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Things To Keep In Mind When You Apply For A Loan

Mon, 16 Aug 2021 06:26:43 +0000

The BuyT Desk

Taking a loan is one of the most significant decisions and requires long research to conclude. It has a direct impact on the financial condition of the borrower. And according to financial experts, the effects of unplanned loans stay for years with the entire family. Therefore, it should be planned astutely.

So, if you are thinking of getting a loan, here are six key points you need to consider.

Interest Rate

You must compare every source of acquiring loans and opt for the one that offers fewer interest payments. Financial institutions such as Credenc, Bankbazaar, Paisabazaar, etc., are there to help you with the loan comparison that different lenders provide. You must carefully choose between Floating and Fixed loans. Floating loans tend to change. They are usually 1-2 % lower than fixed, based on the market condition.

Credit Score

You need to check whether you are creditworthy to take the loan. Maintaining a good credit score portrays that you have a good history of loan repayment. Also known as CIBIL score, it ranges from 300-900. If your score is above 750, then it is an ideal situation to get a loan.

Access The Cost

A loan comes with additional cost that includes prepayment fee, processing fee, and late fee. So, you must get an estimate of the charges that the lender might levy on the loan. You also need to plan your budget to repay the loan. You can also opt for an online loan calculator to estimate the monthly EMI payments.

Evaluate the requirement

Do not make decisions in a hurry. You need to inspect and determine why you actually need the loan. Usually, people take loans to meet financial requirements such as buying a vehicle, wedding purpose, or address medical emergencies. Go through the list of your priorities and decide the amount that you are willing to borrow.

Check Loan Repayment Process

Even before taking the loan, you must have the repayment planned and the source ready. Always take a loan that you can repay through your income. Are you under financial obligation? Is there any repayment of debt left? Then, you must think twice before proceeding.

Make A List Of Your Queries

Before you borrow a loan, always try to resolve every bit of confusion prevailing in your mind. Ask yourself:

What should be your first step to take a loan?
What is your credit score?
How much interest rate would be sustainable?
What are the terms and conditions associated with the loan?
What are the processes of repaying the loan?
What more do you need to do?

Always try to take loans from certified and accredited loan providers. Check whether every process is transparent and never fall for any gimmicky loan offers. Try to reduce the number of credit cards and never exceed 30% credit utilization. And, always try to make payments on time and to avoid any mistakes. You can choose the automated process for payments.

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Should You Opt for a Joint Home Loan or not?

Mon, 10 May 2021 12:26:21 +0000

The Buyt Desk

When you plan to buy a house, there begins a series of long financial calculations. It is not a cheap affair and requires huge funds. In most cases, a home loan comes to the rescue. Now, the important consideration is “how much loan will the bank be ready to sanction?” There is a simple way to increase the loan amount. Take a joint home loan.

Advantages of applying for a home loan with a co-borrower

Let us first understand who is a co-borrower. A co-borrower can be your spouse or a blood relative such as a brother, a sister, or parents. He should be an earning member whether self-employed or salaried. Both you and the co-borrower are liable to repay the home loan. Your friend or an unmarried partner is not eligible to be a co-borrower/co-applicant for a home loan. There can be as many as six co-applicants for a home loan.

Easy loan

A joint home loan is sanctioned easily in comparison to an individual home loan. This is because banks know that the repayment liability is not borne by a single individual. In fact, banks recommend that co-owners (all the people who have ownership of the house) should be co-applicants in the home loan.

Higher loan eligibility

Bank considers earning potential and creditworthiness of all of the co-applicants, and thus, it sanctions a greater amount in a joint home loan. This will reduce the amount you have to save for the down payment. It will also distribute the burden of EMIs among the applicants. Overall, you will not compromise a lot on your monthly budget. Moreover, with two or more people contributing towards loan repayment, you will be free of the debt sooner.

The banks also decide the term of the joint home loan based on the age of the co-applicants. For instance, it will be 20 years if you apply with your spouse and 10 years if you apply with your parents.

Lower rate

If one of the co-applicants in a home loan is a woman, then banks offer the loan at a lower rate. The rate is lower by 10 to 25 basis points for female applicants. Thus, it is only sensible to apply for a joint home loan with your wife, sister, or mother.

Tax benefits

Both the co-applicants can enjoy the tax benefits associated with a home loan, offered by the IT Act. They can file for a tax deduction in the amount paid as principal (Section 80C) and interest in a financial year (Section 24). The tax benefit is proportionate to the share of the applicant in the joint home loan.

A home loan with co-applicants does not put the complete burden of repaying a loan on a single person. Along with the above-mentioned advantages of a joint home loan, your affordability for a bigger house increases. In fact, you have the opportunity to move to a location of your choice. A joint home loan is not only effective for financial planning but also tax planning of the family.

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How Bank FD Can Help You in a Cash Crunch?

Thu, 06 May 2021 06:13:35 +0000

The Buyt Desk

Coronavirus pandemic has played havoc on our finances. Cities are under lockdown, streets are empty, health infrastructure is crumbling down and people are losing jobs. Data from the Centre of Monitoring Indian Economy (CMIE) showed that 73.5 lakh people have lost their jobs due to the second wave of coronavirus. In a situation like this, a sudden requirement of money could arise for anyone. The easy way out is to get a personal loan. Lots of banks offer this instant personal loan which is approved instantaneously. But they do come at a cost. The interest rate on these personal loans ranges anywhere between 16-20%. But if you have a Fixed Deposit (FD) in a bank this could come to your rescue. You need not break the FD prematurely but can avail of a short term loan against your FD.

What is the benefit of taking a loan against FD?

You can take a loan against your FD. The interest on a loan against FD is also much lower as compared to a personal loan. Many banks are currently giving loans at less than 6% interest on FD. Taking a loan against FD is much cheaper than a personal loan. You can take a loan by paying only 1 or 2% more than the interest on FD. Currently, the returns on bank FDs range from 4 to 6%. In that scenario, you can get a loan at an interest rate of 6-8 per cent. However, don’t forget that the loan amount will be decided based on the value of your FD. That means you can take a loan up to 90-95% of the value of FD. For example, if the price of your FD is Rs 4 lakh then you can get a loan of up to Rs 3.5 lakhs.

How to get a loan against Fixed Deposit?

You can also apply online for Loan Against Fixed Deposit. Most banks have given this facility online. Apart from this, it can also be applied by going to the bank branch. The good thing is that it is a secured loan because you pledge your FD as security thus banks also do not hesitate in giving this loan.

Top 5 Banks and the rate at which you will get the loan

Bank	Rate of Interest	Loan Value
State Bank Of India	1% above the FD rate	Up to 90% of FD value
Punjab National bank	1% above the FD rate	Up to 95% of FD value
ICICI Bank	2-3% above the FD rate	Up to 90% of FD value
HDFC Bank	2-3% above the FD rate	Up to 90% of FD value
Axis Bank	2 % above the FD rate	Up to 85 % of FD value

Credit card Against FD

You can also apply for a credit card against your FD. Apart from a loan against your FD, you can also avail the facility of taking a credit card against FD. This credit card will have a credit limit ranging from 75- 85% of the value of the FD. But you must have an FD of at least Rs 25,000 to avail the facility of a credit card.

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