What Does A Home Insurance Policy Cover?

by Vinaya HS on February 14, 2017

in Finance

The following post is a sponsored post.

You have finally moved into your dream home. Or your home loan application is finally approved. Or perhaps, you have decided to renovate your house to give it a fresh look altogether. In any case, it is advisable that you think about getting a right insurance cover for your house.

Nowadays, people have increasingly started buying home insurance. This is because of the awareness that has started developing pertaining to the benefits and security that a home insurance cover offers. While buying a home insurance policy, there are several questions that may cross one’s mind. Some of them may be, what does homeowners insurance cover? Does homeowners insurance cover plumbing? Does homeowners insurance cover water damage? Read on to find the answers.

To begin with, home insurance coverage can be broadly classified into three categories:

  • First is insurance coverage for the house’s structure. It is also referred to as dwelling coverage or dwelling protection.
  • Second, coverage for the contents of the house against various perils
  • The third type of coverage insures a person from injuries while being inside the house

When you avail a home insurance cover that offers dwelling protection, your house will be secured against damage caused to its structure. However, the catch here is that the reason for damage i.e. in insurance terms, the cause of loss should be covered. Typically, home insurance providers don’t cover damage caused to your house due to natural calamities such as earthquakes and floods. However, in case you live in an earthquake or flood-prone area, it becomes essential to get coverage against such peril. In such a scenario, you would need to talk to an agent for a customised home policy. Do note that you would need to pay a higher premium for such coverage. Also, dwelling protection may be extended to plumbing, air conditioning as well as electrical wiring. However, this will depend on the policy coverage.



As far as content coverage is concerned, it is a very useful benefit to have these days. This holds true especially if you have valuables in your house such as jewelry, expensive gadgets like smart TV, laptop, mobile, tablet and so on. A content coverage policy not only covers these items against accidental damage but also against theft and burglary. This is a must-have benefit if you are away from home all day and live in an unsafe area. The house contents can be covered against perils such as earthquakes, flood and inundation along with fire.

Reliance offers a great house policy with unique benefits like coverage against accidental breakage of fixed glass. This is a very useful benefit if there are kids that play inside the house. When it comes to your jewelry, they are covered against theft while you are wearing them away from home too. With this cover, you need not worry about chain snatching anymore. In addition to these, you also get a great a bouquet of services in the form of HOMEASSIST, totally free. With this, you get assistance in:

  • Electronic Gadget Repair Assistance
  • Plumbing/Carpentry Assistance
  • Pest Control Assistance
  • Medical Contact Assistance

Additionally, Reliance home insurance covers your family from accidents resulting in death or disablement.

Now that you are aware of the coverage you can avail from home insurance, you should be able to choose the best policy for your house.

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The Role Of Lending In An Economy

by Vinaya HS on February 4, 2017

in Finance

The following post is a sponsored post.

Remember how difficult it was for the earlier generation to get loans until a couple of decades ago? Most of us remember our parents having to run around, submit documents, and then wait at the banks. All this to get a loan approved. The situation has changed quite a bit over the last few years. Nowadays, banks and other financial institutions encourage people to take loans. The loan processes have become much simpler. It is easy for an eligible person to get a loan. When banks and financial institutions lend, it strengthens the country’s economy.

The role of lending in an economy

Lending plays a big part in improving the economy of a nation. Some of the reasons behind this are:

1. More investments: This holds true in the case of business loans. Many a time, a business loan is taken to finance investments. With the help of these investments, businesses grow and so does productivity. This adds to the economic betterment of the country.

2. Increase in sales: You could take a home loan to buy a property or a personal loan to buy furniture for a house. Remember, lending leads to an increase in the purchasing power of customers. A rise in purchasing power is proportional to growth of a nation’s economy.

3. More employment opportunities: Loans enable people to spend more. This has a domino effect. For example, when you take a home loan to buy a house, the builder appoints an architect. The architect, in turn, appoints a contractor. The contractor then appoints a team of construction workers. One thing leads to another and many job opportunities are created. This increases employment and has a positive effect on the country’s economy.

4. Loans empower an individual: Loans are vital. A loan enables you to reach your true potential and realize your dreams. It increases productivity and plays a significant role in improving the nation’s economy. Here is an example to understand this.

29-year-old Rishi, for example, was on the brink of inventing a machine. The new machine would reduce the power consumption of large factory equipment. But he needed some more money to convert his ideas into reality. He took a personal loan. Armed with it, he travelled to Japan and attended a few training sessions. He then took a business loan to buy the raw materials he needed. Soon after, he came up with his revolutionary product. It is now patented in his name and used all over the world. Rishi now earns hefty revenues. Being an honest tax payer, he contributes to the country’s economy as well.

The bottom line.

Lenders need to give out loans as much as borrowers need to take them. Without lending, the country’s economy cannot grow. This has made the loan process quite simple these days. So, if you need a loan, make a valid application. This is the best time to borrow.

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Student Loan Snapshot

by Vinaya HS on February 4, 2017

in Finance

The following post is a sponsored post.

Today, soaring education costs are making it practically impossible for parents to fund their children’s education without resorting to an education loan. Professional courses like medical, management, engineering or IT courses cost nothing less than Rs. 5-10 lakhs per annum, while some post-graduate (PG) courses cost over Rs. 10 lakhs. Private college fees are higher than Government colleges, and courses abroad are a different story altogether.

An education loan is not only a smart financial choice, but is good future investment too. Most banks/financial institutions today offer attractive education loans on a range of courses – under-graduate, graduate, vocational or professional.

But what does taking an education loan in India exactly entail? Here are the answers:

Eligibility: The applicant must be an Indian citizen aged between 16 to 35 years, pursuing a graduate or PG degree/diploma. He/she must have a confirmed admission in an educational institution recognized by Government/University Grants Commission/All India Council for Technical Education etc. Certain vocational and technical training courses like aviation and air-hostess training are sometimes included.

Application: A student cannot apply for an education loan independently. It is mandatory to have a co-applicant with a sound financial record. The student’s parent, sibling, spouse or parent-in-law qualify here.

To get an education loan, one needs to submit the following documents with a completed application form to the bank:

• Letter of admission
• Detailed course cost break-up
• Academic records
• Duly filled in loan application form
• KYC documents and photographs
• Valid identity and address proofs of student and parent/guardian/co-applicant
• Income proof of parent/guardian/other co-borrower
• Last 6 months’ bank statements of student/co-borrower/guarantor
• Previous 2 years’ IT returns or assessment order of parent/guardian/other co-borrower, if IT payees
• Assets and liabilities statement of parent/guardian/other co-borrower

Amount: Banks in India typically lend up to Rs. 10 lakhs for education within India and Rs. 20 lakhs for education abroad. For special cases, banks may consider lending higher amounts at their discretion. For instance, for PG courses in premier management colleges in India such as the IIMs, banks give loans up to Rs. 20 lakhs. The loan size usually depends on the institute and course. The ticket-size of student loans in India ranges between Rs 2 lakhs and Rs 22 lakhs.

Security: For educational loans up to Rs. 4 lakhs, no security/guarantor is required. However, parents must be joint borrowers. For loans between 4 to 7.5 lakhs, collateral security in form of third party guarantee is required along with parents. For loans above 7.5 lakhs, parents must be joint borrowers along with the provision of a tangible collateral security, usually residential property, whose value lenders consider for sanction. The collateral could also be a non-agricultural land, FD, or a life insurance policy where the sum assured is minimum 100% of the education loan amount.

Inclusions: Education loan covers include 100% college tuition, library and exam fees; accommodation charges/hostel; laboratory; books, instruments, and equipment including computers; travelling expenses abroad; caution/refundable deposit; and other reasonable expenses required for course completion such as project work, study tours, uniform, etc.

Margin money: Borrowers need to bear some of the expenses, called ‘margin money’ by banks. This is 15% for education abroad and 5% for studies within India, both on loans above Rs. 4 lakhs. For loans up to Rs. 4 lakhs it is nil.

Sanction: Education loans are sanctioned only for education in recognized institutions. You may check the list of approved institutes with your bank. It could take anywhere between one to three weeks from the date of application receipt for an education loan to be sanctioned by the bank, provided the application is complete in all respects. Successfully securing an education loan also depends on the credit history of the co-applicant or guarantor, quality/reputation of the institute and the bank’s confidence in the student’s capability to secure a job after course completion.

Disbursement: Usually, education loans are disbursed directly to the educational institution either in full or in appropriate installments, considering the fund requirement and/or fee schedule as assessed by the bank. The borrower needs to submit a fee request letter from the institution.

Repayment: After course completion, the borrower gets a moratorium period of six months to a year, before beginning repayment. One year after course completion the repayment has to start, regardless of whether the student has secured a job or not. As an exception, engineering course students are given four years (course duration), plus an additional year to start repaying.

Interest rates: Interest rates on student loans are calculated as the base rate (9.5 to 10%) plus mark up. The total interest works out between 11.75-14.75%, depending on the bank, quantum of loan, and the institution. Banks sometimes offer better interest rates for courses in premier institutions, to outstanding or to female students.

Tax benefits: Interest paid on education loans for self, spouse or children, is eligible for deduction under Section 80E of the Income Tax Act, 1961. This applies for 8 years from the year(s) that loan repayment begins, or for the period during which the loan is in effect, whichever is more.

Points to remember:
• In case of repayment default, the guarantor/co-applicant and student both are held responsible, adversely affecting their credit history/rating.
• If the student goes abroad, the lender recovers from the co-applicant.
• For foreign courses, insurance is compulsory, increasing the cost.

Conclusion:

Since an education loan is usually the first loan a student avails, it helps instil financial discipline. Timely repayment allows students to build good credit histories, which in turn helps immensely when they wish to take bigger credit in future such as home or car loans, credit cards, etc. Impressive credit scores can sometimes even help secure pre-approved loans.

You can get an excellent deal on your student loan if you have admission in a reputed institute, complete documents, a good credit score, and have compared offers, terms and conditions from different banks/lenders.

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Safety Tips When Taking A Home Loan

by Vinaya HS on February 4, 2017

in Finance

The following post is a sponsored post.



As important as a home loan is for you, it is also important for you to keep in mind some of the safety tips, as mentioned below:

• Keep a handy list of all documents required for the application filling.

• Prepare the required documents with attested photocopies ready.

• Make sure every photocopied page is signed by you before you attach it to your application.

• Ensure to ask the bank executive you are dealing with for proof of his/her identity.

• Check and read the Terms and Conditions before signing the loan application document.

• Check all the details filled in carefully before you finally hand over your application to the bank executive.

• After you’ve submitted the documents, if you decide not to avail the loan, inform the bank immediately.

• Avoid giving original KYC documents to the executive.

• If you issue any cheques for any charges or fee, remember to issue them in favour of your bank. The cheque should never be in the name of any individual.

• Do not ever handover original / copy of property documents to unknown person.

Types of Home Loan Protection Plans

Home Loan Protection Plan (HLPP) is an insurance plan to insure your home. Under these plans, insurance companies settle any outstanding amount on the home loan with the bank/lender in the event of death of the borrower. The policy term is usually the same as the loan tenure.

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Your car is a reflection of who you are. When you are buying a pre-owned car, there are a million questions to deal with. Are you getting a great deal? Will your car be in good condition for the next few years? How will it fare on mileage? What can you do to ensure that your car is in the best condition? You can avoid some of the anxiety if you buy a used car from a certified reseller. The good news is that there will be a degree of transparency and accountability. Plus, you will get your car at the best competitive market price.

But before you decide to buy your dream car, apply for a used-car loan (UCL). It is quite attractive for various reasons. It offers flexible EMI options ranging from one year to five years. The loan amount starts from Rs. 1 lakh. The interest rates on your loan are also competitive. Factor in how much loan you need and the rate of interest you can afford. Base your decision on your monthly savings, expenditures, and financial goals.

Consider the following points before investing in a used car from a certified reseller. Here are some more pros:

  • Your certified pre-owned car will come with certain benefits. Among other things, you get warranty coverage for a certain period. This means you can avail certain repairs within that period.
  • Do not lose sleep over maintenance. Your certified dealer will have checked everything. All repairs will have been made before your car is handed over to you. In other words, the car will have undergone stringent inspection. This is to ensure that a quality product reaches the customer. If there is a glitch, the seller will address it immediately.
  • You do not have to fear that you have been promised something you will never get. There are no false claims and features.
  • Cars that have clocked an average of 50,000 to 80,000 km and are at least five years old are eligible for inspection. Of course, this may vary from one dealer to another. So, you may want to check this point.
  • Most certified pre-owned car sellers make it a point to have the history of these cars in their data bank. This includes information about prior ownership and accidents. The car’s current mileage, its wear and tear, and other details are important as well.

Cons to consider before you go in for a used car from a certified reseller:

  • Pre-owned cars with certification cost more. This is because the reseller or the dealer has to spend a certain amount on inspection and repairs.
  • If you do not buy your car from a local reseller and your vehicle has a problem after the purchase, you could face a lot of hassles and expenses.

A last word.

When you buy a pre-owned car from a certified reseller, be sure to make an informed choice. This will save you from any nasty surprises later.

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Personal Loans: What Should I Be Aware Of?

by Vinaya HS on February 4, 2017

in Finance

The following post is a sponsored post.

Excitement was in the air. Rajesh had just secured a personal loan and was planning a trip to Europe with his wife. The mood in the office was infected by his exuberance as he was leaving in a week’s time. Days passed and he came back with beautiful photographs, mementos, memories…and a niggling doubt that something was not quite right with his personal loan.

“I think there is some issue with this loan I have taken; could you please take a look at the documents?” Rajesh said, slipping into the chair next to me. He handed over a slim folder with his loan documents. His euphoria of getting a large loan was slipping and he seemed puzzled with the fine print that he had neglected to go through earlier.

I noticed from a covering letter that his loan had been processed through a Direct Selling Agent for a large nationalised bank. This made me a little wary as DSA’s can go to any length to achieve their lending targets. Nearly 80% of the loans sold in our country are through this indirect channel of outsourced sales persons. Alarm bells ringing, I opened the actual loan document.

What went wrong?

“I paid Rs. 20,000/- to get the loan sanctioned urgently and the agent had confirmed that there are no processing fees. But now I see that only Rs. 3,82,800/- has been credited instead of the 5 lakhs I was to receive. I was in a hurry to finance my trip, so, I did not read the documents before leaving. Once the loan was sanctioned I was sure that the agreed amount would flow into the bank. But now I see many irregularities in the paperwork. It is quite different from what we had agreed.” He looked at me helplessly.

“Paid for getting the loan fast-tracked? There are no cash fees or payments for getting loans sanctioned. And why did you not check the amount when you received it?” I was shocked at the blatant cheating. Obviously, Rajesh had left the country without waiting for the sum to be credited as he would be using his credit cards. But, the damage was done. The burning question was by how much?

I started reading the loan documents. The fine print is what most of us neglect to read, preferring to depend on the verbal assurances of agents who are not even directly attached to the bank. As expected, the detailed pain points were many.

“The processing fees were so high, and I paid a commission also!” lamented a distraught Rajesh. “I should have figured all this out earlier.”

“If it is restricted to this much you are lucky. Did you apply to multiple banks by any chance? If yes, then your credit score or CIBIL credit will be impacted adversely. A good CIBIL score is necessary to avail further loans, good interest rates, and is an indicator of your credit worthiness. Do remember that personal loans are unsecured loans and the bank takes a sizeable risk in processing the loan”, I shared the information gleaned from my years as a financial advisor.

Check points for a loan application

By this time, Rajesh looked dazed. The interest rate was a little different from what was conveyed earlier. Also, The EMI was much larger than what he had anticipated. Given all this, it was natural to see him puzzled and on tenterhooks.

“That is normal; the banks inflate the first year’s EMI by adding more interest in the initial stages. Also, the rate of interest needs to be calculated on the EMI calculator to ascertain that you are not being cheated.”

Rajesh shook his head with frustration. “I should have asked you to read through the fine print with me. Luckily the tenure and prepayment norms are as he had promised. I will prepay this loan after a year after taking a new one of a lower amount.”

I noticed his hung shoulders as he got up and walked towards his cabin. All I could do was feel sorry for my colleague.

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Bloomberg Quint is a multiplatform, Indian business and financial news company aims at providing high quality business news, insights and trends for India’s sophisticated audiences. Read more about Union Budget 2017 and India Budget News here.

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Are you looking to upgrade your old washing machine to an advanced one but are postponing it due to financial constraints? If yes, have you considered buying your new washing machine on loan?

If not, here are five reasons why you should purchase your washing machine using a durable loan.

1. Easy and affordable repayment

With a CD or consumer durable loan, you can repay the loan amount in Equated Monthly Installments (EMI). The EMI may be paid easily without the need for a credit card, thereby helping you avoid any financial difficulties. Furthermore, paying the EMI without a credit card is cheaper because most lenders charge 0% interest on CD loans.

2. Quick approvals

A consumer durable loan application requires minimal documentation. All you need to provide is your KYC documents This makes it simpler for you to apply for a consumer durable loan. Furthermore, the entire process from loan application to disbursement is completed in a short period.

3. No foreclosure penalty

Lenders offering CD loans do not levy any foreclosure penalty. This means you can easily prepay the loan amount if you receive a surge in income or a bonus or increment.

4. Flexibility

Purchasing a washing machine on EMI with a CD loan is flexible. You may choose any amount you require to purchase the appliance. CD loans are available for amounts between INR 8,000 and INR 5 lakh.

5. Online account accessibility

When you opt for a CD loan, you receive access to an online account, which may be used for various purposes. You may check the amount due on your loan, download interest certificate, or view the repayment schedule through this online account.

If you are aged between 21 and 65 years, you can apply for an instant consumer durable loan to purchase consumer durables like a washing machine. You can apply online through the lender’s website, within the comfort of your home. The online loan application only takes a few minutes and you receive an approval within a short period of time.

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Why Do People Not Buy Life Insurance?

by Vinaya HS on January 22, 2017

in Finance

The following post is a sponsored post.

India’s insurable population is estimated to reach 750 million by 2020 with a life expectancy of 74 years. However, insurance penetration in the country was 3.9% in 2013. The ratio of premium to Gross Domestic Product (GDP) was 3.1% for life plans and 0.8% for general insurance plans. This was significantly lower than the global average of 6.3%.

Insurance penetration is based on several factors, such as the economic development of the nation, size and reach of the service providers, and the savings rate in various financial instruments. Although most people agree that they need insurance, a majority of them do not acquire such coverage. People do invest in the best investment plans however when it comes to life insurance they are skeptical

Here are five reasons why most people do not acquire insurance coverage.

1. Not prioritizing insurance needs

Most of the individuals insure their homes, cars, and other assets but fail to insure their lives. Many people do not like to think about death, which is why they do not consider acquiring life insurance coverage. Unfortunately, individuals fail to comprehend that all their assets are replaceable but life cannot be replaced. Considering how their family members will survive in case of their demise is very important and not setting insurance priorities in the right order may be one of the biggest mistakes to make.

2. Tedious offline procedure

When individuals start looking for coverage they come across several kinds of insurance plans. Some of these include term plans, endowment policies, and money back plans, besides others. Some people may find it difficult to comprehend the plans and the complexity may cause them to procrastinate regarding their decision.

Even after deciding on the type of insurance policy, they may have to undergo a long and tedious procedure. The application form is often lengthy and requires them to provide several personal details. Furthermore, most insurance companies require the applicants to undergo a medical examination to determine their current health status. Several people are hesitant to provide information on pre-existing medical conditions and other personal details. This cumbersome procedure often acts as a deterrent for people who want to acquire insurance coverage. However, many insurers provide the facility of applying for an insurance online, thereby making it a convenient and hassle-free process.

3. Life insurance myths

Several myths surround life insurance, which is why its penetration in India remains low. One of the biggest myths is that the sum assured is available only if the policyholder passes away. However, this is true only in the case of term plans. Other kinds of insurance policies offer survival benefits at the end of the policy term.

Furthermore, individuals need to remember that the primary objective of acquiring such coverage is to provide financial security to their family members in case of their sudden demise. Therefore, even if the survival benefits are not available, acquiring insurance for the security of the loved ones is important.

4. Lack of awareness with regards to cost and expenses

A majority of people consider a life insurance policy to be expensive. However, this is not completely true. A person who is young and is in good health may easily purchase a policy without having to pay huge premiums. The amount primarily depends on factors, such as age, health condition, risk profile, and the type of insurance. Many people do not purchase life coverage because they are unable to fit the premium within their budgets. However, researching the different options and opting for term plans may be an excellent yet inexpensive way to avail of such coverage. Another way to make the premium affordable is to purchase the policy at a younger age when the risk profile as assessed by the insurers is low.

5. Lackadaisical approach

The laid-back approach adopted by most people is one of the biggest reasons of the low insurance penetration in the country. Some individuals continue to delay the purchase of insurance thinking they are young and healthy. Others often wait to acquire insurance coverage until they are married and have children, which increase their responsibilities. However, death is uncertain and a person would not want his family to face difficulties in the case of his demise.

Many individuals think they do not need insurance. A good knowledge of income tax slab also helps to avail tax exemption benefits from life insurance. However, they must consider what would happen to the surviving family members in case of their early death. They would certainly not want their loved ones to face financial constraints in the future. Therefore, individuals must opt for life plans and safeguard future well-being.

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Top 10 Benefits of Roadside Assistance (RSA) Add-on

by Vinaya HS on December 26, 2016

in Finance

Top 10 Benefits of Roadside Assistance Add-on

Image source: ICICI Lombard

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Demonetization – A Bright Future Ahead

by Vinaya HS on December 18, 2016

in Finance

The following post is a sponsored post.

India is a country where most of the transactions are cash-based and preferred by many. This preference has led to a situation of high demand for currency. In these transactions, the currency used are of high denominations i.e. INR 1000 or INR 500 notes. All of a sudden these currency notes have been demonetised, making them no more valid legal tender. This took place on the 8th of November 2016 at 8 p.m. when it was announced by the Prime Minister in his address to the nation.

Implications of Demonetization

The implications of demonetization have been calculated, and it’s effects are felt, both socially & economically. In the immediate economic consequences; production slow down, less number of goods are offered and less demand for goods are expected. As far as the social consequences are concerned, the public at large are finding it hard to carry out daily transactions, and have become slightly uncomfortable, as they have to either deposit their cash or exchange the same.

Effect on Economy
The short-term problems were expected when the announcement took place, but the benefits, in the long run, are expected to outweigh the other problems. In the short run, cash shortages are expected and economy shall show a downward trend. This is expected as the outflow of cash from the system shall be more compared to the inflow.

But in the long run, when the market gets stabilised, the balance is struck between inflows and outflows. The reverse economy, in the long run, expects more of outflows as banks, who work on commercial terms are expected to disburse more loans. In purely economic terms, interest rates have to decrease because of large cash balances. The public at large, as well as investors, are expected to utilise this opportunity for increasing the investments. Real estate being the biggest investment sector, it is expected that the number of people who apply for home loans in the near future, is going to increase. For the public in general, loans are taken for assets purchase and long-term assets purchase are housing/ land investments. Taking home loans at lesser interest shall reap benefits both in EMI amounts as well as the tenure of investments. In a similar manner, organisations take loans for capital investments for expansion of existing or new business set up. In both the cases, employment is generated thereby expanding the flow of money.

The public deposits increase shall mean flushing of money from circulation. If money is taken out, people’s purchasing capacity shall decrease in the short run, but if more opportunities are generated, which is expected, the flow of income is going to increase. Then, it is expected that the demand for goods and services is going to go up. Once the circular flow takes place, the economy is bound to boom. The time taken for this boom to be visible purely depends on the investments flow. If we go by the capital markets, until now there has been no crash in the stock markets, indicating that the markets are stable. Going by this logic, it is expected that the retail markets are to recover very soon.

From the above it is expected that demonetization negative effects are short lived & positive effects shall be long lived.

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Demonetisation – Leading to Fulfilled Dreams

by Vinaya HS on December 18, 2016

in Finance

The following post is a sponsored post.

Everyone dreams of owning a house but despite opportunities, these dreams are left unfulfilled due to lack of sufficient funds. On the 8th of November, the announcement of Demonetization bought some ray of hope for home buying aspirants.

Past Real Estate Scenario

The past few years have seen a considerable increase in prices of flats and land. This has taken place due to more demand & less supply if we speak in purely economic terms. But the reasons are beyond this. The land is being purchased in the outskirts at cheaper prices, infrastructure is developed by legal as well as other means, and later on housing projects were taken up. The prices are pre-decided and if people not ready to purchase at the pre-defined prices, they are left vacant, which is against economic rules.The above reasons and many more have given rise to the situation to wipe out the reasons behind this economic irrationality.

Rectify Economic Irrationality

In order to rectify the current economic situation, it was mandatory to take some stern steps, one of which being, declaring higher denomination currency as non-legal tender. INR 500 & INR 1000 notes have been declared as not legal tender, which means people are no longer going to accept the same, as the law has stopped to recognise them. However, no sooner than the declaration was made, did the confusion arise. People were left wondering what should be done with their current money, either to get it deposited to bank accounts or get them exchanged with bankers. The second step was to help people without bank accounts.

Benefits to Home Buyers

The economic implication of the declaring higher currency notes as non-legal ensured there was a greater inflow of money into banks. There was another restriction on withdrawals which means a reduction in the outflow. So banks have got stagnant cash. As the commercial banks have to earn profits for survival, they have to lend the same to loan seekers and earn interest. The largest loan seekers to whom banks lend are for home loans which are quite a lucrative business. As banks have to compete with each other and RBI will be reducing lending rates whenever it can, the only gap is banks passing the reduction to customers. There has been resistance by bankers because of high NPA’s but the flow should improve balance sheets of banks. Then banks have no option but to pass the benefits to the customers.

The above situation shall lead to a scenario of dropping interest rates. Further for the flats already built or under process there is a situation that they have to dispose of the flats, as there is a squeeze in the money market.

Taking a positive note of the above we can clearly understand there shall be more people applying for home loans in the near future. Further, the existing loan holders shall benefit by the drop in interest rates, which will help them by reducing the amounts they have to repay. The repayment reduction is not in terms of EMI amount but in the period of repayment. So the loans can be repaid at a faster pace. Further, this is going to help people who pay off the principal amount through excess cash if any because the repayment period shall further reduce.

In the near future, it is expected that more people will come forward and apply for home loans, thus helping them fulfil their home buying dreams.

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There would be a hundred things that would go the way you wanted while you’re vacationing at your favorite holiday destination but your entire holiday could go for a toss with just a single mishap you didn’t see was coming for you. What if you break your leg during an adventure activity or simply fall sick?

Obviously, you didn’t expect to fall sick or break a leg after spending a fortune on your vacation. But what if you decided to go on a vacation despite the fact that you’ve got an ailing father back home and there are high chances that you may have to shorten your trip to attend to him in case his health deteriorates further. This is definitely a foreseeable event, an event that you already anticipated could occur. Your travel insurance will not cover the losses that incurred due to such a foreseeable event.

Nature can also be very brutal at times; unexpected changes in weather conditions can ruin your vacation. Let’s say your holiday destination welcomed you with a storm and you had to stay at a local lodge or the airport itself because you simply couldn’t travel to the resort. Your international travel insurance can reimburse your prepaid trip cost or reimburse the cost of your hotel room, while you were waiting for the storm to pass.

Let’s quickly look at the various scenarios that are covered by your international travel insurance for unforeseen weather conditions:

1. Natural disasters

In cases where the impact on your trip is due to a hurricane / storm, the trip cancellation and interruption losses will be covered in the travel insurance policy if it is purchased well in advance before the hurricane / storm was named. You will not be able to enjoy these benefits if you’ve bought the travel insurance after the hurricane / storm is named.

2. Services at airport are interrupted

If the airport is closed due to inclement weather, the travel insurance will cover the costs incurred for the delayed trip. Other reasonable accommodation and travel expenses will also be covered until it becomes possible for you to travel.

3. Damaged accommodation

If the resort/hotel you were to stay at is damaged and cannot provide an accommodation to you or are unable to make any other accommodation arrangements for you, then your nonrefundable costs will be reimbursed.

4. Missed / delayed flight

If there is a delay in the scheduled arrival or departure of a flight due to inclement weather, then this can affect your travel insurance cover depending on how severe the condition is. For example, you have a long travel itinerary and you missed a connecting flight to your next destination due to bad weather. The additional costs to catch up on your travel can be reimbursed by the travel insurance policy.

Timing plays a very important role when dealing with unforeseeable events like these. If there are even the slightest chances that weather conditions can affect your trip, it is wise to avoid taking the risk of traveling. Reliance Travel Insurance policies that take care of all your hassles while you enjoy your vacation.

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Why You Should Never Buy Insurance Without Comparing?

by Vinaya HS on December 18, 2016

in Finance

The following post is a sponsored post.

Health insurance is an important financial instrument that may be used by individuals to secure their future well-being. It is a form of cashless health insurance that allows you to create a pool of resources. This may be used in the future to meet all your medical needs right from laboratory tests, check-ups, to hospitalization fees.

In order to keep up with the ever-increasing inflation and rise in the medical fees in India, it is imperative that you avail of a health insurance plan that meets your requirements. These plans ensure you can receive quality healthcare facilities without facing any financial constraints.

Health insurance purchase cycle

Generally, there is a specific process through which you avail of an insurance policy. While the initial stages focus on increasing awareness and knowledge, the final stage involves the actual payment of premium wherein you stand to benefit from the policy coverage.

The insurance purchase cycle may be divided into the following three stages:

1. Awareness

During this stage, you as a consumer, conduct extensive research in order to familiarize yourself with various insurance policies. It is imperative that you compare health insurance policies in order to understand the benefits of each. During this initial stage, review the terms and conditions of various insurers. This will help you narrow down the list of insurers that meet all your requirements and make an informed decision.

2. Quote review

This stage requires you to engage in thorough mediclaim policy comparison. Most leading insurers allow you to receive instant quotes online which may be the basis of your decision. You should consider reviewing the insurer’s website in order to solve any queries you may have. This is the stage wherein you make up your mind regarding a particular policy you intend to avail of.

3. Acquisition

Purchasing a policy is the next stage wherein a determined sum is to be paid as premium. Also, the insurer mentions the fixed sum insured at this stage. Moreover, you experience coverage as per the terms of the policy and over a longer period of time, you may choose to renew your policy and make claims.

The importance of comparing health insurance plans:

You must always compare health insurance policies before purchasing one. Without comparison, you may not know which health policies offer a cashless benefit or which ones are based on the copayment model. Therefore, experts stress heavily on the need to compare health insurance policies before signing on the dotted line.

Four factors you should keep in mind while comparing health policies are listed below.

1. Insurance portfolio

Comparison of insurance affects the way you invest in your health in various ways. Your insurance portfolio may consist of diverse products purchased by you including family floater plans and riders.

2. Under-insuring

This is a situation where you have not purchased adequate coverage. Although certain policies offer lower premiums, you must review the extent of their coverage and the sum assured. Neglecting to review either of these would cost you in terms of both, mental stress as well as financial crunch.

3. Over-insuring

While conducting mediclaim policy comparison, you must analyze whether there is any overlapping with your existing policy. The purchase of overlapping policies leads you to overspend on coverage that offers you no benefit. You should focus on acquiring adequate coverage that is also financially viable.

4. The reputation of the insurer

While some insurers may choose to market their low premiums or additional facilities, it is important to consider their claim settlement ratios and reputation in the market. This is extremely important as it allows you to gauge your own chances of claim approval and payout.

Comparison plays an essential role in the process of availing of policies. While conducting research on the insurers, it is advisable to frequent consumer feedback forums. This grants you an insight into the workings of the company and satisfaction levels of its existing customers.

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The following post is a sponsored post.

You are considered to be an Indian resident based on the number of days you spend living in the country. If you reside in India for 182 days or more during a fiscal year (1st April to 31st March), you are considered a resident for taxation purposes. A non-resident Indian (NRI) is a person who stays in India for less than 182 days during a financial year.

If you are an NRI having strong roots in the country, you should consider purchasing insurance in India. Most insurance companies offer NRI insurance policies such as investment plan, child education plan, life insurance, etc. based on certain conditions.

Here are seven things you must know when you want to purchase NRI life insurance in India.

1. Eligibility

You must hold a valid passport issued by the Indian Government. Alternatively, you or your parents or grandparents were Indian citizens under the Citizenship Act, 1955 or by virtue of the Indian Constitution. You may also buy insurance in India if you are married to an Indian citizen.

2. Documents required

You may complete the paperwork to buy a life insurance policy during your visit to the country. Alternatively, you may complete the documentation in the country of your residence. Some insurers allow you to avail of insurance through a mail order. However, you need to pay for the medical tests from your own pocket.

In case you are availing of coverage for a high sum assured or buying through a mail order, you need to submit a certified Chartered Accountant’s (CA) certificate. Although you may provide an international communication address, you must have a permanent Indian address. Some insurance companies may also require you to complete NRI forms and questionnaires.

3. Premium payable

In most cases, the premium for life insurance for NRI is the same as that of a resident. However, if you live in a high-risk country, you may have to pay a higher premium. Insurance companies provide several payment modes to their NRI clients. Some of these include net banking, electronic clearing system (ECS), non-resident ordinary (NRO) or non-resident external (NRE) bank accounts, and cheque.

4. Coverage offered

Insurance companies may not offer high-value insurance plans without taking medical tests in India. Some insurers also impose a maximum limit on the sum assured.

5. Claim payout

All claims, surrender value, and maturity proceeds need to be paid in the domestic currency. From the total premium payable, you may receive foreign currency payment proportionately based on the premium amount you paid in the international currency. In case a death claim is filed, your survivors will need to submit a certificate attested by the Indian Embassy or High Commission from the country of your residence.

6. Tax benefits

The tax benefits are same for residents and NRIs. Under Section 80C of the Income Tax Act, 1961, you may save up to INR 1.5 lakh every year. Maturity and death benefits are not taxable. If you repatriate maturity proceeds, these are treated based on the double tax avoidance treaties between the countries.

7. Repatriation of proceeds

All the proceeds under your insurance plan may be repatriated outside the country based on the account used for making payments. Maturity proceeds and death claims are allowed to be repatriated in the proportion to the premium paid in foreign currency out of the total premium paid. If you made payments in domestic currency, no repatriation is allowed.
More than 23 insurance companies provide insurance to NRIs. You must consider the reputation of the insurer, claim settlement ratio, and track record before making your choice. You may take assistance from representatives of the insurance company who provide guidance on how to buy NRI insurance plan in India.

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From vaccination, school to higher education, my friend Satish planned everything even before the birth of his son. Also, one day he sat with his wife and decided the travel destination for the next two years. Not only this, but he also started investing to support his ‘planning’. He was confident that his investment would help him meet all the expenses.

It is good to plan in advance and then start investing for it. However, investing and investing smartly both are different things. Like most of the people, Satish also valued safety over returns and chose safe instruments, like fixed deposits, PPF, etc.; to meet all his future goals. Though considering the safety of returns while investing is not a bad idea, but what most of us forget to consider is the inflation impact. Instruments like fixed deposits, PPF, NSC can give you assured returns, but they can’t give you surety that the returns would be sufficient to beat the rising inflation rate.

As Warren Buffet, says “Do not put all eggs in one basket,” you should also diversify your investment across different options to reap the maximum benefit. So instead of putting the entire investment in fixed instruments, invest some amount in ULIPs which you can invest both in equity and debt as per your risk appetite. Killing two birds with one shot, ULIPs offer high returns along with the life cover.

Let’s have a look at some of the benefits of ULIPs:

1. High returns: ULIPs give you an opportunity to enjoy high returns by investing your money in equity. According to the Morgan Stanley report, equity has generated best returns in India over 5,10,15 and 20-year tenure as compared to gold, real estate, and fixed deposits. While equities gave 12.9% returns, gold, bank fixed deposits, and real estate generated 8.4%, 5.5%, and 6.2% respectively.

How ULIPs Have Performed

Source: Economic Times

2. Assured benefits: Along with the potential to grow your money, Unit Linked Insurance Plans ULIPs also protect your money from the market ups and downs. The insurer offers guaranteed returns on the invested amount. At the time of maturity, the insurer pays you higher of assured benefit or fund value. In some cases, the assured benefit can be 101% of all the premiums paid.

3. Switching option: Switches play a major role in rebalancing your investment portfolio as per the market condition. It is the best option to move out of loss-making funds. According to the market condition, you can adjust your fund portfolio by switching from equity to debt or vice versa. Also, you can switch as per your age and needs. During young age, the policyholder can take more risk and thus, stay invested in equities. However, as the policy moves towards the maturity date, he can switch from equity to debt to protect the investment from market volatility. Most of the insurers offer four to five free switches to policyholders.

4. Transparent structure: As it is said, “risk comes from not knowing what you are doing,” ULIP offers a transparent structure. It means all commissions and charges are clearly mentioned in the policy document. Besides, insurers send daily updates on Net Asset Value (NAV) along with quarterly and yearly reports on the performance of ULIPs. It means you can track its performance and keep a close watch on your policy.

Besides this, all ULIP fund options are clearly detailed in the policy document. Usually, insurers offer the following types of fund options.

Type of Fund Nature of Investment Risk Element
Equity Funds (also called growth fund) The investment is made in company’s stock with an aim of capital growth Medium to High Risk
Bond Funds (also called income and fixed interest) The amount is invested in government securities, corporate bonds and various other fixed income investment options Medium Risk
Secure Fund (also called cash fund, money market fund) The amount is invested in bank and money market instruments Low Risk
Balanced Fund It offers a mix of investment in equity and debt Medium Risk

5. Lesser charges: In 2010, the Insurance Regulatory and Development Authority of India (IRDAI) capped charges at 3% of gross yield for insurance policies with tenure of up to 10 years and 2.25% for those with tenure of over ten years. Also, there are no surrender charges if the policyholder surrenders the policy after five years. Depending on the tenure of the policy, the charges in ULIP are around 2.5%-4%. The most impressive thing about these charges is that they are evenly distributed throughout the policy tenure. Unlike other market-oriented products where the first premium goes towards these charges, in ULIPs only a small proportion of the premium is deducted as charges and the remaining is invested in the market.

Feature Pre-September 2010 Post-September 2010
Lock-in period 3-years 5-years
All charges Could be front loaded Evenly distributed during the lock-in period
Minimum mortality cover Not specified; five times as a practice 125% of the annual premium for single premium policies and 10 times for regular premium policies
Maximum reduction in yield* Not specified For policy tenure less or equal to 10 years, reduction not more than 3% at maturity and 2.25% for policy tenure above 10 years

* Difference between Gross and Net Yield.

Source: Business Today

6. Wealth boosters: Most of the insurers add wealth boosters to the investments and thus, help you to grow your money without making any extra investment. Usually, wealth boosters are added once in every five years starting from the end of the tenth policy year.

7. Top up investment: ULIPs allow individuals to invest the excess cash through periodic top-ups and earn returns on the total invested amount. Further, the top-up investment also enjoys tax benefits under both Section 80C and 10(10D).

8. Liquidity: Though, it is always advised to stay invested for the longest tenure, you can partially withdraw your money to meet any short-term needs like child’s college fee, family vacation or for a medical emergency. Unlike fixed deposits, where there are charges on premature withdrawal, in ULIPs, partial withdrawals are free of cost in most of the cases.

9. Tax benefits: ULIPs offer EEE tax benefit. The premium paid towards ULIPs is eligible to get a deduction for up to Rs 1.5 lakh under Section 80C of the Income Tax Act. Like a traditional life insurance policy, death benefits paid under ULIP are also tax-free. Of course, the payouts will be higher than the sum assured, depending on the returns.

Similarly, upon maturity, the policyholder will get the assured benefit or the fund value, whichever is higher. This payout is exempted under Section 10(10D).

Tax Advantage of ULIPs

Source: The Times of India

10. Life insurance and riders: An additional benefit of life cover is available to ULIP policyholders, which is not available in any other investment options. In the case of death of the policyholder, the insurer will pay death benefits to the nominee who can use it to meet various needs. In this way, you can financially secure your family’s future, even in your absence. Moreover, there are various riders, like premium waiver, accidental death benefit, etc.; that can be added to the main policy to get more coverage. For instance, accidental death benefit rider gives double the sum assured to the nominee in case of accidental death of the policyholder.

11. Online buying: Unlike PPF, ULIPs can easily be bought online from the comfort of your home. Moreover, the online distribution has sharply cut the distribution and maintenance costs, so much so that there are various ULIPs whose cost is lower than mutual funds.

Invest wisely, live happily.

We often prefer to invest in a financial instrument that offers not only high returns but also secures our hard earned money. ULIPs serve both these purposes. So look at market fluctuations as your friend and participate in them to reap the maximum benefits. After all, “Don’t work for money, make it work for you.”

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Why Should You Buy Insurance For Your Office Online?

by Vinaya HS on November 23, 2016

in Finance

Setting up a business and gaining success must have taken a huge amount of hard work, years of perseverance and lots of timely and wise decisions. Finally, you are working in an office; built with your hard-earned money and running a business worth lakhs or crores of rupees. You have your own office equipment, machines, and other office assets. You also have a loyal workforce that needs to be regularly paid.

Looking at this whole structure, one would shudder to think about any unfortunate incident that may lead to the collapse of the whole or even a part of a precious office building or damage its machines and equipment.

But do not worry! This is where an insurance for your office comes into the picture. The best way to obtain insurance for the same is to opt for office insurance online. There are multiple insurers that provide this facility that is economical and comes without any glitches of middlemen, etc. The office insurance covers you and your business from threats like fire, burglary, riot, earthquake, etc.

Moreover, the advent of the internet has made it easy to buy office insurance. If you are still not convinced that an office insurance is a must, following are some of the reasons that you would like to consider to avail office insurance online:

1. Time saver technique: By availing office insurance online, you can protect your office premises without hassles. You don’t need to take a day off from everyday business to visit the insurer as everything is now just a click away with several options of comparing different policies offered by different insurance companies. You can choose whatever suits you the best weighing the premium costs that require being paid and the benefits that different policies offer.

2. Relatively lower premium rates: The online approach will enable you to get the best facilities at lower premium rates. This is because by selling policy online, the insurer saves administration charges and agent’s commission and this saving is passed on to customers in the form of low premium rates.

3. Covering a wide range of damages: The best part of availing an office insurance policy online is that with just some digital work on your part, you can protect your office premises from multiple unwelcome destructive incidents. If you think that your office has been constructed flawlessly and there no damage is likely to occur, think again! There are many dangers that are uncalled for, and they may occur either by mismanagement or due to the use of low-quality material in some areas. These incidents include fire, bursting of pipelines and some unfortunate event in the adjacent building that may also affect your office premises.

4. Protection from natural disasters: A natural disaster is common in coastal areas that have dangers from cyclone or floods. If your office is situated in a mountainous region, there is a risk of landslide. The problem is that such disasters are not in human control and often destroy everything in the region. Imagine the amount of loss in case of such an unfortunate incident takes place. It is thus better to insure your office to protect it from widespread damage and destruction.

5. Protection from criminal activities: Do you think that your office is safe from any illegal activities? With rising criminal activities, you can never be sure enough.

You need to ensure the safety of your office from theft and burglary. A good way is to have a suitable cover in case such incidents might take place. The office insurance policy also covers damage due to riots and strikes. So, if your office is situated in a riot-prone area, secure it through the office insurance policy instead of suffering a huge loss later.

6. Secure office equipment: Most insurance policies also offer a cover for your office equipment and machines. After all, these are the main things through which your business runs.

It is thus better to secure the machines from any damage or destruction due to fire, burglary or forceful entry into the office premises with the aim to destroy office equipment. If you lose your essential equipment, the production and your business are likely to be halted in an untimely manner. It will also decrease your employee satisfaction and reduce their efficiency at work. Extended benefits include compensation for any loss of money in a safe or in transit.

So, no second thought needs to be spared now when you know the easy way to obtain the office insurance is online.

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A PPF Calculator

by Vinaya HS on October 30, 2016

in Finance

The following post is a sponsored post.

PPF calculator refers to the simple calculator that determines interest earned on your investment in PPF account. The basic idea behind PFF calculator is compounding the interest on your investment. Although, you can exercise this method manually when you have to calculate interest for one year. But when it comes down to fifteen or ten years, the calculations can be messier but no need to worry simple PPF calculators can help you do all the calculations. Before we go to details of PPF calculator, Let’s understand more about PPF account, its features and benefits

What Is Public Provident Fund Account?

In simple words, Public Provident Fund is the saving scheme that helps individuals to build the retirement corpus and also save taxes. With this scheme, you can invest your savings for fixed period and will earn the periodic interest (compounded annually). Currently, the PPF interest rate is 8.1%! That is reasonable!

PPF account can be opened with a low and affordable amount of deposit. The second attraction to this scheme is the tax benefits. The interest earned is completely tax-free. And, this scheme is backed by the government, so comes with security. No doubt, why PPF is so popular in India!

PPF is easily accessible. You will face no problem while registering for the account. To open a new account, you have to visit the authorized bank or post office. Simply, get the form, fill it and submit with required documents. PPF accounts can be opened in all PSU banks and some select private banks.

Why Should You Choose PPF Scheme?

Some people don’t opt for PPF scheme because they don’t know its awesome features and benefits. For your convenience, I have outlined some of them as follows:

Interest Rate: The Indian Government set the interest rate for PPF periodically Currently the review period is quarter. You earn interest on investment which is compounded annually. Current interest rate is 8.1%, which is pretty good.

Tenure: To avail the benefits of PPF, you need to keep the account active for fifteen years. It means you need to invest in this account per year for fifteen years. After maturity, you can invest for further five years.

Initial Deposit: You can open the account with Rs. 100.

Minimum/Maximum Annual Deposit: To keep the account active, you have to make a deposit every year. The minimum amount is Rs. 500 and the maximum are Rs. 1.5 lacs per years. You can make deposits with a cheque, cash, PO, online funds transfer and DD, etc.

Withdrawals: Withdrawal is allowed after maturity. Well, premature withdrawal can be made, but on certain conditions and after seven years from opening date. Otherwise, premature withdrawal is not possible!

Tax Advantages: The tax rebate is the main attraction of PPF. The interest earned is completely tax-free

How To Calculate The Interest Using PPF Calculator?

Calculation of PPF interest is not difficult. So what is the exact algorithm of PPF calculator? As mentioned in the start, the interest will be compounded annually. For instance, you have made the initial investment of Rs. 1.5 lac. So, you will calculate the interest on Rs. 1.5 lacs at the rate of 8.1%. Pretty easy right! Now, we have to compound it. Next year, you will make an investment of Rs. 1.5 lacs again. Now, the rate will be applied to the sum of previous year’s balance including interest earned and current year’s balance. And this process will be continued for fifteen years. You can use a simple calculator below to calculate interest and yearly balance for PPF calculator.

Author: Sarabdeep Singh; Co-founder bodhik.com, an online financial advisor.

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What is Property Insurance and How to Buy It?

by Vinaya HS on October 30, 2016

in Finance

Opting for an appropriate property insurance is as important as buying a property. Make sure that you go for an insurance that offers 360-degree coverage. As per your property choose the type of insurance you need and go for the one that offers comprehensive coverage. To help you in deciding the best, we have compiled an infographic.

Property Insurance Infographic

Image source: Securenow.in

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The following post is a sponsored post.



When you are looking to take a personal loan, two of the key factors that play an important role in lender’s decision to lend to you are:

  1. Your Credit History
  2. Your Income Stability

Personal loans are unsecured loans. This means that lender is giving the borrower money without taking any collateral. So in case of a default by the borrower, lender will have no security that can be sold off to recover outstanding loan amount. And this is the reason why interest rates on personal loans are typically higher than rates on secured loans like home or auto loans.

In unsecured loans, the only thing that the borrower can depend on is your past credit history and your future income potential.

If you have been regular with your EMI payments in past, it will reflect positively in your credit report. A good credit score tells the lenders that the applicant has been regular in clearing his past dues and this can be expected in future too. So the perceived risk of a borrower with good credit score is lower.

So having a good credit score is very important for getting a personal loan at competitive rates. If lenders perceive that you are a high-risk borrower with lower-than-average credit score, they might deny you a loan or offer you a personal loan at very higher interest rates.

Now coming to future income potential. You can only pay off your new loans with future income and not by past credit record. Isn’t it?

This is the reason why importance is given to borrower’s ability to meet future EMI obligations. This is judged basis stability of income and its adequateness given other expenses of the borrower. If lenders feel that borrower will be unable to meet his EMI obligations due to lack of sufficient regular income, they can chose to reject the loan application.

So when you are applying for a personal loan, make sure you have paid heed to these two factors. This will save you from any negative surprises that might spring up in loan processing phase.

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