Tag: loan for low CIBIL score

How to choose the right home finance company?

Owing to the rising prices of property, availing a home loan is one of the crucial steps when you plan to build your dream home. A lot of comparative analysis goes around when you consider factors governing the decision to choose the right bank or financial institution.

While you finalise a residential property and search for a lender to back your purchase, it is equally important to have a clear picture of your financial state in your mind. Your CIBIL score undeniably plays a significant role in your loan approval. In case you find that, your cibil score is low; the first step would be to search for a home finance company that offers home loan despite poor credit history.

While there is no denying the fact that you should compare the deals by different lenders before making the decision, there are several other aspects you need to keep in mind.

Loan Amount: With robust credit score you can avail loan for up to 85 percent of the property cost. The lender would consider your disposable income, property value, age, occupation, credit history, and number of dependants before finalising the loan amount. The more the lender approves, the lesser would be your down payment, but it would attract a higher EMI. If higher EMI is not a concern and you do not want to spend too much from your pocket as down payment; choose the lender that approves a higher loan amount.

Rate of Interest: Home loan interest rate is something that would influence your monthly instalments. Conduct a methodical online survey for rates and select the most competitive one. Have a proper understanding of the Retail Prime Lending Rate (RPLR) before sealing the deal. For banks, the lending is higher than or at the base rate as they cannot lend lower than the base rate. The housing finance companies give a discount on the RPLR. Understand it carefully and pick the right lender.

Consider the hidden costs: Most of the times applicants overlook the hidden costs like processing charges, document charges, administrative fees, repayment charges, switch fees and verification charges. It is important to collect all information about the charges before choosing the HFC.

Property type and location: There are HFCs that do not fund in specific localities and they even do not fund every property type. Confirm if the lender you finalize authorises loan in the locality of your choice.

Loan span: To increase your eligibility, banks offer home loans for up to 30 years. Housing Finance Companies generally do not grant a 30yrs loan.  Confirm the loan span while applying.

Disbursal & Processing Speed: It is important that you choose a Housing Finance Company which rule out the possibilities of delays when it comes to approving a home loan application. With right documents and verification reports, it should not take more than 10 working days to process the home loan application. An additional 3 working days generally for the disbursal of the sanctioned amount.

Reliability of the HFC: Home Loan is a long term commitment. Furthermore, you have your title deed mortgaged with the lender. It is, therefore, exceedingly essential that you choose a reliable lender. Reliable HFCs would always offer good customer support and flexibility. Confirm the dependability of the financial institution if you do not have a preceding relationship with the organization.

Credit history and records

It would be to some extent difficult to get hold of a housing loan in case your credit history is not up to the mark. Searching loan for low Cibil score is always a challenge. However, all doors are not closed. There are few housing finance companies that agree to offer housing loans despite your poor credit record. If you have a poor score first try to improve it so that it doesn’t affect the interest rate. Banks are too demanding in authorizing housing loan to an individual with poor credit history. The loan for low Cibil score not only attracts high interest rates but lenders put restrictions on loan period and guarantors.

You are recommended to go through all these aspects and keep these pointers in mind as you move forward to choose the best lender for your home loan. Do not hurry things up. Remember repaying a housing loan is a big liability and you should do your homework carefully beforehand to keep away from future hassles.

Advertisements

Why Poor Cibil Score Destroys Your Financial Objectives?

If you have ever applied for a loan or a credit card, then you must know what CIBIL score is. Although it is a lot easier today to get small personal loans, home construction loans etc. the significance of CIBIL score is still there. In fact, its importance is increasing by the day. Today, CIBIL score is not just an assessment parameter considered by private and government banks, and other financial institutions, it can also affect your job prospects, as some banks have started making it mandatory for the job seekers to have no history of loan defaulting or a poor CIBIL score.

It can’t be emphasized enough why you must improve credit score as much as possible. Even if your current score is above average you should strive to make it even better. A good CIBIL score can improve your chances of getting a loan or credit card greatly. On the other hand, having a poor score can literally destroy your financial objectives. Here are a few ways how:

  1. Loan for Low CIBIL Score

One of the biggest problems that a poor credit score can create, is making loans of any kind almost inaccessible. Say, you just married a few weeks back and now you want to enjoy the new phase of your life by purchasing a new house. However, since your score is below average you won’t get a home loan. Even if you did manage to find a lender who is willing to sanction a loan, it is unlikely they are offering low interest home loans. Since you can’t afford to buy a house yourself, you decide to take it nonetheless. This is where the problem starts. Managing finances becomes a nightmare for you soon, as you have to pay huge EMIs every month while taking care of general expenses to run your home. Instead of enjoying your life with your partner you end up spending days under the burden of debt. All this because you didn’t pay attention to your credit score in the past.

  1. Credit Limits

If you have been a loyal and trusted customer of a bank, they can sometimes take that into consideration and approve a loan despite low credit score. However, this doesn’t mean you can get a loan of any amount. The lower is your score the lower will be the credit limit your bank will be able to offer. Thus, getting a loan won’t be as helpful when you can’t the full amount, or at least an amount that is enough. Say, you want to start a business and since you have been unable to bring in angel investors your bank is your only hope. However, considering your score they are willing to offer only half of the amount that you have applied for. How good will it be to you? Arranging the other half can be almost impossible.

  1. Credit Card Issues

A poor credit score can also give rise to a number of issues with your credit cards. Not only getting a credit card approved is a challenge in itself in that case, your approved limit will also be low. This can cause a lot of problems for you financially. Credit cards are an easy and convenient way to get credit. They allow you to buy items you can’t afford on EMI basis. However, with a low credit card limit you will have to arrange funds for several items by yourself. Getting  supplementary credit cards for your family members can also be a problem.

Your CIBIL score is important. If it has been a while since you took a look at your credit report, then you should get a copy today itself. If your score is not good you can start working on it ASAP. Fortunately, it is not difficult to improve credit score. By merely paying your EMIs on time, limiting the overall credit usage, and rectifying errors and mistakes in your CIBIL report (if there are any) can greatly improve your score. However, if you need expert advice you can also consult a professional company such as CreditSudhaar. They have some of the most experienced credit professionals who can help you improve CIBIL score in the soonest possible time.

 

All the Cost that Needs Consideration While Buying a Car

Just the other day I read a piece of new that said that there are just a little over 24 lakh people in India with an income of over Rs. 10 lakhs yet 25 lakh cars are bought every year. Well this news article was focused on a different subject but yet it did give some other insight too; a lot of cars are bought in India each year. When buying a car the obvious considerations are the brand, model, capacity, technical details and of course the money matters. However it pays to remember that the cost one incurs is not only the upfront payment that one makes but also some additional costs. Again while some costs may be one, other may be recurring. So before buying a car, the first one or the additional one do make sure you are aware about the various costs.India has just 24.4 lakh tax payers who declared an annual income of over Rs 10 lakh yet 25 lakh new cars, including 35,000 luxury cars, are being bought every year for last five years, a top official said. India has just 24.4 lakh tax payers who declared an annual income of over Rs 10 lakh yet 25 lakh new cars, including 35,000 luxury cars, are being bought every year for last five years, a top official said.

 

  • Interest Cost:

A large number of cars are bought with the help of a car loan. Obviously when one takes a loan they will have to bear the interest cost; those who choose to buy a car with their own source of funds they clearly do not have to incur this cost. Your monthly installment for repaying your loan will depend on the amount you borrow, the interest rate charged by the lender and the duration of the car loan. Thus the EMI whether big or small is a recurring expense that will last the loan duration. If one has low credit rating then getting a car loan could be tough. However there may be lenders who may offer a loan for low CIBIL score but these would be at higher interest rates so the interest cost for the loan would go up.

  • Miscellaneous Cost Related to a Loan:

When you avail a loan for buying a car there is the obvious and recurring interest cost. Apart from that there are miscellaneous one time expenditures; though individually these costs may appear to be small but put together they can be of quite a sizeable amount. The costs involved in availing a car loan are; non refundable processing fee (it could be a fixed amount or a percentage of the loan amount), documentation charges, CIBIL report charges, stamp duty etc. Then there are incidental charges which may be charged in the event like a cheque bounce, non-payment of dues or pre-payment of a loan etc.

  • Cost of Insurance:

Getting car insurance is a must in India so this cost is added to your recurring list of costs when buying a car. A car insurance generally covers damages that may occur to the car or loss due to accident, riots, natural calamities, theft etc; the liability of the policy holder in case of bodily injury or property damage due to the car to a third party and also medical cover for treating injuries and other costs like lost wages for the owner driver. The car owner has to pay premium for the insurance cover that he/she buys. The amount of premium depends on the value of the car, how old the car is, occupation of the car owner and the claim history. If no claim is made in a year then one can get a discount in the subsequent year/s.

  • Registration fee:

This is another one time cost that is incurred at the time of buying the car. Registration charges are based on the ex-showroom cost of the car and the discounts received are not taken into account when calculating the registration charge. The registration fee includes a road tax, registration charges, and number plate charges. The charges vary State wise and each state has its own rate structure.

  • Maintenance Cost:

Buying a car means incurring maintenance cost and not once but it is a cost that is recurring. This cost includes expenses like getting your card serviced and cleaned regularly, incidental costs that may occur due to minor damages which you might not like to claim through insurance. Apart from that there is the depreciation cost; the cost of wear and tear that occurs because of usage and passage of time. On an average the depreciation rate for a new car is considered to be 20% in the first year and from the following year it keeps going up. For a used car obviously the depreciation rates will be higher. Thus it may not seem like an obvious cost but depreciation is a hidden expense that you occur as the value of the car you bought reduces with time due to wear and tear

Though we love our fancy new wheels always remember they come with cost, some obvious and some not so obvious.