Connect with us

Finance

Planning To Take A Loan? 5 Type Of Loan You Should Know

Published

on

Nowadays, you need not keep your dreams at stake because of a lack of funds. You can simply opt for a loan, fulfill your purpose, and repay it in easy installments. But there are various loan options available in the market. That is why you have to be very careful about which one you select. The right loan will help you accomplish your goals, while the wrong loan can land you in big trouble. If you want to avoid this, you should explore all options and pick one that fits best into your requirements or purpose. Here are the five common types of loans that you must know about before making a decision.

1 Loan Against Property

If you already own a property, you can avail loan against it. Depending on your lender, you can get up to 60% market value of your property. The only condition is that there shouldn’t be any ongoing mortgage on it. The most interesting fact about the Loan against property is that you can use the borrowed funds for any of your purposes. The only difference your usage will make is on tax exemptions. Otherwise, you can avail of this loan and fulfill all your requirements.

 2 Home Loan

Buying a home is the most significant milestone in almost everyone’s life. But considering the price of houses, it would take you years to save money to buy a property. If you don’t want to wait for so long, a home loan is your solution. Depending on your financial status, you can borrow a significant amount of money. There are several variations available in the features of these loans. You can set them according to your preferences.

3 Loan Against FD

Fixed Deposits are one of the most popular methods of investing your money. They keep your money safe while providing a good percentage of interest on it. But do you know FDs can also be used to claim loan? Yes, you can keep your FD as collateral and get funds against it. This helps you avoid liquidating your saved money. So you can use the money without losing any interest on it.

4 Personal Loans

When you want funds urgently and don’t want to specify its usage in front of the lender, you can opt for personal loans. They are the most accessible loans to get. However, a few crucial factors in this are:

  • You need to have a high credit score and a low debt-to-income ratio.
  • The borrowable amount is also decided based on your financial capacity.
  • You need to show some security to the lender, like your savings or investments.
  • They are available in both secure and unsecured categories of loans.
  • Their interest rate is generally higher than loan against property interest rates or any other loans’ interest rates.

5 Auto Loans

This is a usage-specific loan as the money is borrowed to buy a new automobile. You can buy a car or any other vehicle as per your requirement. The borrowable amount is decided based on your repayment capacity. However, you carry a risk of losing the vehicle if you miss out on your EMI payments.

Apart from these, there are several other types of loans. You can opt for them as well according to your purpose.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Finance

5 Key Differences Between Trading and Investing

Published

on

By

Top Three Tools for Sales Forecasting

Investing and trading are two different concepts in the world of finance. The purpose of doing both- trading and investing is to generate profits but the process differs via market investments. Investors put in money for the long-term whereas traders tap for the short-run movements in the market and make a profit. Both methods have their own pros and cons. It completely depends upon the person and various other factors like income, long-term goals, short-term goals, financial stability, and interest in the financial market. One can create a portfolio by using both techniques. The approach can be customized as per the requirements of the individual.

Let’s discuss the differences in detail for trading and investing below:

Duration:

Investing works on the principle to buy and hold the shares for the long-run. Investments are done in this case to yield returns after five years or more. The fluctuations in the short-run market won’t pose threats to investments.

Trading is a way to buy/sell stocks for the short-run. The duration would be from one day to one week as per the on-going market fluctuations. Traders will observe the market movements closely and act accordingly. Shares are held till the time it is performing well.

Approach:

Traders use the technical analysis method to buy/sell in the market with the help of candlestick charts etc. whereas the investors go for the fundamental analysis of the stocks. The fundamental analysis includes the general macroeconomic situation of the country and the financial attractiveness of the company and the industry.

Growth:

Trading provides capital growth as per the current movements in the stock prices. If the price of the particular share goes up, traders can sell the stocks or they can simply hold it further. Therefore, trading is a skill where traders time the market. Investing is a technique for capital growth with the help of the compounding principle and holding the quality shares in the long-run.

Risk Appetite:

Traders have more risk appetite and are looking for short-term gains. Traders generally focus on scrip price and the share volume in the market. Investors possess lower risk appetite and invest for a longer period to curtail the losses and make investments in a particular stock as per the company’s growth prospects.

Information Horizon:

In trading, there is a requirement of real-time data to track the market. This is required in order to make the right decisions to sell and buy the shares. Investing is more sorted as the investor only required fundamental information to predict the long-run stability in the investments.

To start trading online, one needs to have a trading account so the trader can store securities easily. The steps to start trading online are as follows:

 

  • Select a broker
  • Connect with the Relationship Manager
  • Complete the verification process. The required documents are Aadhar card, PAN card, and bank statements
  • Deposit the required amount to activate your trading account
  • Understand the various features of the trading platform by exploring it
  • Look for the real-time status and start trading
  • Start building your portfolio

Continue Reading

Finance

6 Tips to Handle Your Business Finances Better

Published

on

By

A business comes across a flurry of challenges in its course, but managing finances is, perhaps, one of the most critical for its survival and growth. It is especially evident during today’s difficult times; a recent survey including approximately 28,000 responders, of which nearly 8,400 are start-ups, showed that nearly 38% of the responding businesses have ran out of funds, and approximately 30% are left with only 1 – 3 months of reserves due to the recent economic crisis.

Every business, be it small or large, requires appropriate business finance management to further its objectives. Hence, it is imperative to be financially savvy when running a business. It’s even more apparent today because of an increasingly competitive market that requires organisations to optimise their financial standing continually. 

  • In India, the number of registered MSMEs grew by 18.49% from FY19 to FY20, according to the latest government reports. 
  • According to the annual report submitted by MSME Ministry, there were 6.33 crore MSMEs across the nation in FY2019.
  • 99.4% of MSMEs are micro-enterprises.

Managing finances efficiently is an indispensable skill for entrepreneurs. Here are a few tips that you can apply to improve your understanding and management of business finance – 

 

  • Pay attention to transactions

 

Like any other skill, it’s essential to be attentive towards the financial status in your business; it’s the first step toward handling finances more efficiently. Track all expenses and note where the cash outflow is primarily channelled towards. 

Top 7 Loans You can get as a Business Owner - Finance Buddha Blog |  Enlighten Your Finances

Staying on top of your business’s expenses will allow you to regulate it more effectively. In case you have a financial objective in place, monitor whether the current state of transactions is in line with it. If not, observe corrective measures to organise your business finances and ensure the realisation of those objectives. 

 

  • Negotiate for better deals with suppliers

 

An effective way to handle business finances better is by optimising short-term cash flow. In that regard, a bargain with vendors or suppliers for better terms can prove useful in the long-run. 

For instance, agreeing on an extended period for payment of dues can strengthen your business’s liquidity. This way, you can utilise the payments from debtors toward enhancing operational efficiency or other activities elevating the value of your business. 

 

  • Adopt frugality

 

Moderation of costs is critical to the success of any organisation and a key business finance strategy. It’s of heightened significance to cut expenses wherever possible. Monitor the financial statements of your business on a weekly basis and note down expenditures that seem unnecessary or excess. Execute prompt measures to rectify the situation. 

Also, consider alternatives for every outlay before undertaking them, especially for the larger ones. For instance, when considering procurement of any equipment, analyse the cost-profit dynamics of leasing it. This way, you can bring down the overall cost of processes and commit those excess funds to other necessary undertakings. 

 

  • Secure external funding

 

Several organisations opt for a loan to finance business to address sizable financial obligations in their organisations. Economists consider utilising a mix of internal and external capital (to mitigate monetary obligations of an organisation) as a significantly more preferred option than utilising own capital solely. 

  • According to a financial report, aggregate borrowing by businesses in India was tallied at Rs.64.45 lakh crore, as of January 2020. 

You can utilise a business loan to invest in growth operations, expansion of business, purchasing equipment, restocking supplies, etc. Since a business loan does not entail any end-use restriction, you can commit the fund to a number of areas in your enterprise. 

NBFCs like Bajaj Finserv also extend pre-approved offers to borrowers in order to ease and speed up the loan application procedure. Such offers apply to business loans, personal loans, credit cards, etc. You can check your pre-approved offer by sharing only your name and phone number. 

 

  • Encourage early payments

 

Another efficient way to handle business finances better is by encouraging debtors or clients to pay their undue bills on time, or before the due date. It could involve regular reminders before the due date, providing discounts to early payers, etc. 

By a mix of incentivising and penalising appropriately, you could optimise the cash flow in your business. It’d also allow proper working capital management since you can ensure a timely operating cycle. It’s one of the ways to ensure your business is never short of working capital.

 

  • Make payments on time

 

It’s essential to develop a system of timely payments on your end as well. Late payments can impact your credibility, and corresponding fees can strain your finances. For instance, delinquency in regards to EMIs on your business finance loan can be dearly expensive, especially if it’s a micro or small enterprise.

  • Total lending to MSMEs stood at Rs.17.75 lakh crore, as of January 2020.

Also, keep up with tax payments to avoid any legal issues that might incur at a later point of time. 

You might also consider a flexi business loan from Bajaj Finserv to manage business finances easily. It allows you to withdraw from the sanctioned limit whenever required, necessary to overcome any financial emergencies.

Continue Reading

Finance

What Is The Difference Between Home Loan Vs Loan Against Property?

Published

on

By

Home Loan and Loan against Property are as different as their name suggests. However, it is easy to get confused between the two. A home loan is a loan taken for the purchase or construction of a new home. The property does not belong to you before taking the loan.

A Loan against property is a loan taken by mortgaging your home or any property for any other purpose. Both loans are popular and taken for different purposes. But borrowers thought that aspects of both are the same. In this article, we discuss the price difference between these two types of loans to clear your confusion. It is advisable to use the loan against property EMI calculator before opting for the property loan to now the EMI payments. Also, the home loan calculator is present on lender’s website to know the EMI amount.

Difference Between Home Loan Vs Loan Against Property:

  1. Purpose: This is the primary foundation on which the two types of loans differ from each other. A home loan as a specific purpose. It is an unsecured loan. It can only be used to buy a new property or for the construction of a new home. Loan against property is a loan that can be taken for any intents or purposes. It is a secured loan that mortgages any land or property already in your name. You don’t have to specify the purpose when applying for a loan against property. It can be used for funding higher education, purchase of a vehicle, or planning a wedding, except for speculative purposes.

  2. Rate of Interest: This is another crucial factor in differentiating the two types of loans. A home loan has a low rate of interest. In the current scenario, a home loan interest rate is decided by the Marginal Cost of Fund based Lending Rate. The rate of interest usually falls between 8.5-12%. The approval and the interest rate mostly depend upon the credit profile of the borrower and the tenure. There are several government schemes such as PMAY, which help borrowers incur savings while applying for a home loan. Whereas, a loan against property has a higher rate of interest. It usually ranges from 10-15%.

  3. Loan Amount: When buying a home or beginning construction of one, a borrower can get an approval of 90% of the property’s current market value. The rest needs to be offered as a down-payment. When it comes to loans against property, the borrower can apply for a loan between 55-70% of the market value of the property. The current market value of the property depends on several factors such as the property’s age and location in both types of loans.

  4. Tax Exemptions: Taking loans can greatly benefit your tax returns. Home loans are eligible for tax exemptions on both the principle as well as the interest components. A principal amount of up to Rs 1.50 lakhs is eligible for tax deduction under Section 80 C of the Income Tax Act. The interest paid on home loans can also enjoy tax benefits under Section 24(b). It works a little differently for Loan against property. If the mortgage loan was used for business purposes, the interest and the incidental costs could be claimed for benefits under Section 37(1) of the Income Tax Act. If the loan was used to purchase another property, the interest can be claimed for benefits under Section 24(b).

  5. Loan Tenure: Both, home loans and loans against property are labeled as long-term loans. A borrower can choose up to 30 years to repay their home loan. However, this is a little shorter for borrowers of loans against property. They have only up to 20 years to repay their loans. Home loans differ from LAP in terms of risk too. A borrower runs the risk of losing their property on defaulting their EMIs on loan against property. A loan against property calculator is essential to know the EMI payments required to pay each month.

Irrespective of their differences, both these types of loans are easy to get and are swiftly approved by lenders.

Continue Reading

Trending

Copyright © 2020 wackulus.