13 Jun, 2012 By:
Whether purchasing a vehicle, investing in a house or stuck in a financial crunch, borrowing money from a financial institution is the best means of getting the required funds. As easy it may sound, borrowing funds calls for plenty of efforts. A person has to chart out a plan for his borrowing needs and implement it wisely so as to escape any trouble later on.
Of all the stress one has to go through for getting a loan, finding a competent lender tops the list. Therefore, one should be very careful as choosing the right lender will not only eliminate the chances of any probable glitches, but will also help reduce the expenses of his undertaking.
First and foremost, the borrower should look around which means consulting everyone who has an experience of getting loans. This may include family members, friends, colleagues, kins and even neighbors. One can ask them about their lenders and how their experiences were working with those lenders. One can make a list of all the lenders suggested by people and note down their pros and cons as well.
Prodigious information about loans and lenders can be conveniently found over the Internet. So,one can spend a few good hours online searching for competent lenders. One can also search as per the list made after consulting people he knows. This will help him zero down his search and save plenty of time which can further be used to compare different lenders. While one is at it, he can search for competitive offers available online in order to nail a lot better deal.
Once he has narrowed the list down to minimum five lenders, he can call up the customer service of each one and inquire about interest rates, loan tenure, application fee and other costs. He must ensure that he is asking the same questions to each lender. It's important because he will have the same information to make comparison easier. In case he asks different questions to each lender, he will be, let's say, comparing the guavas, apples, grapes, pomegranates and pears. While with the exact details at hand, he will be comparing guavas to guavas.
One more thing to consider here is that the information gathering part should not take more than two to three days because if one takes longer, the market will probably fluctuate, resulting in different answers from each lender. During this digging into various lending institutions phase, one should also ask the institutions' representatives to explain the different types of loans. One should express his financial requirements and ask the representative to spell out the kind of loan that would best suit his situation.
13 Jun, 2012 By:
Like everything else, cost of education is also on the rise. Getting higher education has become so difficult that students are left with no other choice than getting educational loans. Such loans are specially designed for students who want a part of their education (in India or abroad) to be funded by a financial institution on various terms. An educational loan typically covers expenses of tuition and examination fee as well as hostel and mess costs. Several banks also get on board to finance the cost of equipment, books and various instruments required for the completion of a particular course.
Eligibility criteria for getting a loan varies from one bank to another, but the uniform paradigm is the confirmation of student's admission in an institute. Other criterions that vary in each bank are student's age, qualification, good academic record and the fixed source of income of parents. Another important factor most lenders consider is that the institute must be recognized.
Likewise, maximum amount to lend also varies from one bank to another. Most banks consider the course program and the institution for which a loan is being sought; others come to decision after going through the monthly salary of the parents of the borrower. Some banks even have policies of offering 75 percent of the total cost of the course program. However, the loan amount solely depends on the relevant bank's discretion.
Under Section 80 E of the Income Tax Act, banks allow a deduction in repayment of the loan. The amount is deductible for only full time higher education courses, professional courses and applied sciences programs. The deduction is available for up to eight years from the beginning of repayments.
The interest must be paid from the following month of loan disbursal whereas the principal amount is payable only after a specified amount of interest and principal amount has been repaid. The candidate must keep paying the amount of interest on his loan while studying. The repayment schedule is charted out by the bank and is based on various factors. It includes interest rates, monthly payment, term of loan repayment, payment due dates and total repayment obligations.
While repaying the educational loan, one should always ensure that payments are made on time. When a borrower fails to make timely payments or meet the terms and conditions of the bank, he may face legal consequences. The lender will take legal action against the debtor and may withhold his income tax refunds.
If he fails to make payments, the debtor will be left with a bad credit which will make him ineligible for any kind of future financial aid from all lenders. Therefore, one must follow a few suggestions in order to avoid such situation:
Go through the terms of loan thoroughly so as to fully understand it
Keep the contact information updated so that bank can reach him any time
Automatic payments should be set up to avoid late repayments
If in need of help, contact the lender ASAP
Since the rules, regulations, repayment options, interest rates and others are, at times, revised by various lenders, it's advised to the borrower to be up-to-date with the changing policies of the bank, evolving market trends and various schemes on offer by the lender.
07 Jun, 2012 By:
The cost of living is very high and is on a consistent rise. People who are looking forward to buy property can't pay the asking price on their own, given the heavy price tags associated with realty business in the country. They are left with no other choice to get a loan. And when it comes to applying for a loan, one can get great benefits from adding a co-applicant to his loan application. A co-applicant is a person who can jointly apply for a loan with the primary applicant.
The main advantage of having a co-applicant by one's side is increasing the odds of getting a larger amount loan. When two people jointly apply for a loan, one is listed as the primary applicant and the other as co-applicant. During the process, the lender examines the application, both applicants' credit score and overall financial standing in order to decide the loan amount and tenure. After the loan is granted, both applicants become co-borrowers and account for debt repayments as per their shares.
So, who can be a co-applicant? Family members – spouse, parents, brothers and children are the only people who can jointly apply for a loan. It actually varies from one bank to another – some banks don't allow siblings to co-apply. And the person co-applying must not be a minor. A co-applicant can be a brother, but not a sister. Even in case of a brother, it's important that both the brothers stay together and also intend to do so in the newly purchased property.
Though designed for maximizing loan eligibility, co-applications' biggest advantage is tax savings. A borrower can claim tax deduction on the loan's interest portion under Section 24(b) of Income Tax Act. Both the borrowers are entitled to tax benefits in the proportion to their share of the loan amount. The principal repayment component as well as the interest usually exceeds the deduction limit only because the amount is extremely large when applied jointly.
Having a co-applicant has its downside as well. If a person is in course of preparation for investing in a second home, he will have to be confronted by some loss. As per the Income Tax Act if a person owns more than one house, only one will be considered as self-occupied and others as rented out. Henceforth, he will have to pay tax on the rent received because one of the house is considered rented out, even if that's not the case. This means the person will have to pay tax on an income he is not receiving.
Applying for a joint home loan comes with significant benefits in optimizing loan eligibility and getting tax benefits. And at the same time, has a drawback as well. Therefore, one must very carefully gather all information about co-applications in order to make an informed and right decision.
07 Jun, 2012 By:
Whether a small business or a well-established one, the need for financial aid can spring up anytime for its growth and for that, most business owners choose to rope in investors. However, sometimes it becomes hard to attract investors and borrowing money from financial institutions in order to pay the expenses comes forth as a viable option. Prior to applying for a business loan, one must familiarize with the types and procedure associated with each kind so as to make an informed decision.
Fixed loan comes with an established interest rate that remain unchanged throughout the loan tenure. So, when the average interest rate of other business loans escalate, the interest rate of fixed loan doesn't change at all. One doesn't have to worry about fluctuating rates. He can be rest assured that he has to pay the same repayment amount every month irrespective of the ongoing rate.
Variable loans, on the flip side, come with interest rates that are vulnerable to market changes. While one avails a variable business loan at a very low interest rate, he may end up paying a larger amount after a year or so. Changing rates completely depend on the market fluctuations and sometimes dramatic changes can increase the amount so much that it may become hard for the debtor to make payments.
Despite being risky, variable loans are often applied for by business owners as they have some benefit for the borrowers. Variable loans are a means of getting money quickly without being choked back to repay large amount each month. As compared to fixed loans, interest rates are very low in variable loans. Due to low interest rates, flexibility of borrowing larger amount and quick funding are the main reasons many business owners are willing to take the associated risk.
The main concern of a lender is timely repayment of the loan and to ensure that he looks into the cash flow of the business. Therefore, one must convince the lender that the business is not facing any problems that may negatively effect its cash flow and he will make sure that loan payments are made on time. The most common documents a banker is more likely to look into are:
Business financial statements
Business plan with budget or projection
Business tax returns
Personal financial statements
Personal tax returns
Banker will go through the collateral in order to calculate the lending amount. The most common kinds of collateral are business inventory, equipment available, accounts as well as equity in one's home. Other than that, the lender will check the track record of the business, number of years in business, size of the company and amount required.
One must do adequate research about different kinds of loans available with various banks. Internet is the right start. One can also ask around to get a more personal advice from experienced people so that he lands in the right spot to get a business loan.
07 Jun, 2012 By:
With the skyrocketing prices of just about everything, our expenses are rising simultaneously. And because of these packed budgets, most of us struggle to pay mortgages. Maintaining a perfect balance between monthly expenses and debt repayments, becomes very hard sometimes which may result in home foreclosures. If one is lagging behind on his mortgage payments, he should try out some simple solutions that may help him save his home from being foreclosed.
1. One shouldn't ignore any letter and notice from the bank as these keep him posted about every detail relevant to the procedure so that he can get right assistance to get the matter resolved within time.
2. Due to any reason, if one is going to fall behind on repayment, he must call the bank ASAP and inform them about his plight.
3. Get a reinstatement figure from the bank. It gives the info on previous payments, precise amount due and exactly how much money is required to bring the loan back to current status.
4. If it has been three months aggregating past due, the debtor may get in trouble. The bank will officially place the property in foreclosure status and the amount to bring the loan back to current status will be more than before because of the addition of late fee and legal fee. Adding to the troubles, the bank can refuse to accept any payment unless the debtor pays entire past due amount.
5. Creating a budget comes very handy. One should enlist all his monthly expenses as well as sources of income each month. This out-and-out information will help the attorney in sorting things out, in case the borrower decides to seek legal assistance.
6. Loan modification is another aide-de-camp in eluding foreclosure. One can ask his lender to lower interest rates or monthly payments through loan modification.
7. It's of absolute importance that one follows up his loan modification plea. It's not unusual to find out that the lender is going through foreclosure process exactly when the borrower is applying for loan modification. Therefore, one should contact the lender very frequently and ensure that the foreclosure process is being put off for a while and the loan modification application is being reconsidered.
8. Don't fall into a trap. Many companies make false promises to help the borrower save his home from being foreclosed. As appealing and affirming it may sound, one must not fall for such bonds. One should realize that no third party can help him retain his property and he may end up losing the house as well as additional money paid under such scams.
9. Another thing that may help the borrower is taking responsibility. If the lender is convinced that the borrower is being financially responsible regarding his payments, he (lender) is more likely to cut the debtor some slack. So, what one needs to do is cut back on the expenses and find different sources to earn from in order to arrange for payments.
10. Consulting a local attorney helps a great deal. Lawyers with expertise in foreclosure issues can provide the borrower with some excellent advice. Bankruptcy lawyers can be really helpful here as they have immense experience in putting an end to foreclosure auctions.