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Personal Loan

What is loan against share and how to get it?

It is now simpler and more socially acceptable than ever before to obtain a loan, whether the purpose is to satisfy immediate financial obligations or to accomplish particular immediate or long-term objectives. However, because there is such a high demand for loans, the interest rates that are attached to them have skyrocketed, rendering them inaccessible and unaffordable to a huge number of people. Also, they sometimes need valuable items or real estate as security, which makes them a risky alternative. Taking out a loan against the shares held in your Demat account is an option worth considering if you need money but don’t want to part with any of your physical possessions in the process. [B-01] Loan Against Shares: How Does it Work? The process of securing a loan by using the value of your shares of stock as collateral is referred to as a loan against your shares. You can make a profit off of your investments using Demat shares to secure a loan, so you won’t have to liquidate them first. When you take out a loan against shares, you do not need to provide any security or additional securities in addition to the shares that are already in your Demat account. Here are some of the reasons why a loan against shares is an excellent borrowing alternative: You have the option of taking out a loan from the same financial institution that is providing you with the Demat account service if you want. When you take out a loan from the same financial institution that manages your Demat account, the process of disbursing the loan you took out against your Demat shares is simplified and streamlined. In reality, you are just borrowing the money from the financial institution because it is pledging your shares against the money that it has received as collateral. You can assure this ease of disbursal by making sure to open a Demat account with a reputable financial institution that offers convenient loans against securities. This will allow you to get a loan without having to pledge any of your stocks as collateral. When you use your Demat shares as collateral for a loan, your shares are essentially retained as a security deposit. Even if your Demat shares are used as collateral for the loan, you will still be eligible for all of the benefits associated with stock investments. This entails receiving and retaining not only profits but also bonuses and rights that are legally yours. Eligibility Criteria for Availing a Loan Against Shares You have to make sure that you are qualified to go through the loan process before you can take out a loan against the shares that are held in your Demat account. Here are the eligibility requirements: You must be between the ages of 18 and 65. It is only possible to pledge the ownership of shares that are registered to individual shareholders. You are not permitted to make a shared commitment on behalf of minors, HUFs, non-resident Indians, or businesses. In addition to that, we will require you to submit certain important papers. These can include a statement from your DP, proof of your identity, proof of your address, and proof of your income. You are not permitted to pledge the company’s shares if you are a director or a promoter. Features of Loans Against Shares The loan that you can get against the shares that are held in your Demat account comes with several unique features that set it apart from other kinds of loans. The following is a list of some of the most crucial aspects that you should be aware of: Your Demat shares can be pledged to obtain a loan of up to INR 20 lakhs. Loans against shares are frequently less expensive than personal loans, with interest rates ranging from 12 to 18% p.a. Guarantors are not required for loans against shares. Furthermore, there are usually no prepayment penalties. Every week, an evaluation of the value of the pledged shares is performed. Things to Avoid While Availing of a Loan Against Shares Even though taking out loans against the shares held in your Demat account might be a practical alternative, it is essential to make use of these funds in a responsible and circumspect manner. Some investors take out loans secured by their Demat shares solely to reinvest the money they get back into the market. If, on the other hand, the market enters a bearish trend, this move could result in significant losses for you because you will still be obligated to pay the interest to the financial institution. Therefore, it is strongly suggested that you steer clear of using this tactic. Instead, it is recommended that the loan amount be used for unexpected financial needs or to quickly accomplish financial goals. These can include finances for home bills, a wedding, schooling, and money for investments in businesses, among other things. [B-02] Conclusion You too can take advantage of the borrowing perks that come with having investments in the stock market by using your Demat shares as collateral for a loan. Finding the proper financial institution that can give you an optimal Demat account and the facility to avail of a loan against your Demat shares is the key. The key is to identify the right financial institution.
08-11-2023
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Personal Loan

What is Loan Underwriting? Explaining the Underwriting Process and Rules

If you are planning to get a loan, you need to learn about loan underwriting. Underwriting is a behind-the-scenes process. It is the most crucial step in acquiring a loan. The underwriting process takes place for all types of loans, whether you apply for a personal loan, a home loan, a car loan, or any other kind of loan. Understand the underwriting process and the rules that guide the decision to prevent rejection. [B-01] What is Loan Underwriting? The underwriting process is an assessment of your creditworthiness by the lender. The idea of credit underwriting is to determine whether you meet the eligibility criteria for a loan. Here, the lender assesses your income, debt, assets, and other financial details. They further categorize the findings into three C’s: Collateral. Capacity. Credit. Based on these 3 determiners, the lender establishes whether you can pay the loan. Loan underwriting is important to secure the interest of both parties, the lender and the borrower. Underwriting Process Prequalification Prequalification is not a part of the underwriting process. However, this tool can be used by borrowers to get a fair idea of their eligibility for loans. It’s a casual step that gives you a general idea of how much loan to apply for and what interest rates you can afford. Getting prequalified could mean that if you were to apply formally, you could likely get a loan. Pre-approval Pre-approval is an important part of the loan underwriting process. This step will determine the maximum loan amount that can be offered to you. Here, a lender will evaluate various financial documents and run a credit check. After a thorough evaluation, the lender will determine the loan amount and its interest rate. To get the pre-approval process started, the lender would require certain financial information. Make a formal loan application and offer financial documents. The financial documents include income proofs, debts, savings, credit scores, and other loan information. The lender verifies the information and makes important decisions based on it. The documents submitted should reflect true information. If not, your application will be denied. Income and asset verification The most crucial part of the underwriting process includes the verification of income and other financial proofs. The only reason for this check is to make sure that you can pay back the loan with your current income. The income and asset verification includes a detailed study of your tax returns and bank account statements. The asset study includes the balance in your account, investments, retirement savings, stocks, and much more. If the lender finds your income and asset proofs adequate, they will issue the preapproval letter. A pre-approval letter is an indication that you could obtain a loan. However, this still doesn’t imply that your loan application is accepted. There are further steps to determine that. Appraisal In the case of home loans, this is the most important aspect. The underwriter examines the value of the home you are planning to buy. Here the sale price of the house is verified with the fair market value. This is done so that lenders don’t end up paying more than the worth of the house. The appraisal step rules out the chance that you save loan amounts by buying cheaper homes. Title search and insurance A title search ensures that the property can be transferred. This will prevent the lender from lending money on a house that has legal claims on it. The property history, liens, claims, pending legal actions, mortgages, and other aspects are assessed. The title company then offers insurance to ensure the accuracy of its research. Final decision The entire underwriting process will lead to the decision of whether to deny, approve, or suspend the loan application. The loan application can be rejected if the lender doesn’t find you suitable enough for the loan. They can suspend the application if a few documents are found missing. However, you can reactivate the application again by submitting the required documents. If approved, the lender will finance your loan. Rules that Guide Loan Underwriting Decisions Credit score A high credit score establishes the fact that you are credible. It reflects your history as to how regular you have been in paying your loans. A credit score is a very important factor affecting the loan underwriting decision. A recommended credit score will help you get a loan at competitive rates. If you are applying for loans, a credit score of 750 or above makes a good start. Income Income is the cornerstone that establishes whether you can repay the loan. Lenders determine the income level below which they won’t approve a loan. Collateral To avail a loan, you need to pledge assets that can act as collateral. Collateral is required for nearly all kinds of loans. In cases of default, collateral is used to repay the loan. The value of the collateral is very important. It should ideally be higher than the loan amount to serve the required purpose. Debt and liabilities Don’t apply for new loans while the underwriting process is going on. Your current debts and liabilities are assessed to ensure that you can still repay the new loan. The lender needs to ensure that you can repay the loan with your current debts. Ideally, your total debts should not be more than 30 to 35% of your income. [B-02] Final Takeaway Underwriting is not to be feared. It’s a friendly process. All you need to do is understand the basics that guide the underwriting process and adapt accordingly. With sorted fundamentals, the underwriting process will only get easier. Head over to Piramal Finance and learn more about the world of loans, finance, and markets. Free yourself from the hassles of complicated loan processes with Piramal Finance.
08-11-2023
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Other

What is Inventory Financing & How It Works?

What Is Inventory Financing? Inventory financing is a short-term, asset-backed financial solution that a firm can use to cover non-inventory-related expenses. This solution is offered to small and medium-sized shops or wholesalers with a large inventory. To use this benefit, a borrower must give business goods as collateral to gain funds and cover costs. But if the merchant can’t repay the loan on time, the moneylender can take the inventory or any other inventory of similar value. Since inventory is so important to inventory financing, the financing company must ensure that the inventory has a good resale value before giving the loan. As a result, this financing arrangement is inappropriate for businesses that are new to the market or do not have real products in their inventory. [B-01] Types of Inventory Financing A business can apply for any of the following inventory financing options: Inventory Loan When a business needs money quickly and plans to use the value of its inventory to get it, this type of financing is a good choice. An inventory loan can only be taken out once. Inventory Line of Credit This is more popular with businesses because it can be used to pay for unplanned costs after the borrower gets the loan. In this financial arrangement, the lender gives the borrower money whenever needed. Inventory Financing Eligibility Criteria When getting a loan through this program, borrowers must keep the following in mind: The company should have been in operation for at least a year. The company applying for this financial scheme must have a good turnover. The company must have a good business credit history. The borrower should have a successful business sales record. If a company has a mature product and little debt, there is a good probability that the merchant will get a loan to finance their inventory. The business should not have committed severe credit violations like bankruptcy or repossession. If a company has an aging inventory or wants to take out a long-term loan, its loan application will be declined. Documents Required for Inventory Financing You’ll have to submit the following documents if you decide to use this short-term funding arrangement: Applicant’s Driver’s License Cancelled Business Check Bank Statement Business Balance Sheet Company Registration Information Appraisal Report Business Profit and Loss Statement Business Tax Returns Supplementary Documents Copies of Sales Invoices Things a Bank Will Look At Economic, Business, and Industry Inventory Sequences Inventory’s Value for Reselling Limitations in Logistics and Shipping Stock’s life and how quickly it goes bad Provisions for theft and loss, and much more How Does Inventory Financing Work? Inventory financing can work in two ways. A bank can give you a term loan or a line of credit to buy things. The difference is that a term loan gives you the whole amount of money upfront. You usually pay back the loan in fixed monthly payments over a certain period of time. On the other hand, a line of credit is used to buy things as they become available. In this case, you only pay interest on the part of the credit line that you use. And when you pay off your debt, your credit limit will return to what it was before. Here’s an illustration of how it might function. Assume you must buy INR 6,00,000 in inventory to prepare your firm for peak season. You contact a lender who assesses your assets’ liquidation value to be INR 4,50,000. Suppose the lender offers to lend you 80% of that amount, or INR 3,60,000, at a fixed 17% interest rate. Assume you spend the entire INR 3,60,000. Then, you would have to repay INR 4,21,200 (INR 3,60,000 plus INR 61,200 interest) over the course of 12 monthly instalments. That equates to INR 35,100 per month. You repay the loan in full after 12 months. You now have full access to the 3,60,000 INR and can purchase items as needed. Assume you get a better offer by buying in bulk. You decide to withdraw INR 50,000. You’d still have access to the remaining INR 3,10,000. If you repaid the INR 50,000 you borrowed, your credit limit would be reset to INR 3,60,000. With either method of financing, the inventory you purchase serves as security for the loan. Your lender determines the amount you can borrow. For example, Lender A may allow you to borrow up to 100% of the liquidation value of the inventory. However, Lender B may only let you borrow up to 70% of the liquidation value. Lenders usually require professional assessments to determine the liquidation value of any goods you intend to purchase. Things to keep in mind Few private and public sector banks and non-bank financial companies (NBFCs) don’t offer inventory finance because they don’t want to collect and keep collateral that isn’t useful to them in case the borrower doesn’t pay back the loan. Over time, the value of any stock tends to go down. So, it’s possible that the borrower won’t be able to get a loan for the full value of its stock. [B-02] Conclusion When they need emergency credit, many retailers, manufacturers, and dealers choose inventory financing because it immediately gives them access to cash. Inventory financing is a good way for businesses with large inventories to get funds at a lower rate. It is a type of asset-based lending that is efficient and reliable. This financial solution helps small and medium-sized businesses increase sales and operations, improve cash flow, and prepare for peak season. This financial solution can help merchants with short-term cash flow problems and help them buy more inventory. Contact Piramal Finance for great deals on inventory financing.
08-11-2023
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Home Loan

What is a Secured Loan? Meaning, Definition, Advantages

In today’s world, staying on top of schemes and loans introduced by banks and the government has become crucial. But unfortunately, many individuals are unaware of the different loans that can aid them. Therefore, they miss out on a lot of life-changing and money-securing opportunities. A secured loan requires the borrower, you, to put forth an asset or security to avail of the specific benefits attached to the secured loan. If you can’t pay back the money by the due date, you can use this asset as payment instead. The most common examples of secured loans are car loans and home loans. Banks usually ask you to give collateral when their loan is too large. This helps the bank retain the money disbursed by setting up auctions for the properties or assets they have seized. Again, this allows them to regain what they are owed. [B-01] What Purpose Does a Secured Loan Serve in the Market? What is the use of a secured loan in a financial market when an unsecured loan already exists? There are two main reasons why someone would take out a secured loan and why a lender would offer one: Lenders offer secured loans so that they have something to fall back on. They do this to ensure that even if you, as a borrower, default on payments, they can recover the total amount through the collateral you have put forth. Individuals take up secured loans because that makes them eligible for larger loans. They are also provided with lower interest rates and more favourable terms, all due to the asset they have given up. Difference between a secured and an unsecured loan An unsecured loan is issued not based on collaterals or submitting properties but on your ability to repay the loan you borrowed. For example, you might be asked for a detailed history of your employment and a credit and background check. These help the lender decide whether you would be a good candidate for the loan. A few common examples of unsecured loans are personal loans, student loans, and credit cards. Different types of secured loans There are many different types of secured loans; some of them are: secured credit cards, car title loans, mortgage loans, vehicle loans, secure lines of credit, life insurance loans, home loans, car loans, home equity loans, bad credit loans, and share-secured or savings secured loans. Advantages of Procuring a Secured Loan The collateral motivates you to fully pay what you owe: If the bank takes your asset as collateral, you will be heavily motivated to repay the loan. Furthermore, since there is a risk of foreclosure from whichever institution the money is borrowed from, that is reason enough to pay back the money borrowed. Lower rates of interest: Typically, a secured loan comes with a lower interest rate than other types. This is because the borrower is providing collateral and the lender is not taking on much financial risk. Tax Deductions: Individuals eligible for some secured loans, like home equity loans or mortgages, can have their taxes deducted at the end of the year. This is due to the interest they are paying on loans. Guarantor not required: Since you have already submitted your assets as a substitute, you do not need a guarantor for the loan you are trying to obtain. Also, lending institutions don’t need a guarantor as long as the collateral you give them meets their requirements. Disadvantages of a Secured Loan Risk of losing property or assets: If you cannot repay the loan for some reason, the property or asset you have provided as collateral is at risk of foreclosure by the lender. This makes the threat more significant for you and serves as a potential disadvantage if you cannot repay your loan. A loan is for a specific asset: A secured loan can only be used for particular assets you want to purchase, like a car or a property. Apart from that, the money cannot be used for anything else. The only exception to this is a home equity loan. Loan rejected in case of no collateral: Your loan application will be immediately denied if you do not own an asset or a property. You need collateral if you are applying for a secured loan. Otherwise, you will have to look into loans that do not require collateral. The collateral value should be more than the loan amount: Any property or asset you submit must be verified by the lender. They will determine the value of the loan and then assess if you are eligible for a secured loan. Finally, an appraisal is carried out for the asset, and a fair price is determined that satisfies the lender enough to disburse a loan. [B-02] No matter which loan you might be considering applying for, it is always wise to get your documents in order and check if you are eligible for that loan. It is also essential that you find out specific details about the loan, such as: If the interest rate of the loan is variable or fixed. The maximum and minimum amount you can borrow. The income and credit requirements for the loan you want to avail. The type of asset/property you need to give to avail of the loan. The annual percentage rate and the interest rate of the loan. There are many different types of loans a person can consider these days. If you want to make an informed decision based on facts and numbers, head to Piramal Finance, an excellent financing solution for individuals looking to secure a loan.
08-11-2023
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Personal Loan

What Is Personal Loan And How To Apply For Personal Loan Online During Festive Season

A personal loan is a form of credit that allows you to access funds needed for personal expenses. You can use it for home improvements or to celebrate the holidays without having to use your assets as collateral. A personal loan is an unsecured debt that requires few formalities. You can get it in minutes from anywhere in India by applying online on our website, and once approved, you can receive the money very quickly. [B-01] What is a personal loan? A personal loan is a type of unsecured loan that is used for your personal needs. You can apply for a personal loan from any bank or NBFC (non-banking financial company) in India. The interest rate on this type of loan is usually higher than on other types like home, car, and education loans. There are many reasons why you might need a personal loan. Whatever the reason, it’s important to know how much you can borrow before applying for one. During the festive season, you might want to buy many things. This is when you need a personal loan the most. You can use the money to buy gifts, organise parties at home and the office, or even travel abroad with your family and friends. Personal Loan During Festive Season The festive season brings a lot of joy and happiness. You need money to enjoy this season, and you don’t want any restrictions. To meet these requirements, you can apply for an online personal loan to help you get the money instantly at the lowest interest rates possible. The process is straightforward and takes only a few minutes to complete. Once you complete all formalities, it takes only a few minutes for the banks to approve your application and send the money to your bank account. You can use the money for any purpose, which is completely hassle-free. The best part is that each borrower’s interest rates are different based on their credit score and income. Personal Loan Interest Rate It is important to understand the interest rates if you are looking to apply for a personal loan. The interest rate will also depend on the loan you have taken out. For example, if you have taken out a short-term loan, it will be cheaper than a long-term one because the latter has a higher risk associated with it. Personal loan interest rates can vary from one company to another. You will be charged to determine the personal loan interest rate; you need to compare different lenders and their interest rates. This way, you can get the best deal possible on your loan. Interest rates on personal loans are fixed at the time of approval. Unlike floating rates, the interest is fixed and will remain constant for the entire tenure of the loan. The interest rate on personal loans ranges from 12% to 30%. The interest rate is determined by many factors, such as the industry, credit score, loan amount, and term of repayment. Eligibility to Apply for a Personal Loan During the Festive Season The festive season is the most popular time of year for people to apply for personal loans. However, if you are considering applying for one, there are some things to consider first. For example: You should be in between 21-60 years of age You must live in India and have a valid ID, like a PAN card, passport, voter ID, Aadhaar card, driving license, etc. You should have valid residence proof like an electricity bill, ration card, telephone bill, bank passbook, etc. You should have a regular income source and provide at least six months of employment proof. Your salary should be a minimum of INR 25,000. Your credit score should be good enough to get approval for a loan. You should have an active bank account and decent transactions to prove your credibility. After taking into account the EMI on the personal loan, the FOIR ratio should be between 50 and 55%. You should be able to pass the eligibility check. How to apply for a personal loan online? The first step to applying for a personal loan is to search for one on the internet. Many companies provide personal loans, but you must choose the right one. The second step is to refer to the Personal Loan EMI Calculator and calculate your monthly instalment based on your income, existing debts, and other expenses like rent, mortgage, utility bills, etc. The third step is to get a personal loan from any bank or NBFC that offers low EMI rates so that you can pay it easily without any trouble in the future. The fourth step is to compare the APL, interest rate, and other charges with those of other banks or NBFCs so that you can get a better deal. Once all these formalities are over, select the amount of loan required along with the tenure option and submit it online along with some basic details such as the name of the applicant, address, etc. After entering these details, confirm them once again before submitting, because if there are any errors, it may lead to the rejection of the application form by the lender company. Once the application is submitted, it takes around 1-3 days for approval from the lender company, and once approved, you will get a confirmation message on your registered mobile number. Personal loans are available in any amount, starting from Rs. 1,00,000 up to Rs. 10 lakhs or more. Here, you don’t need to disclose the purpose of taking the loan. [B-02] Conclusion The key to getting a personal loan at the lowest possible interest rate is to shop around, compare different lenders, and choose a lender who will offer you the best deal. It’s also important to keep track of your credit score and report to avoid future surprises. This blog covers what you need to know about personal loans and how to get the best deal from your lender. If you have any queries related to this topic, don’t hesitate to contact Piramal Finance for any query or assistance related to personal loans this festive season.
08-11-2023
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Other

What is a NOC Letter: All you need to know about the importance of a NOC letter

Nearly everyone must have taken out a loan in their lifetime, whether we are talking about a house, personal, or car loan. The lifecycle of a loan consists of three parts: loan approval, loan repayment, and getting a NOC letter. This third part is often neglected. However, it’s one of the most important parts of the loan cycle. So what is a loan NOC letter, and why is it so important? We will cover everything you need to understand about this important document in this blog. [B-01] What is a NOC letter? NOC stands for “No Objection Certificate.” This legal document implies that the borrower has repaid the entire loan and all dues have been cleared. This no-dues certificate is issued by the lender and proves that your loan cycle is truly over. The NOC letter is very important for your credit image and legal safety. A NOC includes important details like your name, loan details, and details of loan closure. Most banking companies and NBFCs issue NOC letters to your address after you repay the loan. However, you need to work through the process and prioritise getting a NOC letter if one hasn’t been issued. How to get a NOC letter? In today’s digitised world, you don’t need to worry much. Banking institutes and NBFCs usually use systems that automatically generate NOC letters on completion of the loan tenure. However, there are certain procedures you need to follow to get a loan NOC letter. Send a letter or email your lender. Ask them to send your original documents, invoice copies, and a NOC letter. The closure format varies from lender to lender. So check with your lender, banking institute, and financial institute before requesting a loan NOC letter. Prepare a formal letter draft, include your loan details, and attach proof of loan payment. This process takes a few days. Keep in touch with the lender and get it issued ASAP. Submit the NOC copy to the registrar of properties when you take a home loan on the registered property. This step is important to remove the lien from the property. If not, the lender will continue to have ownership rights even after repaying the loan. If you have taken out a car loan, you will receive RTO Form 35 and a NOC. Submit copies of these documents to your insurance company and regional transport office. A NOC letter is required for a home, personal, car, or business loan. It is also required in cases of availing loan against property and shares. Why is the NOC letter so important? The NOC letter regulates your credit score. Submit NOC letters to credit bureaus to get a healthy credit score. When you have repaid all the EMIs on time, your CIBIL score needs to reflect that. Getting a NOC letter will improve your credit score, and hence, you will be seen as a credible person. We all know the benefits of a healthy credit score. If the NOC letter for previous loans isn’t taken, it will affect your future loan availing capability. If your credit report doesn’t reflect loan closure, submit a copy of the NOC to the bureau and get the credit report updated. A NOC certificate ensures legal safety. Without a loan NOC letter, there is no proof that the loan has been repaid. A NOC certificate indicates that the loan was successfully closed. It is a legal document that ensures that particular debts have been paid in full. It’s your safety net to avoid any legal discrepancies in the future. A NOC certificate will make sure that no financial company sues you because they gave you bad information. A NOC certificate is proof of repayment. A NOC letter is useful not only for availing further loans but also for purposes like immigration and employment. This no-dues certificate is much needed in your personal and professional life. A loan NOC letter is legal proof. No one could falsely claim outstanding dues when you have a NOC letter. A NOC letter guarantees peace of mind. Imagine waking up one day and getting a notice for pending dues. A NOC letter saves you from the mental trauma and harassment that may arise if the lender decides to sue you. A NOC letter will ensure mental safety and security amidst stressful times. Advantages of having a NOC letter A NOC letter prevents discrepancies and misunderstandings that may arise regarding loan repayment. It safeguards you from false accusations of pending debts in the future. It avoids confusion between the lender and borrower in terms of pending dues. The transfer of ownership takes place with the help of a NOC letter. NOC letter increases your credibility in the market and your chances of availing of high-value loans without any hassles. [B-02] How to Recover a Missing NOC Letter The NOC letter is the most important document. You cannot lose it. However, if the NOC letter goes missing by any chance, immediately file an FIR. Get in touch with the lender and ask them to generate a duplicate NOC. You will have to submit a copy of the FIR and loan documents to get the process started. Getting a duplicate NOC might take a few weeks, so stay patient. Once you get a copy of the NOC, make sure it is well written and says “no objection.” Conclusively, the NOC letter is important in a world run by credit. Don’t procrastinate if you don’t have the NOC for previously paid loans. Get in touch with the lenders and accelerate the process. The process is quite simple and requires basic documents. If you have recently repaid a loan, check the progress of the NOC certificate. Get financially educated with Piramal Finance and avail easy personal loans without any hassles and with assured security at Piramal Finance.
08-11-2023
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Tax

What is Tax Liability?

Tax liability refers to the total amount of tax that individuals and organizations owe to the federal, state, and local governments in a given time frame. These liabilities are considered short-term debts for businesses, usually settled within a year, and are reflected on a balance sheet. Individuals generally pay tax liabilities either out of pocket or through income tax withholding from their salaries. Every taxable event, such as earning income, making sales, or paying employees, creates a tax obligation. The total tax liability includes all these events. It is calculated based on income tax rates, types of taxes, and other factors. Your tax bill is essentially the sum of all your tax liabilities owed to the IRS or the income tax department, whether from earned income, investments, or other sources such as lottery winnings. Types of Tax Liabilities You might encounter several types of tax liabilities. Income tax liability (Federal, state, and local) Corporate tax liability Capital gains tax Payroll taxes Excise and franchise taxes Understanding these can help you reduce your taxable income and make informed decisions regarding your finances. Taxation of Capital Gains When you sell an asset for a profit, you incur a capital gains tax liability. This can be classified into: Short-term capital gains, taxed as regular income if the asset was held for less than a year. Investors pay preferential income tax rates on long-term capital gains if they hold the asset for more than a year. Planning your asset sales carefully can help you manage and possibly reduce your tax liability. Tax Liability for Corporations Under Indian corporate tax laws, companies are mandated to pay taxes on their total income. Even companies operating globally but registered in India are liable to pay taxes domestically. Sections 90 and 91 of the Income Tax Act offer provisions to prevent double taxation. Filing accurate audit reports and keeping your records updated is important. This helps ensure compliance and may lower the amount you owe through eligible tax credits. Tax Liability for Small Businesses Small businesses face multiple tax-based obligations from different types of taxes, including: Income tax liability on business earnings Payroll tax obligations Sales tax liabilities As a small business owner, your tax liability depends on different taxable events. These include income, sales, and payroll. It's important to know these triggers. Consult a tax professional to file accurately. They can help you find ways to lower your tax bill by claiming eligible deductions and tax credits. How to Reduce Your Tax Liability Reduce your taxable income by claiming all eligible deductions. Utilize tax credits to reduce the amount you owe directly. Stay informed about income tax rates and types of taxes applicable to your situation. Work with a tax professional who can advise you on strategies to reduce your tax liability legally. Conclusion Ignoring your tax liability can lead to severe consequences, including penalties and audits. Stay aware of your deferred tax liability and ensure that you correctly withhold and pay taxes on time. Keeping good records, making timely payments, and working with a tax professional can help you manage and lower your tax bill.
08-11-2023
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Home Loan

Things You Must Know About the Home Loan EMI Calculator

Would you like to buy a new house or renovate your existing house? If you answered “yes” to this question, we can assume that you are already thinking about applying for a home loan. Do you know how much money you will need to pay in equated monthly instalments (EMIs) if your home loan is approved? If not, you will need to use a home loan EMI calculator to find out the amount you owe. When you borrow money from banks and other financial institutions, you have to pay equal installments every month. The online home loan EMI calculator helps you determine your EMI easily. Before applying for a home loan, learn more about a home loan EMI calculator and a home loan eligibility calculator and how to use them. Learn of their advantages as well. [B-01] Home Loan Calculator This online tool provides you with the exact EMI amount you need to pay based on some information about the given home loan. The EMI calculator for home loans consists of three main parts: The term of the loan Main amount (principal amount) Interest rate With the help of the calculator, the borrower can better understand what the repayment installment will be over a certain period at an interest rate that depends on the amount and term of the loan. Benefits of the Home Loan Calculator Calculating your EMI will take several hours of paperwork. But with this online calculator, you only need to click once to make these calculations. Manual calculations often result in errors. The home loan calculator solves this problem, as it always provides accurate results. The home loan EMI calculator can be used to look at financial information and figure out how a prepayment will help a borrower pay off a loan before the due date. You can plan your budget better and get an amount that suits your needs if you know the repayment rate of your home loan in advance. Since you don’t have to reveal your identity when you use a free online EMI home loan calculator, you don’t have to worry about security when you use it. How to Calculate a Home Loan EMI If your home loan is approved, the financial institution will determine your monthly payment based on the loan amount, interest rate, and tenure. It’s crucial to keep in mind that adjustments to the interest rate and term will also affect your home loan EMI. So, it’s crucial to keep up with the latest plans and market rates. The formula for home loan EMI calculation EMI = [P x R x (1+R)^N]/[(1+R)^N-1] Where R = Rate of interest P = Loan amount or principal amount N = Tenure or term of the loan Let’s look at an example to help us understand. Consider that you want to spend Rs. 60 lakh on the house. The lending company has extended you a home loan for Rs. 50 lakh with a 25-year term and an annual interest rate of 10.5%. The EMI that must be paid based on the formula above is then: (50,00,000 x 0.00875 x (1+0.00875)^ 300)/ [(1+0.00875)^ 300-1] = Rs. 47,209 The above formula can be used to manually calculate the EMI of a home loan. However, manual calculations are very time-consuming and tedious. With an online home loan calculator, you can do these calculations quickly. With the EMI home loan calculator, you can simply enter values in the required fields and get instant results. What is a Home Loan Eligibility Calculator Utilizing a home loan eligibility calculator is one of the easiest ways to determine your eligibility for a home loan. You can find out how much you can borrow based on your credit score by using the home loan eligibility calculator. You can enter the required information in the online calculator to get a quick overview of the maximum amount of a home loan you can apply for. The factors that determine your creditworthiness are interest rate, age, monthly income, unpaid installments, and loan term. How to Use the Home Loan Eligibility Calculator Select your location. Specify your age. When you apply for a loan, you must be a minimum of 21 years old and, 21 years old and, ideally, between 62 and 70 years old when the loan matures, depending on the lender’s criteria. Select your monthly net income (or, if you’re self-employed, your annual profit after tax). Please keep in mind that the money should be earned after all tax deductions have been taken. On the right, you will see the total amount of the home loan you qualify for. The term and interest rate are flexible and depend on you. To qualify for a loan, you need a minimum credit score of 750 on a scale of 300 to 900, and that’s it! The credit score calculator is a quick, easy, and user-friendly tool. [B-02] Key Takeaway Use an EMI calculator for home loans. It is completely free of charge. Anyone can use it whenever they want and as often as they want. The online home loan calculator is 100% accurate and consistent. It is fast and gives an accurate estimate instantly. Piramal Finance offers other calculators besides the loan EMI calculator. Visit Piramal Finance’s website or click here to learn more about their products and services.
08-11-2023
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Things You Need to Know About Amortization Schedules

What is Amortization? Amortization is the process of writing off or paying off the expenses of an intangible asset over a period of time. It is similar to depreciation in its process, except that amortization is only for intangible assets such as trademarks, patents, licenses, etc., while depreciation is for tangible and fixed assets such as machinery, equipment, factories, land, buildings, etc. But it is not restricted to just intangible assets. Amortization can occur for liabilities as well. In lending terms, it is a way of spreading out the payments that you need to make when making a large purchase, such as a house. Similar to assets that depreciate in value, liabilities such as loans and repayments also depreciate in value. These are known as amortized loans. [B-01] In an amortized loan, the EMI you pay is divided between a principal amount and interest that you pay each month as your amortization table. The repayment starts off with paying higher amounts of interest and smaller principal amounts. Over the years, as you progress further down your repayment period, the interest you pay starts decreasing as compared to the principal amount. What is an Amortization Schedule? An amortization table or schedule is basically a chart that details the amount you must pay over the period of the loan you have taken to buy a house. It includes the total value of the loan taken, the monthly EMI that you have to pay, and the breakup of that monthly instalment into a principal and interest amount. To understand this better, let’s take a look at an example. Let’s say you have taken a home loan of Rs. 50 lakhs for a period of 20 years with an interest rate of 7%. Here’s how the first 10 months of repayments will look for you: MonthPrincipalInterestTotalBalance 1959829167387654990402296542911138765498074739711290543876549710374976728998387654961270598242894138765495144569882288833876549415647993928826387654931625899972876838765492162891005528709387654911572101011428651387654901458 As you can see from the table above, the principal amount in the first month is less as compared to the 10th month, and the interest amount is more in the first month as compared to the 10th month. As you progress to years 5 and 10, the principal amount will have overtaken the amount to be paid as compared to the interest. This happens because over a period of time the value of the loan starts amortizing. This amortization table gives you a clear understanding of how much you will be paying every month for the duration of your repayment. You can use any amortized loan calculator online to give you an accurate breakdown by entering your loan amount, the interest rate, and the duration of your repayment. Loans that are generally amortized include home, personal, and car loans. Advantages of an Amortization Schedule Here are some reasons why you might want to choose a lender who offers amortized loans: Fixed payments – A great thing about an amortized loan is that once you have chosen and confirmed the amortization schedule or plan, you will be able to make a fixed and equal amount of payment each month.Although the breakup between the principal amount and the interest will be different every month or a few months, the total amount to be paid each month will be the same.This will allow you to have peace of mind in terms of hitting income goals over the years and always be certain of how your money will be utilised without facing any difficult circumstances. Flexible repayment period – Most banks and lenders will have a very flexible repayment period for all their plans, many of which go all the way up to 40 years. Apart from this, if you pay an EMI of Rs. 10,000 every month including principal & interest, you notice that you have the power to pay Rs. 15,000 every month comfortably, then the lender will allow you to do so as they earn money faster and you also get to pay less interest in the long term. Easy to asses the right option – With the help of amortization calculators and schedules, you will easily be able to see how much you have to pay every month depending on your total amount, rate of interest, and the repayment period. Using the online calculator, you can adjust the values easily and within a matter of seconds, you will get the exact values for different amortization schedules. [B-02] How to Choose an Amortization Table? Choosing the right amortization loan plan will depend on how much you can pay each month to repay the loan while also ensuring that you have enough money to keep running your household and basic needs. The more you can pay each month, the shorter the repayment period will be. And in such a case the total amount you finally end up paying is also less. The further you extend the repayment period, the more comfortable it will be to make monthly repayments, but you will also end up paying a much bigger total amount because of the interest that is applied to the extended period. Piramal Group is one of India’s oldest companies that has been operating for over 40 years. Piramal Finance is a branch of this company that helps people understand personal finance and take better decisions along with providing various financial services. To know more, check out the Piramal Finance website.
08-11-2023
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