Finance

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A Systematic Investment Plan (SIP) is a disciplined way to save. Under an SIP, you choose to invest a certain amount at regular intervals with the objective of earning profits. Regular investing allows you to accumulate your capital over a period of time. You may use an SIP for any financial instrument, such as mutual funds, equities, or bank deposits.

Difference between equity and mutual fund

1. Equity

Equity provides you ownership of the company. For example, if you hold 100 shares in a company that has issued 10,000 shares, you are the owner of 1% of this company. As a part owner of the company, you are entitled to receive benefits through dividends. However, if the company does not perform well, there is a risk of losing your capital investment.

2. Mutual funds

Mutual funds pool money from several investors to invest in different financial instruments. The corpus may be invested in equities, debt instruments, or other types of securities. There are different types of funds, such as equity-related schemes, debt funds, and balanced funds. Each of these fund types invests in financial products based on its investment objectives and philosophy. A major advantage of investing in mutual funds is that you are able to diversify your portfolio and reduce the risks. Furthermore, you may be able to generate regular income through debt funds. Compared to interest earned on a savings account and fixed deposit, you may be able to earn higher returns through mutual fund investing.

When you choose to invest a fixed amount in shares through a SIP, it is known as equity SIP. On the other hand, when you choose to regularly invest in mutual funds, it is referred to as mutual fund SIP. Opting for an SIP allows you to avoid timing the market and helps decrease the volatility due to fluctuating market conditions.

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Marriage is a huge event in an individual’s life. Couples make several commitments when they are married and financial responsibility is one such commitment. Both spouses must avail of life coverage to protect themselves from future uncertainties. A crisp knowledge of income tax slabs would help one to avail maximum tax benefits via life insurance.

Although you may find it unpleasant to think about death just when you commence the new journey of your life, it is important to consider the same. Purchasing a policy earlier helps you reduce the premium, which may save a significant amount during the entire tenure of the policy.

Insurance is beneficial for you and your spouse to meet various financial goals during your lives. This financial product is useful when you decide to buy a home, start a family, plan for your children education, and retirement.

However, if you, unfortunately, were to get divorced, it would impact your finances. In the western countries, it is common for couples to lay down the terms and conditions in case they are divorced in the future. However, this is not common amongst Indian couples where marriage is considered as a sacred union of two people.

Here are three situations you must consider while discussing the divorce terms.

1. Divorce settlement

When your divorce is mutual, both would agree on the terms including the financial aspects of your separation. Divorce settlements may or may not include assets and monetary terms. While discussing the terms, you must not let your emotions take over. It is recommended you list down all your assets, such as retirement plans, life insurance policies, home, and vehicles. After agreeing to all the settlement terms, you must reaffirm these separation details in the court of law.

2. Handling nominations

There is a high possibility that you have included your spouse’s name as the nominee in your insurance cover. The first thing when you are divorced is to remove your former partner’s name as the nominee. You may include any blood relative as the new nominee in your insurance plan. To make this modification, you would have to submit a letter mentioning the name of the new nominee to the insurance provider.

3. Spouse as an assignee

If the new nominee is a minor, you would require an appointee. This individual is the caretaker of the nominee in case you pass away within the policy tenure or at the time of maturity. Furthermore, complications may arise if you have chosen your spouse as an assignee. Assignment implies transferring the liabilities and rights provided by the life insurance plan to the assignee. When your spouse is an assignee, he will exclusively receive all the rights. In case you need to make any modifications to the insurance policy, you would need approval from the current assignee. Therefore, to avoid any difficulties, it is advisable for your spouse to reassign the plan in your favor before the divorce is finalized.
If you hold joint plans, you may have to surrender the policy or allow it to lapse because insurers do not allow splitting these types of insurance plans. Policies that comprise some investment component (like endowment plans) are often settled on the basis of each partner’s contribution. Divorce is emotionally difficult; however, certain difficulties are avoidable with the help of a little pre-planning.

About HDFC Life

HDFC Life, one of India’s leading private life insurance companies promoted by HDFC Ltd. & Standard Life Ltd., offers a range of individual and group insurance solutions. HDFC Life’s product portfolio comprises solutions, which meet various customer needs such as Protection, Pension, Savings, Investment and Health.

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In March 2014, months before the Bhartiya Janta Party (BJP) would establish government after the 16th Lok Sabha elections, the Reserve Bank of India (RBI) announced grim news. Bad Debts in India were rapidly on the rise, so much so that banks had reported Non Performing Assets worth INR 1,73,800 crore. Fast forward three years and we have moved from the frying pan into the fire.

Bad loans have escalated by 135 per cent i.e they have risen from INR 1,73,800 crore in 2014 to INR 2,61,843 crore in just two years. Not only have the amount of NPAs increased, the recovery rate from these bad debts is merely 18.4 per cent, i.e banks have managed to recover around INR 32,000 crore as of January 2017. Earlier this year, bank credit growth hit an all time low, perhaps the lowest in nearly two decades. Recent reports in business news have confirmed that there is still a whopping outstanding of INR 6.8 lakh crore (this figure could have even crossed INR 7 lakh crore) in NPAs. We’re talking about a 56.4 per cent surge in NPAs in 2016 alone and this is likely to follow an upward trajectory. NPAs of public sector banks stand at a 70:30 ratio with 70 per cent bad debts belonging to large corporate houses and the remaining 30 per cent belonging to small and medium scale enterprises.

While the RBI has been chalking out a plethora of restructuring schemes, there haven’t been any drastic improvements to curtail this situation. Additionally, banks are blaming the pressure set by the demonetisation drive for their delay in clearing balance sheets. It is predicted that most banks will miss the March 2017 deadline set by the RBI.

Meanwhile, Finance Minister, Arun Jaitley’s brainstorming session with RBI governor, Urjit Patel, RBI Deputy Governor Viral Acharya and S S Mundra, besides Chief Economic Advisor Arvind Subramanian, Principal Economic Advisor Sanjiv Sanyal, Financial Services Secretary Anjuly Chib Duggal and Corporate Affairs Secretary Tapan Ray has left business news publications abuzz. The meeting held on Friday, 10th March discussed options for resolution stressed assets in the banking sector including the twin concept of Private Asset Management Company (PAMC) and National Asset Management Company (NAMC).

Though the RBI is not in favour of extending timelines of large loan defaulters, it has suggested various schemes for tackling bad loans, including Scheme for Sustainable Structuring of Stressed Assets (S4A), Corporate debt restructuring (CDR), Joint Lenders Forum (JLR) and Strategic Debt restructuring (SDR). Although nothing is concrete yet, there is definite hope for recovery to pick up pace once RBI reforms are put in place.

In other business news, Chief of the Public Accounts Committee (PAC), K.V Thomas in a statement last week said that he hoped Public Sector Banks would consider publicly shaming large corporations by revealing their names (a common practice undertaken by banks to shame small scale defaulters).

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Your first car helps you learn a lot about various aspects and technicalities pertaining to an automobile. You get to learn, to begin with, how to drive and park a car, how to prep your car for an oil change, how to change a flat tyre, motor insurance, and the list goes on. Ever wondered what the sticker on the car that reads “BS Compliant” or just “BS IV” implicates or what it translates to? Let’s find out.

What are BS norms?

BS is an acronym that stands for Bharat Stage. It is typically followed by a numerical, say three or four, depending on the car manufacturing date and model. BS norms are basically a set of regulatory standards concerning the emissions from automobiles or four wheelers in India. These norms are conveyed and regulated by the Central Government as needed, from time to time. This is an exercise that is implemented by the Central Pollution Control Board as a measure to curb air pollution from car emissions. This board comes under the purview of Ministry of Environment, Forests and Climate Change. With the increased sale of private cars causing the number of cars on Indian roads to rise greatly, the air pollution levels have reached a record high. Hence, the BS norms and standards have acquired a lot of importance in the hope of tackling this issue.

Difference in BS-IV and BS-VI standards

As mentioned earlier, the number followed by ‘BS’ is the stage number that indicates the version of BS norm compliance. The latest one that is employed with the current crop of car models is BS IV. The number keeps ascending as and when the new norms are enforced according to the government’s directive. Till now the BS norms have been based upon its European counterparts and the trend is expected to continue with BS VI. The BS IV will enforce tighter regulations which will force the oil companies to produce fuel i.e. both, petrol and diesel that is compliant with the new regulations.

Impact of BS VI norms on car insurance

As per a directive by the central government, it will be mandatory for all four wheelers to be BS VI compliant by 2020. This has created quite a stir in the industry since this entails skipping a number, going directly to BS-VI from BS-IV. This is because it will cost a lot to both, the oil as well as the car manufacturing companies to produce fuel and cars that meet the new BS VI standards. This new standard is slated to affect your vehicle insurance premium too! Here’s why. In order to make the cars BS VI compatible, car manufacturers will increase their prices. Due to the increased price tag, the sum insured of the car will increase in tandem. Since the automobile insurance premium is directly proportional to the sum insured, the premium amount is bound to rise. As per industry experts, a rise of around 20% is expected. Because of this, the leading players of the automobile industry are trying hard to extend the deadline for BS IV to 2023.

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Two-wheelers are popular among individuals across all age groups. The demand for motorbikes in the country is increasing due to their fuel-efficiency and easy-to-handle capability.

There are many aspects that need to be taken into consideration before purchasing a two-wheeler. It is important to conduct extensive research on various brands and models available in the market.

One of the most important factors to be considered is finance. If financial constraints are preventing you from making your dream bike purchase, you may avail of a two-wheeler loan. Many financiers offer benefits like minimal documentation, extended loan tenure, instant loan approval, flexible repayment schemes, as well as competitive two-wheeler loan interest rates.

Here is the mandatory checklist you must consider while buying a two-wheeler.

1. Budget
If you spend more than your budget it will cause a huge strain on your finances. Hence, analyze your financial position and select the model according to your budget.

2. Brand and model

There are numerous brands in the market offering bikes with a unique set of features. Select a brand carefully as the brand value decides the resale value of the bike. Decide the model based on your needs and budget.

3. Mileage

The mileage of a two-wheeler is one of the important factors to consider. Choose a bike that offers a mileage of at least 35 to 40 kmpl. It is also important to consider the city traffic and small roads while calculating the same.

4. Finance

If you do not have the outright cash to finance your dream bike, you may avail of a loan and repay the same through Equated Monthly Installments (EMIs). Buying the bike on EMI is light on the pocket, thereby making loans a great finance option. You must conduct extensive research and opt for a well-known financial institution like Capital First that offers extended loan tenure, minimal documentation and attractive bike loan interest rates.

5. Location of service centers

Ensure that the service centers of the bike’s company are located near your residence. In the case of an emergency, you may visit the nearby service center for repairs, instead of traveling long distances.
You must consider the aforementioned checklist before purchasing the bike. This will ensure you ride home your dream bike without facing any difficulties.

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The Best Time to Buy a New Bike in 2017

by Vinaya HS on March 4, 2017

in Finance

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(Source: www.moneysavingexpert.com)

Do you want to buy a new motorcycle? Do you want to know the best month to make your purchase in order to maximize your benefits? Predicting the best time may be difficult however you should try not to purchase a bike before it gets discounted.

Most dealers offer discounts during the festive season, which makes it a good time to purchase a bike. Also, you may purchase one during the year-end as dealers may offer attractive schemes to clear their current stock. These discounts may also be available at the beginning of the year as dealer’s last year’s inventories may still be unsold. Purchasing a bike manufactured in the previous year is not a concern especially if you do not plan to resell it. You may also get discounts in the month of March as the financial year comes to an end. However, the choice may be limited during this period.

Companies may also offer excellent discounts prior to the launch of new models. Manufacturers often release new models at the same time each year. Therefore, you must stay abreast during the release of the latest models from your preferred brands to enjoy discounted prices.

You may avail of a bike loan to ensure you do not face financial constraints while purchasing your dream bike. Non-banking financial companies (NBFCs) and banks provide such loans at attractive interest rates, thereby making it easier for you to purchase the latest bike without facing any difficulties.

Here are three benefits of availing a two-wheeler loan.

1. Simple documentation

Lenders require minimal documentation to provide such loans. You simply have to submit basic documents like residence, identity, and income proof as well as bank statements. Furthermore, the processing time of such loans is short and therefore you will be able to ride your dream bike within a few days.

2. Affordability

The bike loan interest rate is not high, thereby making it affordable for you to avail of these facilities. Furthermore, the processing fees are nominal with no hidden charges and therefore you may easily borrow the loan amount.

3. Repayment flexibility

The lenders generally offer up to five years to repay the borrowed amount through Equated Monthly Installments (EMIs). This ensures you do not face any financial constraints in repaying the loan.

When you purchase a bike on EMI, you may enjoy the freedom of traveling as per your convenience, without weighing down your budget. Therefore, you should conduct extensive research to purchase your dream bike at the right time and avail of a loan to enjoy affordable two-wheeler loan interest rates.

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Before you plan to have children, preparation for their financial needs seems easy. You visualize about how you will open their first account, teach them all the tips and tricks of saving money right from the age of 2, and imagine that they will be financially independent by the age of 15. But then the bubble bursts, you go ahead and have a kid and realize how expensive it’s to raise a child. Your planning and budgeting skills require an upgrade and you start wondering as to when should you open a savings account for your kid, the answer to that depends on the end goal of the account.

Education Savings

Savings for education is a must and for this you need the most amount of time possible. Compounding interest is on your side, ensure that you open a savings account as soon as the baby is born. An important lesson while saving for your kid’s education is to start early and make systematic deposits into the account.

Long-Term Savings

There are several ways that you can help your kids with long-term savings, and most of those depend on if your children will be contributing by putting any money into the savings account. One of the greatest gifts you can give your child is a whole life insurance policy. Most banks and companies will issue these long-term saving options any time after the child is 30 days old, it also helps to choose a company that is financially strong as it ensures maximum growth.

Conclusion
All of the would-be parents and the ones that are planning for a kid wonder about when to open a savings account for their child. The right answer is as soon as they are born. Be smart and make systematic deposits to avail the maximum benefits.

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Manufacturers across the country are releasing new scooter models to increase their market share and reach. The demand for gearless scooters is also rising because these are easier to maneuver and more comfortable when compared to motorcycles.

Manufacturing companies are launching new models for potential buyers belonging to various age groups. Here are the top three gearless scooters that were popular in 2016.

1. Honda Activa

This is the company’s flagship model and has been popular since its launch. It is equipped with a 109.2 four-stroke single cylinder HET engine. This model comes in three stylish variants; Activa 3G, Activa 125, and Activa-i.

2. TVS Jupiter

This gearless scooter is primarily aimed at young riders. It offers advanced features, such as wide comfortable seat, bigger headlight and arrow shaped air-intake in the front. The Jupiter is equipped with 109 CC single cylinder and air-cooled engine. Furthermore, it comes with two modes, Eco mode and Power mode, thereby ensuring optimal performance. It is available in three variants; the Jupiter, Jupiter ZX, and Jupiter MillionR Edition.

3. Hero Maestro Edge

It is an automatic scooter with an attractive look and graphics. You can enjoy a comfortable ride with the combined braking system. This scooter comes with a 110.9 CC four-stroke and air-cooled engine for greater power. This scooter comes in two variants; the Maestro Edge LX and VX.

The high prices of the top three gearless scooters may make it difficult for you to buy one. However, financial institutions across the country offer affordable two-wheeler loan interest rates. The entire process is quick and you need to submit simple documentation before you receive approval. Lenders fund up to 95% of the on-the-road price, which makes your down payment affordable. Moreover, you may repay the money through Equated Monthly Installments (EMIs). The maximum tenure for a bike on EMI is five years. Longer repayment tenure ensures you do not have to face any difficulties in repaying the loan on time.

Several banks and non-banking financial companies (NBFCs) offer attractive bike loan interest rates. However, you must consider other factors to make the right decision. Some of these factors are loan inclusions, processing fees, other charges and prepayment penalties. Comparing the terms and conditions online from various financial institutions is recommended. This will help you understand two-wheeler loans in detail and make an accurate decision.

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Two-wheelers have become one of the most preferred modes of transport. Bikes have a lower maintenance cost and are also a great solution to traffic woes.

Due to such advantages, the sale of two-wheelers is increasing at a rapid rate. However, due to lack of adequate funds, you may not be able to afford your dream bike.

At such times, availing of a two-wheeler loan helps you to purchase your dream bike without any hassles. Financiers these days offer a plethora of benefits on loans, like minimal documentation, extended loan tenure, simplified documentation process, attractive bike loan interest rates, and quick disbursals. You may also avail of an instant loan if you wish to purchase the bike in minutes.

About instant loans
Loans that are approved instantly, without any delay, are known as instant loans. The loan is approved on the basis of the information you provide on the application form. After successful submission of the duly filled application form, it is reviewed. The lender then instantly approves the loan and disburses the amount into the preferred account. The loan amount has to then be repaid through Equated Monthly Installments (EMIs) over a period of time known as loan tenure.

Tips to obtain instant loans

1. Compare two-wheeler loan interest rates offered by various lenders before selecting one. Capital First, a leading financial institution, offers competitive interest rates and is also known for providing instantaneous loan approvals.


2. Apply for an instant loan online, through the lender’s website or mobile app. Such interfaces are convenient and user-friendly.

3. Provide complete details on the online application form. As the application is reviewed solely on the basis of the information provided, it is imperative to submit a duly filled form with correct details.

Now, you do not have to worry about accumulating money and utilizing your savings to purchase the bike. You may apply for an instant loan, purchase the bike, and then repay the loan amount easily through EMIs. Purchasing a bike on EMI ensures you do not face any financial constraints while purchasing your dream bike.

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What Does A Home Insurance Policy Cover?

by Vinaya HS on February 14, 2017

in Finance

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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

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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

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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

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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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The following post is a sponsored post.

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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The following post is a sponsored post.

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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