Advices Budgeting Business Education Financial Advice Personal Strategy

When and How to get a loan?

Loan

Short on cash? Whether it’s a trip you’ve been planning, a car you want, or just a sudden shortage of money there could be many reasons why a loan is your best option. In this article, we will discuss when the loan is right for you and how you can get financed.

Loan - What is it and How it works?

It is an agreement between the borrower and a lender, where the borrower borrows money from the lender. And the lender receives a legal document that ensures the repayment of the money borrowed. Both borrower and lender can be an organization or an individual.

Types of Loan

Types of loans

These can be classified into two types based on the security provided:

Secured Loan

In a Secured Loan, the borrower pledges security for the money that they are borrowing. Here, the securities are the assets that can be sold if the borrower defaults on the repayment of the loan. In this type of loan Lender have security for their money.

Unsecured Loan

Unsecured ones are riskier than Secured loans as per the lender’s perspective. These loans do not require collateral, however, the eligibility criteria are more strict in Unsecured than Secured Loan.

Further loans can also be categorized on the basis of their purpose. To list a few we have,

  • Education
  • Home
  • Personal
  • Car or Vehicle
  • Business

Different types of loans have a set of similar eligibility parameters along with other specific parameters according to the loan type. Also, every lender defines their eligibility criteria differently.

Types of Lender:

There are many financers in the market that provides loans. These financers can be categorized into:

  • Banks
  • NBFCs
  • Private Financers (Individuals or corporations)

Different finance offers different loan products i.e. different interest rates, tenure, collateral, etc.

Lenders

What financers look for while evaluating your application?

Before issuing any loan, every financer performs some eligibility checks on the borrower’s profile. In most cases financers are looking for profiles that have:

The interest rate is often based on the below features of a borrower’s profile.

CIBIL

Documents required

Loan application

For Salaried Applicants:

  • Application form with photograph
  • Identity and address proof
  • Last 6 months’ bank account statement
  • Latest Salary Slip
  • Form 16

For Self-Employed Applicants:

  • Application form with photograph
  • Identity and address proof
  • Last 6 months’ bank account statement
  • Proof of business
  • Business profile
  • Income Tax returns (self and business) for the last three years
  • Profit/loss statements and balance sheets of the last three years

When should you apply?

Before you apply for a loan, you should be aware of your financial situation. It is you who must pay back the amount later. Proper planning for your personal finances is necessary to ensure good financial health.

How to apply?

To apply for the loan, you can either go to the bank and talk to the bank officials or steer past all that and apply online. We will discuss the procedure in the following steps:

  1. Choose the lender you’d wish to borrow from that supported your research and check for your eligibility.
  2. To apply, you should visit their bank branch or go through their official website.
  3. Read the form carefully before signing in anything.
  4. Submit or upload all the necessary documents mentioned in the application form.
  5. Wait for the bank’s response, it can take from few minutes to few days. The bank will process your application and respond accordingly in a stipulated time.

It is always advisable to read all the documents carefully and discuss every clause thoroughly until nothing remains vague. Never take a loan unless you absolutely need it. Defaulting on the EMIs can lead to an unpleasant situation that is not good for your financial and mental well-being.

For more such updates, keep watching this space!

Business Daily News Education

RBI Increases ATM Transaction Charges

Reserve Bank of India changes rules and regulations from time to time regarding charges of ATMs. We will discuss these new changes in this article. How much of the charges increased and what are the interchange charges for ATMs. changes rules and regulations from time to time regarding charges of ATMs. We will discuss these new changes in this article. How much of the charges increased and what are the interchange charges for ATMs.

RBI has permitted banks to increase charges for cash and noncash ATM facilities. Free monthly transactions will remain the same as before. Bank customers will have to pay Rs. 21 per transaction instead of Rs. 20 w.e.f January 1, 2022.

To compensate the banks for the higher interchange fee. They are allowed to increase the customer charges to Rs 21 per transaction. RBI stated in the circular that it will benefit from 1 January 2022.

What is an interchange fee?

interchange ATM fee

An interchange fee is an amount that a card-issuing bank pays to ATM operators in case its customers use an ATM that does not belong to it.

From August 1, 2021 banks are given a permit to increase the interchange fees per transaction from Rs. 15 to Rs 17 for financial transactions. For all non-financial transactions, it is Rs 5 to Rs 6 in all centers, the circular stated.

The interchange fee has been a bone of contention between banks and ATM deployment companies. Consequently, the charge is divided between the acquirer and the ATM companies. And this is the reason banks encourage the customers to use their own bank ATMs.

Committee

The revised charges are based on the report by a committee constituted by the RBI in 2019. The chairman of the committee is VG Kannan, the then chief executive of IBA (Indian Banks’ Association).

For more updates like this, keep watching this space!