fees.

Finance charges keep creditors in business and are detrimental to card holders who let their debt spiral out of control. Pay off your debt in a prudent manner and you’ll avoid finance charges altogether.

Why 0% EMI Schemes are not really Interest free..?

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EMIs or Equate Monthly Installments means that you can buy an item of high value today for which you can make payment by EMIs in pre-decided period of time with or without interest. Banks temp consumers to make big-ticket purchases by offering to break up credit card payments into EMIs or Equate Monthly Installments. Consumer durable manufacturers offer the zero per cent facility mostly on high-value products such as smartphones, LED TVs and premium home appliances.
Do you really think that the interest free or 0% EMI schemes offered by companies are actually interest free? Have you ever wondered why any company or a bank would offer you something free of charges?

If you are not able to understand this, then you are the person who is being lured by the companies in the form of interest free or 0% EMIs schemes to purchase high cost  consumer items you have been vying for.

What are  interest free or 0% EMI schemes?
EMIs or Equate Monthly Installments means that you can buy an item of high value today for which you can make payment by EMIs in pre-decided period of time with or without interest.
Banks temp consumers to make big-ticket purchases by offering to break up credit card payments into EMIs or Equate Monthly Installments  Consumer durable manufacturers offer the zero per cent facility mostly on high-value products such as smartphones, LED TVs and premium home appliances.

What is the catch?
There are many hidden costs which the consumer fails to identify and becomes a loser..
Like:
No Discount:  If you opt for an EMI  finance scheme, you forgo the discount which is available on an upfront payment.
More Charges: You pay more charges in the form of processing fees, file charges and shipping or installation fees.
Additional Credit card debt: You are tempted to buy through credit card which ultimately adds to your debt.
Buying stock clearance items: The easy finance schemes are used by retailers and manufacturers to clear the inventory of goods.

How 0% is not really 0% 

Suppose you plan to buy a laptop costing Rs 30000,
  • ·         If you pay cash, you get 10% discount
  • ·         If you opt for 0% EMI scheme, you forgo the 10% discount of Rs.3000
  • ·         You pay processing fee of Rs 1500 for EMI scheme
  • ·         At an EMI of Rs 5000 for 6 months, you pay 31500 along with processing fee.

·       This means you pay 4500 extra for a product which could have cost you Rs 27000 had you paid upfront 

This additional money of Rs. 4500 is 16.66% extra for a period of 6 months with an annualized rate of 33% interest.

The interest component in a zero per cent scheme is often camouflaged and passed on to consumers in the form of a processing fee and charges. The concept of zero per cent interest is non-existent and cannot be.

Loan consolidation to avoid complications of multiple loans

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The act of debt consolidation involves taking out a new loan in order to pay off several other loans or debts. Taking a new loan is beneficial especially if it is available at a lower interest rate.
Several banks have been offering various easily-accessible loans for almost everything, ranging from a motorcycle to a house; but having many loans and credit cards from different banks can make life tricky.

Having several loans or keeping several credit cards from different financial institutions makes it hard to ensure that EMIs for the loans are paid on time.

To avoid any such situation, the best suggestion is debt consolidation.

In simple words, debt consolidation can be described as an act of merging or mingling many loans or credit card liabilities into one loan.
The act of debt consolidation involves taking out a new loan in order to pay off several other loans or debts. Taking a new loan is beneficial especially if it is available at a lower interest rate. In addition to providing simplicity of a single loan and a greater ease in making repayments, the new loan at a lower interest rate will also bring the burden of interest down.

India banks offer loans against property. The lower rate of interest and longer tenure of repayment make these loans the ideal consolidating instrument.

How to avoid Credit Card misuse and frauds

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Credit card fraud is a big problem these days. It’s your responsibility to protect your card and use it safely. Despite your best efforts, if you think your card details have been copied or stolen tell your card provider straight away.
Credit card fraud is a big problem these days. It’s your responsibility to protect your card and use it safely. Despite your best efforts, if you think your card details have been copied or stolen tell your card provider straight away.

Follow these basic rules to help reduce the risk: 

  • Don’t let anyone else know your PIN (personal identification number). Your PIN is the security number you get with your credit card. You will be asked to input your PIN when you buy something with your card or withdraw money from a cash machine (ATM). If you think someone knows your PIN tell your card provider straight away. If you don’t, and someone else uses it, you may have to repay the money owed. 
  • Keep your card in sight. When you are paying for things in shops, restaurants or anywhere else, you should be able to see what is happening with your card at all times. If your card is taken away from you, it could be skimmed. This is where the information in the magnetic stripe on the back of your card is copied to be re-used illegally. If you think this has happened, contact your card provider straight away. 
  • Check your statement each month. Make sure all the spending records are correct and talk to your card provider about any spending you don’t recognize. 
  • Shred your payment receipts. Your payment receipts show some details about your card. Shred them if you can or tear them into small pieces so that no-one can steal your details 
  • Use secure websites for online purchases. Make sure that you are making payments over the internet to a secure website. Look for a padlock next to the website address at the top of the internet page 
  • Use an online verification scheme. For extra security your card provider may suggest you use an online verification scheme, either Verified by Visa or MasterCard Secure Code. You set up an additional password which you key in when shopping online. The password is then verified by your card provider before your payment is completed. 
  • Report lost or stolen cards immediately. The contact number for reporting lost or stolen cards will be on your last credit card statement or on your provider’s website. If you have card protection insurance you should contact the insurance company as well. 
A little extra care will prevent many troubles and hardships.

Legal obligations of Guarantor for home loans and other debts

There may be occasions when any of your close friends or relatives ask you to be a Guarantor for taking any loan-be it for housing or personal or vehicle loan. Becoming a guarantor means that you are giving guarantee that if the borrower fails to pay, you stand to pay the outstanding dues.

Becoming a guarantor or co-borrower is huge responsibility. Before agreeing, carefully consider if you are willing to be a guarantor, and if you can cover the loan yourself if necessary.

What is a Guarantee?

A guarantee is a legal contract that binds you to pay the debt of the borrower if the borrower fails to do so. The financial institution can sue you when the borrower does not pay back his/her debt.

Why Guarantee is required?

Financial institutions may require guarantees to enhance the credit standing of prospective borrowers, thus enabling them to obtain financing.

Who can be a Guarantor?

Anyone can be a guarantor as long as the person can meet the legal requirements to be a guarantor. Nevertheless, the final decision whether or not to accept you as a guarantor lies with the financial institution

The Guarantor’s Responsibility

Too many people believe that the friend or relative that you guarantee will never do anything to make the lender enforce the guarantee against you. The reality is that your friend or relative may suddenly find they cannot meet the repayments of the loan because of some situation (such as illness or unemployment etc.) and the onus will be on you to pay up. The bank or the financial institutions can sue you if required in case of default of the borrower.

Be very clear on your obligations as a guarantor before you sign on the dotted line.


Precautions for becoming Guarantor


ALWAYS ensure that:
  • The maximum amount to be guaranteed is clearly stipulated and whether it is inclusive of accrued interest
  • You are aware of your liabilities in the event that variations are made to the terms and conditions of the loan 
  • In a joint or joint and several guarantee, all the guarantors sign the guarantee
  • The name of the borrower is clearly stated on the guarantee document
  • You seek clarification or explanation on any of the terms of the guarantee, if in doubt. If necessary, seek legal advice before signing.


Conclusion

In considering whether to act as a guarantor for a person or party, general view is that you should never guarantee payment for more than you can afford and should never put your home or assets at risk.

Taking a student loan ? be careful!

So you have the admission letter in an expensive school and the fees is to be paid. Your parent cannot (or will not) pay the fees and you have to now borrow the amount of money that you need. So you MUST borrow if you want that education, so there is no great choice, right? Well, if you must borrow, do so, but keep the following in mind:

Borrow as little and as late as possible: the week the money comes it should be paid out to the college: So if your last day for paying fees is 31st July, make sure that your loan is disbursed on say 23rd, not on the 5th of the month and the money lies in your own account.

Borrow the minimum amount that you HAVE TO borrow: Use most of your past savings, scholarships, money from parent, ….and then go and borrow the minimum amount that you MUST.

Look real hard for part time work and save up that money (see if you can ask the bank for some mode of prepayment if it is possible).

Remember that CIBIL is watching your repayment – so take decently difficult loan amounts, but not so difficult to make you pant and default.
Now all your credit is being watched – so behave well with your credit card loan, vehicle loan….etc. too

Be prepared for a recession when you finish! It is not the most encouraging advice, but be careful about a recession exactly when you finish your degree. Ouch it hurts, but being prepared is better than not being prepared.

When you start to repay, stretch an repay. However if you cannot, GO TO THE LENDER before he comes to you. But remember ‘deferment’ hurts real bad. It is just a way of postponing your payment – and in that period interest at high rates are being recovered from YOU. So be careful.

Borrowing to pay fees for higher education is an emotional product – the more care you take, the better it is – do not suffer this myth. A foreign degree is useful only if you are seeking to make a career abroad. That in turn depends on whether you really want to live abroad all your life, etc. Very very good high quality Indian education is available, explore that first. For all higher studies many scholarships are available – exhaust them first. See, research, re research, ask, ….you may land up with some part scholarships.

After all these efforts arrive at a sum of money that you MUST borrow….all the best!

This article was originally published  by :http://www.subramoney.com/


Overdraft Facility For Short Term Financing Needs

During emergency situation  people look   forward to   contingency  fund use credit card, borrow money from friends / relatives or take loan from banks. Borrowing money from banks or using credit card will incur higher interest costs. Also, there are situations in which contingent funds are not enough to fulfill some short term financing needs. Not many people are aware of overdraft facility from banks against their assets to finance short term needs. It’s quick to get approval from banks and cheaper compared to other loan offers.  In this article, we will discuss on Overdraft facility.

 Meaning of overdraft facility
Overdraft facility is a credit given to an individual against his or her assets as collateral with banks. As collateral, you can offer following assets to banks: house, insurance

Pre-paid gift cards

Gifting to your loved ones is an essential part of Indian culture and is special. However, it often leaves many of you hassled as you are unable to come up with appropriate gifting ideas. For all those of you who face a tough time in choosing gifts, a pre-paid gift card is an excellent option.

What is a pre-paid gift card?
The pre-paid gift card is a smart gifting solution which essentially works like a gift voucher. A pre-paid gift card is a magnetic strip based pre-paid card which looks similar to a credit card or debit card. However, a pre-paid gift card is neither a credit card nor a debit card in entirety. It is not like a credit card as it does not allow the user to

The ABCs of pre-approved loans

"Congratulations sir, you have been sanctioned a pre-approved personal loan of Rs. 5,00,000. All you need to do is contact our nearest branch to complete a few simple formalities."

Baffled by such a call from a pesky telemarketing executive? Well, you sure aren't alone. Almost every day banks use telemarketing executives to sell pre-approved loans to prospective borrowers. So do such loans actually make sense and how minimal are the formalities? Here are the several finer points of a pre-approved loan you must look out for to decide if it is actually worth it.

Pre-approved loans and credit record:
From the secured home and car loans to the unsecured credit card and personal loans, pre-approved loans exist for all. So how do banks pre-approve a loan, even

CIBIL Credit Score for Credit history & loans

What is CIBIL...?

Credit Information Bureau (India) Ltd; CIBIL is India’s first Credit Information Company, also commonly referred as a Credit Bureau. CIBIL collects and maintain records of individuals’ and non-individuals’ (commercial entities) payments pertaining to loans and credit cards. These records are submitted  by banks and other lenders on a monthly basis; using this information a Credit Information Report (CIR) and Credit Score is developed, enabling lenders to evaluate and approve loan applications. A Credit Bureau is licensed by the RBI and governed by the Credit Information Companies (Regulation) Act of 2005.

Applying for a Loan...?

Did you know all banks check your Credit Score before approving your loan application? 80% OF THE LOANS APPROVED ARE FOR INDIVIDUALS WITH A SCORE GREATER THAN 750.

Your credit Score...

A Credit Score (including Credit Information Report-CIR), is your detailed credit history and full evidence of your credit worthiness. Based on your credit history, CIBIL gives you a score between 300 and 900. The higher your score, the greater are your chances of loan approval. Before you apply for a Home Loan, Car Loan, Personal Loan or a Credit Card, check your Credit Score.

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