4 points to consider while taking a personal loan against property

The amount of loan against property right now is valued at Rs.2.5 trillion, and that amount is on its way to becoming Rs.5 trillion by 2019, with a 22% projected growth in the next 4 years.

If you’re planning on taking one of these, here’s four things you should know:

1. Interest rates and tenures.

loan against property are secured loans. This means you have to mortgage your property with the lender in order to get one, thus considerably reducing the risk level of the bank or NBFC that’s giving it to you. A reduced risk means lower interest rates, of between 9% – 15%, depending on a lot of factors including your current employer, income, CIBIL score and market value of the property pledged. You can have tenures as low as 5 years and up to even 30 years depending on your earning potential, loan amount required, stability and patience.

2. Loan amount.
   

   Apply for Loan against Property

Banks and NBFCs typically only give you between 50% – 65% of the market value of your property as a loan. Lenders consider your repaying capacity as the difference between your income and current EMIs, and decide how much you can pay back on a monthly basis after interest and in the tenure you choose. Loans can be sanctioned from Rs.2,00,000 to a few crores depending on your ability to repay and the tenure you want.

Lenders take a sizeable chunk under what’s called a “one-time processing charge” which can range from 0.50% to 5% (in addition to a 14% Service Tax) and can be entirely avoided depending on your negotiating and offer-leveraging skills. Processing charges are sometimes deducted from your sanctioned loan amount. Another common charge is the “prepayment” charge, which is levied if you wish to clear off your loan before the tenure ends. There are also charges in the form of penalties which will be charged if you don’t make payments on time or default on your loan, which vary between lenders but are generally in the range of around 3% – 8%. These penalties hurt you in multiple ways, as they will also negatively impact your CIBIL score. Stamp duties and other charges are levied as per state laws.

4. Documents required.

When applying for a personal loan against property, you’ll need the following documents:

• Photo proof of identity.
• Proof of residence.
• Proof of income through salary slips (for the last 6 months) or bank statements.
• Form 16.
• Income tax returns.
• Profit and loss account statement (for self-employed persons).

Taking a loan against your property is as dangerous as taking any other kind of loan. If you miss payments and become a defaulter, the bank will take your property and levy crippling charges and penalties on you.

Choose wisely, and ensure you have a regular income and sufficient funds to repay your loan EMIs as and when they become due. Shop around, better deals are around the corner. Try the eligibility calculator and personal loan comparison tool on BankBazaar.com to find the best deal for you.

What is the ideal situation to use personal loan to finance your business?

Though the businessmen can take business loans, they seem to be quite tricky. It is okay for the businessman to use a personal loan to fund his business as it is simple and easy to avail. But, as a businessman must only consider taking a personal loan in the following situations:

• When you are yet to start a business:

When business is in the ideation stage, it is difficult for a person to obtain business loans. Lenders prefer to offer loans to a business that is functioning and performing and not to just an idea. Though your business idea has a lot of potential and innovative, the lenders only provide loans to those business that have a track record. Therefore, if you have to fund your business at the ideation stage, you must consider taking a personal loan online.

• When you don’t have a collateral or a guarantor to offer to the bank:

When the banks or lenders offer you a business loan, they require a collateral or a guarantor. If your company is young or if you are in a service sector, then there may be no collateral for you to offer to the lender. Banks require you to have a guarantor who is creditworthy and if you are unable to provide one then the banks will most likely refuse the loan application. It is best that you apply for a personal loan in such cases.

• When you need a lesser loan amount:

If the loan that you require is really substantial it is best that you take a personal loan. Business loans work best for a large amount of the loan and also the procedure to avail the loan is longer. Personal loan is hassle free and you can avail it with minimum documentation. If the amount that you require is small, then you can repay it within a smaller timeframe as well.

• When you don’t want to reveal the purpose of taking the loan:

When you are applying for the business loan, you are required to present the utilization plan for the money. If the bank considers the plan to be sketchy, then he will reject the loan application. When you are applying for a personal loan, the bank is not concerned about how you are utilising the loan. You will not have to have a concrete business plan either.

Though it is easy to get a personal loan, there are times that you must consider to take a business loan. The situations to take a business loans are:

• If you qualify under Credit Guarantee Scheme:

If you are a micro or a small scale enterprise and you qualify for Credit Guarantee Scheme, then you can opt for the business loan. Under the scheme, you get collateral free loans for up to Rs.1 crore. You can use the money as credit card to meet the working capital requirement or as term loans to purchase commercial assets or to expand your business.

• If your business has a good credit rating:

If your business is up and running and has been a part of the institutional finance channel, then there is a good chance that your business has a good credit rating. And it is quite easy for you to avail a business loan. Business loans carry lesser interest rates when compared to personal loans and they are given for a longer tenure. If your business has its accounts maintained with a particular bank, then approaching the bank for the loan is a lot easy.

• If you already have personal loans:

Personal loan is provided to a person based on their personal credit rating, and if you have other existing loans and unpaid credit card dues it becomes difficult for you to avail another personal loan. If your personal debt to income ratio is high, it is advisable for you to take a business loan.

How an One Time Settlement of loan can affect your credit score?

You might have taken a personal loan, a car loan or a housing loan to meet various needs of life, however unfortunately some event like job loss or illness happens and you are unable to make regular repayments. The loan goes bad, interest and principal accumulates and the bank, after sending you repeated reminders even initiate recovery proceedings against you.  But before that, the bank, as an act of leniency, may decide to offer you a One Time Settlement (OTS) by paying a certain sum. Most borrowers jump at the One Time Settlement (OTS) thinking that this is a golden chance to settle the loan at reduced costs of repayment. Hence they may avail OTS by borrowing from friends and relatives to escape the mounting interest and the staggering bulk of the accumulating loan. But little do they know that the ‘’Settled” Personal loan in bank accounts will affect them in another way reflect adversely on their CIBIL score.

How the One Time Settlement works?

When a borrower defaults on a loan for six months or more and the bank has tried hard to make him pay but unable to do so, it might offer the borrower an One Time Settlement. Often the bank considers a genuine reason, such as job loss, crop loss or loss of any other source of income, a prolonged illness, death of the borrower and so on. Basically the bank takes into account how much has been repaid, what is the outstanding and agree to settle it at the one time payment of a lesser sum. In essence, this is a loss for the bank. But it offers a reprieve to the borrower in the form of relief from recovery agents and legal proceedings and they usually accept the offer in both hands. But they may not know the OTS may go against them on the CIBIL score.

Check your Credit Score to Apply for personal loan

How the CIBIL score is affected? After the bank receives the OTS amount from the borrower, it marks the loan as “Settled” in its books. But it reports the same to CIBIL. While the transaction between the bank and borrower might have come to a close, CIBIL takes a negative note of it. CIBIL regards settled loans as negative credit behavior, and as a result the borrower’s credit score can take a hit of 75-100 basis points because of this. What’s more this negative score remains on the records for seven years and is accessible to all lenders who run checks on borrower antecedents on the CIBIL database. In effect, this could mean banks will perceive you as a “risky’’ borrower and could refuse you loans for next few years.

How to improve the Credit Score?

Hence the borrowers must realize that settling a Personal loan must be the last recourse and should be opted for if there is no other option of garnering money to pay back the loan. Once they make the OTS payment, they must check the credit score and focus all their efforts in paying back the other loans. They must also be more responsible in their credit behavior over the next 12-24 months if they wish to see any improvement in the credit score. Hence the borrowers must be aware about the long term ill-effects about settling a loan and know that it could stem flow of credit in future to a large extent.

SBI Loan against Shares

State Bank of India, the apex bank of the country offers loans against shares which is a comparatively limited domain. The best part about these loans is that these can be taken in times of urgent personal need when you do not know which financial investment to fall back on. Your equities can get you a loan of up to Rs.20 lacs to enable you to meet all urgent monetary needs.

SBI Loan against Shares

Loan against shares is granted only for personal needs and is not granted for any of the following –

• Investments of inter-corporate nature
• Speculative purposes
• Controlling interest in one company or more

Eligibility: Loan against shares is sanctioned only for the existing customers of State Bank of India and is based on customer’s prior relationship with the bank as well as on bank’s discretion. Also, for availing this loan customers should have a DEMAT account with SBI Cap Sec.

This loan can only be availed on a single name and is offered as a demand loan.

Features of SBI loan against shares:

• Maximum loan amount is Rs.20 lacs. This amount cannot exceed Rs.10 lacs if the loan is being taken for subscribing to IPOs. Minimum loan amount that can be availed against stocks is Rs.500
• Repayment period is 30 months in which the loan should be paid through a suitable DP program
• This is a demand loan and is sanctioned only when customer has his/her DEMAT account with SBI
• A margin amount equivalent to 50% of the prevailing market prices of your stocks is to be submitted to the bank
• Security is submitted in the form of stocks against which this loan is sanctioned
• SBI does not charge a processing fee for sanctioning this loan
• Currently, the rate of interest charged on these loans is 16.35% p.a.

What is loan against shares?

With rising consumer spends on loans and increasing costs of loans, new ways of acquiring credit are emerging. Loans against shares is one such new way of generating cash. This option is increasingly becoming popular among borrowing customers as well as lending institutions.

Banks usually specify the list of companies against which they are ready to offer loans. The sanctioning of loan and the corresponding loan amount depend upon the credit history of the borrower as well as the valuation of his/her shares. Sanction of this loan is also majorly dependent upon the relationship of customer with the bank. Usually loan amount is 50-70% of the value of shares that are pledged with the bank.

Advantages of loan against shares:

• A unique way to generate cash in times of need. Instant liquidity is an advantageous feature of these loans
• Interest is charged only on the amount that is actually utilized by the borrower and not on the whole loan amount
• Interest is charged only for the span of time in which the loan amount is utilized
• Some banks offer loans against physical stocks as well. Dematerialized shares are preferred by all banks

While loan against shares sounds like an extremely quick and convenient way of obtaining . If you would like to get a Personal Loan from SBI

 

Benefits of Using Home Loan EMI Calculator

Why do you need a Home Loan?

A home loan enables you to fulfill your dream of buying your own home. Owning a house may be the topmost priority for many of us, if you are planning to settle down permanently in a new city. Buying a home provides a sense of accomplishment and security, not only to you, but also to your entire family. Also, a home loan helps you get exemption from your income tax. As per Section 24(b) of the Income Tax Act, 1961, you can get deduction up to Rs. 1.5 Lakh towards the total interest payable on your home loan.

How to pay off your Home Loan?

You can pay off your home loan with the help of monthly EMIs.  A home loan requires a huge investment on your part as you need to pay for down payment and the monthly EMIs. So, it is logical to opt for a home loan which you can repay over a definite period of time without getting affected by it. Therefore, it is important to know your monthly EMIs before investing in your home, so that you will not face any financial setback in the coming years of your life.

What is an EMI?

EMIs or equated monthly installments refer to the fixed amount of money that you as a borrower need to return to a particular bank in every month on a specific date as repayment for your home loan. It is a systematic way of paying off your home loan to the bank. By using EMI Calculator, you can calculate and pay off the interest as well as the principal amount of your home loan.

What is a Home Loan EMI Calculator?

Loan EMI Calculator

A home loan EMI calculator is an electronic means of calculating the EMIs for your home loan. You need to fill four important details in the calculator to get the exact amount of your monthly EMIs for your home loan. These details include your principal loan amount, the tenure of the loan, rate of interest and processing fee. Also, you need to be aware of the method of computation which can be either at monthly reducing balance or annual reducing balance or daily reducing balance. You can calculate your EMIs by using the mathematical formula, or an excel, or the EMI calculators offered by various banks and financial organizations.

Benefits of Using Home Loan EMI Calculator:

It is always important to know your monthly EMIs before applying for a home loan.  You can do this by simply using a home loan EMI calculator which will provide you the accurate amount of your monthly EMIs.  Also, knowing your monthly EMIs reduces your financial confusions and helps you streamline your budget. You can also think for your other financial goals. Many EMI calculators help you get your loan amortization table which provides you the exact details of how much you have paid and how much amount is outstanding.

EMI Calculations – Possibilities of Making Mistakes

When looking for a personal loan, the first thing to check is the Equated Monthly Installment (EMI) that you have to pay every month. Depending on the amount you have borrowed or are planning to borrow, you can make EMI calculations to come up with the best match of tenure, interest rate and processing fee that you are comfortable with.

A personal loan EMI calculator is a very handy tool if you know how to use it. You should also try to understand the underlying principles of its working so that your EMI calculations are air-tight and are devoid of any errors.

Some of the common mistakes people make when using an EMI calculator for personal loan calculations are:

• Not understanding the results

The EMI amounts that come up when you make relevant calculations through a personal loan EMI calculator are indicative of the actual values.

Out of the four major personal loan divisions – amount, tenure, rate and fees – the interest rates and processing fee values that you find on the internet are indicative values and not absolute values. The rate of interest varies from applicant-to-applicant depending on their income, credit history etc. As such, there is a good probability of the final EMI value varying significantly from your calculations.

• Not understanding the nature of  interest rates

As described earlier, interest rates are highly dynamic figures. Do not assume the interest rate to be constant when entering different values of amount and tenure, as more amount may attract different interest rate as defined by the bank at an earlier time. This can in turn result in you holding a personal loan that you can’t possibly repay.

• Entering unrealistic loan tenures

Personal loan tenures generally range from 12 months to 60 months. When entering a loan tenure, you should consider the unexpected nature of the future. You may change jobs, or you may have landed an amazing opportunity overseas – a previously unpaid loan at such important junctions of your life may adversely impact future decisions. You may be interested in buying a new home or a car, but it will be almost impossible to do so without paying previous personal loan dues.

A way to get out of old loans is by paying a lump sum to clear all dues, after a specified amount of time has passed. Pre-payment or foreclosure is allowed in most of the personal loans provided by banks in India. But to opt for pre-payment, you will have to pay an additional charge to the bank, which is again a bad option.

If you can minimize mistakes in calculating personal loan EMI using EMI calculator, you will have a better view of your situation and can avoid contingencies.

A personal loan EMI calculator is still the perfect tool in your hand when approaching a bank for personal loan. Some banks in India still use pen-and-paper based calculation methods to find EMI values, which may be prone to human mistakes. To ensure that you are not paying over what you are entitled to pay, it is advisable to make your own calculations before applying for the personal loan.

Recap on HDFC Personal Loan Interest Rates for the year of 2014

HDFC Personal Loans are the most preferred in the market for its speedy one minute approval, special offers for HDFC account holders, special offers for women customers, simple documentation and instant online approval as well.

Advantages of HDFC personal loan

• One minute loan approval for any in principal personal loan

• Attractive offers for women customers and even first time applicants

• Also get accident cover along with critical illness

• Loan transfer with just 299 rupees flat fee and just 12.99 percent interest rate

HDFC Personal Loan for Women

You can get up to 3 lacs of HDFC personal loan that too on a pre-approved basis. Any one aged from 21 to 60 years of age and with a total experience of 2 years and at least one year with current employer is eligible with a take home salary of just 12,000.

HDFC personal loan interest rates

HDFC Personal Loan interest Rates

For Salaried applicants

• At a rack interest rate of 15.75 percent to 20 percent

Processing charges

From a minimum of just 1,000 rupees to a limit of 25,000 at 2.5 percent

Early closure Charges

• No early payment or closure allowed until first 12 months of loan tenure

• 4 percent of the balance loan amount in case of 13 months to 2 years

• 3 percent of the balance loan amount in case of 25 months to 3 years

• 2 percent of the balance loan amount in case of more than 3 years

Other Charges

• Penalty charges of 24 percent p.a. from the date of loan non-payment

• No charges for changing from fixed to floating interest rate or vice-versa

• 200 rupees for the loan amortization chart with the monthly interest and premium details

• 500 rupees in case of cheque swapping

• No charges for credit assessment

• As per state tax laws stamp duty and other charges applicable

• No charges for loan cancellation but interest must be paid from the date of loan amount is disbursed till the date of cancellation

• 550 rupees penalty for cheque bounce

• 50 rupees for credit information report

• Also included are service tax, government tax and other fees or charges as and when applicable at the prevailing time

Other Features and Benefits

• Get loans without much hassle

• You do not need any guarantor or security or any collateral

• Get a maximum of 15 lacs loan amount

• Door step service

Do net get irked by the high interest rates and the numerous charges of the HDFC Personal Loan. On the positive side, HDFC personal loans are one of the fastest and easiest to avail. The best part is if you are an existing customer and have a good credit score you can surely negotiate a good rate of interest and get speedy loan approval.

Only thing to keep in mind is to make sure you have a proper, systematic and methodical way of paying a personal loan or you are availing the loan surely for an important purpose. On the other side if you are curious to know about the high interest rates and charges, the reason is that this is an un-secured loan and the bank is taking the risk of giving you the loan assuming that you would repay.

DCB Personal Loan Benefits and Options

DCB Personal Loan is specifically targeted towards making dreams take a real shape for its customers and nowhere else you would find so many loan options under the banner, each designed to make cash acquirement easy and quick for the borrowers.

One can apply for a personal loan online on Bankbazaar.com in simple steps and repay the same in easy EMIs.

Income Vantage, Express Vantage, Transfer Vantage and Proxy Vantage are the 4 personal loan choices that the bank has to offer its customers. Loan amounts ranging from INR 50,000 to 10, 00,000 are available, with flexible repayment tenures extending over 1 year (minimum) to 5 years (maximum).

DCB Personal Loan Benefits

• Personal loans from  DCB, first and foremost, are created to make the customers realise that they have a reliable advantage at hand to fulfil their dreams; thus the suffix ‘vantage’ is attached to every option.
• The rate of interest charged for every loan option remains fixed through the loan tenure and is quite affordable in comparison to many others in the market.
• Repayment of the loan can be done through equated and easy monthly instalments.
• For salaried employees who are taking a personal loan, the option to add a co-borrower is available, which can extend your borrowing capacity.
• The loan processing charge is moderate – 2.50% of the sanctioned amount.

DCB Personal Loan Options

Income Vantage

As the name implies, just presenting your income proof, i.e. your salary slip can entitle you to this genre of personal loan.

Express Vantage

This is a loan formulated especially for salaried employees of certain preferred companies, and for corporate employees too.

Transfer Vantage

Getting a personal loan to settle credit card dues is not uncommonly seen in the finance world. DCB Personal Loan also provides you with this special facility under the Transfer Vantage hood whereby you can relocate your card balance like a loan and pay it back through EMIs.

Proxy Vantage

This is a made-to-order loan where presenting your income papers is not a mandate if certain conditions are satisfied.

How to apply for a Citibank personal loan online?

Most of the times when we are applying for a personal loan it invariably means that we are in dire need of money. Therefore in such times, I am not sure how many of us would have the patience to go about all the formalities. Off course money is of topmost priority but in the urgency to avail the loan we should be careful enough to avoid any pitfalls that could only worsen our situation.

As they say, you cannot be an expert in everything, similarly you need not worry about the procedure of applying for a Citibank personal loan online. On the positive there are a lot of tele callers and third parties who help you apply for a personal loan. However you must be careful that most of them are either under severe selling pressure and are just interested in meeting their sales targets. In the process they can short change or even cheat you by enrolling in fraudulent schemes.

Keeping in the mind the shortage of money, time and resources, I would suggest you to go for the site called bankbazaar.com. Unlike other sites who sell only a few handful of policies or a particular company’s loan products, BankBazaar does not promote any particular loan type or a company.

The process is very simple and in case of entering any wrong details you need not worry. The website has a good customer service and they call you back almost within 24 hours and makes sure you get all the support.

One of the important things while applying for a personal loan is that banks require a whole lot of documents and complete information about your finances. BankBazaar ensures that your personal application is filled correctly and they also enquire about your other loans or liabilities. This means you get a first-hand screening of your personal application and that too without any embarrassment. Simply, because banks do not have the time to look into personal loan application and in most cases they are rejected because of incomplete information or in appropriate application.

By going through BankBazaar for your Citibank personal loan, you already know the exact loan you will get, all the forms are duly filed and in most cases the loan is instantly approved if applied through BankBazaar.

Since banks have already made a tie up with the BankBazaar, as a part of their mutual agreement BankBazaar processes the application with all the formalities. This is the reason for the speedy approval of your loan.

Now, you must be wondering whether all these services cost you? Absolutely NO. BankBazaar does not charge for anything. All of their services are completely free of cost and you need not worry about them short changing or selling you the wrong product. Simply because they do not promote one single loan product or a particular company.

The user experience of the site is exceptionally good to say the least and you can go through the entire process in a matter of minutes. Last but not the least, unlike a typical personal loan application, you need not take off from your work or wait for the bank to open. With bankbazaar you can apply for a citibank personal loan online anytime of the day and they have 24/7 customer service.

Effectively using the ICIC Personal Loan EMI Calculator

Loans extend financial freedom to many who are contemplating making an investment. While repayment of these loans can mean big commitment, splitting the payment into workable EMI installments is the best way to go about the payment of the loan. That said, knowing how much you have to pay each month will help you better prepare your finances and coordinate other purchases to make way for such essential payments.

ICICI bank which is the leading bank for offering personal loans in India makes it easy for borrowers to understand the scope of such a payment by giving them access to an ICICI Personal Loan EMI calculator. The EMI calculator is a handy tool that lets the borrower get in touch with information that is important in deciding whether or not to go ahead with a certain loan offer.

The EMI calculator is also a personalized tool as the components of the calculator can be used to modify inputs and get information.

In essence, an ICICI Personal Loan EMI calculator which can be accessed through the website of bank is a loan planning system that can help an individual get an understanding of whether or not he can afford a loan or a mortgage. It is also a budgeting device that lets the borrower account for the loan expenses to assist him in preparing his finances accordingly.

Now, that you know what ICICI personal loan EMI calculator is and what its purpose is, let us move on to understand the workings. In other words, let us discuss about the steps involved to use the calculator.

Now, that you know what ICICI personal loan EMI calculator is and what its purpose is, let us move on to understand the workings. In other words, let us discuss about the steps involved to use the calculator.

Step 1:

Get to the ‘Personal Loan’ page on the ICICI bank main website. The link to the EMI calculator can be accessed here by using the drop down list.

Step 2:

Once you follow this link and open the page, you will have the opportunity to input the loan amount, interest rate, and the term of the loan into the given spaces.

After you have entered the information, the calculator will proceed to calculate the EMI payment on your behalf and also, the total interest payable.

The graph adjacent to the table will give you an idea as to how the loan will balance out with time and the selected payment tenure.

Step 3:

If you are comfortable with the information you get in terms of the willingness to take on the commitment, you can move to the top right hand corner of the page and click on the ‘Apply Now’ tab.

Getting this information beforehand will help you manage other financial commitments better. This will also give you a fair idea of how you can manage the payment and, if you are in a position to apply for the loan.

The best part about using the ICICI personal loan EMI calculator is that you can always go back to alter the inputs and work out the loan repayments. Doing this will help you get a good grasp of the loan amount you can get that you will be able to honour when the time for repayment comes.