More articles for you

Your one stop place for everything related to finance and lending

Know More

What Is Business Loan Fees And Charges

Easy access to capital is the lifeline that nurtures businesses. A business loan can provide capital to meet various business-related requirements. Be it delay in payments by debtors, plans to grow your business, purchasing additional inventory, or dealing with the cash flow issues because of the lag between payables and receivables. But before you apply for a business loan from a financial institution, it is prudent to understand the various fees and charges associated with it. [B-01] Processing Fees The processing fee is the amount charged by the lender for processing the loan application of a borrower. It is a one-time charge and is deducted from the loan amount at the time of loan disbursal. It includes checking your CIBIL score, loan approval charges, and administrative charges. The processing fee amount varies from lender to lender. Interest Rate A business loan interest rate is the amount charged by the lender to the borrower as a percentage of the principal loan amount. An interest rate can be charged on both, monthly and annual basis. The interest rate is typically calculated on an annual basis and is called APR (Annual Percentage Rate). Late Payment Charges An Equated Monthly Installment is the fixed amount of money paid by the borrower on a specific date of each month during the tenure of a loan. It is advisable to ensure that you keep your account funded on or before the due date of EMI deduction. Any delay or non-payment of EMI on the due date negatively impacts your CIBIL score. The penalty levied for the delay in EMI repayment is called late payment charges and can be different for different lenders. Non-payment of EMI could be because of signature mismatch or insufficient funds in the account. Online Convenience Fee A business loan fee charged by the lender for providing online services to the borrower is called an online convenience fee. The online convenience fee is a nominal amount paid for online services such as obtaining a login ID and password for the loan account. Most financial institutions these days have apps that can be used to keep track of your business loan and these apps are available for free. Documentation Fee To get a business loan, a borrower has to submit the required documentation to the lender. The business loan fees charged by the lender for the services of the employee handling the paperwork is called documentation fee or document processing charges. This fee varies based on the lender and the type of business loan applied. Prepayment Fees A business loan infuses the required capital in your business which can be used for addressing the cashflow concerns and growing your existing business. Let’s suppose your business does well and starts generating a steady revenue stream. You might think of being debt-free by repaying the pending loan amount at one go instead of monthly EMIs till the completion of the loan tenure. A penalty or a fee charged by the lender for the early closure of the business loan is called a prepayment fee or foreclosure fee. Business Loan Process Listed below are some simple steps for getting a business loan Identify your loan requirements and assess the eligibility by visiting the lender’s website. Select the type of business loan as per your business needs. Choose the lender based on the interest rates offered, business loan charges, and the tenure of the loan. Evaluate your chances of getting the loan approval. Gather the required documents. Fill out the application form and apply for the loan. [B-02] Bottom Line As a business owner, you are constantly looking for ways to grow your business. A business loan is a financial tool that can help you with the funds required to expand your business. But before you apply for a business loan with a financial institution, you should be aware of the various business loan fees and charges Refer to the points above to understand the charges/fees taken at the time of loan processing by the financial institutions.

08-11-2023

Tips & Advice

How Credit Score Impact Your Home Loan Interest Rate?

A home is an expensive purchase altogether. Many times, people do not have the required finances to buy a home. As a result, they opt for a home loan to gain financial support to buy a home. When you are preparing to buy a home with a home loan, it is best to do your research and pick the best home loans with competitive interest rates. When it comes to getting the best interest rate, there is something that is more important than saving up enough for your down payment. It is wise to keep an eye on your credit score. It plays an important role in the interest rate of your home loan. In this article, we will dive deep into how your credit score can affect your home loan interest rate and how you can improve your score. [B-01] What Is A Credit Score? A credit score is a 3-digit number that records all your financial habits. It is a measure of your creditworthiness. This credit score ranges between 300 and 900. They are calculated by the credit bureaus in India after considering several factors such as repayment history, debt, credit inquiries, and others. It is usually recommended to have a credit score of or above 750. A higher credit score indicates that you are a financially responsible individual with high creditworthiness. So, if your credit score is below the recommended range, it is best that you improve your credit score before applying for any type of loan. Why Is Your Credit Score Important? Your credit score is crucial as it helps determine the interest rate at which credit is offered to you. It also determines the interest that will be charged on your home loan. Many insurers also consider your credit score to determine the premium to be charged on your insurance policies. So, it is important to have a good credit score to avoid paying high interest rates. You can leverage a good credit score into a great deal on your home loan. How Does Your Credit Score Impact Your Home Loan Interest Rate? From the perspective of the bank or the lending institution, they would be lending you money for a certain period of time. If you have a poor credit score, this would mean you have had a history of poor financial habits, including repayment of loans. In such a scenario, the lenders are at a higher risk. As a result, they charge a higher interest rate to ensure that they collect a reasonable amount of money over a shorter period of time. In contrast, if you have a good credit score, lenders would be willing to reduce the interest rate due to your good repayment habits, which thereby translates to a lesser risk. A small decrease in your interest rate can lead to a large sum throughout the home loan, considering the timelines for home loans, which are usually longer. How To Improve Your Credit Score? If you don’t have a good credit score, you can improve your score by following a few practices regularly. Here are 3 tips that can help you boost your credit score. 1. Be Timely With Your Credit Dues Whether your credit card bills or a loan, it is best to repay your dues on time. Late payments can negatively affect your credit score. So, always remember to make your payments on time. 2. Settle Your Late Bills Having unattended dues can hurt your credit score. So, make sure you have a tab of all your pending dues and settle them as soon as possible. 3. Check Your Credit Report In some cases, it could so happen that your credit report has errors. Check your credit reports to ensure that it is error-free. [B-02] Final Thoughts When it comes to the interest rate of a home loan, credit score is an important aspect. A good credit score can help you get a lower interest rate, making your repayments more affordable. Ensure you maintain a good credit score before applying for a home loan.

08-11-2023

Know More

Difference Between Short Term And Long Term Home Loan

Planning to buy a dream home is indeed a big move and perhaps something almost everyone aspires to. But, unless one has a lot of money saved, all you need is the right home loan to fund the purchase. To sanction a home loan, banks and financial institutions take into account certain eligibility criteria such as the financial condition and age of the borrower, loan tenure & amount, and the borrower’s credit score. The recent decline in interest rates, availability of many loan options to choose from and hassle-free home loan processing has made it possible to turn this distant dream of many Indians into a reality. Although there are ample lenders providing housing finance in the market, before applying for a loan, one must carry out detailed research to find the best option that suits one’s need. [B-01] Types of Home Loans Financial institutions and banks usually provide two types of home loans: Short-term Long-term Short-term Home Loan Long-term loans are loans that are repaid over a long duration. The loan period varies from over a year to up to even 30 years. These loans are characterized by high loan amounts and lower interest charges. The key benefits of long-term loans are: The ability to borrow a significant amount Lower interest rates charged on loans Affordable repayment schedules The demerits of these loans are that the borrower makes an overpayment of amounts that could otherwise be saved due to the long repayment tenure. Comparison Table: Short-term Home Loan vs. Long-term Home Loan. [B-02] Summary There is no thumb rule as to which loan is the best – it all depends on what the needs are. Both these home loans (short-term and long-term) have their pros and cons and are meant to serve specific needs. To opt for a short-term or a long-term home loan depends entirely on the borrower’s repayment capacity. When a borrower considers which type of home loan to opt for, the things that matter are: (1) the loan amount required (2) how fast the loan is needed, and (3) the financial strength and ability of the borrower to pay back the loan.

08-11-2023

Tips & Advice

When Should You Take A Business Loan?

A business is not only a medium of livelihood, but it is the result of a businessperson's blood, sweat, and savings. Many things are responsible for the success of a business; however, the most important one is funding. Funds are the basis of everything happening within the company/enterprise. But funds can also be a limiting factor for your business at times and at that point business loans would come to your rescue. A business loan is a one-shot solution to ensure your business faces no issues. Moreover, getting a business loan online at Piramal Finance is the easiest thing to do. Let us take a look at the reasons for which you should take a business loan: For a New BusinessEvery business must take its first step by completing many pre-opening procedures and setting up. Capital is the most important thing to fund all of these, and taking a business loan for this purpose can reduce the burden on the owners. For Business ExpansionIf a business is going well and the owners would like to expand it, a business loan would help a lot. It can be used to finance the production of new products, promotion and marketing, recruitment, etc. For Renovation PurposesIt is absolutely important to keep your office spaces updated at all times to attract more customers. Taking a business loan would be the best idea if you would like to renovate the place and add new and advanced equipment. To Grab New Business OpportunitiesIf there is a business opportunity in the market and you are willing to grab it, then you might need funds. Business loans are there to fund you everywhere and every time. To have the edge over Your CompetitorsToday, when competition is present in every field, staying ahead of your competitors is very important. Digitising your business, installing advanced technology machines, switching to better software, etc., can all be done with the help of a business loan. Key Features of Business Loans at Piramal Finance Here are the following features that will showcase why you should always choose PCHF for a business loan: Wide Range of Collaterals are AcceptedWhen you apply for business loans, you have the option of using collateral. PCHF understands the need for money in business and, therefore, accepts a wide range of collateral or property against a secured business loan. Hassle-Free and Quick ApprovalsUnlike in the past, getting a business loan online has become a relaxed job. PCHF recognises your valuable time and thus follows the rule of quick approval and disbursal without causing you any hassle. Higher Loan AmountsPiramal Finance offers high business loan amounts that can go up to INR 25 lakhs to help cater to the needs of all types of businesses. Personalised SolutionsWith products specially designed for customer benefit, PCHF has a team of dedicated relationship managers who assist loan aspirants at every stage. Low Interest RatesPCHF offers business loans at 12.5% interest for all salaried as well as self-employed personnel. How do you apply for a business loan at Piramal Finance? If you have to apply for a business loan online, there are some easy steps to follow: Visit the online portal of PCHF and read about business loans Once satisfied, click on “Quick Apply” Fill the form with all valid details and submit Wait for a representative to contact you and further assist you with the process [B-02] Conclusion Business loans are a boon for businesses with the required potential but only need a push to go a long way. Piramal Finance provides the best online business loans with a lot of benefits. Moreover, the online application process for a business loan is indeed easy. So, if you or anyone you know plans to apply for a business loan, PCHF is the place to be.

08-11-2023

Know More

Different Types Of Business Loan

What is a business loan? A business loan, in simple terms, is the capital provided by a lender to a business owner. A lender can be a bank or any NBFCs in India and a business owner could be anyone looking to start a new venture or planning to expand their existing business. These loans are available for all kinds of businesses ranging from a self-employed person to a private company. A business loan is also known as a commercial loan and can aid in taking care of the cash flow requirements of your business, growing your existing business, upgrading your machinery, or renovating your place of business. [B-01] Types of Business Loans There are several business loans available in the market which you can avail of based on your business needs. Some of them are listed below. Working Capital LoanAs the name suggests, this type of business loan is required to meet the day-to-day capital requirements of a business. A working capital loan can help with several business-related needs such as maintaining adequate cash flow, purchase of additional inventory, payroll costs, etc. It is a short-term business loan and comes in handy when you need to meet the cash flow requirement which may arise due to the delay between the payables and receivables. Term LoanA term loan can be short-term or long-term. These business loans need to be repaid in a set period of time. The loan amount sanctioned by a lender is usually dependent on the creditworthiness of the borrower’s business. The loan could be secured or unsecured in nature. A term loan repayment duration can range from 12 months to over 10 years depending upon the borrower’s requirement and repayment capability. Letter of CreditA letter of credit is a payment instrument in which a lender provides a guarantee of funds to businesses that deal in international trading. It is primarily used by enterprises that are involved in the import and export of goods overseas. One of the major concerns of doing business overseas is the payment assurance from unknown suppliers. A letter of credit from the lender comes in handy in such situations and provides assurance of payment to the suppliers or exporters before they perform any transactions. Equipment FinancingBuying new machinery or upgrading existing ones can be an expensive affair for businesses involved in manufacturing. Equipment financing is a funding option provided by a lender to upgrade or buy a piece of machinery. Also known as a machinery loan, an equipment financing option helps the borrowers to meet the fund’s requirement of a business arising from the need for new machinery. Merchant Cash AdvanceA merchant cash advance or a point-of-sale loan is a financial solution for SMEs to deal with a liquidity crunch. A cash advance is provided by the lender for which the repayment is done based on daily sales through the card terminal. This type of business loan is usually provided to the borrowers who use the POS terminals for customer payments. How to Get a Business Loan A business loan can be easily availed online through various financial institutions. But before applying for a loan you need to understand the requirements and accordingly figure out the appropriate loan for your business. Whether you’re just starting a business or looking to meet your day-to-day capital requirements or wish to grow your existing business, refer to the types of loans listed above while finalising the business loan you need as per your fund requirements. All you have to do is check with your lender or visit their website and fill out a business loan application form online. If you are eligible for the loan, most financial institutions these days sanction loans within few days and require minimal paperwork. [B-02] Bottom Line Capital is the lifeline of every business and a business loan provides entrepreneurs with easy access to capital. It is crucial to identify the business needs and the nature of credit when deciding the type of business loan you wish to apply for. Business loans are available at flexible EMIs and nominal interest rates. Be it a big or small business, there is a business loan out there that is designed to fulfil your financial needs.

08-11-2023

Know More

Difference Between Secured And Unsecured Loans?

The two most common types of loans people take out are personal and business loans. They are both intended for different purposes, have different borrowing limits, and have other associated terms and conditions, one of the chief ones being secured or unsecured. Let us examine their definitions and critical differences between secured and unsecured loans. What is a Secured Loan? As the name suggests, secured loans are provided by banks and non-banking financial companies (NBFC) instead of some collateral that the borrower needs to put up as security. This collateral can be a new item purchased, with ownership rights in the lender's name, until the amount is repaid, such as a car, house, or shop. In other cases, it could be an existing security owned by the lender. These securities can be shares, stocks, gold, property, etc. Several financial institutions have many such secured business loan products available in their portfolio, such as home equity lines of credit, loans against property, loans against securities, and gold loans. Secured business loans are the most common method of availing business loans. This is because, typically, larger sums need to be borrowed, which requires the lending institution to safeguard its interests by requiring the borrower to put up collateral. These also involved longer repayment terms and competitive interest rates. Be cautious; a secured loan entails that in case of defaulting in payment or reneging from the repayment contract, the lender will have the right to sell off the collateral to compensate for their losses. [B-02] What is an Unsecured Loan? Unlike secured loans, unsecured loans do not require collateral or security on the borrower's part. From a lender's perspective, these loans are riskier regarding repayment and the credit risk of defaulting. Unsecured business and other unsecured loans come with higher interest rates and shorter repayment tenures to offset this risk. The borrowing limits are also lower, as lenders wish to lend large amounts only after receiving security in return as assurance. However, it is different from lenders unquestioningly providing unsecured loans. Certain factors come into play during the borrowers' financial assessment, such as the credit score, risk profile, past track record, payment history, current income, existing debts, etc. The borrowing limit, interest rate, and repayment tenure are locked based on a combination of these factors. Some typical examples of commonly occurring unsecured loans are credit cards, personal loans, and student loans. In Summation To summarize what we have discussed above, the critical difference between an unsecured and a secured loan is the requirement of collateral for securing the loan. In the case of secured loans, some sort of tangible collateral needs to be temporarily owned by the lender. This is why most business loans are secured loans. Due to the assurance with the lender, collateral allows for higher borrowing limits, better rates, and longer repayment terms. In case of non-repayment, the lender has the right to liquidate the security or collateral and balance the originally lent amount. Business loans may also be taken as secured loans, but the amount might be low and the interest rate high. Overall, there are better options than this. On the other hand, personal loans are frequently unsecured and offered based on the borrower's credit rating and financial history. Due to the reasons above, secured loans are easier to obtain and offer more benefits to the borrower; however, this largely depends on your individual needs and requirements. It also depends on your ability and willingness to put up collateral in return for the loan. In the case of smaller amounts intended for personal use, unsecured loans might be more apt. Visit your preferred lender's website to compare the terms and rates before deciding.

08-11-2023

Tips & Advice

Why Is Early Payment Crucial For Recovering Small Businesses?

Covid pandemic has spared none in the world! The strict curfew laws and lockdown regulations turned everyone’s lives around. However, one sector that was badly affected was the MSME sector. It was reported in a recent survey that more than three-fourths of the country’s small businesses had an adverse effect after the first lockdown was imposed. In addition, most of the small businessmen, majorly manufacturers, blamed the lack of finances for disrupting their supply. Funds and supply solely depend on each other to efficiently manage the supply chain system. However, the cruel pandemic has drained all the cash flows from the markets and troubled sellers and buyers. Small businesses would need working capital to recover from the losses, which can be availed through invoice discounts and supply chain financing. These are similar to small business loans but have lower repayment periods than the latter. Supply chain finance is a set of tech-based financing solutions in which a third-party financer clears the seller's invoices on behalf of the buyers. This helps the seller have enough working capital and also gives the buyers time to clear their payments. This financing solution has benefits and no losses for both parties and thus, it is an effective way to recover from a debt trap. There are enormous benefits of having an early payment made as of course, you have those extra bucks to spend on your business in a much better way. The importance of early payments can be better understood through the following points: Helps the brand grow: A company with insufficient funds struggles to keep its position intact in the market. However, with the early payments made, enough working capital can be availed by the small businesses that can further help them improve their management and look for better opportunities. Let us see how: The funds can be used towards market research to expand the business and improve the product for its potential audiences. The money can be invested in the company’s human resources department to appoint the best talent. Offering employees better perks and job security will ultimately improve the business. High-level marketing techniques can take the product to a different level and increase its sales if invested. It can improve the quality of products and services, enhancing the brand’s goodwill. Strengthens relationships: Like a chain reaction, all business entities are interdependent on payments and supplies. However, difficult times often create unprecedented situations wherein you might not be able to pay your suppliers, stakeholders, or lenders on time, ultimately leading to trust issues. With enough working capital, you can keep your relationships strong with your suppliers by paying them on time. This may come in handy in the future, where if you need a favour, your good impression will get you one! Help keep your employees loyal: Employees are the valuable assets of any small or big company, and what’s better than a loyal workforce? Sharing your profits with your workforce is the best thing you can do to make your employees loyal to your company. Paying them timely, introducing special bonus programs, and hosting award ceremonies and seminars will motivate them and make them choose you. You can do all of these when you have sufficient funds. Helps with collateral-free business loans: Often, loan providers ask for collateral to provide a secured business loan that smaller business people with fewer assets cannot afford. Supply chain finance offers unsecured business loans to companies at competitive rates. Therefore, any legal business entity can easily apply for a small business loan. [B-02] Conclusion The pandemic hit small businesses that are still struggling to recover, but this is easily possible with early payments. Working capital is the crucial element of any company that controls all its day-to-day activities. Supply chain finance offers credit facilities and keeps the supply chain management moving.

08-11-2023

How To?

A Complete Guide To Real Estate Financing

Today in India, a lot of people are still unaware of the perks of real estate investment. Using real estate as an investment strategy has a lot of potential. Amongst investors, it continues to be a popular strategy to grow wealth. But for beginners looking to get into real estate financing, learning a little about the different aspects can be helpful. There are different options for real estate financing. They have their pros and cons that everyone should know about. So, read on to learn more about real estate financing and its importance. [B-01] What is real estate financing? Real estate financing involves several methods used by investors to secure funds for their forthcoming deals. Investors usually secure their capital from an outside source to buy and renovate a property. Real estate investment options A common misconception about real estate investing is that you need a lot of initial money to get going. However, that is not true. Buying real estate isn’t an inexpensive affair. The truth is that there are many different financing options available to fund your investment. As an investor, the method you choose to fund your investment will determine the financial outcome. There are different financing options available. Though all these real estate financing options are equally created, they give different outcomes for everyone. Here are some of the possible financing options available in India. Conventional bank loansConventional bank loans are one of the most preferred real estate financing options amongst investors. Banks offer a certain amount of loan to the borrower, and it needs to be repaid in EMIs. The bank usually offers about 60 to 90% of the total valuation of the property as the principal amount. The rest of the money has to be paid as down payment.The biggest advantage of conventional loans is that they have a long repayment tenure of 20 to 25 years. So, you can pay monthly EMIs for a long period of time. Over this period of time, the value of the property keeps increasing. Thus, the borrower ends up incurring gains. These bank loans also have low interest rates and minimal processing fees. Mortgage loansWhile a conventional bank loan is not secured by a collateral, mortgage loans are. Instead of paying for a property with cash, real estate investors can apply for a mortgage. They can use the mortgage to obtain funds from the bank and use it to purchase the property. The mortgage will act as a security in case the borrower fails to pay back the loan. There are different types of mortgages and you can inquire with your bank about the details. Hard money loanHard money loans are ideal for investors who don’t have a good enough credit score to borrow from a bank. These are loans given out by private lenders for a short period of time. One of the biggest advantages of these loans is that they are solely backed by the value of the property. Hence, in a way, you are not personally liable for loan repayment.In case you want to secure long-term financing but need emergency cash, hard money loans can be useful to get immediate funding. Real Estate Investment Trusts (REITs)REITs are companies that allow investors to invest in big, income-producing real estate. Investors can invest in REITs by buying shares via a broker. REITs operate and own real estate across a range of sectors. They are publicly traded on the stock exchange. The individual investors have potential to gain from the dividends. Thus, REITs are a way of real estate investing without actually having to buy a property yourself. OtherOther than banks, mutual funds and REITs, investors can also arrange capital through credit unions, finance companies, pension funds etc. [B-02] Importance of real estate financing Here are some reasons why you should consider real estate financing. Prime real estate will never lose its demand. Thus, it is a much safer investment option compared to some other volatile options. According to experts, the real estate industry is currently booming. With profits doubling every year, this is the perfect time to invest in real estate

08-11-2023

Tips & Advice

Personal Loan Vs Business Loan Which Is Better

What is a Personal Loan? A personal loan in simple language is an easy to obtain all-purpose loan. Unlike a business loan, a personal loan has flexible end-use and is not restricted to business-related expenses only. It is an unsecured loan that can be used for a variety of reasons without any collateral provided as security against it. Whether it is a medical emergency, a long vacation, a wedding, or funds needed for a business, a personal loan can help you with the required capital to deal with these unexpected as well as planned expenses. A personal loan is an instant approval loan that requires minimal documentation and can be availed by an individual to meet personal and business needs. [B-01] What is a Business Loan? A business loan or a commercial loan can be secured or unsecured in nature. The loan amount sanctioned under a business loan can only be used for business-related expenses. A business loan funds various aspects of business such as expanding your existing business, addressing the cash flow issues, buying or upgrading machinery, or renovating your place of business. Several business loans are available in the market and can aid in fulfilling the capital requirements of a business owner. Personal Loan Vs Business Loan Loan Approval ProcessA loan approval process for a personal loan is much easier and quicker as compared to a business loan. If you are a business applying for a personal loan, you need to ensure an adequate debt-to-income ratio. If you are an individual with a good credit score and a steady flow of income, a personal loan can be approved and disbursed within a day.However, the business loan application and review process can be time-consuming as you may have to furnish a lot of documentation to the lender. In the case of a business loan, the primary focus is on the business instead of the individual applying for the loan. If you have just started your business you might find it a bit difficult to get a business loan. So when it comes to the loan approval process, the personal loan has an upper hand because of the ease with which one can get it. Interest RateA personal loan as the name suggests is primarily designed to meet your fund requirements arising from personal needs such as a medical emergency, home renovation, wedding, etc. Since there is no mortgage as collateral with the lender for a personal loan, the interest rates are higher as compared to a business loan. A personal loan for a business might not be an ideal choice because the higher interest rates can impact the business’ cash flow. Hence, if the purpose of the loan is to meet the business expenses, it is prudent to prefer a business loan over a personal loan. Tax BenefitsInterest paid for a business loan is tax-deductible in India as per the Income Tax Act of 1961. There is no tax exemption or tax deduction for a personal loan. Funds UsageA personal loan is a multipurpose loan without any restriction from a lender on the usage of the loan amount. However, a business loan is strictly limited to cater the business expenses. For a business loan, a borrower has to substantiate the reasons before the loan approval as to how and where they intend to use the loan capital. Loan TenureA personal loan is a short-term loan where the loan is offered for a maximum of 5 years by the lender. On the other hand, a business loan can be both short-term and long-term depending upon the fund requirements and repayment capability of the borrower. [B-02] Bottom Line At the end of the day, choosing between a personal loan and a business loan is dependent on the requirement of the borrower. If the motive is to meet the business expenses then a business loan with its benefits of lower interest rate, higher loan amount, and tax benefits makes more sense. But if you are in urgent need of capital to meet your fund requirements that go beyond business expenses, a personal loan with an easy application process and instant approval would be a good option for you.

08-11-2023