How to make a smart Personal Loan repayment plan

There are different types of loans available in the market and every loan comes with its own terms and conditions and its deadline to avail it. Have you ever thought which loan can be easily availed without any hassles? You are right a personal loan! This loan can be availed with ease compared to other loans and credit cards. Though it is one type of an unsecured loan, this is considered to be one of the hot selling loans. They can be availed through various banks and Non-banking financial companies. The only drawback this loan has is its high personal loan interest rate.

After considering all the factors associated to this loan, it is still one of the best financial products available there. You can use the loan funds as you wish and just because of its speedy approval process you can get this loan within hours if you are encountering any emergency financial situation.

There are many of us, who use personal loans for luxury expenses. This is absolutely bad practice, what happens is that you happen to receive various sales calls asking if you are in need of a loan, you think if there is an option available why shouldn’t I take it? You go for it, spend the loan amount and start thinking how would you repay the loan amount. You are smarter than you think and realize in an early stage that you have made a mistake opting for this loan. You start researching online and come up with the idea to closing the loan with smart repayment plans.

What is a smart repayment plan?

The lender while providing the loan gives you various options of repayment programs. These are different from the traditional ones. This helps you with a clear idea on timeline of repayment.

Today we will discuss various smart repayment options,

Step-Up Repayment option

In this payment plan, the lender allows you to make lower EMIs for a specific amount of time and then you can increase the EMI and start making payments. This is perfect for salaried people, who expect their salary getting hiked every year and they can increase the amount eventually.

Step-Down Repayment option

In this payment plan, you are allowed to make higher payments which contribute to the principle amount of the loan. After a while you are allowed to make small payments. This is ideally for people who earn well and have opted personal loan for luxury purposes.

Bullet Flexi EMI 

This is one of the best repayment plans when it comes to personal loans. You can make bullet payment once in a year or twice in a year with the ongoing EMIs. This will help you to close the loan in no time and helps you build a better cibil score calculation. You are supposed to put it on paper to the lender that you will be making bullet payments on the mentioned time and date. Failing to do so will hamper your credit score and hurt your chances of a loan in the future.

Partial prepayment

Unlike Bullet payments, you can make partial payments with ease and no strings attached. For example you happen to receive a good amount as bonus you can just transfer hat amount as partial payment and that will contribute to your principle amount. The only difference is, you get to do this without signing a contract.

Full prepayment 

This is the best of all! Just make the full payment with some nominal foreclosure charges and have a peaceful life ahead without having a sword hanging down to your neck.

These prepayment schemes may look attractive to you and they are designed to help you out financially. Just make the payments on time and get your financial life sorted.

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How education loan works in India

An educational loan has also become easier now to avail and let the students perused their dreams of higher education in both India and Abroad. There is no much difference in the regular and the usual rules and structure of this loan. Even if the student applied in various banks or NBFC, there would hardly be slight changes that they would notice. Unlike home loan or car loan or personal loan or business loan, this one is standard and do not change with respect to different banks. From the amount that can be sanctioned, interest rates, collateral and much more are all the same in banks and NBFCs.

Education loan has become very common as there are more people who are inclined towards higher education than they use to be earlier. Also, there are various courses that are offered along with the usual studies and people want to explore them!

Amount Sanctioned:

The amount that is sanctioned for the educational loan in India and Abroad varies. First of course with the country course that is going to be taken at, and second if they are with collateral or not.

• Loan if taken for education in India without collateral: 4.5 Lakhs

• Loan if taken for education in India with collateral: upto 10 Lakhs (Or Guarantor required if not collateral)

• Loan if taken for education in Abroad without collateral: 10 Lakhs

• Loan if taken for education in India without collateral: upto 20 Lakhs

A rate of interest:

The rate of interest for any education loan if taken for studies in India or Abroad ranges between 10.25% – 12.5% depending on the banks and the CIBIL score if the applicant is already earning.

Processing fees:

Many of the banks do not charge processing fees for this particular loan. And the one that may charge, has a maximum of 2%.

Tenure of the loan:

These loans have the tenure of 5 to 10 years depending on the student’s choice

Repayment:

Once the course that is opted by the student is completed, 6months grace is given. In those six months, the student is to search for the job and then the repayment starts. So the tenure of 5-10 years starts from the day loan repayment is started.

Courses for which loan is to be applied:

Only graduation and post graduation courses for the proper university are given the approval for education loan.

How fast can the loan be approved?

In almost 2-3 weeks, the application gets the approval.

Collateral Requirements:

• Residential property

• FDs

• Life Insurance

• NA plots

What is covered in the loan?:

• 100% college tuition fee

• Accommodation charges (basic)

• Exam and Library fee

• Books and equipment

• A computer/Laptop

• Traveling expense if the student is traveling Abroad

Documents Required

• Admission Letter

• course fee structure

• Loan application form

• KYC documents

• SSC, HSC, Graduation certificates

• Student’s and Guarantor’s passbook with last six months updated record

• Income Tax returns for the last two years of the applicant and the guarantor

with all of these, the most important is the courage of the student to either study here, in India or Abroad. As everything, here also there can be too much of miscommunication that may happen. Emotional feelings when one is traveling abroad. Even in India if it is a different city, there still would be multiple adjustments that one will have to do.

With this very structured plan, education loan demand is increasing day by day. With various courses, innovative ideas, more people have now inclined towards the studies again. However, for all the courses the loan may not get sanctioned. So one may check it with the banks right after planning if the university of which they are planning the job and course which they wish to opt will be sanctioned or not.

How to take an advantage of your personal loan

Money saved is money earned. Saving is important for many factors that we come across. Investing is one of the factors that are to be considered anytime in life. But with this, also, today’s millennials have different thoughts. Saving for all your life and getting the desired house or car or vacation is not what they do! Loans are the thing. Home loan, car loan, personal loan are the thing for them. By taking a loan if the dream that is seen can be achieved at a much younger age than it can be.

As the home loan is taken for buying a house, education loan is taken for studies, a business loan is taken for any kind of business either start-up or expansion on work, an auto loan is to get a loan to buy a vehicle, but, the reason for opting a personal loan is widely spread. House renovation, medical emergency, Holiday trip, weddings, buying stocks, short-term investments are few of the reasons when one opts for this loan. No one here wants to pay extra. Then, how can one take an advantage of personal loan? Banks or NBFC (Non-Banking Financial Companies) or any financial institution for that matter is also getting maximum benefit from all that they approve! So who wins? Who can get the advantage?

As an individual, our goal is to get the best deal and the majority advantages we can get out of the loan that we have taken. While opting for a personal loan, things that have to be taken while calculating are loan amount sanctioned + personal loan interest rate + processing fees. Also, we have to make sure that if we want to pre-close the loan what are the charges for that also. Usually, the interest rate starts from 10.75% and can go upto any amount till 35%. The question which may arise here is why is there so much of gap between the interest? It is understood if the bank differs the % may differ but such a huge difference?

While closely understanding the concept it becomes clear that the interest rates that are charged over the loan amount that is applied or approved from banks or NBFCs depends on credit score. What is a credit score? It is a three digit number ranging from 300-900 where 900 is the highest, score and interest rate are inversely proportional. Higher the score, lesser is the interest rate; and lower the score higher is the interest rate. The reason behind this is: the credit score is the representation of the individual’s responsibilities over the credits that they have taken. Higher score describes that an individual is responsible over the credits they have and lower indicates the not so responsible individual for the credits i.e. credit cards and the loans that they have taken making it a risk profile for the lenders.

While talking about how you can get an advantage is getting the best option available for you! When the bank is decided along with all other criteria, understating in-depth is also required. These loans come with fixed interest rates. You have the flexibility to choose the tenure. It is the unsecured type of loan so you do not have to put anything in exchange to get the loan. You can also get the tax benefit if you have applied for the personal loan. It can also be used to pay the older debts to settle all the past credits that are to be closed and in turn, the credit score also boosts up!

With being smart enough, if the investment may help you get even a single extra % more than you have to pay in personal loan, you can also get that in such a case. There are wide angles to all the points mentioned in order to get a better advantage of the loan even when the personal loan interest rate is considered! But make sure you do not miss any payments and do not delay them as well! A responsible borrower is always blessed with good credit score!