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Home Loan

Types of Loan: Home loan, Mortgage loan and Loan against property

When it comes to availing loans for either business or personal use, you may come across three types of loans: home loans, mortgage loans, and loans against property. These loans will leave you confused if you are new to the financial market. Although every loan is offered against an immovable asset, be it a house, plot, or commercial property, each one has its own eligibility criteria, repayment tenure, interest rates, and so on. You must understand the key differences between the three loans so that you can choose one according to your needs. Continue reading to learn more about these distinctions and how to find the best loan for you. [B-01] What is a home loan? A home loan is a secured loan that provides you with sufficient funds so that you can buy or construct your dream house. The banks or financial institutions offer a home loan by keeping your property (the one against which the loan is sanctioned) as collateral. Home loans are funded at affordable interest rates and usually have a long repayment tenure. You are supposed to repay the loan amount through equated monthly instalments (EMIs). Once the entire loan amount is repaid, the lender hands you back the title to the property. What is a mortgage loan? A mortgage loan is a secured loan that provides you with funds against an immovable asset like a house or commercial property. The bank or other lender will keep this fixed asset as collateral until you have paid back the loan in full. A mortgage loan is more like an agreement between you and your lender under which you agree to allow the lender to take over your property if you fail to repay the loan amount plus interest. You can use a mortgage loan to buy a property or borrow money against the value of a home you already own. What is a loan against property? A loan against property (LAP) is a secured loan sanctioned against your property by keeping it as collateral. The property may be residential, commercial, or industrial. The property continues to be held as collateral by the lender until the total amount of the loan against the property is repaid. LAP is a loan that benefits both businesses and individuals. Banks or other financial institutions usually offer loans against property at a much lower interest rate than any other unsecured loan. Businesses use this loan to pay suppliers or salaries, keep goods stocked to keep up with rising demand, or pay for operating costs. Key Differences Between a Home Loan, a Mortgage Loan, and a Loan Against Property. Read on to understand the key differences between all three loans—home loan, mortgage loan, and loan against property (LAP)—based on purpose, loan-to-value ratio, and repayment tenure. Home loan mortgage.Mortgage loan.Loan against property.Purpose.To purchase a plot or ready-to-move-in property. Or for the construction of a house or commercial property.No restriction on the usage of the loan amount. Both individual and business requirements can be met.For both business purposes and personal use.Loan-to-value ratio.Up to 90% of the property value.Up to 60–70% of the property’s market value.Up to 60% of the property value.Repayment Tenure.Up to 30 years.Up to 15 years.Up to 15 years. Wondering where to get these loans? After knowing all the key differences between the three loans, you must be wondering where to get these loans with quick application procedures and no hassle. Right? Piramal Finance offers hassle-free home loans and loans against property with minimal documentation and favourable interest rates. Continue reading to learn why you should choose Piramal Finance. Features of Applying for a Loan at Piramal Finance Piramal Finance offers you a loan with no hassle that is worth a try. Read the benefits of applying for a loan at Piramal Finance. There are little to no fees for early repayment or foreclosure. Minimal documentation. Smooth process with quick sanctioning and disbursals. Easy monthly EMIs that fit your pocket Flexible tenure of repayment from 1 year to 5 years. Combining incomes of family members to increase loan eligibility. High eligibility; the maximum loan amount Loans are available for both salaried as well as self-employed individuals. Home Loans and Loans Against Property at Piramal Finance. You can avail yourself of a hassle-free loan with minimal documents and a prompt application procedure at Piramal Finance. Piramal Finance offers a home loan and a loan against property. The table below shows the eligibility criteria, interest rates, documentation, processing fees, and application of these two loans at Piramal Finance. Please note that Piramal Finance does not offer mortgage loans as of now. Home Loan.Loan Against Property.Eligibility.Both salaried and self-employed individuals.Both salaried and self-employed individuals.Interest Rates.Starting at 10.50% p.a. onwards.Starting at 11.50% p.a. onwards.Documents.PAN, identity proof, address proof, income proof, property-related documents, etc.PAN, identity proof, address proof, income proof, property-related documents, etc.Processing Fees.Up to 3% of loan amount+ applicable taxes.Up to 4% of loan amount+ applicable taxes.Application Fees.3500/-+applicable taxes.3500/-+applicable taxes. [B-02] In conclusion The type of loan depends on your requirements. If you are someone who wishes to buy or construct a house, a home loan is a good option for you. And if you are someone who wants to fulfil both business and personal expenses, then a mortgage loan is a good choice for you. Lastly, if you are a business that wants to pay salaries or buy inventory, go for a loan against property. Piramal Finance offers you both a home loan and a loan against property at an affordable interest rate and hassle-free repayment tenure. Apply to get a loan right away, or call 1800 266 644 to learn more.
08-11-2023
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Gold Loan

What Is The Maximum Tenure For Gold Loan?

Gold loans are a great way to meet your immediate cash demands. Suppose you have gold items you want to use during a financial crisis or fulfil other monetary requirements. In that case, you can easily apply for a gold loan without any problem because you can obtain it in a few minutes to 48 hours. The duration of gold loans varies according to the institution. The tenure of repayment for gold loans starts at a minimum of seven days and a maximum of five years. [B-01] Benefits of gold loans Hassle-free documentation: Financial institutions use a relatively easy KYC-based documentation process. The borrower must supply all relevant documentation, such as evidence of identity and address. Income certificates or financial statements are not required in the gold loan application process, as in other loan applications. Reduced Interest Rates: Gold loans are a secured type of borrowing. Hence, lenders charge a lower interest rate when compared to other unsecured advances. No Processing Fee: Banks and publicly traded financial organisations do not charge processing fees because gold loans are granted instantly. No effect of CIBIL ratings: Unlike most loans, gold loans are not based on your financial situation or credit score. The borrower’s repayment limit and previous repayment record determine the advance amount for other unsecured loans. In the event of a gold loan, however, the advance amount is determined by the value of the gold. Safe Gold Storage: The lender is responsible for safely storing the gold jewellery. The gold is secure in their vault, and the borrower does not have to worry about it. Multiple uses: Medical emergency, schooling, business expansion, wedding plans, or the initial instalment for purchasing a vehicle or a property can all be financed using gold loans. Modes of Gold Repayment EMIs, or Equated Monthly Installments, are the most frequent method of repaying a gold loan. This is best if you have a steady income. Use a gold loan EMI calculator to calculate the amount paid in EMIs. People who select EMIs to repay their gold loans enjoy a consistent monthly income stream. The lender would charge monthly interest on the principal in this arrangement. Still, the principal plus interest would be due after the loan term. To keep track of your expenses, you can use a gold loan repayment calculator to determine how much you would have to pay. With a small exception, the monthly payment procedure of a gold loan is identical to that of an EMI. This technique requires simple monthly payments of the interest accrued on the principal amount. The principal is paid only after the gold loan term. The gold loan repayment calculator can help you determine how much interest you’ll pay each month. This repayment plan is also appropriate for low-income borrowers or those who do not have a monthly cash intake. Bullet repayment is appropriate for short-term gold loans of 6 months to 1 year. However, by the time the loan term is up, you will have paid much more interest with the bullet repayment method. Although expensive, this strategy may be suitable for people who do not have a steady source of income and cannot afford monthly payments. Foreclosure refers to repaying the entire loan amount before the loan term expires. Pre-closure money can also be used to settle gold loans. Making partial principal and interest payments is another traditional method of repaying gold loans. You can save money on your loan by making larger payments at the beginning. Repayment Tenure for Gold Loans When compared to most other loans, gold loans have shorter repayment terms. Typically, the maximum payback duration for a gold loan is 24 months for long-term loans serviced in EMIs and six months for short-term loans repaid in a lump sum. You can repay the loan in 24 instalments if you choose monthly payments. This means that the maximum gold loan term is 24 months. Even if you prefer shorter loan payback terms, such as 12 months, you can repay the loan before the term finishes. Banks do not charge prepayment penalties if you pay a minimum of three instalments and close the loan before the end of the term. If you choose a short gold loan term with a one-time payment, you will have a maximum repayment period of 6 months at a set interest rate. When your loan term ends in six months, you can repay the entire amount in one lump sum. Factors influencing gold loan applications Identity evidence, address proof, and recent passport-sized pictures are the most common types of documentation requested for a gold loan application. While this list remains consistent, many institutions have supplemental document lists for increased security. Because gold loans are evaluated based on the value of gold jewellery, financial institutions have a sanctioning limit. They can only make loans within that range. Greater limits are only permitted in exceptional circumstances where management agrees with the events and the borrower has a favourable repayment record. Financial institutions can grant a credit limit of up to 75% of the market value of the gold mortgaged in the case of a gold loan. The Reserve Bank of India caps the loan-to-value ratio in this scenario. When a borrower has fully repaid their loan, their gold loan eligibility requirement for reclaiming the same gold for future needs is positive. The most significant advantage of a gold loan is the flexibility to repay the principal and interest in numerous ways. They include a lump sum or equally distributed monthly gold loan payment alternatives, which are not accessible with other loan advances. Again, each NBFC has its loan gold loan payment options, and applicants must read the terms and circumstances before applying. [B-02] Conclusion Gold loans are great for emergencies, weddings, and personal emergencies since they are convenient and have a faster processing time. However, with fluctuating gold loans, any decline in the gold price may trigger the banks’ decision to sell the jewellery and repay the gold loan instead. However, the borrower might avoid this problem by repaying the bank the appropriate amount. To learn more about personal or gold loans, please visit https://www.piramalfinance.com/personal-loan.
08-11-2023
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Credit Score

What’s the difference between a CIBIL score and a CIBIL report?

While applying for a loan, you might come across terms like “CIBIL score” and “CIBIL report.” Terms like these often confuse you if you are new to the financial world. But what are these terms, and are they important? In the financial world, these two words have significant meaning and value. Without them, you cannot get a credit card or loan approval. You need to understand the meaning of and the difference between a CIBIL score and a CIBIL report so that the next time you are applying for a credit card or a loan, you will have enough knowledge of how these two work. [B-01] What is CIBIL? TransUnion CIBIL Limited, formerly known as Credit Information Bureau Ind Limited (CIBIL), is a credit rating agency or credit bureau that keeps track of all credit-related activity for businesses and individuals, including loans and credit cards. The bureau offers information and resources to help people understand their credit history and financial reputation and protect them against identity theft and potential fraud. The agency lets the lender know exactly how much the borrower can pay back and whether or not their money is safe. Read on to understand the difference between the CIBIL score and the CIBIL report. What is a CIBIL score? The teachers give their students scores according to their performance, be it monthly or yearly. In the same way, CIBIL acts as a teacher and gathers credit histories from banks and financial institutions. It then evaluates and assigns the CIBIL score to the specific borrower. A CIBIL score, or credit score, is a three-digit number that represents a borrower’s history and credit profile over a couple of months or years. The CIBIL score shows the borrower’s creditworthiness for borrowing a loan and making timely repayment. Through a credit score, lenders get a clear picture of the borrower’s credit performance, allowing them to decide if their money is in safe hands. The table shows how your CIBIL score increases or decreases your chance of getting a loan. CIBIL ScoreStatusChances of getting a loan.300-549PoorThere is no chance of loan approval.550-700FairFewer chances of loan approval.700-900GoodGood chances of loan approval.900-AboveExcellentInstant loan approval. What is a CIBIL report? A CIBIL Report, also known as a Credit Information Report (CIR), is a document containing a CIBIL score and an individual’s personal and credit-related information. Banks, financial institutions, and lenders provide credit information to credit bureaus to compile an accurate CIBIL credit report. The lender uses this report to determine the creditworthiness of the borrower. An individual’s CIBIL report may have the following: Personal details include name, gender, date of birth, PAN number, and permanent house address. Contact information such as email addresses, phone numbers, and landline numbers. Employment details like income. Account details, including the number of accounts, the types of loans borrowed, any loans paid off, any outstanding debts, credit card information, and credit card cancellations. Inquiries that lenders and banks make when someone applies for a credit product. CIBIL credit score (based on a person’s repayment history) and other credit-related information. Frequently Asked Questions. Q1. Are the CIBIL score and CIBIL report the same? The CIBIL score and CIBIL report are not the same. But both are interrelated. A CIBIL score is a three-digit number that represents an individual’s timely repayment capacity. A CIBIL report is an entire document containing a CIBIL score and an individual’s personal and credit-related details. Q2. What are the benefits of having a high CIBIL score? The following are the benefits of having a high CIBIL score: Faster loan and credit card approval. Lower loan interest rates. The better credit card offers. The higher credit limit on credit cards. Reduction in the processing fee and other costs associated with loan applications. Q3. What does CIBIL score 1 mean? A CIBIL score of 1 indicates that no credit history data is available for the borrower. This score is also known as “NH” or “no history” because there is no information to report. Q4. What is a bad CIBIL score? Scores on the CIBIL scale vary from 300 to 900. A credit score between 300 and 549 is considered poor. It means you have the slightest chance of loan approval. Q5. How can I get a 900 CIBIL score? The average time it takes to raise your CIBIL score is a few months. Make sure to pay your bills on time, maintain a healthy balance of secured and unsecured loans, and refrain from initiating too many credit inquiries in a short period to get your credit score closer to 900. [B-02] The bottom line Both the CIBIL score and the CIBIL report are not the same. But both are closely related. The CIBIL score shows the creditworthiness of an individual and gives the lender confidence in lending credit. In contrast, the CIBIL report contains the CIBIL score and an individual’s personal and credit-related details. Just as you would like your child to receive a good grade and report card at the end of each year, to maintain a good credit score, always pay your equated monthly instalments (EMIs) on time. Never opt for a loan beyond your repayment capacity, as this might lead to an outstanding debt. Call 1800 266 644 or apply for a loan right away.
08-11-2023
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FD

What Is The Difference Between Fixed Rate And Floating Rate?

Let us understand this concept through an example. Consider the following scenario: Since the beginning, Ravi and his family have been living in a rented home. When his father had to take a transfer because of his government job, the entire family had to relocate. All of Ravi’s schooling years and early life went like this; switching cities and homes. When Ravi was in the 11th standard, he often used to think of having his own home. The thought of having his own home someday motivated him to work hard and earn good money. He decided that someday he would buy his own house and make his parents proud. Fast forward 15 years, and Ravi is working and earning well in a private job. He is the vice president of sales in a big enterprise. Financially, he is now in a position where he can afford to buy a home for his family. However, he needs some clarification about taking a home loan. Should he take a loan at a fixed rate or should he go with a floating rate of interest? So he does what most people do in any confusing situation. He searches for information about the topic on the internet. When it comes to buying a house, many people, like Ravi, spend a lot of time deciding what would be best for them. Choosing a fixed rate or going with a floating rate. [B-01] Firstly, you should know that the interest rate is calculated based on two very important factors. These are: 1) The principal loan amount 2) The tenure of the home loan Now let us try and understand what a fixed interest rate is. What is a fixed rate? A fixed interest rate is simply an interest rate that any borrower would have to repay in fixed and equal amounts. The key feature of the fixed interest rate is that there are no fluctuations in it, irrespective of the market. This gives the borrower a sense of trust and certainty. Needless to say, this is a good choice for those who usually plan their budget in a practical and detailed manner. However, you won’t be able to get any advantage if the rate of interest decreases as per market conditions. You must pay those fixed monthly payments regardless. What is a floating rate? As the name suggests, a floating rate can and does change as per the market conditions. For a floating rate, you will need to pay a base amount while a floating element of interest is added to your loan. The “base rate” is simply the minimum interest rate that is set by the lender. It can be any financial institution, whether it be a bank or an NBFC. They are not allowed to lend below this base rate. And as and when the base rate changes, so does the floating rate. The major difference between the two is that the floating rate is usually cheaper than the fixed rate of interest. However, this is not always the case. Depending upon the market conditions, the floating rate can also overtake the fixed rate at times. Thus, the floating rate is not ideal for those who like to plan everything. Benefits of a Fixed Rate It remains constant. If you choose to go ahead with a fixed rate, you will not have to worry about the fluctuations happening in the market. Regardless of them, it remains constant. Your EMI amount will not change. While repaying the loan, you should pick the EMI amount that you are comfortable paying every month. That is to say, you will need to ensure that it doesn’t hamper your monthly budget. It helps you plan your budget accurately. One of the advantages of a fixed rate is that you can plan your finances in a detailed manner. This is because you don’t have to worry about the rate of interest fluctuating constantly. Now that we are aware of the benefits of fixed rates, let’s talk about the benefits of floating rates. Benefits of a floating interest rate The greatest benefit of a floating rate is that the interest rate is usually lower than the fixed rate of interest. The best part about opting for a floating rate is that if the economy performs well, you end up paying a lower interest amount. Thus, you can save a lot of your hard-earned money. The increased interest rate that you pay is temporary. Another advantage of a floating rate is that even though it may exceed the fixed rate of interest, that would be temporary. Because after a certain point in time, the interest rate gets lower as and when the economy stabilises. Fixed-rate vs. floating rate: What should you choose, keeping in mind the basic differences? If you opt for a fixed rate of interest for your home loan, then you will have to pay a fixed amount for the entire loan tenure. On the other hand, if you opt for a floating rate, then you will have to pay monthly instalments that would be lower than the fixed rate. However, in this case, the amount of EMI can change depending on how well the economy and markets are performing. [B-02] Conclusion Depending on your needs, you can pick whichever interest rate you find convenient. For those who want to play it safe, a fixed rate would be a better option. For those who don’t mind taking a little risk, the floating rate would be a good option. For more detail on financial topics, visit the Primal Finance website today.
08-11-2023
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Business Loan

What is the Length of Average Business Loan Terms

Most businesses, large or small, require finances to satisfy day-to-day business obligations. The nature of the business also determines the amount of funding needed: is it capital-intensive, and what stage of development is it in terms of genesis, growth, or maturity? Typically, firms require the most funding in their early phases and for future growth. Typically, business loan terms range from 12 months to five years. Short-term, or unsecured, loans have a tenure of fewer than five years, whereas long-term, or secured, loans have a length of 15 years or more. For start-up loans, the lender determines the payback term for a term loan at the time of the loan application. [B-01] Let’s find out in detail about the various business loans and their average term lengths below: Term Loans Term loans for businesses are loans for a set period. You can generally use these loans for capital projects such as purchasing new equipment and cars. They can also help upgrade an existing firm by installing computers or upgrading equipment. However, you should be aware of the hazards of taking these loans. Short-term, medium-term, and long-term business loans are available. These loans differ from other types of credit and funding in that they are made for a set period. In long-term loans, the borrower must provide collateral in exchange for the loan. You can repay short-term loans within five years or fewer. Long-term loans can have repayment terms of up to 15 years or more and may have lower interest rates than short-term loans. The borrower can also select fixed or variable interest rates when repaying the loan. Working Capital Loan These loans are intended to provide working capital for a company’s short-term operating needs rather than long-term assets or investments. Such essentials include payroll, rent, and debt payments. Working capital loans are thus simply corporate debt borrowings used by a company to fund its day-to-day operations. Working capital loans may be required by businesses with circular or seasonal sales to make it through periods of decreased business activity. They help buy raw materials when demand is high and pay for labour, rent, utilities, and other ongoing costs. You can repay working capital loans in as few as four months. You can of avail and repay these short-term loans as many times as you want, depending on the rise and fall of liquidity rates in your business. Machinery Loans These loans help you upgrade your business by purchasing the latest machinery and equipment or upgrading the existing ones. A qualified lender in India can provide you with a machinery loan with reasonable interest rates and a flexible payback period. The tenure usually varies from lender to lender but is between one and five years. Government Loans The Indian government has launched several credit schemes for individuals, MSMEs, women entrepreneurs, and other entities involved in the commerce, service, and manufacturing sectors. Loans under government schemes are provided by a variety of financial organizations, including private and public sector banks, non-bank financial companies (NBFCs), regional rural banks (RRBs), microfinance institutions (MFIs), small finance banks (SFBs), and others. Some of the most popular government loan programmes are: Mudra Scheme under PMMY: Length of term loan: 12 months to 5 years Standup India: The maximum term loan term is seven years PSB Loan in 59 Minutes: The maximum term loan length is one year MSME Loan Schemes from SIDBI: The maximum term loan length is ten years The minimum loan amount for all these government schemes is Rs. 10,000. They offer benefits to women entrepreneurs, rural businesses, and new businesses. You can obtain government bank loans for small enterprises by visiting the official website of the government-initiated schemes and applying online or with the bank that offers these schemes. Point of Sale (POS) Loans In a point-of-sale (POS) loan, the consumer pays for goods and services purchased from a specific store. Consumers complete a Point of Sale (POS) transaction when they buy goods from a store. After receiving payment, the merchant will provide its customers with a printed receipt for the transaction. As it relates to sales, customer management, inventory, stock, equipment, and employees, POS, often known as a retail management system, is a central component for enterprises. Almost every POS comprises software and hardware components that help shops manage their everyday operations. This sort of loan is also known as a merchant cash advance. The loan amount granted by banks and NBFCs is determined by the amount of business produced by POS terminals. [B-02] Conclusion The availability of a loan is an act of responsibility because the money must be returned. Various loan repayment opportunities are available today, each with its own set of terms and restrictions. These include delayed EMI payments, flexible repayment plans, step-up repayment plans, and loan foreclosure. Three efficient methods you can implement to pay your business loans on time are: When you have a savings account, you can utilise a standing instruction to withdraw whatever EMI you owe to them automatically. The lender can be informed of the date on which the EMI will be withdrawn. You must have cash in your account to ensure that any EMI isn’t missed and that the payback procedure is not interrupted. Post-dated cheques for the loan amount are provided to the lender, who will submit them to the bank on the designated date. It is similar to a standing instruction, but instead of withdrawing funds electronically, the cheque must be physically mailed to the borrower’s bank. If you do not have an account with your lending bank, you can use an electronic clearing service. The borrower will also authorise the lender to deduct the EMI from your account. Business owners must select a loan that meets their needs and guarantee that it is repaid on time. To apply for a competitive rate loan or understand more about business or personal loans, visit https://www.piramalfinance.com/personal-loan.
08-11-2023
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Cards

Using the Autopay Feature on Your Credit Card to Make Payments

In recent times, we have all transitioned from cash to cashless. Before the advent of digital money, there were cards. As soon as you open a bank account, you are handed certain things. Inside the envelope are your passbook, chequebook and two cards: a debit card and a credit card. Both cards are used for monetary transactions, but as the name suggests, if you use the debit card, money will be deducted from your account. Whereas, if a credit card is used, you can make transactions even if you don’t have enough balance. You just need to pay back the amount at a later date to the credit card company. With the advancement of technology, companies have introduced a new feature known as “credit card autopay.” Nowadays, everything is automatic, even our washing machine. All these automatic concepts are meant to enable us to save time. Similarly, by enabling the autopay credit card online feature, money is debited on its own at a stipulated time without your interference. Cool, isn’t it? You do not have to worry about missing out on your payments and the bank serving you a notice for non-payment. [B-01] Benefits of a Credit Card I still remember, as soon as my salary account was opened, my father prohibited me from using a credit card. He believed that I would indulge myself in a shopping spree or forget to make the payments on time. Well, he was not wrong! Fast forward to the current situation, and I see my husband relying more on credit cards. Sceptical me tried to stop him at first, but then he said something that changed my perspective. Let us see his reasons for convincing me: Credit Card is safer Suppose your wallet gets lost or stolen; if you have cash, say goodbye to your money. If your debit card is used fraudulently, money will be debited from your account instantly. Even if you complain to your bank, recovering the money will take a little time, and your account may go for a toss. On the other hand, if your debit card is misused, you can alert the bank immediately. By doing so, even if purchases have been made using your credit card, you won’t lose any money. Track your spending You can even put a limit on your expenditures. There are certain budgeting apps that import data from your bank account and credit card. The apps help you to keep in check before you overspend. Rewards Lots of additional privileges are provided, like discounts, cashback, gift vouchers, reward points, and many more. Online credit card payments reap better benefits than shopping in a physical store. EMI conversion If you cannot pay by the due date, your purchases will be converted to EMI. However, interest will be charged. Credit score Maintaining a good credit score has many benefits. If you repay your debts on time, it will reflect on your credit history. If you want to apply for loans in the future, many companies check your credit history for eligibility. Impact of a good credit score As discussed earlier, having a good credit score ensures that lenders will readily agree to process your loan application or another credit card. The credit score is known as the CIBIL score. The 3-digit number is the sum of your credit history, report, and rating. In CIBIL, credit scores range from 300 to 900. If you have a score above 750, your loans will get approved faster. You might be approved for a higher loan amount at a reduced interest rate. Not having or using a credit card and not taking loans in the past, will harm the credit score. It will be difficult for the lender to determine whether you are likely to be a defaulter when it comes to your loan application. Closing previous loans has a beneficial impact on the credit score. You will be considered creditworthy if you avoid using your credit card too much and pay your credit bills regularly. Nowadays, we all have fast-paced lives. Under work pressure, we can’t even spend enough time with our family. Keeping track of the expenses and paying them before the due date, can be a tedious process. That’s where the credit card autopay feature comes to your rescue. Advantages of enabling the autopay feature on your Credit Card The autopay feature helps you pay the bills automatically in each billing cycle. You can set up an autopay feature on your credit card through banks or credit card issuers, or enable autopay for your credit card online using internet banking. Once you have linked your bank account, you have to set up your payment amount, date, and schedule. Make sure to set up a monthly minimum so as not to disrupt your budget. It is very important to set the payment date in such a way that you have received your salary or payment, before the due date of the credit card’s statement. Even though it is advisable to pay your outstanding amount in full, it is not possible all the time. By keeping your expenses low and setting up autopay on a good schedule, you can avoid late fees and pay a small amount of interest. Customers will receive pre-debit notification via SMS or email 24 hours before the transaction, according to RBI guidelines effective October 1, 2021. Recurring payments exceeding Rs. 5,000 require customer approval. This safety feature aims at limiting the fraud of unscrupulous, unapproved payments. [B-02] Now that it has been established that having a good CIBIL score, makes you eligible for a higher loan amount, go ahead and apply for a loan. Be sure to check the Piramal Finance website (www.piramalfinance.com). For a personal loan, log in at https://www.piramalfinance.com/personal-loan. Do check out various other products and schemes, including home loans. However, it is advisable to have good knowledge of the risks and features before committing.
08-11-2023
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Business Loan

What is the Best Source for Small Business Loans?

Over the last few years, the ease of doing business in India has significantly increased. Small business owners now have various avenues for securing a business loan. Small business loans are easily available from banks, NBFCs (non-banking financial companies), and the government under various schemes. Several new programmes have been launched by the government to support small business owners in scaling their operations. Apart from traditional sources like bank loans, one can now reach out to relatively newer finance products like crowdfunding or other non-banking lending institutions. Read on to find out the best sources for a business loan. [B-01] Why Business Loans? Small-scale businesses do not necessarily generate a great deal of revenue to earn high profit margins. This makes it difficult for them to plug money back into the operations and make the business sustainable. A business loan can be extremely helpful when starting a new business or at any other stage of the business lifecycle. Now, to secure a business loan, one must consider the merits and demerits of the different types of loans. The person also needs to estimate the approximate size of the loan that will be determined through a budget forecast. In India, the main source of business capital is banks. Other important funding entities are NBFCs, angel investors, and venture capitalists. As a business owner, you would mainly need two types of business loans: equipment and machinery loans and working capital loans. Product-based industries rely more on the first type, while service-based industries need more working capital. The best small business loans in India 1. PSB Loans The government of India has relaxed the process of a business loan application, and one can now apply for one in less than an hour! If someone is looking to expand the scale of their business operations, they can apply for a PSB (private and public sector banks) loan ranging from INR 1 lakh to INR 5 crore. The loan will be sanctioned immediately if it meets all the criteria. 2. Mudra Loans Mudra, or Micro Units Development and Refinance Agency, was formed as a nodal agency to provide small business loans. Businesses that are not covered under secured loans from banks can apply for this loan. 3. NSIC Loans NSIC, or the National Small Industries Corporation, allows small businesses to apply for financial benefits in the form of subsidies. The money from these subsidies could be used to buy materials or pay for marketing costs. 4. CLSS Loans Credit Linked Subsidy Loan, or CLSS, is a government scheme designed to improve the quality of production by small businesses. This allows a small business owner to stay competitive in the market. The CLSS subsidy can be availed as a business loan to upgrade the manufacturing setup. 5. SIDBI Loans The Small Industries Development Bank of India, or SIDBI, has collaborated with banks, accredited consultants, and rating agencies to give out small business loans. This is mainly targeted toward the service-based and manufacturing industries. Under this scheme, one can apply for funding in the form of bank loans. 6. MSME Loans When it comes to the micro, small, and medium enterprise sectors, traditional bank loans are the best option. A person can file a business loan application with any private or nationalised bank in India at affordable interest rates. They can get loans for working capital, term loans, etc. 7. Business Loans from Private Banks Depending on the type of business loan, one can also seek support from private banks in India. Because there is a lot of competition, private banks offer business loans with low interest rates, easy documentation, flexible repayment terms, and quick disbursement times. Small business loan eligibility criteria As a small-scale business owner, funding is always a concern. But with easily available business loans, many of the monetary challenges can be mitigated. If a person fits the below-listed criteria, business loan approval should be easy. Credit history: It is always a good idea to monitor credit reports and keep them up-to-date. This is the first thing lending institutions check while approving or rejecting a business loan request. Feasibility: While curating financial projections for a year, it is important to adhere to industry standards. If, for any reason, a person has not followed the industry standards, then the same must be outlined in the projection. At the time of the loan application, the person will have to give a detailed pro forma statement along with their plans. Business plan: For any lender to invest money in one’s business, they have to be sure that the business plan is financially viable. This includes the business model’s overall structure, estimates of capital, marketing costs, assets, and so on. [B-02] It is thus very clear that securing a business loan for a small business is very simple if the process is followed carefully. Given that there are so many avenues to secure a small business loan, like Piramal Finance, it is easy to make the business sustainable.
08-11-2023
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Business Loan

What Are The Average Interest Rates On Commercial Loans In 2022

The average interest rate on commercial loans varies depending on factors like loan purpose, type of business, borrower’s credibility, etc. The standard range of annual percentage rates (APRs) lies between 3 and 7% for traditional bank loans. As for alternative online loans, the APRs may vary between 11% and 44%, and sometimes even higher. Not all lenders, however, use APRs to calculate commercial loan interest rates. So, your finance plan as a business owner will also need to factor in APRs or something called factor rates from lenders. Sometimes, lenders may also charge you an interest rate on a weekly or monthly basis. The latter, however, can be converted into an APR. Sounds confusing? It’s not. If you are aware of the types of commercial loans, calculating the interest rate becomes simple. Read on to find out more. [B-01] Types of Business Loans and Interest Rates Depending on the nature of the business, there can be different types of business loans. The commercial loan interest rates are determined mainly by this. 1. Term loan Loans that have a specific repayment tenure are called “term loans.” These loans come with a fixed or floating interest rate. The commercial loan interest rates on fixed-rate loans range from 10.55% to 18%. Floating interest rates on business loans range from 8.9% to 16.4%. 2. Working capital loan You may also want to include a working capital loan in your business finance plan. This is a credit facility that you can avail of to manage your daily business activities. By nature, they are short-term business loans that can be paid off within a year. Depending on the type of loan, commercial loan interest rates may vary from 1% per month to 26% per annum. 3. MSME loan MSME loans can be offered in the form of cash credits, overdrafts, working capital loans, or term loans. Depending on the type, commercial loan interest rates may range from 1% per month to 26% per annum. 4. Overdrafts Overdraft facilities allow you to withdraw money from your savings or current account even when the account balance is zero. In this context, overdrafts are an extension of the banks’ credit facilities. Commercial loan interest rates on overdrafts vary from lender to lender and are mostly determined by your account balance. 5. Cash Credit Depending on your company’s creditworthiness and financial history, you may qualify for a cash credit or a short-term loan. This type of loan has a maximum repayment period of 12 months. 6. Invoice discounting Invoice discounting, also called bill discounting, is another way to get short-term financing. You can sell unpaid invoices with a payment date in the future and get a commission from the lender. 7. Letter of credit An LC, or Letter of Credit, is a great finance option for those businesses that are involved in international trade. If you are an exporter, you can get an assured guarantee of payment from banks or non-banking financial companies (NBFCs) on your exports. The commercial loan interest rates depend on the tenure. 8. Loan on machinery As the name suggests, you can apply for a machinery loan to acquire new equipment or machines, which will, in turn, increase business output. This is supposed to increase business profits, which will help you repay the loan. 9. POS loans POS, or point of sale, is nothing but the place where customers make an actual purchase and pay for it, like in a retail store. For business owners, this is the retail management system, as it is directly linked to sales, inventory, and customer management. 10. Government loans Various government schemes and policies have been devised to cater to the needs of business owners and facilitate the ease of doing business in India. Some of the most popular loans that you can avail of at great commercial loan interest rates are Mudra loans, National Bank for Agriculture and Rural Development (NABARD), Stand Up India, Small Industries Development Bank of India (SIDBI), and the Prime Minister’s Employment Generation Program (PMEGP). Factors that Affect Commercial Loan Interest Rates Commercial loan interest rates depend on a combination of important factors discussed below: Nature of your business: Loans are classified as priority or non-priority based on the business sector that you are working in. Non-priority sector loans usually have a higher interest rate. Years in business: The longer you have been in business, the better your chances are of securing a commercial loan. You have to be mandatorily in business for at least 2 years in order to apply for a business loan. Turnover: Your monthly business turnover determines what type of loan and commercial loan interest rate you will be able to get. The turnover reflects your profits or losses, which ultimately determine your loan eligibility. Credit score: Your business’ credit score is a reflection of its credit history and creditworthiness. A credit score of 750 or higher is considered good when applying for a loan. Collateral: High-value collateral ensures you get more benefits while availing of a business loan. Lender type: Banks usually charge a lower commercial loan interest rate compared to NBFCs or microfinance institutions. [B-02] Summing up It is thus very important that you keep these factors in mind while applying for a business loan. A high commercial loan interest rate is something you may want to avoid, as it may hurt your business in more ways than one. For more such knowledge-building articles, follow the Piramal Finance blog.
08-11-2023
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Other

Step-by-Step Guide to Making Your Home Loan Down Payment Effortlessly

When you buy a home, you do not just invest money; you realize a dream. You will need to take out a home loan to afford your purchase. Many banks and NBFCs offer high-value home loans at affordable rates. A home loan usually runs into lakhs and crores. Thus, there are strict rules that banks and NBFCs must follow when issuing housing loans. One of the key factors concerning a home loan is the down payment. When you apply for a home loan, the lender will only provide a specific amount. You will have to pay the rest upfront, i.e., a down payment. Read on to learn about the best ways to make a down payment for your home loan. [B-01] What is a Down Payment? Most lenders have an upper limit when they issue a home loan. They will give you between 60% and 90% of the amount as a home loan. You will have to pay the remaining balance from your funds. As this amount can go into lakhs or crores, you need to plan your down payments in advance. You can pay the down payment all at once or over time. If you have made any payment to the seller before, it will be considered a down payment. But you must keep the receipts ready with you and submit them to your home loan provider. Else, you can deposit the money with the lender, who will then pay the entire amount to the seller. Tips for Making a Down Payment on Your Home If you are going to buy a house, be ready to make the down payment on your home loan. Here are some vital tips to help you make the down payment easily: Plan Early: If you want to buy a home, it can never be a sudden decision. You must plan for years to be able to pay for the deal. If you know you will buy a home after “x” number of years, you can start saving some money every month. The amount can be invested in a risk-free investment. This way, over a period of time, you will be able to accumulate some money that can be used to make the down payment for your home loan. Pay as Much as Possible: Do not take a high-value home loan just because you can. Borrow only what you need. This will help lower the amount of home loan that you require, thus ensuring that your EMIs are lower. You will also be in a better position to repay the EMIs on time. Create a Corpus: You need to create a corpus to be able to make the down payment. There are many ways to create a corpus for a home loan down payment. This includes investment in shares, mutual funds, fixed deposits, or savings schemes. However, you should take precaution before investing. The scheme should have enough liquidity to allow you to withdraw the money when you need it. Proportionate Release: Many lenders offer this option to home loan customers. Herein, you need not make the down payment in one go. The lender will send the money to the seller based on the percentage of the work done. Hence, you will also need to pay the down payment in that proportion only. Only select lenders offer such a facility. Thus, check with your lender before you opt for a home loan. Maintain Records: If you are buying a house from a private seller, you might need to pay some money at the time of the deal and in the interim. This money will count as a down payment. Make sure you send the amount only through a bank account, cheque, or a demand draft. This will help maintain a record and count towards your down payment. You must also get a receipt from the seller every time you make a payment. Liquidate Investments: Borrowing a home loan when you have enough savings is pointless. There is a reason why you save money, which can be used to buy a house. If you cannot make down payments from your current cash flow, you can opt to liquidate your investments. Alternatively, many lenders offer low-interest personal loans secured by securities such as FDs and gold. Personal Loan: When you buy a house, there are many costs involved. You can apply for a personal loan if you do not want to use your savings for the same purpose. This amount will help you take care of the expenses that come with the down payment on a home loan. [B-02] Final Takeaway Be it a home loan or any other loan, you need to plan your down payments in advance. It would be best if you also looked for a lender that offers the maximum home loan at affordable interest rates. To read more about home loans and other finance-related topics, check out the Piramal Finance website. They have many blogs and articles on finance and home loans. You can also look at the various home loan options available and determine which one suits you best.
08-11-2023
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