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Business Loan

Reasons Why Business Loans Are Financially Beneficial

Entrepreneurship has become the talk of the era and is rising at a high pace. Young entrepreneurs are finding ways to get funds for business financing but end up getting nothing in their hands. Pitching in front of big companies isn’t doing any good either, and it is high time to get a decent financing option. [B-01] But what if there is an option that you should probably consider for financing your business? And there is an option, and the answer is business loans. A business loan can help you finance your business venture, buy raw materials, invest in equipment, and tackle marketing and advertising. It can help you take your business to the next level. This article is all about the business loan system. You will come across business loans, why they are taken, and how they can be financially beneficial. Business Loans: Meaning and Significance Like every other type of financial assistance, a business loan is a type of loan that helps you finance your business and meet all the expenses. It allows you to buy raw materials, source new equipment, invest in your market outlets, and meet your consumers’ demands. In a business loan, you borrow money from a lender to facilitate your business, and in return, the lender charges you a rate of interest for a set period. You can repay the borrowed money in the form of instalments within the tenure. A business loan is an unsecured form of credit that doesn’t require you to show any collateral or deposit any security funds at the time of approval. You can just get approved without any collateral and then start investing it right away to fulfill your business dream. Business Loan: Benefits of Opting for It There are numerous reasons why you should give business loans a shot: Lower rate of interest: The rate of interest on most business loans is on the lower side, and this will bother you less while repaying your loan. Banks charge a lower rate of interest so that the maximum amount of your loan money is directed towards growing your business and a minimum of it goes into repaying the instalments. The percentage varies from bank to bank from about 15% to 20% per annum. While some banks also provide a 9.5% per annum of interest rate to some businesses. However, some lenders like Lending kart Finance and Indifi Finance even come down to 1% to 2% per annum. Quick approval: The approval period for an entrepreneurial business loan is somewhere between one and two days. If your credentials, like your credit history and credit score, are decent and your business pitch is strong, you can even go down on the approval period. Loan amount up to 50 lakhs: The loan amount can be as high as 50 lakh rupees for your business, which is a huge amount if your business is at its initial stage. This amount will be a real help if you need a lump sum to invest in your venture. Some banks even go over that and may allow up to 1 crore rupees, but that will depend on the scope of your business growth, your credentials, negotiations, etc. Collateral is not required: You don’t have to give collateral or some security deposits to use it as a guarantee to repay your business loan. It will be of real help to you if you have started from scratch and you lack a property to show as collateral. Convenient instalments: The instalments are likely to be easily payable, considering that the focus would be on growing your business. The monthly or quarterly payments will be lower so that you can manage your expenses wisely and repay your debt at your leisure. Why Are Business Loans Financially Beneficial? Working capital management: Business loans help your business to maintain a cycle of steady cash flow which helps your business to keep going on. This is called working capital management and is a huge reason why you should prefer business financing through a business loan. Regaining control over your business: In case outside investors invest in your business and take a percentage of equity and start controlling it, a business loan will help you to prevent this. Business loans enable you to get over your fund crisis and help you regain control over your business again. Building business credibility: All businesses run on the power of credibility, and building credibility is not a big deal. After having a business loan, you must ensure that you repay your instalments on time, and you will keep building your credit score and bettering your credit history, which will help you out with it. Exemptions from tax: Though the exemption rate from tax in a business loan is not as high as other loans like housing loans and education loans, still there is a decent tax cut. You don’t need to pay tax on the profit you make from the borrowed money. Advertising and marketing: Business loans help you advertise your products and market them to the public so that your sales increase and you land a good amount of profit. [B-02] Conclusion For young entrepreneurs coming up with innovative business ideas, funds could be a real deciding factor. A business loan can provide you with financial assistance and help you reach your business dreams. If you enjoy reading write-ups on finance management, loan systems, investment schemes, and government aid, you should visit Piramal Finance. They have ample content, blogs, articles, and summaries on these topics.
08-11-2023
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Personal Loan

MUDRA Loan Documents – Required Documentation for Mudra Yojana

Small and microbusiness enterprises have been on the rise in recent times. There are millions of businesses that emerge every year with unique business ideas. Catering to such a huge audience is a big deal, and financing them to grow their business is equally tough. Because of the lack of enough financing options, the growth of these businesses is inhibited. [B-01] To tackle this issue, the government of India launched the MUDRA loan initiative under the MUDRA Yojana scheme in the 2016 Union Budget. This initiative funds microfinance institutions, non-banking financial institutions, societies, trusts, etc. These institutions then provide loans to the MSMEs (Medium, Small and Micro enterprises) at subsidised interest rates. In this article, you will come across topics like the MUDRA loan, its features, the eligibility criteria, the benefits, and the documentation requirements to apply for it. What exactly is a MUDRA loan, and what is its purpose? MUDRA, which stands for Micro Units Development and Refinance Agency, is a loan-providing scheme that targets microfinance institutions, non-banking finance agencies, societies, rural banks, trusts, and other informal sources of credit. MUDRA loan refinances these institutions to provide credit to small and micro businesses at subsidised rates. Since the emergence of small business units at an exponential rate, it has become difficult for them to get finance from the banks because of a lack of exposure and collateral. According to government statistics, more than 90 percent of these units do not get credit from banks, which acts as a massive bottleneck. What does the MUDRA loan offer to small business units? To refinance small financing institutions, the Government of India has formed three categories under which credit is provided to small business units. They have been named: Sishu, Kishor, and Tarun. According to these categories, the financial limits of different groups have been set. For the Sishu category, the maximum amount of money you can spend is 50 thousand rupees at a discounted rate. For the Kishor category, the financial limit is above 50 thousand rupees, and the upper limit is below 5 lakhs. Similarly, the Tarun category’s financial range is between 5 lakhs and 10 lakhs. What business sectors does the MUDRA loan touch on? These are some of the sectors that the MUDRA loan touches upon: Transport Sector: A MUDRA loan is given for purchasing rickshaws, autorickshaws, taxis, etc. Day-to-day service sector: This includes saloons, parlors, medicine stores, gyms, tailors, milk booths, etc. Agriculture sector: MUDRA loans also focus on financing poultry, dairy, livestock, horticulture, rearing, etc. Textile industries: This includes mostly handlooms, weaving, shoemaking, etc. Food production: This includes pickles, jaggery, Papads, sweets, cold-pressed oils, etc. MUDRA Loan also gives financial assistance to traders, shopkeepers, service enterprises, etc. What are the benefits of applying for a MUDRA loan? The exclusive benefits of applying for a MUDRA loan are as follows: No collateral or security deposit is required to get a MUDRA loan. The loan amount can be up to Rs. 10 lakhs, which is a huge amount for a developing business. MUDRA loan is available for businesses in both rural and urban areas. Extra perks and benefits are given to women entrepreneurs to expand their businesses and increase their revenues. The interest rate is quite low for businesses in both urban and rural areas, which mostly ranges between 8.40 percent per year and 12.45 percent per year. The tenure to repay the loan amount can be extended up to 7 years, which is a pretty decent amount of time to repay the loan. You can also claim a MUDRA loan debit card, which you can use to withdraw and perform other related transaction services. What are the important documents required to apply for a MUDRA loan? Here is the list of documentation that shows the minimum documentation required to apply for a MUDRA loan: Identity Proof: This includes your Aadhar card, voter ID card, driving license, PAN card, etc. Address Proof: Any legal document that shows your address, like your voter ID card, Aadhar card, domicile certificate, etc. Income Proof: You must show your bank statements or ITR for the financial year as your source of income proof. You have to show your MUDRA loan application form and passport-size photographs. What are the eligibility criteria to apply for a MUDRA loan? You must be an Indian citizen to be eligible to apply for a MUDRA loan under the MUDRA Yojana. You must either have a business or a business plan for any non-farm income-generating activities like textiles, manufacturing, the service sector, etc. Your credit requirement must be up to Rs 10 lakhs, the maximum limit for obtaining a Tarun loan. [B-02] Summing it up Of several government schemes, MUDRA Yojana stands to be one of the most profound because of the scale of business it caters to. MUDRA loan has different interest rates for different categories. For the Shishu category, the interest rate is 8%–12% per annum. For the Kishore category, the interest rate is about 14% to 17% per annum. For the Tarun category, the interest rate is mostly above 16% per annum. For women entrepreneurs, there are several offers, and the interest rates are much lower. If you like reading articles on topics like these, you must visit this website: Piramal Finance. They have ample engaging content on personal finance, investment schemes, government aid, etc.
08-11-2023
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Other

Retirement Planning: Top 5 Best Retirement Investment Plans in India 2022

Physical and mental health are both affected by a person’s chronological age. Eventually, your lifespan will surpass that of a typical human being. The moment to relax and take it all in is now. One needs to start planning for retirement now in order to enjoy a carefree and joyful retirement. Sadly, time marches on, but soon enough, you’ll be able to enjoy your retirement. Once you reach a certain age, it will be physically difficult for you to work. In an adverse situation, savings may be depleted. However, a comfortable retirement is within reach if you prepare ahead. [B-01] It is of the utmost importance to begin planning for retirement right now. The basic objective of retirement planning is to put you in a position where you can continue to enjoy the same quality of life as you do now even if you no longer have access to the principal source of your income. The time at which you anticipate beginning your retirement planning will have a significant impact on the way you live. Top 5 Retirement Planning Investment Pension Ideas in India The first step is to invest in a secure pension retirement plan that fits one’s long-term financial objectives. You can choose from various pension plans in India, each with perks. A safe tomorrow is possible with the correct strategy now. There are a plethora of viable alternative strategies. Each plan’s benefits and features are neatly organized into distinct buckets. All pension plans have different benefit structures. Described below are the various pension planning options available in India. 1. Immediate Annuity Pension Plan The premiums you put into an immediate annuity will be invested and then paid out to you in a series of instalments throughout your lifetime, much like retirement planning. If you and your spouse decide to invest in a pension annuity plan that lasts for both of your lives, you can choose a joint-life pension annuity plan, which guarantees that annuity payments will continue even if your spouse dies first. Only a single premium payment will secure the annuity for you and your family. Annuity payouts can be made monthly, semiannually, quarterly, or annually at the annuitant’s discretion. According to the Income Tax Act of 1961, the premium paid for these annuities is free of taxation and offers guaranteed income nearly immediately. 2. Certain Annuity Pension Plans A company with limited responsibility in the insurance industry provides a certain annuity. Following retirement investment, these savings will provide a steady flow of cash. The annuitant (or his heirs) is assured of a steady stream of funds during retirement, thanks to the specified annuity option. You can also buy the annuity all at once if you like. These annuities provide higher returns than any other alternative due to their fixed term length. They have higher upfront fees and other costs than other traditional annuities. 3. Deferred Annuity Pension Plan Because they provide a steady stream of income, annuities are more in demand than ever. People want to be more responsible with their retirement planning. A long-term savings insurance product. Investors who opt for the delayed annuity option must first save a corpus to purchase an annuity at retirement age. The life insurance company shall pay the insurer regularly or in a single sum upon the policy’s maturity. These annuities can be purchased with a single lump sum or on a recurring schedule. In the same way that insurance policies are free of taxes up to a certain threshold, so are these plans. The expected rate of return on a deferred annuity can be affected by several factors, including whether it is fixed, index-linked, or variable. Fixed retirement investment plans, as their name implies, provide a fixed or guaranteed rate of return. In contrast, variable annuities base their rewards exclusively on the success of the mutual fund portfolio or other accounts the owner has chosen. To calculate returns, index annuities look solely at market indices. 4. Guaranteed Period Annuity In the case of an annuity, there are penalties for withdrawing money too soon. Early withdrawals are subject to a 10% tax penalty. A security annuity covering a predetermined time frame with a guaranteed income for life is what makes an annuity what it is. After the annuitant’s death, payments will continue to the annuitant’s surviving spouse and dependent children for as long as the annuity’s guarantee period lasts. 5. With Cover and Without Cover Pension Plans In pension plans with coverage, the policyholder’s chosen beneficiaries (typically his immediate family) receive a lump sum payout upon the policyholder’s death. Despite the smallness of the benefits provided by these plans, they are indistinguishable from a standard insurance policy. The substantial sums put into such plans are used to build up the corpus rather than as insurance against mortality. Insurance coverage for the policyholder’s life is not included in pension plans that do not provide coverage. Once the policyholder passes away, only the whole amount accrued throughout his lifetime is given to the nominee. Unlike immediate annuities, which are short-term and do not contain life insurance, such as the Deferred Annuity Scheme, long-term insurance plans provide the option of life insurance. [B-02] Conclusion With inflation and rising living costs, saving for retirement planning is more important than ever. This will lead to long-term financial security and make it possible to enjoy life without sacrificing one’s current standard of living while still saving money. Pension plans may help you in your future life, and don’t forget to check out several other insurance plans at Piramal Housing Finance that, at times, incorporate insurance coverage. These are the kinds of initiatives that will pay off in the far future. You can contribute to the plan monthly or four times a year. After retirement planning, all you have to do is make regular payments over a certain period.
08-11-2023
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Schemes

Should You Invest in NPS?

Investment has become a buzzword in recent years, and everyone is trying to save and invest likewise. Speaking of different investment schemes, there are many in the market. But, the real question is which one to prefer and how to know whether a particular scheme suits your interests. Most times this dilemma is unsolved, and to find a perfect answer to it, keep reading this article. [B-01] The Government of India came up with an initiative to help the retired people of different working sectors—the National Pension Scheme (NPS). In this article, we will brainstorm everything about NPS investment, the benefits of investing in NPS, the returns, and why to invest in it. What is the National Pension Scheme? For the social security of the retired class of the country, the Public Fund Regulatory and Development Authority (PFRDA) launched the National Pension Scheme. This pension program not only addresses the employees of the government sector but also the employees of the private and unorganized sectors. This scheme encourages the working class group to invest regularly at intervals to build up a corpus in the near future. After your retirement, you can take out a certain percentage of this amount, and since this is a pension scheme, you will receive a regular pension under this scheme. So, over the years, the NPS investment helps you build up a certain amount and, in the end, gives you returns. What are some of the benefits of investing in NPS on a regular basis? Decent returns: In comparison to other investment schemes like PPF (Public Provident Fund), NPS investment gives you higher returns. This interest rate, which this scheme provides on a yearly basis, is between 8% and 10%. Low level of risk: Because a portion of NPS investment goes to equity, which may or may not provide promising returns, the equity cap is around 50%. The risk-return equation of the interest is therefore balanced in the NPS investment. PFRDA also aims to increase the cap percentage to 75% in the near future. Tax benefits: Under the provisions of 80CCD, your own contribution is subject to a tax deduction of about 10%. According to the Income Tax Act, a tax deduction is allowed within the amount of 1.5 lakhs under section 80C. You can also ask for the same for an additional 50 thousand which also comes under Section 80C. The choice to change the scheme: In case you are not satisfied with your current scheme, you can switch to another scheme according to your preference. You can also change your fund manager if you feel that your current one is not up to the job. Premature withdrawal: If you have completed three years of NPS investment in your account under the NPS scheme, you are allowed to withdraw 25% of the total amount you have collected. You can only withdraw three times during your tenure, with a five-year break in between. Highly economical: Even if your monthly savings are not too high, you can still invest a little money every month. This feature is a benefit for those who have smaller monthly savings but want to invest anyway. Highly flexible: The investment pattern in NPS investment is highly reliable and flexible because of the different options it provides. It also provides you with tailoring options to change your fund managers, existing schemes, investing patterns, etc. Why should you invest in an NPS scheme? Well, you should consider NPS investment as a good virtue because of many reasons. First, if you are planning for a better quality of life after retirement, you must invest in the NPS program. To make your life better after retirement with a steady flow of money, you should invest in it. Second, if you consider having a regular income in the form of a pension after your retirement. Having an income after your 60s is a boon to many people. So, if you are a salaried individual and you want a regular income after your retirement, then you should start investing in it from now on. Third, if you plan an early retirement, then an NPS investment could be a nice move. Suppose you have 20 or more years to retire and you want an early retirement to engage yourself in other activities. You should definitely open an NPS account and start investing in it. This will help you build a huge corpus over time and give you a smooth post-retirement life. [B-02] Wrapping it up For a period of 5 to 10 years, the rate of return on NPS investment for both tier 1 and tier 2 ranges between 9% and 11%. So, all in all, it is a good initiative by the government to provide social safety and security to the retired class. Individuals planning a smooth life after their retirement with a steady income must invest under the National Pension Scheme. If you have come this far, it means you love to gather information regarding investment and financing. If yes, you should visit Piramal Finance to learn more about different investment schemes like PPF, mutual funds, stock market investment, etc.
08-11-2023
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Business Loan

Small Medical Business Loans for Physicians

There are financial options available for general practitioners, specialists, hospitals, and clinics in the form of loans for doctors to open clinics. The funds can be used to acquire an existing medical practice, recruit new employees, and purchase office space. It can also be used for operational costs, the purchase of inventory or equipment, etc. The good news is, it shouldn’t be that hard for these types of borrowers to find a great loan. From a lender’s point of view, doctors have three qualities that make them excellent loan candidates. These factors include strong earning potential, a high net worth, and stable income. In particular, doctors who already own a medical practice and are looking to expand will find themselves perfectly eligible for loans for doctors to open clinics. [B-01] As an investment option, medical practices are an excellent sector to invest in because they offer high returns on investment, consistency, and low default rates. So, people who are looking for loans for doctors to open clinics or financing for medical facilities have a lot of choices. What are the goals that Medical Practice Loans intends to achieve? Choose which type of financing will work best for your medical practice. Please find more information on the most common types of business loans for physicians. You can also get more information on how they operate, the terms of the loans, the most appropriate applications, and loans for doctors to open clinics. You can also find information on the benefits and drawbacks for physicians and other healthcare professionals. Top Seven Loan Options Available for Healthcare Organisations Provision of Funding for Conventional Healthcare Establishments Many financial institutions offer commercial loans to medical professionals, such as doctors and other practitioners. Consequently, they are able to offer attractive terms. They also streamline the process so that the money can be in the doctor’s office within a week. New medical facilities are usually financed by a consortium of banks or a lender. Money Obtaining Credit on Behalf of a Company You can access the funds in your company’s line of credit whenever you need to, and you will be responsible for paying interest on the amount. Business lines are flexible, cost-effective, and a good way for a healthcare organization to deal with emergencies and costs that aren’t planned for. Medical practices should strongly consider setting them up. Funds Obtained Through the Section 7(A) Loan Program of the Small Business Administration The Small Business Administration (SBA) is responsible for establishing the policies and underwriting conditions for the program. It is in charge of administering loans to small businesses. The Small Business Administration (SBA) is not the actual lender. It guarantees up to 75 percent of a loan that the SBA has approved. It is obtained from a bank or credit union. This product is in high demand. It offers customers attractive benefits, including low interest rates and extended loan terms. Please be patient, as the process for the physician loan could take anywhere from 45 to 60 days. Apply for a Payday Loan If your loans for doctors to open clinics are unable to obtain more traditional forms of financing, such as a long-term business loan, or a loan from the Small Business Administration (SBA), etc., short-term business loans are an excellent alternative that you may wish to consider. The requirements are significantly less stringent than those mentioned above, making it possible to obtain financing for loans for doctors to open clinics. This loan can be obtained even if one or more loan applications have been rejected. Lenders focus more on applicants’ credit and cash flow than on traditional financial documents like tax returns. These loans are typically associated with higher interest rates and a greater level of risk than other types of loans for doctors to open clinics. Calculating the costs requires using either factor rates or fixed costs. It is different from calculating the principal and interest rates. Payments are typically due on a weekly or daily basis. The terms of the agreement can range anywhere from six to eighteen months. This is not a loan or any other product typically offered by banks. You cannot obtain it through those channels. Online lending options are the best place for small businesses to start their search for a short-term loan. Provision of Funding for Medical Equipment It should come as no surprise that medical professionals require loans for doctors to open clinics and purchase medical equipment. These loans or leases are used to purchase new medical equipment for a medical practice. In this type of financing, the newly acquired medical equipment serves as collateral for the loan. The terms are more favorable than those typically associated with conventional short-term loans for medical practices. The duration of loan and lease terms for medical equipment can range from two to ten years. Prices are determined by interest rates or lease factor rates. Where can I locate the best loans for acquiring a medical practice? Lenders who specialize in the valuation and acquisition of businesses like medical practices can provide loans for doctors to open clinics. These loans can be used to buy medical practices. As the medical industry is complex, this product is typically provided by a consortium of different banks. Borrowers with good credit can get a loan with no down payment. Those with less-than-perfect credit can obtain loans for doctors to open clinics with as much as a 25 percent down payment. [B-02] Conclusion These borrowers will also receive a prime interest rate or Treasury plus 1 to 2 percent, low origination fees, and fixed terms for up to 15 years with a 30-year balloon payment. Although not every financial institution offers to fund the purchase of a loan for doctors to open clinics, many larger institutions have departments specifically dedicated to meeting the financing requirements of dentists, doctors, and other medical professionals. Go to Piramal Housing Finance for more details.
08-11-2023
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Home Loan

Tips to Determine the Ideal Tenure of a Loan Against Property

Properties are an important asset, and they are expensive as well. You must be certain about your choice when selecting a lender to finance your needs. Nowadays, loans against property are quite popular and affordable. You can opt for them to get financial assistance in times of emergencies. [B-01] The amount and tenure of your loan against property are some factors you should consider before signing up for it. To determine the ideal tenure of your loan, you must first understand what a loan against the property means. Next, you need to plan your finances well in advance. Simply put, you must be aware of all the pros and cons of taking a loan against your property. A loan against property is a type of loan that allows you to borrow funds against your residential, commercial, or industrial property. This is a secured loan and is available at attractive interest rates. You can apply for this loan for business and personal reasons. How to identify the ideal tenure for a loan against property It is extremely important for you to set the appropriate tenure for the loan you take against your property. If you miscalculate and select the wrong tenure, your financial plans for the future will be affected. Choosing the right tenure for a loan against property can also help decrease your overall loan burden. Before taking any loan against property and fixing its tenure, keep in mind the following parameters: Monthly Income Income plays a very important role in the repayment of any loan. See to it that your monthly income as a salaried person or as a self-employed person is sufficient to pay back the loan. After that, you can decide upon what should be the tenure of your loan against the property. If your salary is good enough, you can opt for a short-term loan and pay reasonable EMIs over time. On the other hand, if your salary is not that much, you should opt for a long-term tenure. This way, you get to pay small monthly EMIs that suit your pocket. Loan Amount While taking a loan against your property, keep in mind that the higher the loan amount, the more EMIs you have to pay. It is your responsibility to strike a balance between EMIs and loan tenure. The loan tenure can vary from 15 to 20 years. You need to keep in mind that a long-term loan means you have to pay higher interest to the lender. It is best to choose a tenure during which the interest burden is low. Your mortgage loan should not cost you a fortune to repay. Applicant’s Age Your age helps your bank or lender confirm if you can pay back the loan you have applied for. As a rule, if you are a young applicant, you are more likely to get tenure as long as possible while applying for a loan against property. On the other hand, if you are nearing retirement age, you will get a short-term loan against property. You cannot do anything about your age affecting your loan tenure, but you can plan your finances accordingly. It will help you repay your loan on time, without affecting your necessary expenses. Interest Rate and Monthly EMIs Interest rates and monthly EMIs are two key factors you need to consider while choosing the right tenure for your loan against property. If you want to pay small EMIs, you should opt for a long loan repayment tenure. On the contrary, if you wish to pay less interest, you should opt for a short-term tenure for your loan against property. The interest amount that you pay differs based on the tenure that you chose. The selection of your payable EMIs and interest rate should be based on proper planning. You do not wish to end up with EMIs that are too difficult for you to manage. Applicant’s Future and Financial Prospects While choosing an ideal tenure for your loan against property, you should keep in mind your present and future financial prospects. It helps you assess your loan repayment capacity. Timely assessment and management of your finances guides you in selecting the apt tenure for your loan against property. It gives you useful insight into your current income, upcoming increments, and financial needs for the future. Using this information, you can become fully prepared to deal with unexpected financial issues without disturbing your loan EMIs. [B-02] Conclusion Properties make up a very crucial part of our lives. Thus, it becomes very important for all of us to take the right decision regarding it. Do all the necessary research about financial planning, EMI tenure, and interest rate calculation before you sign up for a mortgage loan. Nowadays, loans against property are easily available in the market through various banks and financial entities. This gives you the flexibility to choose a loan based on your needs and paying capacity. Prior research will save you from getting confused and making silly decisions. The easiest way of determining the right tenure against property is using an EMI calculator for instant loans against a property. If you are taking a loan against the property, make sure that you have no defaults. You can visit Piramal Finance and explore their products and services.
08-11-2023
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Home Loan

Tips to Get the Lowest Interest Rate on a Home Loan in 2022

Have you just started working and already dreamed of buying your own house? Don’t worry, you are closer to your dream than you can imagine. Many financial institutions are eager to provide you with housing loans, just a click away. Whether you are a salaried employee or self-employed, you are entitled to housing loans. [B-01] Before applying for a housing loan, it is very important to know about your eligibility. To get a clear understanding, check out the home loan eligibility calculator. The applicant’s age, occupation, CIBIL score, and earnings are important factors to be considered. Applying for a housing loan with your working spouse as a co-applicant enables you to apply for a higher amount. If you have a housing loan to your name, you will be entitled to income tax savings. You can deduct Rs 1.5 lakhs on the principal, registration, and stamp duty. In the case of a co-applicant loan, your spouse will also get the same tax benefit under Section 80C. Next comes the important step of knowing your EMI, or Equated Monthly Instalment. In the home loan EMI calculator, enter your desired loan amount, the tenure of the loan in years, and the rate of interest (calculated per annum). In August 2022, the Reserve Bank of India (RBI) hiked the repo rate by 5.40%. It has caused the banks to increase their rate of interest on the loans. You can still save your hard-earned money by reducing the interest amount. Read on to learn more. Methods for Lowering Home Loan Interest Rates There are numerous ways to help you save money if you plan from the beginning. You have to act smartly and on time. Let’s see some of them, Maintaining a good credit score Even before you attempt to buy a house, it is advisable to give yourself some time to improve your credit score. Having a high credit score makes you eligible for better housing loans. Seeing that you have a CIBIL of 750, even the lenders will be eager to offer you better deals. You will be able to negotiate your desired interest rate as the lender will see you as a reliable borrower. You just have to ensure that you have not been late or missed any payments. Enable the autopay credit card option whenever applicable. A little responsibility on your part will go a long way. Make a larger down payment Agreeably, no one can buy a house without taking a loan. However, you should have a certain amount of money set aside, that you can use as a down payment. In any case, financial institutions allow only 75% to 90% of the loan amount. It is commendable that you deferred the plan of buying your house until you had a sufficient bank balance. Borrowing a lesser amount will lead you to acquire a lesser interest rate. Curtail your tenure The primary factor influencing your interest amount is your loan tenure. To shorten the tenure, you have to pay more EMI. Even if more monthly payments seems difficult, consider the interest amount you will be saving. If you can close the loan before you save up on the overall interest payable. Revising EMI Your EMI, or equated monthly instalment, can be revised annually. If you get a salary hike, you should start paying more EMI. As discussed earlier, the loan tenure will reduce as well as the interest. You will be the true owner of your dream house sooner than you started. Opting for prepayments The EMI that you pay is a combination of two amounts. One is the principal, and the other is the interest on the outstanding loan amount. In the initial stage of the loan, you are paying more for the interest and less for the principal. Suppose you get a salary hike or a bonus and deposit the amount as a prepayment. The principal amount will be reduced along with interest. Woman benefits Many financial institutions give extra benefits to working female applicants. Women may be the sole owner or co-borrower. They are entitled to lower interest rates on loans. Furthermore, stamp duty charges are lowered if the woman is the primary owner. Market survey Before committing to a particular lender, always compare the interest rates online. If it suits you, go ahead with the loan. Refinance your loan Suppose you feel you are paying more interest on your loan than another bank. You can either negotiate a lower interest rate or shift your loan to another lender. However, doing so is not advisable. There are also many different ways to lower your expenses on the interest, like starting a SIP, paying a mortgage point, or choosing a floating rate of interest instead of a fixed rate. However, keep in mind that different banks offer different services. With so much information available online, spend some time understanding your requirements. Ask the financial advisors about your doubts and learn about the schemes they offer. [B-02] Conclusion I hope you have found the information useful. Please feel free to check out Piramal Finance for a housing loan. The company has a registration certificate from the National Housing Bank (NHB). They not only provide finance for housing but also engage in various other financial services and businesses. At Piramal Finances, once you apply for a housing loan, the relationship manager will contact you. You have to submit the minimal number of required documents. Flexibility is allowed on the loan tenure, prepayment, and foreclosure, according to your desire. You can choose between a floating interest rate and a fixed rate to avoid putting additional strain on your budget. The best news, Piramal Finance is ready to finance 90% of the purchase price. Turn your dream into reality.
08-11-2023
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Other

Things to Consider Before Choosing ELSS Funds

Equity Linked Savings Schemes, or ELSS funds, are one of the most popular tax-saving investment schemes available to investors right now. This mutual fund scheme allows you to save taxes under Section 80C of the ITA, 1961, while you reap the benefits of investing in low, middle, or large-cap stocks. However, you must choose the ELSS funds carefully to get the most out of your investments. This article will show you five things you need to consider before choosing ELSS funds. Let’s dive in. [B-01] Asset Composition of the ELSS Funds Most fund managers allocate at least 80% of the assets of the ELSS funds to equity or equity-related investment options. The remaining assets are usually allocated to the money market or fixed income-based securities. Fund managers often choose the stocks they want to invest in depending on the objective of the fund. For example, if the goal of the ELSS mutual funds is to maximize the returns on the investments, the fund manager may invest a significant portion of the fund in small-cap stocks. Small-cap stocks may provide higher short-term returns, but they are risky. On the other hand, fund managers of medium-risk mutual funds invest more in large-cap stocks. Although investing in these medium-risk ELSS schemes will generate a lower average rate of return on investments, your investment will grow steadily over a long period. The Lock-in Period Most investment options that offer some sort of tax benefit under Section 80C of the Income Tax Act, 1961, come with a mandatory lock-in period. During the lock-in period, you cannot withdraw your invested funds. However, different investment options come with different lock-in periods. In the case of the ELSS funds, the lock-in period is just three years, which is much lower than other investment options. Let us give you some perspective. The PPF, or Public Provident Fund, scheme has a lock-in period of 15 years. Even the NSC investment scheme has a 5-year lock-in period. Compared to them, ELSS has a pretty short lock-in period. It also has the potential to generate market-linked returns, making it a great investment option. Invest in the ELSS Funds Through a SIP Investors who want to invest in mutual funds have two options: lump sum investment and SIP. A SIP, or Systematic Investment Plan allows you to invest a small amount of money in a mutual fund scheme at regular intervals. It makes SIP a good way of investing in ELSS mutual funds, especially if the markets are falling. With SIP, you can slowly invest in more mutual fund units over time to reduce the average purchase cost per unit when markets fall. This way, you won’t have to risk investing a large portion of your funds when the markets are at their peak. What’s more, in ELSS, the lock-in period applies to every individual purchase or investment. Therefore, if you go for a SIP with a monthly frequency, every single month’s investments will have an individual lock-in period. Thanks to this, you will have greater leeway to use your money in the ELSS funds. Don’t Add Too Many ELSS Funds to Your Investment Portfolio. Should you invest in just one ELSS fund or more than one? When most people want to invest in tax-saving options like ELSS, they usually only care about the tax-saving aspect. And they mostly ignore the kind of effect such choices would have on their investment portfolio. So, they just concentrate on grabbing units of a new investment option from different AMCs (Asset Management Companies) each year. Some of these investors are so focused on the tax-saving factor that they don’t even seem to care about the risk levels of the schemes. Because of this, many investors have multiple ELSS schemes in their investment portfolio after just a few years. Now, if you don’t plan your investments carefully, you might end up investing in many ELSS schemes in just one category. This will create overexposure. Therefore, don’t just focus on the tax-saving aspect and invest in multiple ELSS schemes in the same category. Instead, research every mutual fund scheme carefully and invest in different types of ELSS funds to create a diversified investment portfolio. The Risk Level As we have mentioned before, the majority of the assets of ELSS funds are made up of equity and equity-related asset classes. As a result, the risk level of these funds is comparable to the type of stocks in which the fund manager has invested. But it doesn’t mean every single ELSS mutual fund is a high-risk investment option. Fund managers handle a variety of ELSS funds that have different risk levels. And investors can choose to invest in these funds, depending on their risk appetites. Remember, high-risk funds also have the potential to generate higher average yearly return rates. On the other hand, funds with a moderate risk level have way lower average yearly return rates compared to funds with high-risk levels. Weigh the different investment options and your risk appetite carefully to make a solid investment plan. Ideally, your investment portfolio should have multiple ELSS funds with different risk levels, and you should divide a portion of your assets among them according to your financial goals. [B-02] Wrapping Up ELSS schemes are one of the best long-term investment options if you want to expose yourself to stock markets while saving taxes on your investments. And there are tons of ELSS funds to invest in. However, before you choose an ELSS fund, you must do thorough research about the asset composition of the mutual fund scheme. Take a look at the track record of the funds and inspect their risk levels. Invest in different types of ELSS funds to avoid overexposure, and choose SIP options to minimize the risk of sudden stock market crashes. Consider all of these factors carefully for the appropriate ELSS schemes. Do you still have doubts? Contact our experts at Piramal Finance to learn more about the ELSS funds. Do you need immediate financial assistance to break through your financial bottleneck? Learn more about our personal loan programs.
08-11-2023
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GST

Everything you need to know about GST on mobile phones before buying it

The Goods and Services Tax (GST) came into effect in 2017, and since then, it has been one of the essential parts of the Indian taxation system. Nowadays, GST is calculated for every purchase you make. There are various products for which you will need to pay GST. You must also pay GST on mobile phones when you’re purchasing them. Well, now that is having a huge impact. [B-01] What is the mobile GST rate? There has been a change in the mobile GST rate compared to the last time. Till April 1, 2020, the GST on mobiles was 12%, but later it was revised to 18%. The revision for the rate was made at the 39th GST Council Meeting. With the implementation of this change, the mobile GST rates became the same everywhere. Hence, no matter which state you purchased the mobile from, you had to pay the same rate. GST isn’t like VAT. The VAT rates on mobiles used to differ from state to state. However, GST on mobile phones remains the same everywhere. GST played an important role in reducing the effect of tax-on-tax, thereby proving to be helpful in the long run. GST Rate Applicability on Mobiles GST has proven to be an efficient transformation tool, especially for the Indian economy. They integrate all the commodities within the same tax transformation. Whether feature phones or smartphones, GST is levied on almost all mobile phones. Now we come to the question of composite supply. The composite supply has two or more items or services that are included and sold concerning the businesses. Therefore, you wouldn’t get the benefit of purchasing these goods separately. From the foods, only one item is considered the primary supply on which GST is calculated while creating invoices. For example, mobiles are sold with chargers and USB cables, both of which are essential requirements of a mobile phone. Therefore, the GST rate on mobiles will also apply to the charger and USB cable. What is the impact of GST on Exchange and Discount Offers? Various dealers offer various exchange offers and discounts on mobiles. You can understand the impact of GST on mobiles on discount and exchange offers. Exchange Offers We all know what exchange offers are- where one trades their older phones for the new ones. Customers can get a new handset in exchange for their old one and pay the difference between the cost of the new device and the resale value of the older device. When there was VAT, the difference sum would not be taxed. Ever since GST on mobiles got implemented, the exchange offers for mobile phones have become pretty simple. However, you will need to pay taxes on the reduced price too. Promotional Discount Promotional discounts during festive and sale seasons are important in the smartphone industry. When calculating the payable taxes, the discounts will not be calculated for the GST regime. Nonetheless, this will only be valuable when the discounts are a part of the invoice. The GST implementation has therefore played an important role in bringing uniformity across the Maximum Retail Price for all the products. When the government introduced VAT, the mobile tax rate tended to differ from state to state. Hence, specific states used to charge less tax than others. Although you will need to pay a little higher price for GST, the uniformity of MRP plays a vital role in lowering the fluctuating tax rates. Therefore, every individual will need to pay the same tax rate. What is the effect of GST on mobiles and accessories? GST has a wide range of effects on mobiles and accessories. If you are purchasing any of these, you must be familiar with the impact to avoid the higher price risk. Some of the common effects of the GST on mobile phones and accessories include the following: Taxed Interchange offers Since GST on mobile phones was implemented with the same taxation rate, various phone makers have introduced new exchange offers. Therefore, users can buy new phones in exchange for their old ones. Better Indirect Tax System The new taxation system allows individual taxpayers to go for lower tax rates. Therefore, this is highly beneficial for the exemptions and deductions which are a part of the new system. Furthermore, when purchasing phones, you can calculate the dividend income yourself. End-of-price benefits The price used to vary across different retail stores before the introduction of GST. Since VAT was there, people could purchase phones from specific shops at a lower rate than others. Nonetheless, since the enforcement of GST on mobiles, the gap has changed, and the price of smartphones countrywide remains the same. The absence of this gap further leads to the end of all major price benefits for individuals. Did the smartphone dealers get any benefits? Smartphone dealers get a wide range of benefits, with GST implementation being the same countrywide. The introduction has helped to streamline the business and simplify it significantly. Some of the common benefits that smartphone dealers get include the following: Increase in sales Since mobiles are no less than a necessity, almost everyone buys them. With tax rates being the same everywhere, sales are increasing. The dealers and merchants registered for GST eventually benefit from a maximum number of sales. Better competition Healthy competition is everywhere. The prices of mobile phones have become consistent countrywide. Therefore, there is healthy competition among mobile sellers. [B-02] Conclusion Compared to VAT, GST has a simpler tax structure and can contribute to different sectors of the economy. The effort for transition has been made to simplify. Not only does it help lower inventory costs, but it also plays a vital role in reaping all the benefits countrywide. If you are confused about the GST on mobile phones, you must reach out to professionals like Piramal Finance. The team of experts will help you understand how GST works and how much tax you will need to pay. Furthermore, for any tax clarification, you can always reach out to them.
08-11-2023
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