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Business Loan

All You Need to Know about the Advantages and Disadvantages of Small Business Loans?

There are several reasons why a firm would need to raise funds, ranging from coping with a cash flow lag to growing into bigger premises or hiring more people. There are also many choices for firm financing, ranging from overdrafts and merchant cash advances to invoice or asset funding. Small business loans from the bank are the simplest form of getting funds and are likely to be chosen by many small businesses. When deciding whether to borrow money, keep in mind the perks and drawbacks of small business loans. [B-01] Perks of Small Business Loans There are several perks to getting government small business loans. Here are a few to think about: Boost the growth of your firm A business loan, when used wisely, may help your firm thrive. Funding from a business loan might help you put your ideas into action sooner rather than waiting until your firm has produced enough earnings to finance development on its own. You Are Not Required to Dilute Your Equity. A company loan enables you to acquire money without bringing in any investors. This allows you to control your firm and all its earnings as they develop. When you hire an investor, that person will get a share of your earnings for as long as your firm exists. A loan, on the other hand, is a short-term solution. You will have no further duty to the lender after you have paid it off. Overcome Cash Flow Problems Small firms may have a cash flow problem. This is particularly typical when a small firm is rapidly growing since you may need to hire more staff and/or purchase more equipment and supplies before being paid. A loan might help to level out these swells. Profits from the loan are entirely yours. Another benefit of taking out a firm loan rather than seeking investment is that you keep complete control of your firm and retain all earnings. The most common reason that firm owners want cash infusions is to expand their operations or render them profitable. If you bring in an investor, they will demand a cut of the earnings. On the other hand, small business loans do not suffer from this disadvantage. All you have to do is repay the loan and its interest within the time frame specified. Furthermore, small business loans may help many firms profit, with studies showing that a single loan can help 61% of enterprises turn a profit. Flexible funding form If you get financing from an investor, the investor may have a voice in how you spend the money and may impose limits on what you can and cannot do. On the other hand, borrowing from a lender usually has no limits on how you may pay the money as long as it isn’t expressly for firm tools or real estate. It can be less expensive than other types of borrowing. Small business loans are often more cost-effective than utilising credit cards, overdrafts, or personal loans to get the money you want. A good credit rating or a secured loan (meaning you have assets to offer as collateral) may help you qualify for a low interest rate if your business has existed for some time and has a good credit rating. Small Business Loan Disadvantages Getting small business loans has serious flaws. Here are a few to consider: While there are several advantages to obtaining a business loan, there are also drawbacks. Keep these in mind before making your ultimate choice. Comprehensive application procedure Because commercial finance is extended based on your firm’s capacity to pay, lenders often request proper papers throughout the application process. As a result, you will be required to submit not just an application but also two or three years of tax returns, financial documents, and a business plan. Lack of repayment flexibility The terms of most small business loans are rigid. You will borrow a certain amount of money, make frequent, predetermined payments, and be expected to return the loan within the agreed-upon period. A required monthly bill may not be suitable if your small business’s sales vary. Security A lender may demand that you put up some security to receive a loan. If your firm fails, you may be putting your personal property at risk. As a result, you risk losing your firm and your house, vehicle, or other property. There is no equity. Small business loans usually do not allow you to access the cash you have returned toward the remaining debt. This means the only option to receive more money is to apply for another loan. This is different from other types of financing, such as a line of credit, where you may access the amount you’ve returned as long as your loan is in good standing. Strict Rules Even if the bank approves a loan, you may be forced to follow certain limitations during the loan term. For instance, the bank may mandate that you keep a specific debt-to-equity ratio in your firm, which it regards as an indicator of financial strength. If your debt level exceeds your equity, the bank may demand prompt repayment of the existing loan sum. Investing Money A loan may bind funds that may be employed elsewhere in your firm. For example, your firm might be doing well, but the monthly loan payment may prevent you from buying equipment that would allow you to grow or recruit a new employee. You might try to get more financing, but that would raise your debt obligation. Difficult to acquire Many lenders are wary of offering money to new firms and will only provide capital to established companies in good monetary standing. Even if your new firm is approved for a loan, the amount may not be enough. As a result, you may be obliged to cut down your business or decide against starting your own. [B-02] Conclusion Firm loans are an effective tool for funding, launching, and growing small business loans. As a small firm, you may seek funding to keep your firm running, expand your locations, buy new assets, or recruit additional staff. All of this is made possible by a small company loan. Cash flow management is a vital part of every firm. For most small firms, timely access to financing is critical to survival. But how can you get loans when you currently need operating capital? If you need a small business loan in India, the internet can deliver the finest loan offers from around the nation right to your door. To learn more about the SBA loan, visit Piramal Finance for related blogs and explore their products and services.

08-11-2023

Cards

What Is Balance Transfer Credit Card And How Does It Works?

You’ve owned hundreds of credit cards over the years, but nothing makes you feel like you’re getting ahead financially… until now! A balance transfer credit (BTC) card facilitates your getting out of debt faster to achieve your financial goals. It can even save you interest amount along with building build good credit. But how exactly does it work? are there any risks involved? Find out what it means here! [B-01] What is a BTC Card? BTC cards are a practical way to lessen the money you owe to your bank. These cards allow you to transfer your current debt onto a new account with a less interest rate. It can give you more time to repay your original loan while saving money in the long run. How does a BTC Card Work? BTC Cards are cards that help you consolidate your debt. The way they work is that the Balance Transfer Card company pays off your old high-interest rate debt. You then, in turn, make monthly payments to the BTC Card company on your new low-interest rate card until you’ve paid off all of the money that was transferred to the new card. It’s important to note that some BTC Cards charge a fee for this service. This fee can be worth it if you get less interest rate than your current card offers. Advantages of BTC Cards To understand the working of the BTC Card, one needs to be aware of its prominent advantages of it that are as under: BTC Cards Help Save Interest BTC cards help save on interest by transferring a high-interest credit card balance to a new account having a lesser rate. To use this type of card, you need the account number from your current high-interest account and the account number for your new low-interest account. Once you have those numbers, call the bank that issued your low-interest accounts. Click on Top 6 Balance Transfer Credit Cards In India (bankbazaar.com) for more details. BTC Cards are Convenient to Use BTC cards are a way to consolidate all your debt onto one card with less interest rate. Rather than paying back the original amount plus interest, you pay back the new balance for a set amount of time. It can help you save money in the long run because you’re not paying more than you already owe. BTC Cards Allow Multiple Transfers A great way to reduce debt is by transferring your balances from multiple credit cards to one. BTC Cards are designed for this purpose! Many cards offer a 0% interest rate for the first year, allowing you to pay less each month to pay off your debt quicker. You may also get an introductory rate of 0% for six or twelve months instead of just one year. BTC Cards Offer Ample Buffer Period BTC Cards are a relatively new invention to the world of credit cards. When you make purchases with your BTC Card, any amount left over on your purchase will be transferred to a new account. It can be an account at the same or different bank altogether. The main benefit of using this type of credit card is that you have an ample buffer period before you have to start paying off the transferred balances. BTC Cards Stabilize Your Credit Score If you want a good credit score, the best way is by transferring your balances onto a new card with an introductory 0% APR offer. It will allow you to pay off your debt without incurring interest charges. Once you have paid off the transferred debts, you can close down the account and start using a different one. Refer to Balance Transfer Credit Cards: What is a Balance Transfer Credit Card? | Bajaj Finserv for more details. Tips While Using BTC Cards Some helpful tips for using BTC Cards are as under: Transfer balances from high-interest-rate cards to low-interest-rate cards before your introductory offer expires. It will save you money spent on interest charges. Don’t take out another BTC Card: You may be tempted to get another BTC Card with an even lower interest rate as soon as your introductory offer expires. Don’t do it! There’s no guarantee that you’ll find a card with an even lower interest rate than what you already have. Once you’ve paid off all the debt, any new debt could start accruing all those expensive interest charges again. Make sure your BTC Card account is in good standing. If you consistently make payments on time, your interest rate will not increase. Conversely, if you miss payments or close your account, you could have a much higher interest rate on your debt. It can make paying off what you owe much more difficult! Keep track of your balances: BTC Cards can make managing debt much easier. But they can also pull you into a false sense of security. It’s easy to be lulled into paying off your BTC Card without paying attention to other debts you may have as well. Keeping a close eye on your accounts will help ensure that you don’t let any debt go too long unpaid! To avoid closing your BTC Card account, only pay the minimum amount each month. Even if you’re stuck with a higher interest rate for a little while longer, you’ll be glad you made this choice in the long run. [B-02] Conclusion A BTC card is a good option if you want to reduce your debt. You must pay off the debt as quickly as possible. If not, then you will end up paying more in interest than what you originally owed. For more information about BTC Card and its working, check Personal Loan (piramalfinance.com).

08-11-2023

Personal Loan

Online Personal Loan: All You Need To Know About The Pros And Cons Of It

When it comes to borrowing money, a few different options are available to you. You can choose to borrow money through a bank or credit union traditionally, or you can look into some of the more recent online-only lenders. An online personal loan is a type of loan that is offered exclusively through the Internet. So what are the pros and cons of getting an online personal loan? Keep reading to find out! [B-01] What is an online personal loan, and how does it work? An online personal loan is an unsecured loan that you can use to borrow money for any purpose. Unlike other kinds of loans, such as home or auto loans, an online personal loan does not require collateral and does not have a fixed repayment period – instead, you can choose your preferred repayment schedule and make payments based on that. You will usually need to meet specific eligibility criteria to get an online personal loan. For example, many lenders will only approve an application if the borrower has a good credit score or comes from a certain income bracket. Additionally, some lenders may charge extra fees or higher interest rates if they see you at risk of defaulting on your repayments. Once your application has been approved, you can choose exactly how much money you want to borrow. Depending on the lender and your chosen repayment schedule, this amount may be disbursed in one lump sum or over monthly payments. You will then need to make regular repayments until your loan is fully repaid. The Pros and Cons of Online Personal Loans When it comes to borrowing money, you have various options. An online personal loan may be the right choice for you if you need a relatively small amount of money quickly and lack good credit. However, like any borrowing, there are pros and cons to bringing out this type of loan that you should consider before making your decision. Let’s take a look at some of the main pros and cons of getting an online personal loan: Pros 1. Quick application process: With most online lenders, the application process is quick and simple. You can complete the entire process in just a few minutes from your computer or mobile device. This makes it ideal for people who need money quickly and don’t want to deal with a long, complicated application process. 2. Lower interest rates: Because online lenders can operate at lower costs than traditional banks or finance companies, they can typically offer lower interest rates on their loans. 3. Easy repayment options: Online personal loans are often available through direct deposit. You can arrange for your loan payment to be automatically withdrawn from your bank account each month so that you never miss a payment and avoid late fees. 4. Flexible repayment terms: Most online lenders will work with you to find a repayment plan for your unique financial situation. This flexibility makes it easier for borrowers to make their monthly loan payments without struggling financially, even with poor credit or limited income. Cons 1. High fees: Because of the convenience and ease of applying for an online personal loan, these loans tend to come with higher fees than traditional bank loans or personal loans from a local lender. If you can get a lower interest rate elsewhere, this might make more sense in the long run. It’s important to carefully consider these costs before making your decision so that you know exactly how much money you’ll be paying in total over the life of your loan. 2. Restrictions on use: Because online lenders are mainly concerned with protecting their investments, they often restrict how you can use your loan money. For example, some lenders don’t allow borrowers to use their loans for cash advances or make purchases from certain retailers. Make sure that you carefully read any restrictions before accepting a personal loan so that you’re aware of all possible limitations to your financial freedom when borrowing money this way. How to Find the Best Online Personal Loan For You? It can be difficult to know where to start if you’re looking for a personal loan to cover a big expense or consolidate your debts. So many lenders offer loans at different interest rates and terms, which can be overwhelming. And if you’re new to the world of borrowing money, then it can seem even more daunting. But with the right information and guidance, you can quickly find the best online personal loan for your needs – one that suits your financial situation and interests perfectly. Here are some tips on how to do just that 1) Check out what rates and fees different lenders offer 2) Consider the different types of personal loans available 3) Make sure you check the fine print 4) Check out reviews of different lenders The Risks Associated with Online Personal Loans 1. Predatory lenders: Many online personal loan providers are not legitimate businesses. They may offer loans with exorbitant interest rates and fees or not deliver on their promises. Borrowers should be careful to research any lender before applying for a loan. 2. High-interest rates and fees: Even legitimate online personal loan providers may charge high-interest rates and fees. Borrowers should carefully compare the terms of different loans before selecting one. 3. Repayment problems: Some borrowers may have difficulty repaying their loans. This can lead to late fees, additional interest charges, and damage to the borrower’s credit score. Borrowers should ensure they can afford the monthly payments before taking out a loan. 4. Identity theft: Some online personal loan providers may collect sensitive information from borrowers, such as social security numbers or bank account information. This information can be used to commit identity theft. Borrowers should ensure they are dealing with a reputable lender before providing personal information. 5. Scams: There are many scams associated with online personal loans. Borrowers should be careful to research any lender before applying for a loan. [B-02] Conclusion Whether you should opt for a personal loan depends on your specific needs and what you’re looking for in your source of credit. If you want a lower interest rate, have a longer repayment term, or want more flexibility when choosing your lender, then an online personal loan could be the right choice. Make sure you weigh all the pros and cons before making a final decision. Want to know more about Personal Loans? Connect with us here.

08-11-2023

Know More

What Are Floating Stocks and What Are Their Limitations?

Stock markets are one of the greatest ideas of humankind. The basic purpose was to generate wealth, and it has not disappointed. Floating stocks are an important part of stock markets. But how do they work? This guide explains what floating stocks are, why they exist, and their limitations. Read on to understand the concept and find out its limitations. [B-01] What Are Floating Stocks? Stock floats, meaning outstanding stocks, are available to the public for investment. These stocks are a part of the company’s market capitalization. They are essential for providing liquidity in the stock market. Floating stocks are also an indicator of the goodwill of the company in the market. In general, floating stocks offer two options to investors. The first is to hold the securities and collect dividends. The second is to trade them on an exchange or secondary market. They can expect short-term gains if the stock price increases faster than the dividend rate. Floating stocks provide investors with the tools necessary to make educated investment decisions. Features of Floating Stocks Floating stocks are a type of investment that is highly liquid. They have relatively low risk. They are also referred to as ‘free-floating’ stocks, which can be bought and sold anytime. Floating stocks are usually found on public exchanges and make up most of a company’s outstanding shares. Here are some key features of floating stocks: Floating stocks are investments with lower risk, high liquidity, and trade on a market exchange. There are two types of floating stocks: preferred and common stocks. Common stock offers the most voting power but pays the lowest dividends. Preferred stock gives no voting power but higher dividends in return for less liquidity. Preferred floating stocks provide more protection against dilution due to share splits than common stock does (because there are fewer shares). But remember that if you want to utilise your right to buy additional shares when new offerings come out, you need a broker account. You can’t do this with just your brokerage account. Working of Free Stocks Floating stocks are the number of shares available for trading on a public stock exchange. They are calculated by subtracting the total held stocks from the total outstanding shares. Floating stocks enable investors to judge the total shares available for trading in the market. These stocks can be purchased and sold freely in the market, and their prices are determined by the demand and supply forces. The cost of floating stocks changes daily and is based on several factors such as earnings reports, political developments, news events, etc. For more details, click Floating Stock: Definition, Example, and Why It’s Important (investopedia.com) What are the Limitations of Free Stocks? Floating stocks can be a helpful way of tracking the current supply and demand in a particular market or sector. However, it is essential to note that several limitations come with using floating stocks as an indicator of price movement. First, while they indicate the current balance between buyers and sellers, they don’t necessarily reflect the market’s underlying fundamentals. While they can help gauge market sentiment and overall demand, they may not always be a reliable indicator of future price movements. Second, because the supply and demand of floating stocks can change quickly, investors need to be aware that their decisions may be based on outdated information. The supply of stocks can quickly increase or decrease depending on external factors such as news events or changing economic conditions. As such, investors should ensure that they make investment decisions based on the most up-to-date data available. It is important to remember that floating stocks represent only a portion of the total market. Their performance may not represent broader market performance. In addition, because of the relatively small size of many floating stocks, there may be greater volatility in the stock’s price than with more extensive, more established stocks. It can make it difficult for investors to gauge stock value accurately. The company cannot control who buys and sells the stock, so there is potential for speculation and market manipulation. There is less control with a large percentage of stock float meaning a company has less control over its shareholders. It is especially true regarding voting rights. If a company has more shares on the open market, it will likely have fewer voting rights than if it had more restricted stock. Since floating stocks are publicly traded, there can be a significant risk of losses in the market due to the stock’s fluctuating price. This risk can be increased by market speculation and volatility, which can lead to significant losses in the short term. How to Overcome the Limitations of Floating Stocks? There are several ways to overcome the limitations of floating stocks: The first is to invest in companies that you know well and understand the risks associated with them. You should research the company’s financials, past performance, and other relevant information that can make you take a more informed decision. Additionally, diversifying your portfolio and investing in different types of securities can help reduce risk. Another way to reduce the risk associated with floating stocks is to use stop-loss orders. A stop-loss order automatically sells the stock if it falls below a specific price. It allows investors to protect their capital in case the stock drops unexpectedly. Finally, investors can also use leverage to gain more control over their investments. Leverage allows investors to purchase more stocks than they would typically be able to afford by borrowing money from a broker. However, it is essential to remember that leveraging can increase risk and returns. [B-02] Conclusion Floating stocks are a great investment option for diversifying portfolios. While they may be more volatile than other investments, the potential for higher returns makes them worthwhile. However, it is important to understand the risks and limitations of floating stocks before investing. For more information, click Personal Loan (piramalfinance.com).

08-11-2023

Know More

What are bank bonds and what are the benefits of it?

In the finance sector, bank bonds guarantee debts in which the borrower owes the lender a debt for which the borrower is obligated to repay the principal on maturity along with interest at a fixed interval, at agreed terms. These bonds are backed by the government of India and can be subscribed to at any time. Interest can be paid annually or semi-annually. Bonds are a great option for raising funds for a business without giving the investor the right of ownership in the company. Bonds work using a coupon rate, which is a fixed interest rate for the lender and is popularly known as a fixed-income security. For example, if an organization, XYZ Ltd., wishes to raise funds for its distant business requirements, it can take out a loan from the issue of bank bonds. Bonds are a tool for raising business funds for the borrower and a secured and fixed source of income for the lender. In bonds, maturity is when the principal or face value is paid back to the lender. Bonds can be invested in for a minimum of Rs 1,000 and increased in multiples of face value. There is no limit on the maximum investment. Eligibility for investment in Bank Bonds: There are no strict eligibility criteria for applying to bank bonds. Any person who is a resident of India can invest in these bonds. Individually, on a joint basis, or on behalf of a minor, a person can invest in these bank bonds without any restrictions. Features of Bank Bonds: Non-resident Indians cannot invest in these bonds. The maturity period for these bonds is 7 years. The minimum investment amount is Rs 1,000, and there is no capping on the maximum amount. Income earned from these bonds is taxable. These bonds are non-transferable. Premature redemption is available only to senior citizens. Benefits of bank bonds: Low minimum investment: The minimum investment in these bonds is Rs 1,000 and can be increased in multiples of face value. This is one of the reasons why investors prefer bank bonds. Due to this minimum investment, even a person from an economically weaker background with an account in a bank can invest in these bonds. Online/Offline Application: The government has made the application to bank bonds accessible to all through both online and offline mediums. Those who prefer everything online can apply online. Those who don’t have the medium for applying online or aren’t tech-savvy can fill out a form at the branch to apply. No limit on maximum investment: To ensure that investors reap the maximum benefits of these bonds, the government has kept no maximum limit for investment. Those planning to invest a big amount can apply for these bonds. Income or capital appreciation: Investors have a choice to obtain interest income or capital appreciation. Those who choose the interest income option receive interest twice a year, every six months. Those who prefer capital appreciation receive the cumulative amount for interest and principal on maturity. Modes of payment: To make it a feasible and hassle-free process for everyone, payments can be made through cash, DD, cheque, or online. This makes the payment process easy for investors. These are a few reasons why people prefer to invest in bank bonds. If you plan a safe investment with a fixed return, buy bonds like bank bonds. Types of Bonds: Fixed-rate bonds: These bonds provide fixed interest amounts until maturity. Investors earn fixed and guaranteed returns under all circumstances through these bonds. Floating-rate bonds: As the name suggests, the interest rate in these bonds is not fixed but keeps changing. It varies during the tenure, depending on the pre-set benchmarks. Zero-coupon bonds: If you invest in these bonds, you won’t get periodic coupons during their tenure. The investors purchase these bonds at a discounted price, but they receive the par value. Perpetual bonds are debt securities without maturity. In these bonds, investors don’t receive the principal amount but coupon payments until perpetuity. Inflation-linked bonds: These bonds are formed to minimize the impact of inflation on the face value and coupon payments. Convertible bonds: The investors who own convertible bonds can convert them to a fixed number of equity shares in the issuing company at a particular time. Callable bonds are high-coupon-paying securities in which the issuer can redeem them at a pre-agreed price and date. Puttable bonds: The bondholder can return the bond and ask for principal repayment at a pre-agreed date. Out of all these types of bonds, you must choose the one that fits your investment expectations, return expectations, liquidity options, and other factors. Things to consider before finalizing bank bond investment: Before investing in any scheme, you must always know the offerings. Here are a few points to consider before investing in bank bonds. Be sure about your expectations from the investment and compare them with the actual results the bonds can provide. Buy bonds you want to invest in depending on the risk or return in each. Always check the credibility/creditworthiness of the issuer. Before you buy bonds, check their ratings to avoid default in payment. You must have some expectations about the liquidity of your investment. Do compare it with the results. [B-02] Always be an informed investor. Read, analyze, and then invest. If you are planning to invest in bank bonds or RBI bonds, this information will help you understand the basics of these bonds, the types of bank bonds, their features, benefits, and other minute details. Have a safe and fruitful investment!

08-11-2023

Personal Loan

Most Common Factors That Affect Personal Loan Interest Rates

You’ve finally decided to take the plunge and apply for a personal loan. But now, you’re faced with a new dilemma: what are the most common factors that affect personal loan interest rates? The personal loan industry is booming, but that doesn’t mean that every lender is out to give you the best deal possible. Several factors can affect your personal loan interest rate, some of which you may not even be aware of. This blog post will explore the most common factors that affect personal loan interest rates. From your credit score to the type of loan you’re applying for, read on to learn more about how lenders determine your interest rate. [B-01] Personal loan interest rates Several factors affect the interest rate of a personal loan, including the borrower’s credit score, employment history, and monthly income. However, the most common factor that affects personal loan interest rates is the type of lending institution that the borrower chooses. For example, banks typically offer low personal interest rates than online lenders. This is because banks have lower overhead costs and can pass these savings on to their customers through lower interest rates. On the other hand, online lenders often charge higher interest rates because they must offset their higher operating costs. Another factor that affects personal loan interest rates is the length of the loan term. Generally speaking, the longer the loan term, the higher the interest rate. This is because borrowers who take out long-term loans are considered at higher risk than those who take out short-term loans. As such, lenders charge higher interest rates to compensate for this risk. Finally, personal loan interest rates may also be affected by special promotions or discounts that lenders offer from time to time. For example, some lenders may offer a 0% introductory APR for a certain period. Others may offer discounts for autopay or paperless billing. To get the best deal on a personal loan, it’s important to compare offers from multiple lenders and choose the one with the lowest overall cost. How credit scores affect personal loan interest rates A credit score is one of the banks’ most important factors when assessing personal loan applications. This is because a credit score is a good indicator of an individual’s creditworthiness; it shows how well they have managed their finances and how likely they are to repay a loan. Generally, the higher your credit score, the lower the interest rate you will be offered on a personal loan. This is because lenders see individuals with high credit scores as being less of a risk and more likely to repay their loans. However, it’s important to remember that other factors can affect personal loan interest rates, such as the amount you borrow, the term of the loan, and your personal financial circumstances. So even if you have an excellent credit score, you may still be offered a higher interest rate if you’re considered to be a high-risk borrower. Employment status and income A few things affect personal loan interest rates, but employment status and income are two of the most common. Lenders want to know that you have a steady job and a good income so that they can be confident in your ability to make your payments on time. If you’re self-employed or have a variable income, it may be more difficult to get approved for a loan, or you may have to pay a higher interest rate. Debt-to-income ratio Your debt-to-income ratio (DTI) is the percentage of your monthly income that goes toward paying debts. It’s essential to calculate your DTI because lenders use it to decide whether to approve you for a loan and what interest rate you’ll qualify for. A lower DTI means a better chance of loan approval and a low personal interest rate. Conversely, a higher DTI raises red flags with lenders and could result in a rejected loan application or a higher interest rate. The ideal DTI is below 36%, but some lenders will work with ratios up to 50%. To calculate your DTI, divide your monthly debt obligations by your gross monthly income. For example, if you have $500 in monthly debt payments and $2,000 in gross monthly income, your DTI is 25% ($500/$2,000). Lenders consider various factors when making lending decisions, so even if your DTI is high, you may still be approved for a loan. Other factors that affect loan approval and interest rates include credit score, employment history, and income stability. Loan term The term of your loan is one of the most important factors that affect your personal loan interest rate. The longer the term, the higher the interest rate will be. This is because lenders view long-term loans as riskier since there is a greater chance that something could happen to prevent you from making your payments. For example, you could lose your job or become sick and unable to work. If you are looking for a low personal interest rate, you may consider a shorter loan term. However, keep in mind that this will also mean higher monthly payments. You must decide what is best for your budget and financial situation. Whatever loan term you choose, make sure you can comfortably make monthly payments. If you miss even one payment, it could result in late fees and a higher interest rate. The type of lender The type of lender is one of the most important factors that affect personal loan interest rates. There are two main types of lenders: banks and non-bank lenders. Each type of lender has its own set of interest rates, terms, and conditions. Banks are the most common type of lenders for personal loans. They usually offer the lowest personal interest rates and the best terms and conditions. However, they also have stricter eligibility requirements. Non-bank lenders are less common but often offer higher interest rates and more flexible terms and conditions. As a result, they may be a good option for people with bad credit or who need to meet the eligibility requirements of banks. [B-02] Conclusion Many factors affect the interest rate on a personal loan, and it’s important to understand them before taking out a loan. The most common factor is your credit score, but other factors like your income, employment history, and debt-to-income ratio can also affect your rate. If you’re not sure what your interest rate will be, use our personal loan calculator to estimate. In case of doubts, consult a financial expert like Piramal Finance.

08-11-2023

Personal Loan

What Is Collateral Loan? : All About Its Features And Benefits

Loans obtained from a financial institution on the condition that an asset is pledged as security for the loan are known as secured loans or “collateral loans.” Most common types of bank loans need collateral. Here, borrowers are expected to provide some security for the loan. Lenders may reduce the likelihood of a loan going bad by keeping the borrower’s collateral, an item that the borrower puts up as security against the loan. If the lender suffers a loss, they could decide to sell the deposit instead. [B-01] What does “collateral loan” mean? There are two primary categories of loans available from most financial institutions, including banks and non-bank financial firms (NBFCs), which are secured and unsecured loans. One sort of secured loan is known as a collateral loan. In this, the borrower must provide an asset in return for the money for the loan. If the borrower does not repay the debt, the lender can sell the collateral to recoup their losses. Types of collateral loans In most cases, the sort of loan you are applying for will dictate the kind of collateral you must put up. Your home will serve as the loan’s security if you take out a mortgage. When you take out a loan for a car, the vehicle itself acts as the security for the loan. Lenders often accept vehicles, bank deposits, and investment accounts as collateral. It is unusual for someone to utilize their retirement account as collateral. A guarantee to repay a very short-term loan with the borrower’s next salary may serve as collateral for very short-term loans of any kind, not only those offered by payday lenders. You may get these loans via traditional banking institutions, but the terms of these loans often do not extend beyond a few weeks. You should only take out one of these loans if it is an absolute need, and you should check into the interest rates and conditions of the loan before doing so. The best option for collateral providers The borrower is required to provide security for the collateral loan as an investment. The value of the collateral must be more than or equal to the amount of the loan. If you need a personal loan and want to utilize the money in your savings account as collateral, the ideal place to turn for assistance would be the bank or credit union you currently work with. If you have a lengthy banking history with the same bank, the bank is more likely to accept your loan and offer you a decent interest rate. Collateral and collateral-free loans in-depth The term “collateral-free” refers to a loan that does not need a guarantor, security, or any other physical value to be used as collateral. This loan does not require you to put anything you own up as collateral to get it. The capacity of the borrower to repay the loan serves as the primary security for unsecured business loans. To do this, consideration is given to the borrower’s revenue and the cash flow and overall health of the company. To begin, let’s address the most fundamental inquiry: what exactly is meant by the term “collateral”? You can get financing if you are willing to “collateralize” your loan application by providing an asset with an established value. Real estate, land, equipment, shares, stocks, and automobiles are all acceptable forms of collateral when applying for a loan. If the borrower fails to repay the Loan, the lender has the right to seize any collateral provided and sell it to recoup their losses. You can acquire the money you need without putting anything of value up as collateral if you take up a loan that doesn’t require collateral. Loans that do not need collateral may be used for any purpose, including investing in a company or making changes to one’s house. Paying for things like college tuition, unexpected medical expenses, or even a wedding with a loan that does not need collateral is an option. Most loans given to businesses do not need any collateral. Cash Credit and Term Loans under CGTMSE are two examples of well-liked loans that don’t require collateral. Loans without collateral are available for micro and small companies (also known as MSEs) up to Rs 1 crore via the CGTMSE. Because it’s possible that India’s small and medium-sized firms would need assistance, this strategy was developed. Long-term issues with finance, growth prospects, the need for working capital, and the difficulty that enterprises in this area have in expanding their operations are all factors. The Indian government and the Small Industries Development Bank of India (SIDBI) collaborated to create this loan program to assist small and medium-sized enterprises in the country. Features of a collateral loan According to the MSMED Act of 2006, the maximum loan amount is two crores of rupees (Rs 1 crore for retail businesses). There is a possibility of borrowing for much higher sums. However, you must provide security for more than one crore rupee loan. Plant and equipment, land, or any other property related to the borrower’s company might be used as collateral. Collateral loans are available to micro, small, and medium-sized enterprises (SMEs) that are either just starting or are already operational. The money obtained via these loans might be used to satisfy immediate and long-term financial requirements. Guarantee Cover of 75%, 80%, or 85% is required, depending on the kind of Loan being taken out. The coverage of loans is ineligible for use by small and medium-sized companies (SHMS) and establishments that instruct individuals on how to do their tasks. It encompasses businesses not only engaged in producing goods but also those engaged in providing services. The fact that you are not required to provide any security for the loan is the primary advantage of getting one that does not need collateral. More benefits of collateral loans The federal government partially subsidizes the interest rates on these loans. The payment periods are flexible and may continue for five years. Getting an additional 180 days is possible by using a letter of credit or bill discounting. It doesn’t matter your credit history since you will still be approved for this loan. There is also funding available for doing research and manufacturing innovative goods. Processing applications is a breeze and may be done in a short amount of time. [B-02] This was a summary of collateral loans and the benefits they provide. For more info about collateral loans, or if you are looking for an instant personal loan, visit Piramal Finance.

08-11-2023

Personal Loan

How a housewife can get a personal loan easily in a few steps

In modern times, women have become financially independent. They are multi-taskers, i.e. managing their homes and work at the same time. Therefore, access to credit from banks and other NBFCs can help women become financially free. [B-01] Personal Loans for a Housewife Personal loans have become popular in India. The application process is relatively simple. Personal loan EMIs can be smaller if you choose longer tenures. A homemaker can either approach a bank branch or apply online for a personal loan for a housewife. They can obtain two types of personal loans — secured personal loans and unsecured personal loans. Here are the details about various loans for women. Secured Loans. Secured loans are provided based on offering security to the lenders. This collateral can be a fixed deposit, insurance policy, gold, or property. This list includes a host of movable and immovable assets. If the borrower defaults on paying the loan, the lender can seize the collateral and realize the loan amount. Unsecured loans. Banks and NBFCs provide loans that don’t require collateral. However, the lenders would give unsecured loans based on the credit history of the person. In most cases, if the applicant doesn’t have enough income, they would need a co-applicant with a stable income. So if a housewife’s husband has a stable income source, a government job, or a good private sector job, it can easily convince the lenders to give a loan. Gold loan. In Indian society, women generally inherit gold from their parents and elders. Gold can be used as collateral to obtain a loan. All banks and NBFCs give loans by taking gold as security. The benefit of taking a gold loan is that there is no need for a guarantor or a co-applicant. Income proof is also not necessary. The documents are minimal, and the processing fee for a gold loan is nil. The approval for a gold loan is instant. In most cases, the loan amount can be disbursed on the same day. A housewife pledging gold can also be assured that her gold will be safe as it is secured in vaults. So, she can approach banks or NBFCs for a personal loan for a housewife by pledging her gold. The money given as a loan is generally 75% of the gold value. Insurance Policy. If not surrounded by any emergency, a homemaker can think about getting a personal loan for a housewife through an insurance policy. Getting a loan by giving an insurance policy is becoming popular in the current times. Therefore, a housewife can pledge her insurance policy to obtain a personal loan. The insurance contract would act as collateral. The agreement would be between the insurance company and the lender. Generally, the amount provided is equivalent to 80 – 90% of the policy’s value. The repayment period is flexible. However, it varies across lenders. The interest rates are low in this option. The documents required to obtain the loan are not many. Generally, the loan amount is disbursed quickly. In case of default, the insurance policy would lapse. Fixed Deposit. Fixed deposit is common and popular in India. Most banks in India provide loans for fixed deposits. A homemaker can obtain a personal loan for a housewife by pledging her fixed deposit as collateral. Therefore, this is a secured loan. In case of a loan default, the creditor can claim the fixed deposit from the bank. The money given as a loan is generally 70% – 90% of the amount in the fixed deposit. The loan tenure can be the same as the fixed deposit tenure or less than that. One can obtain a loan from the same bank where the fixed deposit is held. In that case, there is no processing fee, and the documents required are the bare minimum. These include a filled application form, fixed deposit receipts, ECS mandate, and a cancelled cheque. Property. If a homemaker owns a property that includes land or buildings, she can pledge to obtain a personal loan for a housewife. Commercial or residential property can act as collateral. In case of loan default, the bank would seize the property, sell it, and realize the loan amount. If the personal loan amount is high, the amount given by the banks would be equivalent to 65% of the property’s market value. The loan tenure differs across lenders. The benefit of having a property is that the chances of getting a loan are very high. Guarantor/co-applicant. Having a guarantor and co-applicant to a house, as a wife without income, to obtain a personal loan is common in India. If the housewife doesn’t have a credit score, is new to banking, or cannot meet the bank’s criteria to get a loan, she can also obtain a personal loan without collateral. However, she would need a co-applicant/Guarantor. In the case of the housewife, a husband can be a co-applicant and grantor, and he can submit his proof of income salary slips and IT return documents. And the co-applicant is equally responsible if the loan defaults. A housewife can also have a guarantor who is not her husband. But the person should have a good credit history and be ready to pay in case the loan gets defaulted. Therefore, having a guarantor/co-applicant with a good credit history can help a homemaker get a personal loan for housewives from either a bank or a non-banking financial company. [B-02] Application Process. Traditionally, to apply for a loan, a person would have to approach the bank, talk to the bank officer, and produce the documents. But in the digital era, most banks seem to be taking the online route for application submission and even for loan approval. Generally, the online application is processed by visiting the bank or NBFC’s website, filling out the application form, submitting the KYC documents, selecting the loan amount, and submitting it. Then the bank representative would call back and take the loan application process forward. A personal loan is one such loan that is obtained quickly. It comes in handy for women if they are starting a business. They can also use the money to help renovate their home, in case of a medical emergency, or to pay any other debt. To learn more about personal loans for housewives and more, and get the best offers, visit Piramal Finance.

08-11-2023

Know More

All About Bank FD: Features and Benefits

Fixed deposits are the financial provisions that are offered by the NBFC or banks. You can deposit some amount of money that yields a higher interest rate. In the comparison of the savings account, FD interest rates are a bit higher and the best personal finance options. In FDs, the deposits can be made for some specific time period ranging from 7 days to 10 years. Once you make a deposit in an FD, it starts earning interest depending on the deposit duration. As a rule of bank FDs, the money can be withdrawn before maturity. However, if someone withdraws money before maturity the banks may charge some extra penalty. FD is considered a good option for personal finance and we are going to enlist here advantages and features of bank FDs in the next section. [B-01] Benefits/Features of Bank FD: To make sure that whether you should invest in bank FDs as a personal finance option or not you should know its benefits. The benefits of features of FD will help you to make a well-informed decision. i) Fix Return or Interest Fixed deposits can give a guaranteed return on investment. When you will open an FD then the return will be mentioned and you will get the same at the time of maturity. You get the same fixed FD interest rate that is agreed upon at the time of investment. This makes the fixed deposit safer and more secure as a personal finance option. ii) Flexible Tenure Most of the banks offer FDs with flexible tenure. This tenure can be from 5 to 10 years or somewhat or some days/months/years more or less. You can select the tenure at the time of investment. This is a fixed tenure that may not be changed with time. iii) Loan Against FD Fixed deposits can also help you with additional fund requirements with personal finance. In case you need some additional or extra funds and your bank FD is not matured, then you can apply for the loan. You can continuously earn interest on your deposit. Most NBFCs allow the depositors to take 90% of the deposited amount to take as a loan. iv) Tax Benefits Any FD as a personal finance option can be of 5 years tenure that can be a tax-saver as well. Under section 80C of the Income Tax Act 1961, you can save your tax up to 1.5 lakhs. FD funds can be deposited for a fixed time period that can again work as some tax benefit instrument. v) Assured Returns Bank FDs are one of the most popular and safe deposit instruments due to assured return. Once you will invest in a fixed deposit as personal finance you will surely get a guaranteed return. The return is usually based on the FD interest rate that is not affected by market fluctuation. Therefore the returns are not affected by the ups and downs in the market. vi) One-Time Deposit If you deposit once in the FD then you can rest assured that your fund is safe. You can invest a lump sum amount one time as personal finance and then just watch your money grow. The money can grow in the desired time — you need not deposit repeatedly. Just by the one-time investment, you can get the expected return. Types of Fixed Deposits As we explained above fixed deposits can be started with any bank or financial institute. But still, while choosing FD as the deposit instrument you may look for the type of FD that you have chosen. Here are the types of bank FDs: i) Standard Fixed Deposit Standard fixed deposits can be opened with any bank or personal finance institution. However, you should have a saving account with the institute to start FD. The investment can be made for a fixed time period or a predetermined time period. The FD interest rate is usually pre-specified. The duration of standard FDs can range from 7 days to 10 years. ii) Corporate Fixed Deposit When the FD investment is made with any private company or NBFC, then it is known as corporate FD. It usually offers a higher interest rate in comparison to standard bank FDs. However, you should check the credit rating of the company before starting your FD. ICRA rating helps the user in determining whether it is safe or not to invest with the company. iii) Cumulative Fixed Deposit Just like any regular fixed deposit any cumulative FD account may require you to deposit money for a predetermined period. You may not receive the regular payout but on maturity, you will definitely receive a fixed amount. If you are looking for long-term investment then cumulative FDs can be the best option for you. iv) Tax-Saving Fixed Deposit As its name convey. Tax-saving deposits are available almost with all banks and NBFCs. It can be used to save tax or for tax exemption up to 1.5 lakh per year. However, the minimum lock-in period for these investments is 5 years. During the lock-in period, you cannot withdraw any amount or funds. Such FDs are used many times to save the tax as well. v) Senior Citizen Fixed Deposit Senior citizen FDs have several additional advantages. Anyone above 60 years of age can use these FDs. The interest rate on these FDs is higher than normal FDs. Usually, there is an additional 0.50% interest rate on senior citizen FDs. Long-term investment, it’s a good investment option for senior citizens. vi) Non-Cumulative Fixed Deposits Investors with monthly goals can choose these types of bank FDs. If the investors have some loan and want to accomplish their EMI goals then this can be the best option. For the non-cumulative FDs, you can choose monthly/quarterly or annual pay-outs and enjoy an interest rate to pay off the bills. [B-02] Conclusion The fixed deposit is one of the safest investment options. FDs or fixed deposits can give you an even higher rate of interest than saving bank accounts. will always depend on the choice of bank or NBFC(Non-Banking financial company). You can check the rate and make informed decisions for investment. To get more information on investment read Piramal’s blogs.

08-11-2023