Wednesday, 12 December 2018

How flexi EMI option is suitable for your business

As we know that loans are another way of bucking up the financial requirements and these days like ancient times, business loans are still what majority of the businesses look upto! There will hardly be any business that has never seen the loan structure. Now, as we know that the loans have the repayment schedules where the principal amount is to be returned along with the interest rate that has been charged with may be the processing fees that would have been charged for the loan that is borrowed. The EMIs that are to be repaid usually are in the fixed scheme when the borrower has to repay a fixed amount of the part every month!

Considering a few of the personal loan like ICICI personal loan and the flexi EMI option that they offer, these can be a suitable option for any of the business. After looking at the different types of flexi (Flexible) EMI (Equated Monthly Instalments) we would discover how is this option suitable for the business.

There are 3 types of flexi EMI options.

• Step Up Flexi EMI Options
• Step Down Flexi EMI Option
• Bullet Flexi EMI option
Step Up Flexi EMI Options
In this arrangement, the EMI for repayment is on the increasing side. In the initial years the EMI that is to be paid is lesser and as and when the time passes by, the EMI structure increases. With the usual logic, in any business the initial years are crucial and can be difficult in few cases to pay the heavy EMIs initially, so this scheme allows the borrower to stay at ease in the start and then when the business grows, the EMI structure demands more amount to be paid and hence the whole scheme!

Step Down Flexi EMI Options
This arrangement is exactly opposite to the one mentioned above. Here, the initial years will have major amount to be paid and eventually the EMI amount decreases. The loans mostly have higher interest rates initially and then it decreases with over the period of time. So, when the major chunk of the borrowed amount is paid initially, it is best that in the end, all the amount that is left will have a smaller amount of interest to be paid in order to save you money while the business and already flourished!

Bullet Flexi EMI Option
In this option, when the EMI scheduled year ends, the borrower can pay a lump sum amount from the profit that the business has made in order to reduce the burden and that may sometimes lessen the tenure of the loan too! Also, unlike other loans where if the amount is repaid at an early stage than the actual tenure there may be prepayment charges that would be applicable. But herein, that will not be an option. As there is already an arrangement that if the business is doing well and the borrower can pay the amount at the end of each year making this a squeezed option for the business.

Now the question arises is, why Flexible Equated Monthly Instalment and not fixed? When it comes to the salaried individual where the incomes are fixed, fixed EMI options work well. The profit margins or we can say the turnover varies when it comes to business. So, a flexible option may help it better for the borrower to get to explore various options. Different business will behave differently in the quarter and the yearly finance. It then becomes the borrower's responsibility to check various permutations and combinations and analyze which will be best suited.
Also, when it comes to checking the credit score, the Low CIBIL Score may change the decision of the lender on how he/she/it wants the flexi EMI structure to be!

Thursday, 6 December 2018

7 financial lessons to learn for new year

New year come up with immense joy and happiness and zeal and also some responsibilities.. As mentioned, fun, joy, zeal, lights, crackers, sweets and so much of more fin. These are all the essentials of any households that are celebrating this new year. Let us today look at the 7 financial lessons to learn in year end.

1. Plan
It is always advisable the plan the things and not just randomly jumping off to them. When talking about finances and financial planning and the festive season, the first thing to do is plan the finances. From spending to saving to investing, all, if planned, would get a wonderful perspective to the whole financial planning thing. Planning the finances is one of the steps growing towards a secured future.
2. Repay on time
Shopping may lead you to various lucrative offers and you splurge more than usual in this time. May it be online shopping or going to mall and buying, utensils to clothes, home decor to gadgets, what not is bought. And you may buy some with cash and some with credit cards. Some also on EMI. But make sure that, any credits that you have taken are repaid on time!
3. Spend carefully
As mentioned in the earlier point, various offers may seem interesting and you may buy many things. But just before the final payment, may it be at malls or while hitting that payment button while shopping online, check what you have purchased, and think if this was really required? You may definitely find a few items which you can drop from the list! And you will be surprised to see the amount must have saved by not buying things which were particularly not essential at this point in time.
4. Invest
Investments are must! Everyone should take a pledge to invest every festive season and enjoy its returns in the next one! This will motivate to invest more. It is no compulsion that one should save 20% of their earnings or 30%. But saving and investing a little or by stretching a little extra is always beneficial. Investments may be difficult at that given point of time but the returns are the sweet fruits of them and they make so many things easy at those moments!
5. Prepare for emergency
With the spending and planning and investing, one must always be ready with an emergency. There is no certainty or anything and especially life! One may fall sick or ill, there can be any medical emergency for which the funds are required. With the investments too, there should be some amount that should be invested in such a manner that it could be liquidized instantly if required.

6. Cleanliness
With the normal cleanliness of the house , the finance and other things related to them should also be cleaned. The investment portfolio should be cleaned and checked upon. The credit score that is also required to be checked. In fact, RBI has passed a rule that one Free CIBIL report is to provide to each individual each year that will get the Free CIBIL Score that will get you the knowledge of the score one has!
7. Spread Happiness
Of course, the most important factor in any year is to spread happiness! The essential rule of any planning is to be happy and spread happiness even when it comes to finances!

Friday, 30 November 2018

9 Money Mantras to Learn from Indian Festivals

In this blog, we elaborate on 9 money mantras that Festivals teaches us:
1. Time to get rid of bad debt
Diwali is the celebration of good triumphing over evil. Thus, it can be a reminder for you to remove bad debt from your life as well which is common with home loans and other big-ticket loans in which the borrowers who default, eventually decide to settle the loan which adds bad debt on their credit report. So, if your report has bad debt too, you must get it removed asap.
2. Sometimes, sacrifice is important for the greater good
During Navaratri-Dussera, people fast and give up on their favorite foods to learn self-discipline and receive the blessings of goddess Durga. In the same way, you should develop the quality of financial discipline in yourself. It can go a long way in creating a stress-free financial future for you.
3. You have to pay for your financial mistakes
In the battle of goddess Durga and demon Mahishasura, he paid the price for all the wrong he did and met his death. The lesson here is that you can’t run away from your mistakes and have to pay the price eventually. So, if you have bad personal finance habits such as ignoring your free CIBIL score, procrastinating credit card payments, etc. then your credit will suffer and if a day comes when you need a loan, then you may face rejections everywhere.
4. Learning financial self-discipline can go a long way
The Navratri festival has a lot to do with self-discipline too. You have to ensure that you are on your best behavior throughout the festival and avoid indulging in bad practices such as consumption of alcohol, non-vegetarian food. By applying this kind of self-discipline in money management, you can control your funds a lot better and reap the benefits in the future.
5. It’s never too late to take control
Navratri falls after the second quarter of the financial year which ends in September. So, you still have half of the financial year left, which is enough time to get things right. For instance, if you are troubled by a poor credit rating, then you can check your free CIBIL score and go over your report to identify the problems. If there are discrepancies in your personal information, repayment history, etc. then you can contact your bank to have these corrected. Similarly, you can also prepare for filing the ITR. by finding all the bills and receipts that you may need when you file the tax return.
6. Be fearless, and you shall be victorious
Are you worried about pending payments, huge loan EMIs, rising expenses, etc.? Don’t be. This is because worrying doesn’t solve problems, but if you are unafraid, then you can think straight and tackle your problems confidently.
7. Learn to multitask
The eight hands of goddess Durga represent the present-day concept of “multi-tasking”. So, if you want to keep your credit record clean, then you must learn how to manage all your finances such as home loans, credit card bills, insurance premiums, income, expenses, etc.
8. Adapt to different situations to solve problems
Durga Maa has 9 avatars each of which has different qualities and characteristics, and they all have a dedicated day in Navratri (hence the 9 days of the festival). In the same way, if you can adapt to different situations, you can live an easier and comfortable life.
For instance, when you are short on cash, you can assume the role of a responsible spender and save money. Similarly, when you are dealing with a number of expenses and bills, etc. then you can become a top organizer and get on top of your finances to protect your CIBIL score.
9. You have all the power and strength you need within you
Durga Maa eliminated Mahishasura herself without anyone’s help. In the same way, you too can defeat your financial enemies yourself if you believe in yourself.

Friday, 16 November 2018

Factors that don’t impact your credit score

We do understand that credit score is an important factor to whoever is stepping into the financial world. A good credit score can help you many ways you cannot imagine. There used to be a time where cibil score was only used to check if you are loan worthy or not, but nowadays there are many other factors which are influenced with a good credit score. Factors like your next job, your next rent, etc. these days credit score has more to it than just gauging if you can avail a loan or a financial product.
Not many of us have the habit of checking our credit score from time to time just to have an idea on how we stand in terms of credit worthiness. There are instances where you unknowingly default your loan and that hampers your cibil score. Similarly, there are many other factors which can hamper your credit score. Once the cibil score is down, you find new ways to get your score up and you do each and every thing in your power to get your score up! But does that help? There are many factors which won’t make any difference to your score.
Today we will sight you such points where your cibil score does not get impacted,
If you check your own credit
There are two types of inquiries, hard and soft. Hard inquiries are made by the lenders and banks whenever you are trying to get a loan or a financial product. These inquiries stay on your report for a very long time and get your score down. On the other hand, if you are doing a routine check on your cibil score, it is taken as a soft inquiry and your score does not get affected. You can check your cibil score twice a year.
Your income
No matter how much you earn, it does not get reflected on your credit report and at the same time it does not impact your cibil score. Through your income, the bank or the lender can only check if they can provide you a loan and how much would be the loan amount.
Your education
Just like your income and gains, education also does not play any role when it comes to score appraisals. Even if you have studied MBA from a top B-School in the country, it won’t make any difference.
Insurance payments
Insurance payments are just like any other payments we make and sometimes we forget to make the premium payment, what happens then? Nothing! Maximum what happens is you get your insurance expired. Failure to pay the insurance premium on time will not hamper your cibil score. On the other hand, if you happen to default a credit cards payment will get your credit score down.

Paying someone else’s bills
If you think paying someone else’s credit bills will get you into CIBIL’s good books, you are absolutely wrong. Paying other’s bills won’t make any difference as you paying someone else’s bill will get their score up not yours.
Getting Married
If you are in the perception where you think getting married to someone with a bad score will hamper your score as well, then you are wrong. Every individual has different financial identity and their scores are also different. You can be rest assured of your score being safe even if your spouse’s report is bad.
There are many other small factors which will not make any difference, but this practice of adhering simple things can lead to financial integrity and can help you in long run.

Friday, 2 November 2018

What you should do if you are not eligible for a credit card due to credit score?

Credit cards are no longer just a nice to have financial tool. They have almost become a necessity for every household because of the convenience they provide in making purchases. Before issuing a credit card, the card company verifies the credentials and makes sure that you are a credit worthy individual.
There are several reasons why a card company may deny issuing you a credit card. Here are some reasons and suggestions as to what you can do in each of these cases.
  1. Your credit score is below their set benchmark limit- Most financial institutions have set a benchmark credit score that the applicant must have in order to get approved for a credit card. If you haven’t paid down your loan EMIs on time or if you have maxed out your existing cred card limits then you pose a risk to the card issuer, that you may not be serious about repaying their credit card outstanding balances as well. If you have previously defaulted on loans or if you have taken too much debt then you will have a low credit score and affect your eligibility for a credit card.

Work on improving your credit score. Check your CIBIL report to analyse your current credit situation. Identify areas that need improvement. Negative entries like collection accounts, public judgements make it harder to get approved for good credit card offers. Clear your past due accounts. Make payments of the outstanding balances on the existing cards and ensure that you do not use more than 30% of the available credit limit. If you charge too many expenses on your credit card then consider making payments twice a month. This way you can keep the credit utilization levels low. Too many enquiries also hurt your score. Do not apply for too many cards at the same time in order to avoid portraying a credit hungry behaviour.

Inaccuracies in CIBIL report are also fairly common today. They may also be a reason for your low credit score. Review your report carefully and file a dispute in case you find any inconsistencies. Once the errors get corrected your CIBIL score will improve gradually.

  1. Your income is too low- Credit card companies always analyse the repayment capacity of an individual before fixing a credit limit. They usually require you to have a minimum income of Rs 1 to 1.5 lakh per annum. That is why you are required to submit salary slips, bank statements and income tax returns to prove your income level. If it does not fall within the minimum range then your application will most likely be rejected.

Read the eligibility conditions before applying for a card. If your income is less, try to look for other financial institutions where your income falls within the minimum income range.

  1. You do not have any past credit record- A card company may reject your application if you do not have any past experience in handling credit. In the absence of any past credit history, the card issuer does not have any way to validate whether you are a reliable individual. In such situations you will not be eligible for low interest or reward credit cards.
  2. Consider applying for a secured credit card - There are many banks that give you a credit card against a fixed deposit. The credit limit is usually a percentage of the deposit amount. Apply for a secured credit card and use it responsibly to display good credit behaviour. Once you build a good credit history using a secured card you will become eligible for a regular credit card.

  1. Incomplete application- If you haven’t filled in all the necessary details in the form, or if you haven’t furnished all the necessary documents that were essential with the application, then you risk being denied.

Make sure that you fill in all the required details in the application. Make sure that the documents are in order.

It is recommended that you wait for at least three months before you reapply for a credit card after an initial rejection. Make sure you are clear with the eligibility requirements of age, employment, income and credit score as far as possible. Work on the suggestions mentioned above depending on the reason for rejection, and your next credit card application will surely be approved.

Thursday, 27 September 2018

Learn How Loan Settlement affect Your Credit Score

In today’s financial situation in India, every individual is associated to one loan or the other. You have different loan options which can satisfy your different needs and wants and because of this ease, you can avail a loan at any given time. Does your responsibility gets over once you opt for a loan? No, you will have to make all your payments on time, make sure you do not have any skipped payments which would affect your credit report.
Even if you are up to the mark when it comes to financial adherence, due to some unfortunate incidents you tend to skip a few payments. In such cases the lenders give you time to make payments with the penalties associated to them and life comes back to normal. On the other hand, if you are in severe problem and are not able to make the payment for a longer duration the bank will declare your account as a non performing account. A non-performing account is really bad in the loan market and it can severely damage your credit score.
You made the necessary attempts to make payments on time, but still you are not able to meet loan expectations of the creditors. What would you do? You throw the towel and call for a loan settlement. What is a loan settlement? Is it the best option when it comes to loan commitments? How do I go about it? If you are sailing in the same boat as the above situation, you have come to the right place.
What is a debt settlement?
If you cannot pay your debt in full, you can contact your lender and give them a counter offer to pay a lump sum amount to settle the loan once for all. For example, if you owe the bank one lakh rupees, after understanding your financial situation you can offer them a lower amount that can be around seventy thousand rupees and ask them to close the account. The lender before closing on the deal will check if the deal is feasible to them and can agree for a settlement on the sole discretion of the lender. If they do not find the deal to be up to the mark, they may deny the settlement offer. In some cases its vice versa, where the creditors will give you offers to settle the loan and you can play the negotiation game with them.
But, if you settle on an amount and the loan account is closed, is it over yet? Absolutely not! You are going to face, what is called the worst nightmare in financial market after you go for a settlement.
How does a settlement affect my credit score?
As we all know, all your financial transactions are recorded at the credit bureaus and hence you have a credit score. A credit score is an interpretation of how you’re doing financially to your future loan lenders. A good credit score can get you loan in merely seconds like Axis bank personal loans and a bad credit score can cause you a lot of problems. The creditors send report to the bureaus on the financial transactions every month, even the minute details are recorded on the same like late payments, advance payments, etc.
When you settle your debt, the transaction is recorded as settled towards the loan account and the same stays on the report for a very long time. This will create a negative impression on the future lenders, if you are planning to take a loan in the future. In most of the cases, if you have a settlement record on your report, you will be denied any financial product without hesitation and the bank may not want to know the reason why the account was settled.
When you take a loan, make sure you make all your payments on time. If accidently you miss on a few payments, make sure to clear your debts with penalties and never go for loan settlement. A loan settlement can look tempting, but it can keep haunting you in financial market for the rest of your life.

Friday, 21 September 2018

5 Benefits of Checking your Free Credit Report Every Year

Do you know that a while back RBI made it mandatory for all credit rating agencies to provide a free credit report once a year to all clients who ask for it? If you do not already know this, then we suggest you go through the discussion below understand the implications of this. Well if you do know about this that then hopefully you have made use of this facility and if you haven’t then this discussion is essential for you too!
Getting a Credit Report is Now Free…….
We come to first things first, as we said earlier you can get a free credit report from the credit rating agency once a year. There are four credit rating agencies which means if you want you can get four credit reports in a year if you want without paying anything. Often the cost of getting a report deterred people from accessing it but now this hurdle has been done away with. So even if don’t get four reports in a year at least make sure you get one report in a year.
Benefits of Getting a Credit Report:
  1. You Can Get a Loan Whenever Required:
Loans can help you fulfill your dreams or they can provide financial aid in times of need. If you have a good credit rating then getting a loan is not difficult and the borrower has more choice and also more bargaining power. Often when you apply for a loan you may not have enough time to try and improve a low CIBIL score before you apply for a loan. This may cause you to miss out on an opportunity or you may not be able to get money in time to deal with a crisis. Checking your report ensures that you are not faced with such a situation.
  1. Helps You In Efficient Personal Finance Management:
Your credit report gives you a comprehensive picture of your debt, how much you owe, what is the time frame for repayment and so on. This aids in better financial management, you can plan your future income inflows and outflows to match your liabilities timeline. Doing this annually will help you manage your debt and overall finances better.
  1. You Can Spot and Rectify Errors:
There may be times when your report may have some errors in your report which may cause not only your score to dip but can also result in other complications. This could be due to erroneous reporting of a missed or delayed payment, including a loan which is not yours in your report and so on. When you get your report you can spot them and then take appropriate action. There might be times when you can also spot your own mistakes that may be causing you to have a poor rating. An open loan for which you have paid all dues could be due to the fact that a NOC has not been taken for it. Going through your CIR can help you resolve if there any such issues.
  1. Prevents From Being a Victim of Identity Theft:
Identity theft is a scary possibility in today’s world. Apart from being careful about your documents and where you submit them, credit reports can also help you deal with this problem. If your documents have been misused for getting a loan approved fraudulently, a look at your CIR will let you detect this and then deal with it before it’s too late, you can report to the concerned organizations and take legal help also if required.
  1. Can Be Helpful When Looking for a Job Change.
Increasingly organizations are asking for credit reports of applicants as part of back ground check. This is done so that they hire the right kind of people who have shown responsibility and integrity in their treatment of debt. This also ensures that they do not acquire any undue liability because of any employee who is debt ridden or has defaulted on his loans or credit cards. This trend is very common in more credit driven economies but is catching up in India too. So being sure that you are credit healthy can help you in your next job change.
So make use of the facility of getting a free credit report and remain credit healthy always.