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Why is it Important to Increase Credit Score

A credit score is a three-digit number that depicts your creditworthiness. It indicates your entire credit history. A credit score is also an important factor when it comes to acquiring loans. It informs the lender of your ability to repay. You might also get additional benefits, like better rates on mortgages and car loans, with a high credit score. Thus, maintaining a good credit score becomes important when you are trying to get a new credit instrument, like a loan or a credit card. Several factors can affect the credit score, like repayment history, credit mix, credit utilization ratio, etc. A credit score generally ranges from 300 to 900. Most lenders consider 700+ a good credit score. It makes acquiring large amounts of loans at lower interest rates easier. There are several benefits to increasing your credit score. Let’s take a look at them. [B-01] Benefits of Increasing Credit Score Easy Credit Approval Receiving a loan rejection can hurt. Therefore, it is best to maintain a good credit score. Having a good credit score increases your chances of loan approval. Lenders will be more willing to lend you the money. The waiting period may also reduce as lenders quickly sanction loans for people with high credit scores. Many lenders even offer pre-approved loans to individuals with healthy credit scores and strong credit histories. Lower Interest Rates A good credit score will inform the lender of your repayment capabilities. Thus, people with higher scores generally get loans at lower interest rates. This also means that you will be able to save a large chunk of money by paying less interest. There are further benefits, like discounts on the processing fee and other charges. This is why increasing credit scores can turn out to be really beneficial in the long run. Higher Credit Limit A healthy credit score not only provides a loan with lower interest rates but also helps in securing higher loan amounts and credit card limits. This is because a higher credit score ensures the lender that you have repaid the loan in the past without defaulting. Thus, it increases their trust to loan you a higher amount. Access to Better Credit Cards In addition to higher credit limits, a good credit score also ensures you access to better credit cards. You can unlock a wide variety of cards with several benefits, such as travel points, cashback rewards, and other advantages. These rewards also help you save money in the long run. Longer Loan Tenures Good credit scores can get you loans with longer terms. This will further increase your chances of repaying the loan on time. The option is great for people who want to repay the loan over a long period of time. However, keep in mind that a longer tenure generally means a higher interest rate will be paid. That is why it is recommended to keep your loan tenure short. Tips for Increasing Your Credit Score If you have a low score, you don’t need to worry. Your credit score can be increased. There are several ways to go about it. Let’s have a quick look at some of the ways you can increase your credit score: Review your credit reports regularly. Correct the errors that you find, if any. Pay your debts and bills on time. This directly impacts your credit score. Have a mix of credit products. Diversity can help increase your credit score. Keep your credit utilization ratio low. It is best to keep it as low as 30%. This shows a lower amount of dependency on credit. Keep your old credit cards. A longer credit history plays a key role in determining your credit score. It also acts as proof of reliability. Summing Up Your credit score plays a big role when it comes to borrowing loans. Poor credit history makes the whole loan-acquiring process difficult. Thus, it is important to have a good credit score. It helps obtain large loans at lower interest rates. You can even get longer repayment terms. A good credit score also makes sure the approval process is hassle-free and quick. Access to a variety of credit cards is another advantage of having a good credit score. These are the privileges that one can gain by increasing their credit score. For more finance-related blogs and other tips, head over to Piramal Finance. Our experts over there will solve all your related queries and make your financial journey more simple. [B-02] FAQs What is the ideal credit score to have? Generally, a credit score ranges between 300 and 900. Anything above 700 is considered healthy. However, you can get a loan or other credit products if you have a lower score. But the interest rates and loan amounts may not work to your benefit. Thus, it is advised to keep your credit score high. It helps secure larger loans at lower interest rates. What factors can affect the credit score? Many factors come into play while calculating a credit score. These include your repayment history, credit mix, credit utilization ratio, and so on.

08-11-2023

GST

What You Need to Know About the New GST Registration in 2022

Taxpayers register themselves for GST via the GST registration process. Once they have successfully registered, a special registration is assigned to them. This number is known as the “Goods and Services Tax Identification Number” (GSTIN). The 15-digit number is free of charge. You can verify your GST number and collect all the information. It allows businesses to collect taxes on the government’s behalf. After GST registration, the person can collect taxes from the customers. He/she can also claim the input tax credit on the tax he/she pays. Let’s get into the details of the new GST registration. [B-01] Criteria for GST Registration People who meet the requirements below should register for GST: Businesses with turnover above Rs. 40 lakh in normal states. This is for the supply of goods only. For special category states, the turnover limit is Rs. 20 lakh for the supply of goods. The special category states include: Arunachal Pradesh. Assam. Himachal Pradesh. Jammu and Kashmir. Manipur. Meghalaya. Mizoram. Nagaland. Sikkim. Tripura. Uttrakhand. Note: For suppliers of services, the threshold limit is lower. It’s Rs. 20 lakh for normal states. (For special category ones, the limit remains at Rs. 10 lakh.) Suppliers of interstate goods and services. People registered under the pre-GST law. People who pay tax under the reverse charge procedure. Non-resident taxable people. E-commerce operators provide a platform for supplies. People supplying through it should also register for GST. Input service distributors. People who supply online services from abroad to non-registered Indians. Steps for New GST Registration Visit the GST registration portal through the link: https://www.gst.gov.in/ Click on “Click the Services.” After that, click Registration. Choose “New Registration Option.” Go to the “I am” drop-down list. Select the “type of taxpayer to be registered” option. Choose the state for which registration is required. Select the district too. Enter the legal business name according to the PAN database. Indicate your email address. Also, enter your mobile number. Enter the captcha text correctly and proceed. On the OTP verification page, enter the OTP you have received via SMS. In the Email OTP field, enter the OTP you received via email. Click the PROCEED button. (NOTE: The OTP for both cases is valid for 10 minutes only.) Your Temporary Reference Number (TRN) is displayed on your screen. Login using the TRN and the captcha code. The “My Saved Application” page is displayed. Choose the edit icon under the “Action” column. The Registration Application Form is shown. There are 10 tabs on the top of the page. They are as follows: Business Details. Promoter/ Partners. Authorized Signatory. Authorized Representative. Principal Place of Business. Additional Places of Business. Goods and Services. Bank Accounts. State-Specific Information. Verification. You have to select each tag and enter the details. Enter the details of the bank account. Submit the required document. A verification tab appears. The details of the verification submitted in the form are shown. Sign the application digitally through a Digital Signature Certificate (DSC). It’s known as “e-signatures” or “EVC.” This is mandatory for LLPs and companies. To update, click the “Submit” button. Click Proceed. The DSC dongle must be kept inserted throughout the process. Select “Sign” from the pop-up window. Once done, the screen will display a confirmation message. Documents Needed for GST Sole Proprietorship PAN card and address proof. Proof of business premises like electricity bills. Cancelled cheque of the bank account. It shows all the details of the account holder. For Partnership Firm Pan Card of the firm. Partner Id. Address Proof. Partnership registration certificate. For LLP (Limited Liability Partnership) COI of the company (certificate of Incorporation). PAN card. Partner Id. Problems Faced at GST Portal and their Solutions Error Display on the GST Portal: Clear the cache if the portal displays an invalid provisional ID and password. You need to delete your browser history. Log in to the website again. You will receive a 10-digit token ID. If you get a 9-digit token number, place a zero at the end. Contact the GST helpdesk if you have any further problems. OTP Issues: You might not get the One Time Password (OTP) on the registered mobile number. The reason could be the “Do Not Disturb” status of the number. Fix the issue and start the registration process for GST again. For email OTP issues, check the spam folder. Changes in GST from 2022 The following changes were introduced in the GST in 2022– Government can restrict your Input Tax credit under these cases: Default in paying tax for small periods by a certain percentage. If the person uses ITC to pay taxes more than the limit. Obtaining excess ITC. Cancellation of GST if returns are not filed. Tax officers can cancel the registration in the following cases: Composite taxpayers fail to file returns for a fiscal year after the three-month deadline. Regular taxpayers fail to file returns for all continuous tax periods. Statements of outward supply must be filled in chronological order. The returns should be in sequence. There will be consequences if sellers aren’t paid timely under GST. Previously, the interests were imposed on the buyer. Now the liability attached to it will increase with time. Two-way communications are no longer relevant. The time to obtain an ITC has been extended. GSTR 3B can’t be filled for the current period if GSTR 1 for the prior period is incomplete. The last date to fill GSTR 5 and GSTR 5A will be the 13th of next month. There will be a late fee if TCS Returns are not filled timely. [B-02] Conclusion It is prudent for citizens of India to be well informed about the GST and its Registration. It’s a step to improve the economy and make it more formal. The changes brought in by the GST are for the benefit of trade and commerce. The article above has given you sufficient details for GST registration in 2022. For further details and help, you can visit Piramal Finance. There are many articles and blogs that will help you learn more about key finance topics.

08-11-2023

GST

All About GST on Laptops in India

Laptop users must be aware of laptop taxes. Since the tax was first levied on laptops, there have been inquiries on the applicability of GST on laptops and computer devices. We will discuss the various aspects of GST on laptops and computer accessories in India. From the brief history of laptop tax to the present day, we will cover everything you need to know about the taxation of laptops in India. [B-01] GST Rates on Computer and Laptop with Accessories The Goods and Services Tax (GST) is a new tax that was implemented in India on July 1, 2017. With GST, there are different rates for different types of items. For computer hardware and accessories, the tax rate is 18%. The final rate applies to all other items, including laptop computers. So, now that you know the basics, it’s time to head to the store and start stocking up on tax-free items. How Was a Tax Levied on Laptops in the Pre-GST Era? Before the introduction of the Goods and Services Tax (GST) on July 1, 2017, laptops and computer accessories in India were taxed under multiple indirect tax systems. Value Added Tax (VAT) - 5% to 14.5%, depending on the state in which the laptop was purchased. Excise Duty - A 12.5% excise duty was applicable on laptops manufactured in India. Central Sales Tax (CST) - If a laptop was sold across state borders, a 2% CST was levied (if the buyer had a valid tax registration) else, full state VAT applied. Customs Duty (for Imported Laptops) - Imported laptops were charged a 10% Basic Customs Duty (BCD). An additional Countervailing Duty (CVD) of 12.5% was applied (to offset excise duty on local manufacturers). Special Additional Duty (SAD) of 4% was levied to neutralize VAT impact. What is the Applicability of GST on Laptops? With the Goods and Services Tax (GST) implementation in India, many people wonder what this tax will apply to. Thankfully, laptop computers are included under the tax rules. As of now, the GST will apply to all electronics. This includes laptop computers, tablets, smartphones, and other electronic equipment. Buying a laptop for personal use or business purposes, the GST applicable will be 18%. However in case of business, you can claim Input Tax Credit (ITC) on the GST paid, reducing the tax liability. How are GST Rates Determined? Goods and services in India are subject to the GST (Goods and Services Tax). This tax is applied at 10% on the value of the goods or services, whichever is greater. This means you don’t have to worry about paying GST on items that cost less than 100 rupees. However, if an item costs more than 100 rupees, you must include the product’s full price in your GST calculations. This is important to remember, as it can save you a lot of money in the long run. If you’re looking to buy any new items, it’s important to consider this tax and factor it in during your calculations. What is the HSN Code for Laptops and Computer Devices? When buying a laptop or computer device in India, it’s important to know the HSN code. This code is a unique tax identifier for laptops and other computer devices and is required by the government of India. It helps businesses to classify their products so as to determine the tax on them. You can use the HSN code to look up certain specifications about your device, like the processor type or RAM size. Impact of GST on Other IT Accessories The impact of the Goods and Services Tax (GST) on other IT accessories has been far-reaching. Most items previously taxed at a 5% rate now fall under the 18% GST bracket. This includes digital devices like smartphones, laptops, tablets, and e-readers. So, whether you’re looking to save on your tech accessories or know someone who is, keep up with the latest tax news. How is GST Calculated on Laptops? GST is a tax that applies to most consumer goods in India. When you purchase a laptop, the GST amount will be shown on the invoice. You need to pay the GST to the vendor before taking possession of your laptop. Basic GST breakup for LaptopsThe GST rate on laptops is 18%, which includes: CGST (Central GST) = 9% SGST (State GST) = 9% (if purchased within the same state) IGST (Integrated GST) = 18% (if purchased from another state) Let's say you buy a laptop with a base price of ₹50,000. According to 18% standard rate the gst applied will be 18% i.e Rs 9000 and hence the laptop will cost you Rs. 59000. Here if the laptop is purchased in the same state, the sgst and CGST would be Rs. 4500 each and if its purchased from another state the IGST will be Rs. 9000. Types of GST Applicable to Laptops, Computers, and Accessories For starters, the GST is a federal indirect tax that applies to laptops, computers, and accessories. This means that the tax rate, value of the goods, and other specifications are all listed on the GST website. Additionally, if you’re buying a laptop or computer in India and it’s not explicitly mentioned on the invoice/bill/receipt – then it’s likely subject to GST. Keep this in mind when shopping, and be prepared to pay the tax on your purchase. [B-02] Conclusion This blog has provided you with a comprehensive understanding of the tax implications when purchasing laptops in India. You now have insights into the applicable GST rates for laptops, computers, and accessories, as well as the HSN (Harmonized System Number) codes. Staying informed about these tax details can help you make smarter financial decisions. If you are looking to buy a laptop, whether you're a student, a professional, or a business owner, you can apply for Piramal Finance personal loan and choose flexible options to help you finance your purchase with ease. Apply today and take home your dream laptop without financial stress!

08-11-2023

Know More

Best Tips to Increase Your Credit Score in 2022

A credit report contains all the information regarding your borrowings and repayments. Based on this information, your credit score is calculated. A good credit score is a sign of a healthy financial life. It is an indicator of how well you manage your credit. It also affects your overall credit report. That is why it becomes important to keep your credit report in good shape. [B-01] What is a Credit Report? A credit report acts as proof of your creditworthiness. This makes acquiring loans or credit cards easier. With a good credit report, you can secure larger personal loans online at lower interest rates. It is an essential parameter that lenders consider to ascertain your repayment capability. A well-maintained credit report ensures that you can efficiently repay the borrowed money without defaulting. Some of the things that a credit report reflects include: Current debts: Whenever you apply for a new loan, the lender will check your current debts or obligations. This will help them determine your capacity to repay the loan. The lender will look at your FOIR, which must range between 30% and 50% to secure a higher loan amount conveniently at lower interest rates. Types of credit availed: Your credit report also reflects the variety of credit products you have availed of in the past. A good mix of credit products helps mitigate the risk of repayment failure and also helps improve your credit score. Past credit performance: Another thing your credit report reflects is how well you have managed your debts in the past. It shows if the EMIs have been paid on time. Or if there is a history of defaulting during paying debts. A good history of repaying debts helps increase the credit score and makes securing a personal loan online easier. Importance of Credit Report Maintaining a healthy credit report gives a borrower many benefits. It also makes the whole process of acquiring personal loans online more smooth and hassle-free. A good credit report can result in: Increased creditworthiness Higher amounts of loan Lower interest rates Quick approval of loan applications A lot of factors can affect your credit report. One of them being your credit score. Factors ranging from your repayment history to your credit utilization have an impact on it. However, you don’t have to be worried if you have a low credit score. Some actions can help you optimize it. Let’s have a look at some tips and techniques to increase your credit score. Correct Errors in Your Credit Report One way to find out where you need to work on your finances is by checking your credit score regularly. Review your credit report frequently. A lot of online portals let you check your credit report for free. Errors in the report can affect your credit score. Look for mistakes, and if you find any, raise a query with the bureau. Correcting errors can help improve your credit score. Paying Debts and Bills on Time A lender will always check your relationship with your debts in the past. Whether you have paid your debts on time or not is also reflected in your credit report. Timely payment of debts and bills has a big impact on your credit score as well. It increases your creditworthiness, which helps when acquiring new loans. Hence, make sure you pay your credit card bills and other EMIs on time. Keep Your Older Credit Cards Another element that your credit report includes is the duration of your credit history. It plays a key role in determining your credit score. A lengthy credit history of a borrower is proof of their reliability. Thus, keep your old credit cards active. An older credit card can indicate your ability to manage your finances. This will result in an improved credit score. Have a Mix of Credit Products Keeping a diverse mix of credit products can help increase your CIBIL score. The diversity can be a mix of secured and unsecured loans, credit cards, and other lines of credit. Paying the bills on time and in full will result in an increase in your credit score. But make sure you have figured out a repayment plan before you take on more credit. Keep Your Credit Utilisation Low It is best to keep your credit utilization as low as 30%. This shows that you are not completely dependent on credit. If you spend the majority of your money on credit, make sure to pay your bills on time. If you fail to do so, this will lower your credit score. Failure to repay the bills will also leave a negative impression on your credit report. [B-02] Conclusion Maintaining a healthy credit report is highly important. A lender determines your credit history and creditworthiness based on it. Your credit report contains all your financial information. This information helps the lender calculate your credit score. A good credit score can pay off in various ways. You may get larger personal loans online at lower interest rates. Not only that, but it makes the whole process of acquiring a loan easier and quicker. We have mentioned the ways you can improve your credit score and overall credit report. For more informative blogs and other tips, you can reach us at Piramal Finance. Our experts will guide you through your finance-related queries.

08-11-2023

Education

Calculate Land Area With Our Area Converter

If you are planning to purchase a piece of land, it is important to use a land area calculator to get its correct measurements. In the context of India, you will find that almost every state uses a different measurement for land. So, it is necessary to familiarize yourself with the units of measurement in the relevant state. Otherwise, it is helpful to learn about an equivalent unit which can be used to convert the area. A land area calculator is like an online tool. It can help you obtain clear and correct measurements of the area of land. [B-01] What Is A Land Area Calculator? A land area calculator is an online tool which helps to convert one unit into another. When it comes to land, there are many different measurements used. A land calculator helps to find the local equivalent units of an area. There is no other easier way to make such a calculation. Most Common Units Of Conversion Used In Land Area Calculator Here are some of the most common units of conversion used in a land area calculator. Square Feet Square feet are also denoted as sq. ft. It is an area of a square with each side measuring 1 foot. It is the most basic standard unit of measurement. And most cities in India use this measurement to denote the area of land. Square Metre A square metre is a measurement of an area which helps to determine the area of the ground or floor. The measuring unit denotes an area that is equivalent to one metre on each side. Hectare It is not as common as other units of measurement for land. It is commonly denoted as ‘ha’. A hectare is a metric unit that measures the area of land. It should not be confused with acre. Acre Acre was originally used in the imperial system of units. It is among the oldest units in use for measuring a piece of land. An acre of land can be measured even if it is in different shapes such as rectangles, pentagons or circles. The length and width of the land could be anything. But, it should not exceed a total land area of 43,560 square feet. Bigha In many North Indian states, Bigha is used as the traditional unit of measuring land. However, the measurement of Bigha differs from one state to the other. Most Common Units Used For Area Conversion In India The following table elucidates some of the common units of conversion which are in use in India. It will give you an idea about the results of a land area calculator. Unit of AreaConversion Unit1 Square Foot (sq. ft.)144 sq. in1 Square Inch0.0069444 sq. ft.1 Square Centimetre0.00107639 sq. ft.1 Square Metre (sq. m)10.76391042 sq. ft.1 Square Yard (sq. yd)9 sq. ft.1 Square Kilometre (sq. km)247.10 acres1 Acre4840 sq. yd1 Hectare10,000 sq. m or 2.49 acres (approx.)1 Square Mile640 acres or 259 hectares Measuring Area Of Land It is very easy to calculate the area of land. We can use a simple formula to collect the area of land. It is expressed as follows: Measurement of the area of land = The sum of the area of all rectangles + the sum of the area of all triangles You can calculate the area of any piece of land. The product of the length and breadth of the land is the ultimate area of land. You can also calculate the area of an irregular piece of land. Let us get to know about the benefits of using a land area calculator. Benefits Of Using A Land Area Calculator India is a diverse country. Since the geography here is so varied, it can be a struggle to deal with different conversion metrics. Also, you should not rely on manual calculations. They can carry errors and the results may be incorrect. To calculate the area of a property or the value of land, it is best to use a land area calculator. The calculations obtained using it may be especially useful if you are trying to get a loan against the property. It helps the lender evaluate the correct value of the property. Some of the prominent benefits of using such a calculator are as follows. Using such a tool ensures that your results are free of errors. You can perform instant calculations using the tool. You can convert any value of land area into a lesser-known metric. You can make correct property-related decisions. You can get proper information and knowledge about the actual value of the land. Apart from the common units for measuring land areas such as the hectare, acre and square yards, there are many other units of land measurement that are prevalent in India. Some of them are Kanal, Guntha, Killa, Biswani, Chatak, Cent, Dhur, Lecha, Kuncham, Ankanam, and more. Each of them is distinctly popular in one or more parts of India. [B-02] Conclusion By now, you must have understood the purpose of using a land area calculator. It serves as an important online tool. And it helps in the measurement and conversion of land area. If you want to use a reliable and secure calculator for this purpose, you can head to Piramal Finance. Over here, you will find the best online tool for converting land measurements. With minimal input, the calculator delivers accurate results in no time. You can trust it to get the desired results instantly without any effort. So, if you were looking for a tool to convert metrics of land area, you can safely head to Piramal Finance for the same. Check out the website for more financial literacy blogs as well.

08-11-2023

Know More

Reasons for Senior Citizens to Invest in the National Pension System

The national pension system (NPS) is a pension fund run by the government. It encourages businesses to invest money in the public, private, and unorganized sectors. With these plans, people can set aside a set amount of money each month. The extra payments made towards the National Pension System are spread over various financial markets and investment tools. Interest rates can range from 9% to 12% per year. [B-01] Benefits of the NPS Scheme The national pension system (NPS) gives people who want to save for retirement an easy way to do so. There are several benefits of the NPS scheme, making it a top choice among investors. Here are a few reasons why you should invest in the National Pension System: A steady way to make money When you retire, you stop working, but your living costs stay the same. Also, rising inflation affects every part of our society in a big way. So, to maintain the same living costs, you need a reliable source of income. You might get a pension from NPS when you retire, which lets you choose how much money you get each month. Compared to other investment options, an NPS scheme provides a relatively low level of risk. Since the government owns the program, the stocks can only lose up to 75% of their value. At age 50, investors face 75% of the market’s risk. By age 60, that number drops to 62.5%. This stock exposure allows you to earn more money with less risk. Alterations in funding priorities are sometimes made on the fly Participants in the National Pension System have complete control over the composition of their portfolios and may do it in any manner they deem appropriate. There are four separate asset classes that investors may choose to put their money into depending on how comfortable they are with risk. If the investor is dissatisfied with the fund’s performance or has reason to believe that it is not performing as planned, they can rebalance the portfolio whenever they see fit. Assurances of a profitable outcome Even if some of the investments made via the National Pension System are made in equity, which may not always provide a guaranteed return, the returns on the aggregate investments are guaranteed. Furthermore, the returns offered by these plans are superior to those provided by other investment possibilities, such as PPFs or FDs. An NPS scheme is an excellent option if you are looking for an investment that requires little initial capital but has the potential for significant returns. Because the impact of compounding is magnified in these plans, participants may contribute less money each year while benefiting more when they reach retirement age. Reduces the stress experienced by taxpayers The returns generated through NPS provide additional tax advantages over those provided by Section 80C of the Income Tax Act. Section 80CCD of the Income Tax Act allows donors to deduct charitable contributions of up to Rs 50,000 from their taxable income (1B). Take note that this is in addition to the tax credit of Rs. 1,50,000 that you are eligible for under Section 80C for investments you make. If you follow these measures, you can reduce the amount of annual taxes you owe by a significant amount. This benefit is exclusive to contributions made to a Tier 1 NPS scheme account and cannot be earned in any other way. Rewards Retirees Can Anticipate From The NPS With the minimum age for opening an NPS scheme account increased to 62, more seniors will be able to participate and start saving for a reliable retirement income. The following are some of the benefits of the NPS scheme that retirees may get from it: Anyone who signs up for the NPS after reaching 60 will have access to the same pension funds and investment options as anyone who signs up before that age. People who join the NPS after the age of 60 will have the option of leaving the program normally after 3 years if they want to do so. This indicates that the subscriber must utilize at least 40% of the corpus to purchase an annuity and that the remaining money may be withdrawn in a lump sum at any time. If they want, subscribers are allowed to terminate their membership in the NPS before the conclusion of the three-year commitment. On the other hand, the subscriber must spend at least 80% of the corpus on the purchase of an annuity and take the remaining 20% as a lump sum withdrawal. If a subscriber dies while still participating in an NPS, the beneficiary will receive the entire corpus. NPS scheme returns are eligible for a deduction of up to Rs. 1.5 lakh per financial year under Section 80 CCD (1), while Section 80 CCD (2) permits an additional tax benefit of up to Rs. 50,000 per financial year (1B). Many filers make use of the extra tax deduction provided under Internal Revenue Code Section 80CCD (1B). People over 60 who are still working and paying taxes for the good of society will benefit from this. [B-02] Final Thoughts How you spend your retirement years depends on how well you plan for them. A smart investment like the National Pension System (NPS) could pay off in the future when you need it most. Moreover, the NPS scheme returns have several tax advantages, making it an attractive investment option. To learn more about the benefits of the NPS scheme, check out the Piramal Finance website.

08-11-2023

Personal Loan

Who is Responsible for a Personal Loan Amount if the Borrower Dies

Each bank’s and NBFC’s agreement for a personal loan has a section that says what happens to the personal loan on death of borrower. In this situation, the loan balance is usually paid for by the legal heir of the family. If the borrower died and had life insurance in his/her name, the insurance company would pay back the personal loan. The borrower’s family wouldn’t have to worry about the money. [B-01] Types of Loan Home and car loans are secured loans, while credit card payments and monthly instalments (EMIs) on personal loans are unsecured loans. Let’s look at each case to see if the bank can force the borrower’s family to repay the personal loan on death of borrower. Home loan In the event of a joint house loan, the other co-applicant would be exclusively liable for loan repayment if the primary applicant passes away. Auto loan If the borrower dies, their family must pay back the car loan. If the family can’t repay the loan, the bank takes the car and sells it at auction to compensate for its loss. Personal loan / Credit card Unsecured loans include personal loans and credit card debt. If a person dies without making payments on a personal loan or credit card account, the bank cannot ask the person’s family or legal heir to pay the debt. Since the loan is unsecured, there is no security for it, so the property can’t be taken. The bank writes it off in this case and adds it to an ” NPA account.” What Takes Place if the Personal Loan is Taken in the Borrower’s Name? When there is no valid will and the personal loan is only in the borrower’s name, the loan administrator would take care of the obligation. Bank would use the borrower’s assets to pay off the loan, not the administrator, who will not lose money on his own. What Steps Must be Taken to Repay a Personal Loan on Death of Borrower? Notify the creditor or lender of a personal loan if the borrower dies. If you don’t, the EMIs will be thought to have been paid in the usual way. Ask the lender how much money you need to pay back. Check to see if the borrower has a personal loan or life insurance. It could be used to pay off the debt. If there is no insurance, the person in charge of the loan should ask the borrower about any property, real estate, or land they may have owned with their family. Only if the borrower’s name is on the personal loan will the remaining debt likely be written off if the borrower’s assets are not enough to pay off the debts. When a Borrower Dies, How Would Lenders Get Their Money Back From a Personal Loan? Lenders never demand repayment of an unsecured loan, except secured loans or personal loan on death of borrower from a legal heir or any living family member. Since there is no security on this credit, lenders can’t seize and sell real assets to get their money back. Whenever this happens, lenders usually write off the outstanding debt or add this to an “NPA account.” Similarly, family members should know what to do if a person with a personal loan dies. On the other hand, if a co-applicant and co-signer are engaged in a personal loan, then the individual would have to pay off the sum if the main borrower dies. But this rule doesn’t say that the borrower’s legal heirs must pay back the debt. They can or could take the things. The Bank’s Method for Recovering the Loan No matter what caused the death, a loan must be paid back when someone dies. In this case, the loan will have to be paid for by the guarantor. The bank gets in touch with the legal heirs to ask them to pay off the loan based on how much they own of the asset and property without a co-borrower or collateral. If the legal heirs don’t pay back the loan, the bank could take possession of an asset like a house or car and then sell it at auction to get their money back. Most responsibility for paying back the loan falls on the co-borrower or guarantor. What is Personal Loan Insurance? Personal loan insurance lets you pay back the loan if you get hurt, sick, or die before the loan is due. For debt consolidation, the insurance company would pay your loan back. Personal Loan Insurance has rules and terms that the borrower must follow. But if their loan was insured, which means they had insurance, the insurance company would have to pay back the loan amount. Almost all loans today come with insurance because if the borrower lost money, the bank would have no way to get it back. Getting insurance with your loan is almost a must if you want to ensure your family doesn’t suffer if you have bad luck. The lender needs to know that you will pay back the loan. Protecting Loved Ones After Death The simplest strategy to prevent heirs from obtaining personal loans after a death is to prepare a will that details how the assets would be distributed. It is illegal for debt collectors to require surviving relatives to pay for a deceased person’s loans, except for joint or co-signed accounts, including loans. They will still attempt, so you’ll be aware of your rights. Accounts containing recipients who are still alive are also immune to creditors (life insurance, retirement accounts, trusts, etc.). A family won’t need to inquire about what occurs to personal loan on death of borrower. If they are prepared and aware of what to do. [B-02] Conclusion Families who have lost their main income earner are worried about how they will pay off any debts or credit card balances. The last thing they would have wanted to do was talk to people from the collection agency. Financial institutions’ steps to get back money that hasn’t been paid depend on the type of loan. In some cases, like a home loan, the law makes it easier for lenders to get their money back. In some situations, like a personal loan, a lender has no legal options.

08-11-2023

Personal Loan

How to Get Two Personal Loans at the Same Time?

You may have taken out a Personal Loan to purchase a new device, but before you could pay it off, your friends’ group decided to take a trip to Thailand, for which you now require funds. So, what are your intentions? Can you get another personal loan if you already have one? Yes, it is an unequivocal YES! You can apply for multiple Personal Loans at once. However, as a borrower, you should be able to service all of your loans so they do not harm your credit score. If the lender you choose does not charge prepayment penalties, you should aim for personal loan preclosure. Lenders typically discourage taking out multiple personal loans at once. Your lender, on the other hand, is not required to prohibit you from applying for more than one loan. If you have a strong financial and credit profile, you may be eligible for more than one loan from the same lender. [B-01] Is It Possible for You To Get A Second Personal Loan? The straightforward answer is yes. A person may get more than one personal loan. However, much like the previous loan, you must fulfil the lender’s eligibility conditions to be approved for the loan. Before granting personal debt lenders analyse numerous variables such as your current income, outstanding loans, and so on. If you are currently repaying a personal loan, the lender will carefully consider your repayment ability before authorising further personal loans. If the lender believes you will be unable to repay two loans, your loan application may be refused. Things to consider before taking out Multiple Personal Loans If you are considering taking out several personal loans, you should be aware of the following factors that may be impacted if the loans are not properly managed: Credit Score Because the personal loan is an unsecured loan, the credit score of the applicant is much more important. Lenders look at your CIBIL score before approving a loan. If you decide to take out a second personal loan rather than your first, your CIBIL score becomes even more important. A CIBIL score of 700 or higher is considered excellent by most lenders. Before deciding whether or not to approve your second loan, lenders will look into your credit repayment history. Choosing multiple personal loans at the same time can be difficult, and one must ensure that one will be able to repay the loans on time. Repayment Capacity You must carefully consider your repayment capacity before taking out so many personal loans. This requires you to earn enough money each month to pay off your loans on time. Lenders will be wary of you if you spend more than half of your income on EMI payments, as this raises the risk of default. Ideally, no more than 40% of your income should be used to pay off debt. In fact, before applying for personal loans, you should make a payment plan. This will help you estimate how much money you’ll require once your EMI payments begin. Preclosure You should aim for personal loan preclosure if your lender does not impose a prepayment penalty. Try to pay off at least one or two of your loans early, depending on how many you have. If paying off multiple debts proves difficult, close the loan with the highest interest rate first. The money saved by paying off this debt early can then be used to pay off the other loans. Keep a close eye on the DTI (debt-to-income). The ratio (DTI) is an important factor to consider when borrowing money. It essentially reflects the portion of the borrower’s income used to make debt payments. A high DTI indicates that the majority of income is going to pay off active debts. A low DTI, on the other hand, indicates lower debt payments relative to income. Banks and NBFCs pay close attention to DTI when it comes to loan approval. As a result, you must keep your DTI low, especially if you plan on taking out multiple personal loans. Furthermore, multiple loans can increase your DTI, which can lead to higher interest rates on subsequent loans. In general, if your DTI is greater than 36%, you may struggle to qualify for a low-interest personal loan. Documentation Some lenders may require additional documentation if you apply for multiple personal loans with the same lender. This is simply to ensure that your situation has not changed since you applied for a loan with them and that you still have the financial means to repay the loan. Adjust your EMIs to reflect salary increases. A good rule of thumb to follow when managing multiple personal loans and their payments is to increase your EMI outgo with each salary increase. This will necessitate fiscal prudence and discipline. It will also ensure that any extra money you make is put to good use. If you follow this plan, you should be able to pay off the majority of your debts ahead of schedule. Never, ever skip a payment. This may appear to be the most obvious factor, but it is worth mentioning again. If you have several personal loans, it can be difficult to keep track of all your payments. You will almost certainly miss an EMI payment deadline, which is a bad situation. It will not only result in late fees, but it will also harm your credit score. One way to avoid being in this situation is to set up automatic payments through your bank. This way, you will never miss an EMI payment. As long as your bank account has the required balance, you will never miss a payment. [B-02] Conclusion In today’s world, it is easier to fulfil our innate desires and wishes. Accepting financial assistance to meet personal obligations and achieve your goals is not a bad thing. You must, however, keep track of all of your loans and be diligent in repaying them. Starting with the loans with the highest interest rates and working your way down the list is the most prudent way to manage multiple loans. To know more about such types of topics visit Piramal Finance.

08-11-2023

Schemes

Investment Options Under the NPS Scheme

National Pension Scheme (NPS) is a savings plan that gives you the opportunity to save for retirement through regular and disciplined investment. The NPS scheme was introduced by the Government of India. The government launched it as a replacement for its regular pension scheme for employees who joined the service after January 1st, 2004. But later it was expanded to include all Indian citizens. The fund is regulated by the PFRDA. [B-01] The main purpose of the NPS Scheme This scheme aims to provide financial security to people after they retire. The government also offers tax rebates on money deposited under the NPS scheme. This has been done to encourage people to participate in this system and develop a habit for saving. Who can invest in National Pension Scheme? All Indian residents can invest in this national pension scheme. It does not matter if they are employed in the private or public sector or self-employed. You can start with a minimum payment of only Rs 100 per person per year for NPS. Different investment options under NPS? NPS allows persons to choose from several Pension Fund Managers or PFM. Then there are four asset classes, two investment options available. These options are based on risk-taking capability, time horizon, and other personal factors. Pension Fund Manager (PFM) You can opt for any of the total eight available PFM, who overlook the funds under the National Pension Scheme. You can select one of these entities as your PFM when investing in this scheme. LIC Pension Fund. UTI Retirement Solutions. Aditya Birla Sun Life Pension Management. HDFC Pension Management. ICICI Prudential Pension Fund Management. Reliance Capital Pension Fund. SBI Pension Fund. Kotak Mahindra Pension Fund. Asset Classes Pension fund managers invest your money in 4 distinct asset classes: Class E – Equity and equity-related investments. Class G – Bond and other securities backed by the Government. Class C – Corporate debt and debt-related instruments. Class A – Alternative investment funds such as real estate investment trusts, infrastructure investment trusts and others. Investment options Now let us explore the investment options available under National Pension Scheme to help you understand the opportunities under the scheme and make the right choice. Active Choice If you are confident about managing your own funds and have the knowledge to do so effectively, this NPS Scheme choice is ideal for you. It allows you to choose from multiple funds and decide on allocation across the four asset classes discussed above. This enables you to diversify your fund as well. This option of the National Pension Scheme gives freedom. There are certain restrictions on the amount of allocation into equity and equity-linked instruments based on your age. This has been done to reduce the overall risk exposure of your portfolio. This ensures that you don’t lose money unnecessarily. For example, if you are aged 50 years or less, you can invest up to 75% of your money in equity and equity-linked instruments. This percentage allocation, however, keeps reducing as you age. Once you reach the age of 60, you are allowed to invest a maximum of 50% of your portfolio into equities. However, this restriction exists only for equity and equity-linked instruments and not for the rest of the asset classes. Auto Choice If you lack experience in financial markets and instruments, this option is suitable for you. Through this option of the NPS scheme, instead of choosing where to invest, you can delegate the decision to an experienced fund manager. The auto choice of the National Pension Scheme includes three risk base investment options: i) Conservative Life Cycle fund or LC25: As the name suggests, this is the conservative option available under the auto choice of the National Pension scheme. LC 25 allows a maximum allocation of 25% into equity and equity-linked instruments (asset class E) and 45% in corporate debt and debt-related instruments (asset class C) for investors aged 35 years or less. This allocation percentage reduces as you become older, reaching 5% for asset classes E and C when you reach the age of 55. Investment in asset class G – government bonds and such instruments is treated in a reverse manner. You are allowed to invest a maximum of 35% into government bonds up to the age of 35, while you can invest up to 90% once you reach 55 years of age. ii) Moderate Life Cycle Fund or LC 50: This is a balanced fund which aims to generate stable returns for you. Hence, the maximum allowed amount in equity starts at 50% and corporate debt at 30% (for 35 years or less) and goes down to 10% for both of these as you become 55 years or older. On the other hand, if you are aged 35 years or less, you will be allowed to invest a maximum of 20% in government debt. This percentage increases as you age, reaching 80% once you reach 55 years of age. iii) Aggressive Life Cycle Fund or LC 75: This is a growth fund designed to grow faster than the other options. If you are aged 35 years or less, you can invest 75% into equity. This amount keeps reducing, reaching 15% once you are 55 years or more. Government and government-backed bonds are treated the same way as the other two options. You can invest 15% if you are 35 years or less. The allocation percentage increases as you grow older. You can invest 75% of your fund in these kinds of bonds once you are 55 years or above. However, asset class C – corporate debt and the debt-related instrument are treated differently from the other two options, increasing with age instead of decreasing. [B-02] Investing in the National Pension Scheme is a smart decision to enable you to build a corpus for your future. However, explore the various investment options available under the NPS scheme before making investing your money to ensure the fund performs as per your risk appetite and return expectations. Thorough research can be immensely beneficial in the long run. Visit Piramal Finance to access blogs and articles to improve your NPS skills.

08-11-2023