More articles for you

Your one stop place for everything related to finance and lending

FD

All you need to know the features, benefits and disadvantages of FD

A fixed deposit (FD) is one of the best investment products you can include in your portfolio. It is reliable, safe, steady, and simple, even for new investors. Best of all, it is a tried and true method of growing your money despite market volatility. One of the primary advantages of investing in an FD is that you may make a lot of money. This is because of the interest rate. This rate is greater than the interest on savings accounts and a few other alternatives. As an investor, you need to consider the pros and cons of an FD to make an informed selection. The benefits and drawbacks of a fixed deposit are listed below: [B-01] What exactly is an FD? An FD is where money is placed at the start of a period, and interest is earned before it is credited and saved at the end. It is similar to a savings account. In this, the account user has to invest money once and receive returns for the amount funded. The accrued interest is credited to that account, and interest on interest is also supplied. This process is known as a compound of interest. After the deposit term, the investor or account holder receives the money deposited plus any extra interest collected throughout the year. Features of Fixed Deposits Now that you know what fixed deposits are, let’s look at some of their features: Fixed interest rate This is among FD’s greatest features. A fixed deposit is among the most reliable and safe new assets for anybody seeking to begin their money journey. Its rewards are new by market volatility. Secure FD investments are completely safe. Rates are not affected by market fluctuations. The interest rate on an FD plan is fixed for the length of time until it matures. Exempt from tax The initial monetary amount the depositor places in the FD is tax-free under Section 80C of the Internal Revenue Tax Act. FDs are a popular tax-saving option for salaried people, workers, and salaried people, employees, and stockholders. The clause provides an exemption of up to Rs 1.5 lakhs for FD deposits. Renewal and Term Flexibility You may start your fixed deposit for as little as a week and as long as ten years. Yet, before selecting any fixed deposit plan, remember to verify the interest on FD. The rate of return is mostly defined by the fixed deposit term. Fixed deposit perks The rate may not be higher when compared to equities mutual funds or stock market holdings. But bank FDs provide safety in terms of low risk compared to those other business investment options. They also ensure capital returns at maturity. Here are some of the advantages of fixed deposits. Payments of interest Based on the consumer’s needs, interest payments might be set monthly, quarterly, or yearly. It may also be renewed at maturity with the principal sum to continue as an FD. FD with tax breaks Tax-saving fixed deposits are also qualified under Section 80c Tax Act. One of many investment options within 80C gives a Rs 1.5 lakh income deduction. Tax-saving FDs have a 5-year lock-in term. Deposit safety According to the latest update of the DICGC Act, an account holder can get coverage up to Rs 5 lakh within 90 days after a bank (except NBFC) is restrained due to an unusual closure of business. Senior persons get a tax break FD income paid by a senior individual is free up to Rs. 50,000 from income tax. Senior folks’ deposits also get greater interest rates. Loan secured by a bank FD Loans against FDs are available. Almost all banks provide this option. The deposit amount and the term of the FD determine the loan. The rate on such a loan might even be as much as 10%. Several FDs may be opened One may open an endless amount of FDs at a single or many banks. The FD is a perfect option to invest one’s savings. The earned would be tax-free till it hits the Rs 1.5 lakh exemption limit. Credit facility A savings account may also be utilised to get a loan. The lending facility enables the depositor to get funds when they are needed. The loan may be extended to cover up to 90% of the debt plus interest. Senior Citizens Get Better Rates Senior citizens benefit from even higher fixed deposit rates. Interest rates may vary according to the bank selected and the duration of the FD. It might be as much as 10%. As a result, older adults may earn much more money via deposits. This s exactly what they want and desire in their golden years. Starting a Single or Joint Account A joint account allows two or more people to create an FD jointly. Any account member can deposit or withdraw funds from the account. This simplifies the operation and maintenance of the FD accounts. HUFs are accepted. Members of any Hindu family may create an HUF and open a Fixed Deposit jointly. HUF is taxed differently (from individual family members). So a family may save more on taxes by creating an HUF FD account. Fixed Deposit Drawbacks While some plans offer help, they also have downsides. Assess the following flaws of FD: Funded money Your cash will be trapped in a fixed deposit for a certain period. To convert your money, you must go through a separate procedure. As a result, until you remove your cash, this money will be unavailable to you. Exiting penalties If you withdraw money before the term is over, you may be assessed a penalty for pre-closure. The interest income so far may also be removed before crediting the principal amount. Fixed interest rate FDs offer many benefits. But the rate does not grow with inflation. The deposit may give less than the inflation rate in certain samples. And it is for this reason that investors are losing rates in fixed deposits. In most cases, the rate on a fixed deposit is set throughout the deposit. As a result, they will not profit from increased interest rates if interest rates rise in the market. [B-02] Conclusion Even those with a low-risk tolerance spend their money on FD, making it the most reliable and adequate financial tool. An FD is the only option in the market if you want a safe return without putting your funds at risk. But, when investing in any market instrument, you should do some research and analysis. And for this, you can visit Piramal finance for more related blogs and explore their product and services.
08-11-2023
Read More
Business Loan

Everything About Unsecured Business Loan Eligibility And Interest Rate

India’s economy is called an “emerging economy.” It has given a lot of chances to young people who want to make a name for themselves in the business world. Firms need money to operate. From the idea stage to putting the first working system on the market, they need to have a lot of money. There are also other costs. It includes wages, raw materials, utility bills, transportation, and other small things. Most business owners get loans to pay for their businesses. Business loan eligibility is also different for many lenders. There are two kinds of business loans: Secured Business Loans Unsecured Business Loans [B-01] Secured business loans are those that the person backs with a security deposit or a kind of collateral. Most of the time, secured loans are given out in the form of equipment loans, vehicle loans, term loans, or loans against property. Unsecured loans are given out based on the business’s reputation, not on collateral or a guarantee. Most people get these loans for a short time, up to a year. Good credit, submitted documents, income, and other factors are required for unsecured business loan eligibility. Read on to learn more. What is an Unsecured Business Loan? An unsecured business loan is granted based on your credit history and does not need collateral. These loans are used to develop or sustain a firm’s functions or to maintain cash flow. You may use it to bring extra money to a firm. It helps it achieve its aims. Interest rates vary from lender to lender. They might exceed 14.99%. Although the standard concept of an unsecured loan does not need security, the reality is a bit different. Rather than seeking collateral, the banks impose a general law on vital assets until the debt is fully repaid. This enables those with strong credit or solid firms to get loans without giving large assets to small firms’ loans. Benefits of an Unsecured Business Loan Different banks have different business loan eligibility criteria and benefits for their best-unsecured business loan offers. Here are some traits that these loans have in common: Unsecured business loans are those that do not need collateral or security. These loans are made based on the applicant’s reputation and payback history. The lender may also take into account other relevant aspects. Most banks ask that the said firm be profitable for at least two years. The loan sum might range between Rs. 10,000 and Rs. 1 crore. This is based on the size and needs of the firm. The loan term is generally varied, ranging from 1 to 5 years or more. Unsecured Business Loan Eligibility Criteria Given below are the unsecured business loan eligibility criteria: Minimum age of 18 at the time of loan request and maximum age of 65 at the time of loan completion. A credit score of 750 or above is needed. Presence of a business for a minimum of one year in the same place with proof of profit. You must have a steady source of income and wage slips. Bank information or the most recent six months’ bank statement. Documents needed for Unsecured Business Loan eligibility The papers needed for unsecured business loan eligibility are as follows: You will need to give a recent passport-sized photo of yourself, proof of your identity, address, signature, income, bank statements, and proof that your business will keep running. Customer letter for the end use or proposed end use of BIL funds OD sanction letter, where DP/OD limit is not listed in the bank statements. Certificate of professional qualification for experts Partnership deed, or MOA/AOA for partnership firms, and a certificate of incorporation, or Form 3CB and 3CD or Form 3CC and 3CE for companies, as applicable. Factors affecting Business Loan eligibility Small business owners can get business loans from multinational firms. Their revenue projections differ, as do their business loan needs. To figure out the best interest rates, the bank must carefully evaluate the entities’ eligibility. The factors which affect business loan eligibility are given below: Credit Score Banks must be confident in your ability to repay. A good credit score guarantees that to the bank. To determine credibility, the bank will look at the firm’s credit score. They investigate your repayment history for other loans and liabilities. A good credit history will make it easier to get a loan with favourable terms and interest rates. Business Stability The economic stability of the business is critical for loan approval. Banks will investigate the vital’s sales and profit margins. This can be deduced from your business record and the duration of your vital’s existence. Banks typically prefer to lend to companies that have been in operation for at least three years. The older the business, the better the chances of obtaining a business loan with an attractive interest rate and other terms. Profitability and continuity of the Business Another vital criterion is that your business should make a lot of money. A business that isn’t doing well wouldn’t be a good candidate for a loan from a bank. The bank could ask to see your profit and loss statements from the last two years. Profitability and revenue are vital factors in deciding whether a business can get a loan. Your current relationship with the Bank Your present position with the bank is also vital. All your dealings with the bank, such as your cash flow and payments, will be looked into by the bank. It will see how well you’ve paid back any bank loans you already have. Collateral Many government programmes offer business loans without collateral, but the borrower can offer any kind of collateral he is comfortable with to get good loan terms and interest rates. The government rules say that the applicant does not have to provide collateral, but they can if they want to. By putting up something of value as security for a loan, you can borrow more money and pay less interest. [B-02] Conclusion Unsecured business loans are an effective way to get quick financing for your vital needs. You may give your dreams wings and help you to reach new heights. Yet, before applying for and closing on an unsecured business loan, you should carefully examine the factors affecting unsecured business loan eligibility. For more blogs on the best-unsecured business loans, check out Piramal Finance and explore their products and services.
08-11-2023
Read More
Personal Loan

Know different types of unsecured loans and how they work

Whether you need the money for a future project, unforeseen expenses, or even school fees, unsecured loans can help you get funding without providing capital like your home. These loans have less strict eligibility and application requirements than secured loans, and many lenders offer same- or next-day financing. Even so, unsecured loans come with higher rates and less good treatment than secured loans because they pose a greater risk to lenders. We’ll walk you through how unsecured loans work and help you decide if they’re right for you. [B-01] What are Unsecured Loans? Unsecured loans may be issued without any security. A lender offers it to you based on your lender’s creditworthiness. A reason, having good credit is needed to be approved for an unsecured loan. Since asset acts as safety for the lender, it is crucial to the loan approval procedure. The interest rate on this loan is often higher when compared to secured loans. How do Unsecured Loans Work? You may use unsecured loans, which usually range from $1,000 to $100,000, for several purposes. Loan terms range from two to seven years, with annual percentage rates (APRs) ranging from 6% to 36%. Today, several lenders provide online prequalification so buyers may compare rates without applying or enduring many demanding credit checks. Depending on the lender, prospective borrowers can also submit an online loan application and get the lender’s decision. In addition, as unsecured loans do not need collateral, clients are not obliged to wait for an appraisal or provide evidence of the value of any assets. When an unsecured loan is approved, funds are disbursed in one lump payment, and interest is added to the loan balance. Interest is only applied to the outstanding balance, and the lender can use unsecured credit cards and other lines of credit to make the necessary purchases. Monthly payments are needed, and late payments must usually be reported to the three major credit reporting agencies after a time limit. What are the types of Unsecured Loans? Continuous Loan With a revolving loan, you borrow, pay it back, and then borrow again. The bank sets a max credit limit. Depending on your needs, you may use the whole credit limit or only a part of it. Once you have paid all your debts, the credit limit is restored. Time Loan A term loan is a great way to have cash when you need a sizable sum of money. On this loan, a set interest rate is often provided. You may repay the loan in equal payments at regular intervals for a certain period. When purchasing expensive fixed assets, a loan is useful. Loan Consolidation While you are having trouble with money, your debts may grow. You could find it challenging to make your payments as a result, especially with the rising interest. In this case, a joint loan could be of the most help. You may erase your debt growth and reduce your repayment duration with the aid of this loan. Types of Unsecured Loans Based on Utilization We previously characterized loans in terms of their makeup – unsecured loans are divided into several sorts depending on their intended usage. Marriage Loan Weddings in India are sometimes expensive ceremonies. You could decide on a term loan to make your wedding special and fund it. You could also be well enough to pay for the wedding’s expenses. But sometimes, you may need to loosen your spending constraints because of other little fees. A revolving loan could be the best choice for covering little or infrequent expenses. Holiday Loan A client could use a term loan to cover their holiday costs. You could opt for a revolving loan to pay for recurring or erratic expenses for items like food, shopping, or hobbies. Many people also carry a credit card that may be used to make purchases of any amount of money, wherever in the world. Festival Loan Festival loans are personal loans made available during the holiday season at low-interest rates or with added benefits like no processing fees. You may utilise a credit card or revolving line of credit for little expenses. Yet, acquiring a personal loan is an option for several things, like investing in gadgets or organising. Loan for Home Renovation You may make your house seem better and more attractive with the help of this loan’s funding. By making improvements to your house with the help of home renovation loans, you may also increase the market value of your property. Booster Loan Money is borrowed to pay off an existing debt as a top-up loan. As a result, if you now have a personal loan but need more money, you may apply for a loan that combines all the extra funds you need into one. The result is a straightforward EMI payment rather than having to cope with the challenges of paying and recording many EMI instalments. A Bridge Loan A bridge loan is a short-term loan that is necessary. The period may be extended for a total of 12 months. Loan for agriculture The agriculture sector continues to employ 50% of the country’s workforce. There is a great demand for agricultural loans as a consequence. A term loan might be used to purchase land, farm equipment, irrigation systems, etc. Yet, revolving credit might be arranged to pay for running expenses like seed purchases and other working capital requirements. Loan for Pension Retired people receiving a pension are eligible for a pension loan. It gives you money in unexpected, unforeseen financial situations that must be attended to immediately. Loan for Consumer Durables A loan may be taken to purchase gadgets or white goods like computers and mobile phones. Couples often use these loans to buy TVs, fridges, and washing machines. [B-02] Conclusion Unsecured loans, often called personal loans, are often granted to clients with great credit ratings. Depending on an actual base rate, personal loan interest rates may be fixed or liable to vary. This essay has helped you understand unsecured loans better. To learn more about Piramal Finance, go to their website.
08-11-2023
Read More
Business Loan

Main Perks Of Unsecured Business Loans You Need To Know

Firm owners may use collateral to get a loan in certain instances. As the asset is linked to the term loan, if the firm owner fails on the secured loan, they must give the asset to the lender. As a result, the asset covers the working capital loan if they are not reimbursed. An unsecured business loan is another choice. Unsecured business loans do not demand assets, which makes them less risky. Many types of loans can meet money needs, with unsecured loans for businesses being one of them. [B-01] What is an Unsecured Business Loan? An unsecured business loan is given without the use of any asset. In this case, the lender or bank relies on your credit ratings and payback abilities. If you cannot improve credit ratings or income stability, the bank or lender may request assets in return for the unsecured business loan. Any firm or person may obtain an unsecured loan for many reasons, including: Enhancing firm stocks. Purchasing new tools. Extending work to new markets. Infrastructure or building construction. Buying stocks or assets. Micro and small firms often use unsecured loans. Yet, the bank or lender may provide loans to firms, self-employed people, and others that they see as a good option. Features of Unsecured Business Loans The terms and perks of banks’ unsecured business loan plans vary. The following are a few features of these loans: No asset is needed to be put up when requesting a firm loan. These loans are approved depending on the applicant’s credit and payback record. Other vital factors could also be taken into consideration by the lender. Banks often require that a firm has been successful for at least two years. The loan amount might vary from Rs. 10,000 to Rs. 50 lakhs, depending on the demands and size of the firm. The loan’s length is between one and five years. Startups, owners, merchants, SMEs, MSMEs, private firms, public firms, and big firms may all apply for unsecured loans. Perks of Unsecured Business Loans Here are some major perks of getting an unsecured business loan: No Collateral Required As the name suggests, these firm loans are “unsecured”. You are not required to put up assets to get credit. This function is particularly helpful for newly established firms without tangible assets to provide as collateral. Thus, obtaining a loan becomes much more attainable for firm owners or entrepreneurs just beginning their activities. Fast Processing & Distribution When a loan is secured, the bank is needed to confirm the value of the pledged asset. This activity often takes more time. The lender is not needed to know the worth of the asset or support records, such as firm revenues and credit reports, in the case of a loan. Affordable Interest Rates You may get an unsecured business loan at reasonable interest rates thanks to the RBI’s record-lowering repo rates and bank competition. Little Paperwork Required The paperwork needed to apply for an unsecured business loan is modest. You simply have to upload scanned copies of your ID, address proof and a voided check. To verify your firm’s age, some lenders may additionally want bank account records, necessary paperwork, and a certificate of firm existence. Flexibility Most lenders provide short-term finance in the form of an unsecured loan. An unsecured business loan lasts between 12 and 60 months. This relieves firm owners of their need to make lengthy EMI payments to repay their loans. People find maintaining a positive cash flow simple due to the shorter loan term. Many lenders now provide flexible loan payback plans to make payments simpler. No Shared Ownership Many firms turn to venture capitalists to finance their operations. Getting these folks to invest in startups is a big challenge. Without a complete firm plan, asking these venture investors may often result in rejection. Contacting a bank or nonbanking money firm is simpler. In addition, many angel investors want a cut of the firm’s earnings in exchange for their contributions. Business owners often forfeit their firm’s exclusive ownership while seeking funding without taking on debt. But, you need not be concerned about giving up or splitting your ownership when you ask for a firm loan. Makes The Loan Process More Efficient It is simple to submit an online application for a loan since the paperwork needs are modest and fast. The loan distribution process is streamlined, and less time is spent appraising assets due to the lack of assets. With no need for assets, an unsecured business loan enables the lender to pay attention to factors like credit score, monthly sales, and length of operation. Suitable For New Borrowers It is a fantastic method to build credit as first-time users have no credit records. Lenders are more concerned with your firm’s profitability than your credit record. Minimum Criteria Even if your loan needs are far less, you would still need to provide proof of stable monthly revenue. A financial statement from the previous 6 to 12 months & your PAN is needed. Therefore, your chances of receiving an unsecured business loan are higher if you can supply this data. [B-02] Conclusion Any firm owner seeking more working capital must assess their present financial status. Due to the faster approval procedure and low risks for you, an unsecured business loan makes the most sense. This is the case for many scenarios. But, a secured loan may be a better option for your firm if you have a poor credit score or need to hold vital assets. Consider your firm’s needs and base your choice on them. Do you have any other questions regarding obtaining an unsecured business loan? You can visit Piramal Finance to read similar blogs to get your doubts solved. You may also explore their products and services.
08-11-2023
Read More
Personal Loan

What is a Professional Loan? Types, Features and all that you need to know

A professional loan is intended for those who are self-employed. It is available to self-employed professionals such as lawyers, doctors, chartered accountants, etc. Customers can get professional loans from various banks in India. Before taking a professional loan, you must compare the loan amount and interest rate. You should also be aware of the repayment term before choosing a loan that meets your requirements. [B-01] What is Professional Loan? In contrast to most ordinary businessmen, professionals such as Chartered Accountants, Company Secretaries, and Doctors tend to function. But, these professionals also have differences in their individual financial needs. For instance, an accountant or a company secretary will have different financial requirements than a doctor. Unlike a Doctor, who might must a significant amount of money to start their professional career. A Chartered Accountant will need much smaller money to begin their professional career. It is necessary to separate professional loans from personal loans. As they cater to each profession’s financial needs. Most professional loans are to the particular needs of the individual who takes out the loan. Thus, there is a certain degree of difference between personal and business loans. A company generally offers a business loan to expand its business. In contrast, a professional loan would meet a professional’s needs and eligibility requirements. If, for example, a company wanted to enter a new market, the amount of money needed would be different from what a company secretary required. Types of Professional Loan Professional loans can be categorized into five main types, which are as follows: Chartered Accountant Professional Loan A Chartered Accountant seeks professional loans for a variety of purposes. Including hiring new employees, renting office space, buying office furniture, and any other personal needs the accountant may have. Doctors’ Professional Loan During their professional careers, doctors take out professional loans for various reasons. Such as acquiring advanced medical equipment, enrolling in advanced medical courses, or paying off large loans. Lawyers’ professional Loan As a lawyer, your income isn’t guaranteed when starting. As a result, a lawyer can rent space for their office or hire staff by taking out a professional loan. Engineers’ Professional Loan Engineers can use professional loans to create their engineering firms or for any other personal purposes, they may have. Consultants’ Professional Loan To establish a consulting practice, consultants may need a professional loan. As their clients must have a credit cycle for their services. It will be helpful for them to manage their cash flow. Features of Professional Loan A professional loan can be extended for up to five years. There is no universally accepted definition of a mandatory requirement for any mortgage or collateral. However, a few banks may ask for it to process the transaction. There are several advantages to getting a business loan, one of which is that they are flexible compared to other types of loans. A post-dated check, an EMI facility, or even an ESC mandate can be used to repay the amount borrowed in case of late payment. The benefit of such a loan is that it can provide relief from paying for the charges associated with business travel, including accommodation costs, air travel, and other associated expenses. An individual with a professional loan could use it for various purposes, including purchasing office equipment, hiring employees, renting an office, etc. Depending on the individual’s profession or business practice, the bank will determine the principal amount and the interest rate charged to the individual. Importance of Professional Loan The need for a professional loan can be attributed to various reasons. Among them are a few that have been listed below for your convenience: Doctors may be interested in setting up a private clinical practice to improve their income. If you want to set up one of these businesses, you will require considerable capital. Therefore, a professional loan would be the ideal solution in such a situation. A professional might already have a practice location, but they might want to expand or upscale it to improve its efficiency. As part of this process, renovations can be carried out, new places can be sought, and additional employees can be hired. By using a professional loan, you can quickly access the funds required for each expense. A solid understanding of the technological advancements and progress in your industry is crucial to staying on top of your game as a professional. To keep your professional practice up to date, an experienced loan can allow you to purchase new equipment or machinery of such type. Is it reasonable to apply for a Professional Loan? Like any other hard-working individual, professionals aspire to grow in their careers, just as any other hard-working individual would. As a result of the organization’s capital requirements, they can expand their office space, renovate, hire additional staff, purchase new equipment to enhance their professional efficiency, and make other improvements when required. Lending institutions/lenders would have required borrowers to attach certain tangible or physical items with monetary value to the lender/financial institution to obtain loans for their needs as required. Professional loans are loans extended to certified professionals such as doctors, chartered accountants, and company secretaries who frequently need funds. Despite this, lenders regularly perform background checks on many potential borrowers before extending any loan to them and verifying their eligibility and other credentials required in it. The low-interest rates, the flexible loan tenure, the standard processing fee, and a technology platform that supports seamless and quick communication make these types of loans ideal for ensuring smooth and fast channels towards enabling a professional to grow with it. [B-02] Final Thoughts Piramal Finance’s many strengths are its rapid and smooth application process, maximum borrowing limit depending on eligibility, and prompt disbursement of the borrowed funds. Therefore, getting your professional journey started as soon as possible is essential.
08-11-2023
Read More
Banking

What Is A Bank Statement & Why Is It Important In A Company?

Keeping track of one’s financial situation is made easier with the help of monthly bank statements. These statements are sent out by financial organisations or banks. By visiting the bank’s website or logging into the net banking portal, customers with savings or checking accounts may see their statements online. You can check your bank accounts weekly for numerous reasons. The most important of which is to identify any suspicious activity and avoid overdraft penalties and other costly financial mistakes. Through this article, you will know the meaning of bank statements, their importance for customers and the company, and their long-term requirements. [B-01] Meaning of bank statement The bank statement is a list of all the transactions carried out throughout a specific period in a particular month. The statement includes the account holder’s name, account number, and banking information such as expenditures, withdrawals, deposits, and deductions. Both the beginning and ending balances of accounts are shown on bank statements. Importance of a bank statement Bank statements are an excellent resource for you (account holders) to manage your finances. They may assist you in managing your accounts, identifying discrepancies, and discovering spending habits. Here is the list of reasons why bank statements are essential Reconciliation and fraudulent activity detection Account holders typically have 30 to 60 days after the bank creates a bank statement or e-statement at the end of the month to review the charges and reconcile their cash balance. You may quickly identify suspicious behaviour in a bank account by reviewing the bank statement, which details all charges, dates, and associated payees. For instance, if a fraudulent transaction appears on a bank statement but you did not buy the product, you may call the bank and ask that the charge be investigated. Through these account statements,companies can detect whether their employees or soon-to-be employees are involved in fraudulent activity. Planning a budget and managing your money A bank statement may be considered a personal profit and loss statement. Being an account holder, you may monitor your funds. In addition, bank statements are an excellent resource for budgeting since they break down expenditures by category, making it easy to see where money is going. These statements will determine your monthly expense by tallying up purchases made during that particular month. Account verification and credit check Companies may use bank statements to assess employees’ creditworthiness. Before approving a loan, most banks and credit unions need to see your bank statements from the past 2-5 years. The bank reviews the borrower’s bank statements and other credit papers as part of the creditworthiness assessment process. It applies to most loans, including mortgage loans, student loans, and loans for small enterprises. Why is a bank statement required? Investors, lenders, creditors, bank owners, and company managers all need access to a customer’s bank statements to determine the customer’s creditworthiness. Credit card offerings by firms and financial institutions use this information to verify loan applications. People requesting any loans, mortgages, or financial aid must provide bank statements as evidence of their income or employment. Companies often need bank statements as a form of identification as they provide a summary of a person’s spending and saving patterns and the status of their assets. Since they include information that could be used to identify the account holder, bank statements are often used in addition to other forms of government-issued identification to verify a person’s identity. Bank statements have several advantages Banks send electronic bank statements to account holders at the end of each month. They are used to demonstrate account activity and check for discrepancies between deposited and withdrawn funds. Here is a rundown of what’s in it for you if you choose to check your bank statements regularly: It helps you prevent financial scams Monthly transactions such as withdrawals and deposits are recorded on bank statements. Financial data is recorded by banks’ intelligent document processing technologies, which end users may analyze to spot any inconsistencies or disparities in numbers. The bank’s records of your transactions may be cross-referenced with your own to help you identify any suspicious financial activity. If there are no discrepancies, the data has been verified and is reliable. It helps to reduce accounting mistakes Electronic bank statements are more trustworthy in this aspect than manual data input of financials, which is susceptible to human mistakes. Companies utilise automated bank statement extract solutions to automatically pull financial data, check it for accuracy, and enter it into the company’s accounting system. Since data extraction from bank statements, reading, and recording transactions is automated, as a user you don’t have to worry about mistyped amounts, missing numbers, or accounting mistakes. Multiple financial institutions have already used AI-powered document processing software with these desirable qualities. Displays current and past due amounts, fees, and payments When customers study their bank statements, they can see every transaction made in their accounts. By checking your account history, you can see how much money is coming in and going out of their accounts and any fees or penalties that have been assessed. You will be informed if any unlawful charges or withdrawals have been made from their accounts. This eliminates a lot of the headaches and trouble with monitoring their accounts. [B-02] Briefly summarizing You should review your bank statement each statement period if you are utilising it to reconcile your accounts. Otherwise, you may look at it whenever you want. If you check your bank statement often, you may be able to catch mistakes before they cost you a lot of money or see patterns in your spending. Reading and using your bank statement may help you get some very valuable insights into the entry and exit of your financial resources. It also helps keep your finances in order and prevents wasteful expenditure.
08-11-2023
Read More
Other

What Is Compound Interest And Why It Is Important All You Need To Know?

Compound interest is sometimes also referred to as “the eighth wonder of the world.” There is a strong reason behind saying this. A famous proverb “money makes money” is true in the case of compound interest. Investing your money on a compounding interest earns you more money. You not only get the interest amount on the sum invested by you initially but also on the previously earned interest. Sounds interesting? Continue reading to deep dive into everything related to compound interest and how investing in compounding interest adds value to your wealth. [B-01] Understanding Compound Interest. You receive an interest amount when you deposit money into your savings account. You receive this interest at the same rate each year. This is simple interest. Every year, it is calculated on the initial investment amount. Imagine, however, that you also receive interest on the principal amount and the interest from prior years. Sounds intriguing, yes? It happens in the case of Compound interest. “Compound” is when two or more things are combined. What you are combining in this instance is “Interest.” To put it simply, Compound interest is just a combined interest. In other words, it occurs when interest is paid on top of interest. Compounding interest is the simplest and quickest approach to increasing your investment amount. Components of Compound Interest. There are four main components of compound interest. Take a look at each one of them in detail. Principal. The principal is also known as the initial investment. It is an amount that you invest in the very beginning for say, in your savings account in a bank. The principal is the basis of the first year’s interest. Interest Rate. It is a rate at which interest is calculated. It remains the same throughout the investment tenure—however, the principle for calculating interest changes. Every year the interest rate applies on a variable sum (principal plus interest from previous periods). Compounding Frequency. It is the number of times you get interest amount in a year. The compounding frequency occurs yearly, half-yearly, quarterly, and monthly. The interest rate depends on compounding frequency. The higher the compounding frequency, the lower the interest rate. Tenure. It is the period in which an investment sustains. It has a direct impact on the interest amount and final amount. The higher the tenure, the higher the interest earned and the higher the final amount received. It is the most important component as it allows an investor to predict the future profitability of the investment. An investment with a low-interest rate and low compounding frequency is still attractive with long tenure. Practical Example of Compound Interest. To understand better let’s take a practical example of an investment of Rs 1,00,000. The interest rate is 10% compounded yearly. And the tenure for the investment is 3 years. The table below shows the calculation of Principal sum (subject to change every year), Interest earned, and The final amount(Principal plus interest). Year.Principal Sum.Interest Rate.Interest Earned.Final Amount. 1st1,00,00010%10,0001,10,0002nd1,10,00010%11,0001,21,0003rd1,21,00010%12,1001,33,100Total––33,100– The formula of Compound Interest Calculation. The basic formula to calculate compound interest without doing manual calculations is A = P(1+r/n) ^ nt Here, A represents the final amount at the end of the tenure. P represents the Principal Sum or initial investment. r represents the compounding rate of interest. n represents compounding frequency per year. t represents the number of years in the tenure. Let’s now take the same example as the previous one. Say, P = 1,00,000 r = 10% n = 1 t = 3 years The Final Amount at the end of the tenure using the formula of compound interest will be A = 100000(1+0.10/1)^1*3 A = Rs. 1,33,100 The interest earned over the years is 33,100. Why is Compound Interest important? Compound interest causes your wealth to grow faster. Because you will receive returns on both the money you invest and returns after each compounding period. It causes a sum of money to increase more quickly than with simple interest. As a result, you will not need to save much money to accomplish your goals. Additionally, it’s essential for assisting in the mitigation of wealth-depleting causes like rising living expenses, inflation, and declining purchasing power. When accumulating wealth, the power of compounding can be crucial. Let’s understand this with the help of an example. The amount of compounded interest increases with the number of compounding frequencies. Consider it like a snowball. The sooner you start investing, and the more money you put into it, the bigger your snowball gets. Consider what would happen if you push the snowball down a slope covered in snow. Now that you’ve packed additional snow, it will remain and you’ll continue to do so. Your snowball will eventually contain the snow you started with, the snow it picked up along the way, and even more snow on top of that when it reaches the bottom of the hill. This is how compound interest works and plays an important role. [B-02] In a nutshell Investing your money in compound interest gives you exciting returns on your investment. All you need to do is make early investments and earn returns for a long period. Through the returns earned you can beat real-life challenges like increasing living expenses, inflation, etc. To find more such useful and informative blogs head to our website.
08-11-2023
Read More
Home Loan

Home Loan Calculator – Features, Benefits and Importance Explained

Before taking on a home loan, buyers should start planning for their money since it is a big financial commitment that often lasts for decades. One of the easiest ways to get ready for a home loan is to use a home loan calculator. The calculator is a great online tool that most lenders’ websites offer for free. It can estimate a rough EMI schedule for the desired loan amount. This will help you determine if your mortgage loan request will likely be approved and reduce the chance of a mistake. The EMI Calculator lets buyers try out different loan amounts and terms combinations to find their best EMI. A house loan calculator helps people plan their loan process and determine how they will pay for it. [B-01] What is a Home Loan Calculator? A home loan calculator is an online tool to determine how much a mortgage payment will be each month. The Home Loan calculator figures out both the payment breakdown and the EMI. The payment breakdown includes the amount of principal and interest. You can use this online calculator to determine how much you’ll have to pay monthly for a certain loan amount. This EMI calculator uses the loan amount, the bank’s interest rate, and the chosen term to figure out how much the client will have to pay each month for the chosen term. How to Use a Home Loan EMI Calculator? The formula for figuring out EMI is complicated, so it is easy to make mistakes when doing calculations by hand. Also, it will take longer to make your plan to repay the loan. So, people need to use online financial tools like a home loan EMI calculator to determine their monthly EMI payments and how the loan will be paid off. Advantages of Home Loan EMI Calculator EMI Home loan calculations are reliable and accurate. They lead to the right results. After you put all the necessary information into your calculator, which is quick and accurate, you will get your monthly EMI and amortisation plan in a matter of seconds. You can use an online calculator to try out as many combinations of loan amounts, interest rates, and loan terms as you want. The results are available in just a few seconds. By trying out different combinations, you can find the one that works best for you. You can use the online calculator to compare offers from different lenders and choose the best fit for your needs and budget. Home loan calculators‘ EMIs are simple and free to use. Features of Using a Home Loan Calculator Using a home loan EMI calculator, you can calculate your EMIs. It is a mortgage calculator you can use online. Because EMI involves a large amount of money, it may take a lot of work. The EMI calculator gives you a detailed breakdown of your EMI each month, which may help. Shows each payment that is due up to the date it is due. Compare them at different interest rates to find the best EMI for you. Benefits of a Home Loan Calculator An EMI home loan calculator helps you plan your budget by giving you a place to write down what you need each month. When you put the important information—the principal loan amount, the interest rate, and the length of the loan—into the right boxes, the calculator will give you the amount of your home loan EMI. You can make as many changes and variations as possible to help you figure out the right EMI. You can also change the length of your tenure. You can pay back your instalment thanks to this benefit. Based on what the calculator tells you, you can choose between a long-term and a short-term mortgage. If you can afford to make bigger EMI payments, a short-term loan makes more sense because your overall interest rate will be lower. Choose a longer-term home loan if you want to pay a smaller EMI and keep up with your living costs. If you did that, your EMI might go down, but your total interest rate would go up. Why is it Important to Use a Home Loan EMI Calculator? We should only sit down with a pen and paper and figure out EMIs on our own if we know the formula. Because the algorithm for calculating EMI is so complicated, it is hard to do calculations by hand without making mistakes. Also, it will take longer to plan to pay back the money. Because of this, you need to use online tools like an EMI calculator to understand your monthly EMI payments and amortisation schedules. Calculations for home loan EMIs are accurate and fair. They do what needs to be done. After you put all the necessary information into your calculator, which is quick and accurate, you will have your monthly EMI and amortisation schedule. An online calculator gives you results quickly. You can try out as many combinations of loan amounts, interest rates, and loan terms as you want. If you try different combinations, you might find the best one. Use the online calculator to compare the offers from different lenders and choose the one that best fits your needs and budget. EMI home loan calculators are easy to use and don’t cost anything. [B-02] Conclusion A home loan calculator can help you figure out the payments, called EMIs (equal monthly instalments), that you must make to the bank until the loan is paid off. The amount of your home loan, the interest rate, and the length of your loan all affect how much your EMI will be. This is one of the best ways to plan your finances if you want to buy a house. To learn more about the Home Loan Calculator, you can go to Piramal Finance.
08-11-2023
Read More
Mutual Funds

What You Need to Know About Growing Sip and How It Works?

A systematic investment plan (SIP) is a method used to invest in various mutual funds. The investment plan in SIP is simple. You can invest a minimum of INR 500 over a specified period. For instance, every month, every six months, or even every year. A SIP is a popular investment plan for any age group above 18 years. It is less confusing. Anyone can start with a small amount that goes on to add as time passes. It is as simple as it seems. You invest, and your money starts growing gradually. [B-01] A SIP is your best option for anyone looking to invest with financial discipline. In the long run, a SIP can give you good returns. It is a less risky and more secure form of mutual fund investment. Another fascinating thing about SIP is that you can invest according to your investing need. Say, every month, you invest 500, but now you want to change it to 1000 – you can easily do it with a SIP. It is this flexible and easy investing option. Let us see the nitty-gritty of how SIP functions and works. We will also see how a SIP can grow and add value to your investment plan. How Does a SIP Work? SIP is a method of investing with a fixed amount in a fixed interval of time, like monthly, quarterly, or yearly. Once you know your customer (KYC) norms are complete, investors must fill in the SIP application form with each mutual fund mandate. In the form, details like the SIP investor’s plan, amount date, term plan, and net asset value (NAV) are mentioned. After the form is accepted. Initial sip payment is to be made. Only after these steps does investing in a SIP become hassle-free. One need not worry about market ups and downs. You just need to select a SIP plan with an amount and the term of payment interval. Your investment money will automatically get debited every interval. No worrying about the market, and no worrying about payment due date. However, if an investor doesn’t want an auto-debit facility from the bank, they can do it through other mediums like postdated cheque facility. Benefits of Investing in SIP Compounding Power The prime factor of investing in any SIP is the power of compounding. Compounding any small investment amount can also become huge over the period. Because compounding not only gives interest on the principal amount but gives interest on interest earned. With this method, your SIP amount accumulates and grows to achieve your financial goals. Financial Discipline Having a long-term financial goal is important. But it is possible only with proper savings. SIP is a good saving plan for a financially stable future. Always keep in mind that financial discipline is the key to attaining financial goals. By investing regularly, you are saving and building up your wealth. With the help of a SIP calculator, one can plan their investment accordingly. With financial discipline, your wealth grows. Rupee Cost Averaging (RCA) The term RCA might get hard to understand in SIP investment. But by RCA, it means SIP can help investors avoid market volatility. Your money is secure despite market ups and downs. So, no need to worry – your SIP is risk-free. The method is simple when the market falls, you get higher units, and when the market rises, you get lesser units. By this, your amount is saved from market volatility. Here is an Example of How Investing in SIPs Can Create Extra Wealth Let’s say you are to invest INR 1000 in a SIP mutual fund. And the current NAV for that mutual fund is INR 25. Since the NAV is 25, you will be allotted 40 units of that mutual scheme. (INR 25 x 40 units = 1000). Now your earning value depends on the NAV. If the NAV becomes higher, say INR 40 next year, your invested amount will rise to INR 1600. This way, your wealth grows and is created over time. (Moreover, do not forget the compounding effect that you are sure and bound to get in any case whatsoever. In this case, it applies to both principal amounts invested as well as interest earned.) Other Advantages of SIP Investing in SIP is flexible. You can decide whether to increase the amount or decrease the investment with ease. You have control of your investment without any interference. Investing in SIP comes with lower financial risk due to market ups and downs. You are comparatively on the safer side while investing in a SIP. Start early with a minimum amount. The best part of the SIP is that it requires a very low initial start to invest. Any earning group can invest in a SIP. Low investment and high returns. As simple as that. It is best for investing in the long term. Long-term investment in a SIP gives you a higher return and better wealth value. No uncertainty when you age or when you need money the most. No anticipating and contemplating the market like how it is done in the share market. Your invested amount is safe and growing. [B-02] Conclusion A SIP is undoubtedly one of the most convenient, easy, and high-value investment plans for the long run. It comes with less risk, high return, a compounding advantage, and an easy auto-debit feature linked to your bank account. Investing in a SIP is like a cakewalk. The next time you think of securing and growing your wealth for the future, think of SIP. Moreover, we always encourage our readers to visit the Piramal Finance website and blogs for more information on personal finance of such kind. Piramal Finance can become your one-stop solution for all your financial needs.
08-11-2023
Read More