Loan

Having a car is an absolute necessity in many parts of India where public transport is not at par with the modern transport facilities. However, it is also a reality that affording the dream car in India does not come easy. With a steep inflation and unstable economy, many people are cutting down on their luxury aspirations and settling for smarter solutions. This has resulted in a high demand for second hand cars in the Indian market. With many authorized dealers stepping into the used car sector, and offering features as good as a new one, there is a boom in the second hand car market. Today, you can easily buy the car of your dreams at a much lower price from a used car dealer and with money loan apps, affording a second hand car has become easier than ever.

You just have to install the best money loan app and apply for an online loan through the app. The loan process is simple, the documentation is minimal and the loan is processed in a matter of hours. But when it comes to buying a second hand car, many people get confused whether to opt for a personal loan or a used car loan.

Personal loan or a used car loan

• Personal loan gives you full ownership of the car

When you buy a car on a used car loan, you do not get the ownership of the car outright, whereas if you take a personal loan, you will actually buy the car. This is because a used car loan is a secured loan and a personal loan is an unsecured loan. Going for a personal loan gives you the freedom of selling the car at any moment if you are not satisfied or if you want an upgrade.

• Personal loan is simple and costs less

When you buy a used car with a car loan, there is the whole extra charges and process related to hypothecation in the registration of the new vehicle. Hypothecation by a lender allows them a kind of pseudo-ownership over the vehicle. The same is also mentioned in the vehicle registration certificate by the RTO when it is transferred in your name. When the loan is paid off, you will have to go to the RTO office and apply to get the hypothecation removed from the registration certificate.  You may also need to do the same with other vehicle documentation as well in some cases. However, if you take an online loan and buy the car with the loan money, there is not hypothecation mentioned in the car RC and there is no need to remove the same either.

• Personal loan is simplified

Third factor you must understand is that getting a used car loan is a complicated process. In fact, the formalities to buy a used car through a used car loan are same as that of a new car. You will have to undergo the same documentation and hassles and what’s more the interest rate on used car loan is also higher than a new car loan. On the other hand, if you are taking a personal loan to buy a used car, you will not be charged as high interest rates and paperwork is much simpler than the used car route.

• Personal loan is quick

The time taken to apply for a used car loan is much longer than a personal loan. When you apply for an used car loan, the documentation has to be done manually and some lenders may even require car valuation by their authorised valuers. This makes the process slow and vulnerable to human error. Moreover, if the valuer undervalues the used car, they lender will only give you a smaller loan amount which might not be enough to buy the car. Instead, if you take a personal loan, you do not have to deal with the loan hassle. Personal loan can be obtained from a money loan app in a matter of minutes and since there is no valuation involved, you can get a loan of your preferred or required amount.

• Personal loans are easy to settle

Finally, if for any reason you need to sell off the used car, it can be very complicated with a used car loan. Pay off the loan first and get NOC, only then can you transfer the car ownership. A used car purchased with personal loan can be sold off immediately. Sell the car to a buyer; pay off whatever amount remains of the personal loan and you can use the rest of the money for your own requirements.

Conclusion

With the increased demand for financing, the loan market is ripe with different types of loan products. As such, it becomes your responsibility to research these different loans available in the market and go for the one that best suits your requirements. Though now you know the benefits of a personal loan over a used car loan, make sure to check your eligibility and credit score before applying for the loan.

Buying houses without requiring any financial support is something that very few manage to pull off.  What most people do is apply for home loans that provide the required finances for them to complete their property purchases. Now, many people are of the thought that the only expense of taking the loan is to pay off its monthly instalments. It is very important to understand whether the loan amount that is being borrowed can be afforded, and this is much more than just clearing EMIs.

Having a good financial plan in place before applying for the loan can help in getting the best deal possible. So, go through the following factors that will help in understanding what affects your home loan affordability:

• Lender’s down payment requirement

As per RBI guidelines, banks are only allowed to fund a certain cost of the property purchase. This means that your lender cannot offer 100% financing for the house. Usually, lenders cover 80% of the cost of the property if the loan amount is in the range of Rs 20-75 lakh and 75%, if the loan amount crosses Rs 75 lakh. Now, it is important to be aware of the exact down payment amount you are required to pay, as this will affect your budget for the home loan.

• Your debt-to-income ratio

You might be earning a very high monthly income, but this does not necessarily mean that it guarantees you a high home loan amount. An important factor determining your loan affordability is the debt-to-income ratio. If you already have multiple loans to repay, the existing debt will already eat into your budget. This leaves you with a lesser amount for the home loan and could be a problem. This is the reason why it is best to not have any existing debt while applying for a home loan to improve your loan affordability.

• Type of property being purchased

If you are buying a property that has completed construction, you can live in it while paying off the home loan. However, if you have chosen to buy a property that is still under construction, this could lower your home loan affordability. The reason for this is that in this case, you might also have to pay for rent while the new house is being constructed. This reduces your income and can affect your ability to borrow a higher loan amount. Therefore, this becomes an important point to think about before you apply for home loan.

So, these are the factors that a borrower needs to keep in mind to understand their home loan affordability. A simple way to understand this is to make use of a home loan affordability calculator. All that this calculator requires is details regarding the home loan’s interest rate, repayment tenure, your monthly income, down payment, and existing debt obligations. The calculator will then show the loan amount that can be afforded based on these details.

Owning a house is a big deal nowadays. Hence, a home loan is beneficial when it comes to buying or building your own home. There are certain things that need to be kept in mind if you want to know more about the whole process of buying your own home. Read further to know how much home loan amount you can be eligible for.

How to know if you are eligible for a home loan?

Wondering if you are even eligible for a home loan? You can find out with the help of the home loan eligibility calculator. This calculator makes sure you know the criteria as well as whether or not you meet the standard criteria required to get a home loan. To know if the applicant is eligible for a home loan, the calculations of a salaried /self-employed customer are done based on the applicant’s age, income, expected loan amount, loan tenure and the type of company they work for.

Tips to know before applying for a home loan

• You can enhance the eligibility of your home loan application by adding a co-borrower/ co-owner
• You can also opt for a longer tenure loan
• An additional source of income can strengthen your application as well.

Factors that determine your home loan eligibility 

There are certain factors that determine your eligibility for a home loan; they are as follow:

Steps to take for a home loan

As mentioned above, there are several things you need to understand before you take a further step in this process.

1. Eligibility

With a few eligibility criteria already mentioned above, different banks have different requirements you need to meet if you want to choose them as your home loan provider. One of the essential requirements is credit history to know how often you tend to repay. The preferred credit score is 750, so make sure you have a tight credit score. Using a home loan eligibility calculator is also one of the ways to determine eligibility for a home loan. The eligibility is estimated considering various factors, including age, occupation, collateral security, income, etc. If you meet these requirements, you are considered for your home loan application.

2. Pay the down payment amount after meeting your eligibility requirements.

Generally, the applicant is only supposed to pay 10-20% of the total amount as a down payment, but if you can afford to pay more, you can go ahead and do so. The rest can be arranged by taking a home loan from the bank or HFC. For cases when the applicant does not have 10% to pay as the down payment, they can take a soft loan from their friends, relatives or employers. But keep in mind that the lesser the borrowed amount, the lesser the burden of repaying.

3. Check your affordability beforehand.

Before you finalize an amount you will be paying as your home loan EMI, make sure it doesn’t become a burden. The basic formula to keep in mind while paying the EMI is to look at your loan to income ratio, which should be 20-30% from your income. Don’t decide the EMI amount based on your future raise. And the rest will go easy for you.

Conclusion

These were the things you need to keep in mind if you are planning to buy your own house with the help of a home loan. Choose a trusted home loan provider and unleash your dream of owning a home.

Your equated monthly instalments (EMI) amount is based on a few core factors like loan amount, tenure chosen and interest rates. While you can pick your tenure and loan amount yourself, interest rates are levied by lenders. However, your interest rate has a significant impact on your home loan EMI. If you get a higher interest rate, you are bound to have a higher EMI. Therefore, you must try to reduce your home loan interest rate while applying.

Here are some ways through which you can reduce your home loan interest rates.

• Choose lender carefully

You must choose your lender carefully. Not all lenders offer the same interest rates. Some lenders offer the lowest home loan interest rates in the market, provided you fulfil the eligibility. You would need to do some research to check a lender that helps you reduce your interest rates. Opting for lenders that help you restructure your loan and tenure can help you decrease your interest rates during the tenure. In addition, you must note which lender transfers the cut in repo rate to the borrowers. Consider the different home loan interest rates before applying for a home loan.

• Check your credit score

Your credit score can help you reduce your interest rates. However, for that, you must have an excellent credit score. Lenders usually offer a low interest rate for borrowers who have a credit score of 700 or above. Before you apply for a home loan, check your credit score and fetch your credit report. In case of a low credit score, you should defer applying for a home loan until it is improved. Moreover, if there are any discrepancies in your credit report, request the credit bureau for rectification.

• Opt for transfer balance

If you find a lender offering lower interest rates, you can opt for a transfer balance. With a home loan transfer balance, you can switch your loan and save on your interest outgo. However, ensure that the difference in interest outgo is substantial, as only a slight difference might not help you save against the cost of the transfer balance. Therefore, it would be best to do a cost-benefit analysis, comparing the total cost and gain of transfer balance before making the switch.

• Change interest type

Fixed interest rates are usually charged higher than floating interest rates. Therefore, if you have opted for fixed interest rates, you could be paying high interest rates. You can switch to a floating interest rate to reduce the interest rates. Moreover, the home loan interest rates are historically low, but its benefit can be availed only if you have a floating interest rate. You can make the switch with the same lender or with a different lender. However, ensure to do the calculation to know the savings it will help you do.

A high-interest rate can make you spend a high EMI every month, impacting your personal finance. However, these tips can help you save money by reducing the housing loan interest rates. Apply for a home loan today.

A bad credit score should not hinder you from getting that personal loan to take care of an emergency or consolidate your debts.

 However, you have to put in a lot of work to qualify for these loans, especially if you don’t have a credit history.

Here are a few steps you should consider to get a personal loan with bad credit.

Improve Your Financial Health

If you’re not taking a loan to respond to an emergency, then begin by improving your credit score. This will enable you to afford the loan that you want.

Improve your creditworthiness by paying your bills on time. Ensure the balance on your credit cards is less than 30 percent.

After that, don’t apply for any new credit. The combination of these factors, ranging from on-time payment, no new credit to low credit utilization, will account for 75 percent of your credit score. You’ll not be at 100 percent yet, so you need to move to the next step.

Check Your Credit Score

Lenders have a minimum credit score requirement, so they can reject your application if you have a lower score than their minimum. Also, you’ll find lenders who see it as a business opportunity to offer you a bad credit loan. These bad credit loans come with a higher origination fee and interest rate.

You’re entitled to access one free credit report. So take advantage of that and check your credit report from AnnualCreditReport.com.

Although the report won’t include your credit score, you can still purchase it from the credit bureau or get it free from some financial institutions. If you find any error in your report, get it fixed to improve your creditworthiness.

Get Loan Pre-Qualification

Many personal loan lenders would want you to submit a prequalification before contacting a personal loan Montreal lender.

Prequalification allows the lenders to find out if you can qualify for a loan. They’ll also see if they can offer you a loan without hurting your credit. So take this as an advantage before you apply for a loan.

With prequalification, you can determine whether you qualify for a loan or not, so you know what to do. You can also compare different loan offers that are available online and from some banks.

Add a Co-Signer to Your Application

With a co-signer, you can easily qualify for a loan and get a lower interest rate loan. This is possible because a co-signer’s credit and income information are added to your application.

A co-signer must agree to pay the loan on your behalf if you default.

It’s important to discuss all your loan details and agreement with your co-signer. A co-signer should be able to understand their involvement in your loan terms before agreeing to co-sign.

Research the Available Lenders

As you do your research, try to compare lenders since not all lenders have the same borrowing requirements. Their rates and charges are also different. Compare many options available.

A bad credit lender will offer you an affordable rate. They also offer other important features such as credit-building tools, fat funding, and a mobile app to help you manage your loan payments.

Home loans are long term financial commitments that can span up to decades. Therefore, you must do adequate research on different housing loans to find the one suitable for you. While the home loan interest rate should be a vital determinant of your choice, you must also consider the services offered by a lender and the convenience of dealing with them. To do so, you might have to make one crucial choice – bank vs NBFCs. It could get confusing to pick one of the two. Though they may seem similar on the surface, there are differences between them, which affects your overall home loan experience.

If you are planning to avail a home loan, here is a small guide on banks vs NBFCs to help you make the right decision.

Banks

Banks in India are regulated by Reserve bank of India. Here are the advantages of availing a housing loan with a bank.

• Overdraft facility

Banks provide you with an overdraft facility on a home loan. Your home loan is linked to a bank account where you can park your surplus funds. The funds over and above the EMI amount are considered as prepayment, reducing your interest outgo and total borrowing cost.

• Transfer of interest rate changes

RBI has made it mandatory for the banks to follow the marginal cost of funds based lending rate (MCLR) regime for home loan interest rates. With this regime, banks usually transfer the change in interest rates faster to the borrowers.

However, the stringent home loan process and documentation of banks often leads to delay in home loan approval and disbursal for borrowers. Also, if you have a low credit score, you might not be able to avail a home loan with a bank.

NBFCs

National Housing Bank (NHB) governs non-banking financial companies or housing finance companies. NBFCs have to procure certificates from NHB to lend home loans.

• Higher loan amount

Based on your eligibility, NBFCs usually sanction a higher loan amount. In addition, they include stamp duty and registration charges of the property in the home loan amount.

• Easier processing

With a relaxed home loan process, you can get a home loan with an NBFC quickly. You might also get a home loan with a lower credit score from an NBFC. NBFCs also have a lesser documentation process. So, if you are unable to get a loan from a bank due to its stringent process, NBFCs can be of great help.

However, keep in mind that NBFCs usually charge higher interest rates.

Summary

Amidst the plethora of options available, it is better to weigh the features of the bank and NBFC while making the decision. While with NBFCs, you might get a higher loan amount, they usually charge higher interest rates. On the other hand, banks have a complicated documentation process and require a high credit score. Therefore, it would be best to assess your needs and then make a decision. If you have a low credit score but are in search of a high loan value, you can opt for a loan from NBFCs. However, if you wish to have an overdraft facility and low interest rates, banks could be a better option for a home loan.