Personal loans are handy when you are in a spot and need some urgent cash. However, personal loan are tricky and you need to know as much as possible about their basics before applying for one.
Before you choose your personal loan:
Calculate the inexpensive loan offer: Personal loans come with very high interest rates ranging from 14% to 24%. Compare personal loan interest rates and get the complete picture by understanding the annualized interest rates for each offer.
Then figure out the total amount of repayment you need to shell out with all the offers before opting for the loan of your choice.
Processing fee et al: You need to keep in mind the processing fee and other fees that will be levied when you apply for your personal loan.
Prepayment penalty check: Ask upfront if there would be any penalty payments for prepayment of the loan at any point in time. More often than not loan consumers tend to pay up their loans earlier than planned to be rid of debt. Hence, its important to know if your personal loan offer allows part prepayments.
If that is the case, then you should be aware from what time frame in the loan period you can start prepaying and understand the cost you incur due to such prepayments in part or full.
EMI and tenure: Evaluate all loan offers. The first condition for loan offer selection is the total money outflow that the loan will cost. The second factor is the EMI. A loan offer with a lower EMI and a longer tenure may seem attractive, as it could be easy on your purse strings, however not all such loans prove to be cost effective in the long run.
Hence, first calculate the total loan cost and then try to opt for a higher EMI, which you can comfortably manage to enable shorter loan tenure.
Tuesday, November 16, 2010
Tuesday, September 28, 2010
Mumbai banks plan to stay loan rates unaffected
Many banks in Mumbai are reconsidering their plans to hike home loan rates next month because of the upcoming holiday season, which will increase the demand for those loans.
This comes after the decision last week by the Reserve Bank of India to change policy rates. The banks said that they will potentially increase their lending rates next month when a review of the base rate is done.
Indian festivals such as Dessehra and Diwali in the next two months are expected to create a big demand for home, car, and personal loans because of the belief that this period is an auspicious time to acquire things.
“Banks may not hike home loan rates immediately since sales are expected to pick up soon after the Pitr Paksha is over,” said Oriental Bank of Commerce CMD Ty Prabhu.
The Hindu festival of Pitr Paksha is considered an inauspicious time to invest so loan rates may remain unchanged at this time.
This comes after the decision last week by the Reserve Bank of India to change policy rates. The banks said that they will potentially increase their lending rates next month when a review of the base rate is done.
Indian festivals such as Dessehra and Diwali in the next two months are expected to create a big demand for home, car, and personal loans because of the belief that this period is an auspicious time to acquire things.
“Banks may not hike home loan rates immediately since sales are expected to pick up soon after the Pitr Paksha is over,” said Oriental Bank of Commerce CMD Ty Prabhu.
The Hindu festival of Pitr Paksha is considered an inauspicious time to invest so loan rates may remain unchanged at this time.
Tuesday, June 8, 2010
How to find the Lowest Personal Loan Rates
Two people creation the same income, walk into the same bank, wanting the same amount for personal loans. While they both get the loans they were seeking, one gets a much better interest rate and thus gets a much superior deal.
Why Do Some People Get Better Rates Than Others?
First, there is no law saying how much of an interest rate a bank can charge. This means the bank can decide how much and at what interest rate they are willing to offer a personal loans. In most cases, the better rates and the better terms go to those with the better credit score.
How to Improve Your Credit Score
Since your credit score does more than determine the interest rates on personal loans, it is important to do everything you can to keep that score high. People use your credit score to determine job eligibility, insurance premiums, interest rates, availability of personal loans, and so much more. Here are some things you can do to either raise your score or keep it high.
Pay Hospital Bills – Many people are unaware that as long as you pay part of your bill you are ok. Therefore, every month pay something on all your medical bills.
Only have 1 or 2 Credit Cards – Revolving credit is a tricky thing. On the one hand, you need some revolving credit to get a credit score. However, too many credit cards or too many request for credit cards can lower your score.
Keep Balances Low - Paying off your credit cards each month is ideal. If you must roll over a balance, then pay it off as soon as possible. You need to keep a low debt to income ratio.
Pay off Bad Debt - Many people believe that once a debt goes bad, there is nothing you can do. However, paying off charge offs and slow pays will still be better than nothing.
Negotiate Large Debt – Even after a debt has gone to collections or been written off, you can call and try to negotiate a smaller fee. You may be surprised to find the creditor is willing to settle for pennies on the dollar.
The best thing you can do about your credit score is to watch it. Take advantage of the free yearly credit card report to keep the right information on and faulty credit information off.
Why Do Some People Get Better Rates Than Others?
First, there is no law saying how much of an interest rate a bank can charge. This means the bank can decide how much and at what interest rate they are willing to offer a personal loans. In most cases, the better rates and the better terms go to those with the better credit score.
How to Improve Your Credit Score
Since your credit score does more than determine the interest rates on personal loans, it is important to do everything you can to keep that score high. People use your credit score to determine job eligibility, insurance premiums, interest rates, availability of personal loans, and so much more. Here are some things you can do to either raise your score or keep it high.
Pay Hospital Bills – Many people are unaware that as long as you pay part of your bill you are ok. Therefore, every month pay something on all your medical bills.
Only have 1 or 2 Credit Cards – Revolving credit is a tricky thing. On the one hand, you need some revolving credit to get a credit score. However, too many credit cards or too many request for credit cards can lower your score.
Keep Balances Low - Paying off your credit cards each month is ideal. If you must roll over a balance, then pay it off as soon as possible. You need to keep a low debt to income ratio.
Pay off Bad Debt - Many people believe that once a debt goes bad, there is nothing you can do. However, paying off charge offs and slow pays will still be better than nothing.
Negotiate Large Debt – Even after a debt has gone to collections or been written off, you can call and try to negotiate a smaller fee. You may be surprised to find the creditor is willing to settle for pennies on the dollar.
The best thing you can do about your credit score is to watch it. Take advantage of the free yearly credit card report to keep the right information on and faulty credit information off.
Tuesday, May 25, 2010
Gold loan: A more precious debt option
If you have gold jewellery to offer as collateral for personal loan, procedural hassles are minimal and banks don't check your credit score.
The amount of documentation and the excessive verifications before your personal loan gets processed can be a nightmare.
Here is where your jewels can lend a hand, specifically gold.
With the current interest rate fluctuations, opting for a jewel loan as against a personal loan is more lucrative. Not only are your overall costs reduced, this will save a lot of your time.
The Credit Information Bureau (India) Ltd Score which reflect an individual's credit history are beginning to play an important role in acquiring personal loans. However, a jewel loan requires no such score.
While the requisite documents for a jewel loan differ across lenders, most normally require no more than a proof of income or address.
The clincher: the interest rates between a jewel loan and a personal loan can differ by as much as 5-8 per cent for the same amount loaned.
Some lenders charge a nominal fee for processing and others a small fee as closing charges. Co-operative banks require you to be a member, charges for which, again, can be as low as Rs 5.
Jewel loans can be availed of at co-operative banks, public sector banks, private sector banks and other private lenders. Some banks, however, offer it only in certain regions, the only disadvantage.
While private lenders process the loan in less than a couple of hours, some co-operative and public sector banks may take up to a day to issue the loan.
In any case, the time is much less than the minimum three days of processing time for a personal loan. Loan to value, or the maximum ratio of a loan's size to the value of the asset, for a jewel loan is on par with that of a personal loan.
The Reserve Bank of India has no strict policy on jewel loans.
In late 2007, the RBI had issued a notification which permitted bullet repayment (a lump sum payment of the principal at maturity) of gold loans.
Subject to specific guidelines from the apex bank, each bank may fix its rate for gold, reflecting the market price at that point of time.
Care should be exercised if you have defaulted on a loan earlier, be it personal or any other. Your jewels might not be returned at the end of the loan tenure if you approach the same branch.
Approaching another branch or bank in this case would be one solution, as they would not have any record of your default history.
A State Bank of India official, however, cautioned that some time in the near future, they would start looking at Cibil scores before approving a jewel loan.
The loan tenure is not uniform across banks. With private lenders like HDFC Bank and some co-operative banks, the tenure is annual.
Non-banking financial companies like Mannapuram Finance have one-month tenure. But, an advantage with monthly renewals is that the loan value also increases every month with the appreciation of gold.
At SBI, the individual must repay some amount of the principal along with the interest every month, as non-repayment for a continuous period of three months will render the loan a non-performing asset.
Considering the advantage a jewel loan offers in terms of a rent-free locker, a little bit of juggling can even help you save renting a locker for your jewels! (Obtain a fixed deposit on the loan, which should work out lesser than the rent charged on lockers.)
Of course, it makes more sense to opt for a jewel loan from a public sector bank or a co-op bank, as some private lenders have had a history of shutting down and not returning the gold.
The amount of documentation and the excessive verifications before your personal loan gets processed can be a nightmare.
Here is where your jewels can lend a hand, specifically gold.
With the current interest rate fluctuations, opting for a jewel loan as against a personal loan is more lucrative. Not only are your overall costs reduced, this will save a lot of your time.
The Credit Information Bureau (India) Ltd Score which reflect an individual's credit history are beginning to play an important role in acquiring personal loans. However, a jewel loan requires no such score.
While the requisite documents for a jewel loan differ across lenders, most normally require no more than a proof of income or address.
The clincher: the interest rates between a jewel loan and a personal loan can differ by as much as 5-8 per cent for the same amount loaned.
Some lenders charge a nominal fee for processing and others a small fee as closing charges. Co-operative banks require you to be a member, charges for which, again, can be as low as Rs 5.
Jewel loans can be availed of at co-operative banks, public sector banks, private sector banks and other private lenders. Some banks, however, offer it only in certain regions, the only disadvantage.
While private lenders process the loan in less than a couple of hours, some co-operative and public sector banks may take up to a day to issue the loan.
In any case, the time is much less than the minimum three days of processing time for a personal loan. Loan to value, or the maximum ratio of a loan's size to the value of the asset, for a jewel loan is on par with that of a personal loan.
The Reserve Bank of India has no strict policy on jewel loans.
In late 2007, the RBI had issued a notification which permitted bullet repayment (a lump sum payment of the principal at maturity) of gold loans.
Subject to specific guidelines from the apex bank, each bank may fix its rate for gold, reflecting the market price at that point of time.
Care should be exercised if you have defaulted on a loan earlier, be it personal or any other. Your jewels might not be returned at the end of the loan tenure if you approach the same branch.
Approaching another branch or bank in this case would be one solution, as they would not have any record of your default history.
A State Bank of India official, however, cautioned that some time in the near future, they would start looking at Cibil scores before approving a jewel loan.
The loan tenure is not uniform across banks. With private lenders like HDFC Bank and some co-operative banks, the tenure is annual.
Non-banking financial companies like Mannapuram Finance have one-month tenure. But, an advantage with monthly renewals is that the loan value also increases every month with the appreciation of gold.
At SBI, the individual must repay some amount of the principal along with the interest every month, as non-repayment for a continuous period of three months will render the loan a non-performing asset.
Considering the advantage a jewel loan offers in terms of a rent-free locker, a little bit of juggling can even help you save renting a locker for your jewels! (Obtain a fixed deposit on the loan, which should work out lesser than the rent charged on lockers.)
Of course, it makes more sense to opt for a jewel loan from a public sector bank or a co-op bank, as some private lenders have had a history of shutting down and not returning the gold.
Wednesday, April 28, 2010
Personal loan and loans of personal use
Personal loans are loans supposing by financial institutions without objects or security. Personal loans are unsecured loans for personal needs and can be used for any purpose. In India, personal loans are normally at the level of life are to manage, weddings, business graduation losses and investments in opposite monetary arrangements. These personal loans are really gentle and encounter all your needs. The volume of the personal loan of Rs 50 000 can Vary – R. 20 lacs and the generation of the amends of the loan varies personal 1-5 years.
In India, high-interest in isolation loans since the bank takes a incomparable series of risks, by personal loans without security. In India, personal loans from banks such as SBI, ICICI, HDFC and monetary institutions like Reliance etc. This supposing banks / monetary institutions rest on personal loans for people with seductiveness rates of in between 16-25%.
You can request for loans and might not benefit from these personal loans immediately. It is not required to the unchanging use of borrowed money divulge I. e for the role of borrowing for home loans. The banks are endangered that if the borrower does not pay off the loan with seductiveness before the due date or not, and they reliable by a review of income, practice or business and other factors of the borrower.
The support process is in the personal loan fast cumulative loans in more aged to others. Personal loan and other charges on credit by the lender, the stroke on the overall cost of personal loans and contingency as a more aged with the banks. You can additionally request online to the information accessible on personal loans. The particular websites of assorted banks and finance associated websites for other applicable information to guide the people for a personal loan.
In India, high-interest in isolation loans since the bank takes a incomparable series of risks, by personal loans without security. In India, personal loans from banks such as SBI, ICICI, HDFC and monetary institutions like Reliance etc. This supposing banks / monetary institutions rest on personal loans for people with seductiveness rates of in between 16-25%.
You can request for loans and might not benefit from these personal loans immediately. It is not required to the unchanging use of borrowed money divulge I. e for the role of borrowing for home loans. The banks are endangered that if the borrower does not pay off the loan with seductiveness before the due date or not, and they reliable by a review of income, practice or business and other factors of the borrower.
The support process is in the personal loan fast cumulative loans in more aged to others. Personal loan and other charges on credit by the lender, the stroke on the overall cost of personal loans and contingency as a more aged with the banks. You can additionally request online to the information accessible on personal loans. The particular websites of assorted banks and finance associated websites for other applicable information to guide the people for a personal loan.
Saturday, April 24, 2010
personal loan disbursals down to 4.7%
Growth in personal loans was muted in 2009-10, data from by the Reserve Bank of India’s (RBI) macroeconomic report shows. However, education loan and home loans have not as fared as badly as the rest of the personal loan constituents.
Personal loans grew 4.7% annually as on February 26, 2010, as against a 6.6% growth a year ago. Loans to education sector grew by 31.2% (33.8%) annually while housing loans grew by 8.3% (6.4%).
The Macroeconomic and Monetary Developments in 2009-10 report, is a background to the annual monetary policy statement for 2010-11 that will be announced today.
“Low home loan (teaser) rates helped the growth in disbursements,” said Hatim Brochwala, banking analyst, Khandwala Securities. During the recovery from the global economic downturn, the housing loan segment witnessed a tide of teaser home loan schemes from banks which offered low fixed interest rates in the first few years and floating rates thereafter.
Most of these schemes have been discontinued but some have been revised with changes in interest rates and tenure.
“Teaser rates may not stay for more than 2-3 months as interest rates are going up. So the growth in home loans may come down slightly,” said Brochwala.
Growth in educational loans can also be attributed to higher demand. “During the downturn, many people went for further studies for which they had taken bank loans,” said M Narendra, executive director, Bank of India. “Now that the economy is recovering they can effectively use their higher qualifications pursued during the time of recession,” he said.
“The government has been emphasising on education loans, which is reflected in its guidelines stating that an educational loan can only be rejected by the highest authority. So almost all educational loans applied for are sanctioned,” said C S Jain, head (personal banking), IDBI Bank. Moreover, loans of up to Rs 4 lakh do not need a security, according to RBI guidelines.
The personal loans segment also includes advances against fixed deposits, credit cards and consumer durables.
The credit card segment took a hit due to heightened caution on the unsecured loans front by banks post recession. Issuances were restricted to individuals holding salaried accounts or having multiple relations (fixed deposits account, insurance etc.) with the bank in some cases. This segment declined by 28.3% annually.
Personal loans grew 4.7% annually as on February 26, 2010, as against a 6.6% growth a year ago. Loans to education sector grew by 31.2% (33.8%) annually while housing loans grew by 8.3% (6.4%).
The Macroeconomic and Monetary Developments in 2009-10 report, is a background to the annual monetary policy statement for 2010-11 that will be announced today.
“Low home loan (teaser) rates helped the growth in disbursements,” said Hatim Brochwala, banking analyst, Khandwala Securities. During the recovery from the global economic downturn, the housing loan segment witnessed a tide of teaser home loan schemes from banks which offered low fixed interest rates in the first few years and floating rates thereafter.
Most of these schemes have been discontinued but some have been revised with changes in interest rates and tenure.
“Teaser rates may not stay for more than 2-3 months as interest rates are going up. So the growth in home loans may come down slightly,” said Brochwala.
Growth in educational loans can also be attributed to higher demand. “During the downturn, many people went for further studies for which they had taken bank loans,” said M Narendra, executive director, Bank of India. “Now that the economy is recovering they can effectively use their higher qualifications pursued during the time of recession,” he said.
“The government has been emphasising on education loans, which is reflected in its guidelines stating that an educational loan can only be rejected by the highest authority. So almost all educational loans applied for are sanctioned,” said C S Jain, head (personal banking), IDBI Bank. Moreover, loans of up to Rs 4 lakh do not need a security, according to RBI guidelines.
The personal loans segment also includes advances against fixed deposits, credit cards and consumer durables.
The credit card segment took a hit due to heightened caution on the unsecured loans front by banks post recession. Issuances were restricted to individuals holding salaried accounts or having multiple relations (fixed deposits account, insurance etc.) with the bank in some cases. This segment declined by 28.3% annually.
Friday, April 23, 2010
HSBC to rebuild retail loans book
HSBC Bank Plans to focus on credit cards and home loans this year.
After booking losses on its consumer banking business for three straight years, Hong Kong and Shanghai Banking Corporation (HSBC) looks to rebuild its retail loan book in 2010, aided by an improving credit environment.
The UK-based bank, the third-largest foreign lender in India by assets, plans to focus on credit cards and home loans, where lending was virtually at a standstill till the second half of 2009.
The bank is now disbursing home loans worth Rs 100-150 crore every month. “Our focus for 2010 is to expand our mortgages business profitably,” said Rajneesh Bahl, country head, personal financial services.
In 2009, the lender cut exposure to mortgages in India by 20 per cent to Rs 4,061 crore from Rs 5,115.2 crore at the end of 2008 to keep a lid on losses.
“There is no doubt the economy is looking up again and customer confidence is on the rise. As the market picks up, so does the demand for affordable housing; we believe the overall pie will get only bigger, which could result in an increased market share for all players,” Bahl said.
After months, the bank is expanding its credit card portfolio. And as a sign of growing confidence in the market, HSBC has started sourcing credit cards from the open market this week onwards, according to bank sources. During the consolidation phase, the bank will only service specific requests for credit cards and not solicit customers.
“We never stopped open-market sourcing. For some time now, we have opted to grow selectively. We continue to offer cards to customers with a good profile and track record,” said Bahl.
In a departure from its earlier policy, the bank introduced co-branded credit cards last year. “Earlier, our thinking was that the HSBC credit card brand is strong and we should not dilute its value by co-branding. However, seeing the success of co-branded credit cards, we decided to introduce our own cards,” said a senior executive at the bank.
Among foreign banks, HSBC was one of the hardest hit by the downturn, reporting a loss of $219 million (about Rs 1,007 crore) on its consumer banking portfolio in 2009.
Standard Chartered Bank, the second largest foreign lender in the country by assets, reported an operating profit of Rs 248.4 crore from its consumer banking division in 2009.
Citigroup’s non-banking finance company, Citi Financial, reported a loss of Rs 729 crore for the year ended March 31, 2009.
HSBC saw stress on its consumer banking book even before the onset of the economic downturn in India. It reported a retail banking loss of $70 million in 2007. The loss widened to $155 million and $219 million in 2008 and 2009, respectively.
In 2009, loan impairment charges on consumer banking at the global level rose 9 per cent to $649 million, mainly due to rising delinquencies in unsecured consumer lending businesses in India and Indonesia.
“The delinquencies in India began to moderate in the second half of 2009 as measures implemented by HSBC in the second half of 2008 to mitigate loan losses, including ceasing consumer finance loan origination and tightening lending criteria on other unsecured lending products, began to take effect,” HSBC had said in its 2009 Annual Report.
After booking losses on its consumer banking business for three straight years, Hong Kong and Shanghai Banking Corporation (HSBC) looks to rebuild its retail loan book in 2010, aided by an improving credit environment.
The UK-based bank, the third-largest foreign lender in India by assets, plans to focus on credit cards and home loans, where lending was virtually at a standstill till the second half of 2009.
The bank is now disbursing home loans worth Rs 100-150 crore every month. “Our focus for 2010 is to expand our mortgages business profitably,” said Rajneesh Bahl, country head, personal financial services.
In 2009, the lender cut exposure to mortgages in India by 20 per cent to Rs 4,061 crore from Rs 5,115.2 crore at the end of 2008 to keep a lid on losses.
“There is no doubt the economy is looking up again and customer confidence is on the rise. As the market picks up, so does the demand for affordable housing; we believe the overall pie will get only bigger, which could result in an increased market share for all players,” Bahl said.
After months, the bank is expanding its credit card portfolio. And as a sign of growing confidence in the market, HSBC has started sourcing credit cards from the open market this week onwards, according to bank sources. During the consolidation phase, the bank will only service specific requests for credit cards and not solicit customers.
“We never stopped open-market sourcing. For some time now, we have opted to grow selectively. We continue to offer cards to customers with a good profile and track record,” said Bahl.
In a departure from its earlier policy, the bank introduced co-branded credit cards last year. “Earlier, our thinking was that the HSBC credit card brand is strong and we should not dilute its value by co-branding. However, seeing the success of co-branded credit cards, we decided to introduce our own cards,” said a senior executive at the bank.
Among foreign banks, HSBC was one of the hardest hit by the downturn, reporting a loss of $219 million (about Rs 1,007 crore) on its consumer banking portfolio in 2009.
Standard Chartered Bank, the second largest foreign lender in the country by assets, reported an operating profit of Rs 248.4 crore from its consumer banking division in 2009.
Citigroup’s non-banking finance company, Citi Financial, reported a loss of Rs 729 crore for the year ended March 31, 2009.
HSBC saw stress on its consumer banking book even before the onset of the economic downturn in India. It reported a retail banking loss of $70 million in 2007. The loss widened to $155 million and $219 million in 2008 and 2009, respectively.
In 2009, loan impairment charges on consumer banking at the global level rose 9 per cent to $649 million, mainly due to rising delinquencies in unsecured consumer lending businesses in India and Indonesia.
“The delinquencies in India began to moderate in the second half of 2009 as measures implemented by HSBC in the second half of 2008 to mitigate loan losses, including ceasing consumer finance loan origination and tightening lending criteria on other unsecured lending products, began to take effect,” HSBC had said in its 2009 Annual Report.
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