Tag: cibil score

Gold Loans V/S LAP

There are a lot of loans available in the market tailored to your needs and wants. The loans are categorized into two, secured and unsecured loans. When a loan is sanctioned without collateral, it is called an unsecured loan. Personal loans, some type of education loans and credit cards are categorized in unsecured category.

On the other hand, if you are applying for a loan, guaranteed by collateral it will be a secured loan. Loans such as home loan, LAP, car loan, gold loan, LIC policy, etc are categorized into secured loans.

When you encounter a financial crunch and are in need of urgent funds, you can definitely apply for a loan. Taking a loan completely depends on your requirement and your repayment capacity. Personal loans are always at your disposal. The processing is so fast, Sometimes you get you loan sanctioned within minutes. But there are many of us who do not like personal loans because of high interest rates and less tenure of repayment. Sometimes even a personal loan cannot help at urgent situations because of its limitations, so what would you do in such situation?

Opting for a gold loan or a LAP can be a helpful remedy in such situations. But which one is better?

Let’s do a short comparison between these two loans and understand which one suits you better when faced with an urgent financial requirement,

Gold Loans

Loan against gold is an easy one. It can be opted at lightning speed and there are not much paper work demanded in the processing. Every Indian family has some chunk of gold with them, irrespective of their financial condition. A gold loan is taken as the most proffered type of loan against Indians as it offers low gold loan interest rate.

You just have to produce your gold ornaments or biscuits to the bank, the bank will then weigh the gold and determine the amount of loan it can sanction. The amount completely depends on the ornaments weight.

The following are the features of gold loan,

  • Gold loans have flexible tenure which ranges from days to months. There are Non-banking financial companies which allow longer tenure as well.
  • EMIs are flexible and depends on the gold market’s upward and downward revision of prices
  • The loan disbursements are quick as compared to other loans.
  • The gold is took as collateral until you do not make the payment.

 

Loan against property

This is an entirely different concept than the gold loans. You can opt for a LAP by keeping your residential or commercial property as collateral to the lender. There are a lot of factors which determine your loan sanction. The bank also conducts a credit score check on you and if you have a low cibil score, no matter how expensive the property is, your loan will be denied.

This loan can only be availed if you have a property n hand.

Here are some key features of loan against property,

  • You can opt for tenure between 10 to 15 years for loan repayment.
  • The loan amount is determined between 40%-60% of the total value of property.
  • A thorough background check is done on the applicant or applicants if any like cibil check, monthly income, etc.
  • The property’s original documents will be submitted to the bank until the loan is not paid in full.
  • This loan is suitable for higher loan amounts as individuals can opt for long repayment tenure.
  • If the loan is not paid on time, the lender has the power to auction the property and recover its loan money.

Both have its advantages and disadvantages. If you want quick money and can make the repayment within days, go for a gold loan and if your requirement is high and cannot make the payment in short notice, go for a LAP. Understand your need and take the loan you plan for. Before taking these loans, do a thorough research on the options with different lenders and get the best on your situation.

Taking a loan is easy, if you make all your payments on time you will be in financial heaven but if you default your payments, not only it will affect your cibil score but also will hamper your financial and personal life.

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I Have A Debit Card, Why Do I Need Credit Card?

It’s an era of plastic money. Gone are the days where we had to carry a big chunk of cash and be worried all the time. While travelling to outstations, while making huge payments, while shopping, it was a task from counting notes to checking them if they are fake; all was a hazard. But while cards coming in picture, things have changed and these hazards have decreased. All you need to carry is a small 3’*2’ plastic card, in your wallet and you are sorted. The question then arises is which card is better? Credit card or debit card? Let’s discuss both in detail.

What is a debit card? A debit card is a card where you have the money already present in your account. You swipe your card or you withdraw the cash, the amount used is debited from your existing bank account. So you can not over spend. You can spend only that much, which is available with you. So, for people who are not calculative or over spenders, its best option.

Let’s talk about Credit Cards now. A credit card is an option which allows you to use the money even when you do not own it. So, whatever you spend in given to you on the credit based, for few days, mostly one month or the billing cycle of your card. So, if your billing date is 10th of every month, wherever you use your card from 10th of that month to 9th of next month every time the bill is reflected in that cycle of 10th. The benefit here as stated is that you can use the month in advance, even when you do not have. So it a good option when you do not have any cash in hand, but it’s too urgent to use, but at the sometimes, it is a thing which has responsibility. “With great power comes the great responsibility” as the quote states, you have the power to utilize the amount you don’t have, but you should be responsible enough to make the payment of the amount used by you on time.

As explained, both debit card and credit card have their own pros and cons. It’s on us that we fall in which category of people, and what fits us best. Now, the question arises here is: If one has a debit card, why should they have a credit card? There is one huge benefit of having credit card over debit card. And that is credit score. A credit card usage gives you an access to change your credit score. Credit score is the result of the payments you have made across your various credits. It’s also important when you are planning to take any loans, as your credit score is checked by banks or any financial institutions when you apply for the loan. So, a credit card is one of the fastest and easy ways to change your score drastically. But, you have to be very particular in making the payments, only then will the score would go up. Else it can drag you down if you are not a responsible payer.

So, the credit card works as a boon for you when you are actually trying to build your credit score or increase it. When you check your cibil report and see the detailed information, you would come to know that because of your credit card payments made on time, your scores have gone up. This work can not be done by a debit card.

With the major factors explained here, now its clear that what is the need for the credit card even when one has a debit card. All that is expected is that the person should act responsibly and patiently. If that happens, a credit card can create wonders.

Will You Get You Get Your Dad’s Credit Score?

Death of loved ones, especially a parent can be traumatic. However devastated and sad one might be, there are various obligations and duties that need to be taken care of both financially and other wise after a parent’s demise. The family members have to necessary action regarding various bank accounts, securities, properties and assets that may be held in the deceased person’s name and so on. While bank holding, assets and property are governed by inheritance rules, this rule does not apply to credit scores.

Will You Get You Get Your Dad’s Credit Score?

Before answering the question it is important that we understand a little about credit report. Credit reports reflect how a person has treated his/her debt in the past and what his levels of debt are; depending on various factors included in the report and individual’s credit score is calculated. Thus a score reflects an individual’s credit worthiness based on his credit history.  So when a person expires his/her credit score is not passed on to the family members as it reflects an individual’s creditworthiness which has no bearing on his children. So, if your dad passed away you will not get his score.

Your dad would have had loans and cards in his name and when the person expires there are specific rules to be followed to deal with them. Just like if you have loans and cards in your name they reflect your credit history and how responsible or irresponsible you are towards debt and not somebody else’s attitude. So if you default it will be reflected only in your report and not any other family member’s report. So while you can inherit your father’s property you will not get his score.

What happens to the Credit Report of the Deceased?

So, now we know that when the parent expires the credit report is not passed on to the children but what happens to the credit report of the deceased. It is important that the family member get the report of the person to get an idea about the open loans, cards etc that a person has in order to get a clear estimate of what is owed to lenders. The family members then need to inform the concerned lenders and credit card companies about the demise of the borrower or the card holder; a valid death certificate needs to be attached along with the application that is submitted to various FIs.

Depending on the type of loan there would be various formalities that will have to be completed but the lender will inform the credit agency that the person in question is no more and a deceased indicator is attached to the credit report of the person. This prevents any identity theft or fraud that may happen by misusing the identity of the deceased. The process of surrendering the card or closing a loan may take time but in the meantime, it is important the report be marked as that of deceased.

There might be instances when there may be joint home loans that the deceased may have taken with their kids, in such a scenario the fate of the loan impacts the score of all the applicants. After the demise of one applicant, who in this case is the father, the surviving applicant/s will have to make sure that they inform the financial institution about the situation and continue to pay the EMIs in order to avoid defaults and penalties.

So while you will not get your dad’s score after he expires there are a host of things that you may need to do which includes informing the concerned lenders and also take appropriate action in case of joint loans.