6 Smart Tips to Get Lowest Interest Rates on Personal Loan

Planning to go on a enjoy-now pay-later vacation? Here are some tips to get personal loan on lowest interest rates.

1 Check your CIBIL Score: Your CIBIL score is used by banks to check your previous loan repayment record. In case your CIBIL score is above 750, you are likely to get personal loans at lowest interest rates.

   

Check Seasonal Offers: Banks often offer special rates of interest on personal loan for limited periods. So always compare latest interest rates and schemes of multiple banks before applying for the loan. Remember that your salary bank may not always give you the best offer. Like phones, shoes and apparels, best offers are typically available online at Lowest Personal Loan Interest Rates in India

How about a gold loan instead? – Interest rates on gold loan range from 10-13% vs. 12-16% on personal loans. So, you may like to check the lowest rate available on personal loan with those on gold loan.

Hidden Charges: Some loan offers may look cheap with their low headline interest rates but come with hidden charges like processing fees, administrative fee, mandatory insurance premium and the likes. So, always check the overall costs before deciding on the loan. Many a times, these are not disclosed to the customer at the time of application. So, please check these upfront before applying for your loan.

 Prefer banks over NBFCs: Banks and NBFCs both may give same offers on loan but when you compare it in totality, most banks offer better deals on personal loans.

 Check Interest Calculation Method: Sometimes, Loans with low interest rates may be costlier than the higher rate of interest loans. It all depends on the way interest is calculated. So, don’t get carried away by such offers without understanding the details.

A flat rate would cost you more than reducing rate. In flat rate, you pay interest for the initial loan amount till end of loan tenure whereas in reducing rate, you pay interest only on the outstanding balance.

Everything You Need to Know About CIBIL Score 2.0

If you are a prospective home loan customer who is planning to apply for a loan, your CIBIL score would be one of the most important factors that a bank will consider while taking a lending decision. You might be required to check your own CIBIL report  in case you face any difficulty in getting an approval from banks.

You will, however, now receive a CIBIL TransUnion 2.0 report which is an upgraded version of the previous report. CIBIL TransUnion 2.0 follows a different approach for evaluating the past history of the borrowers and is considered to be an improved version of the earlier CIBIL credit report.

CIBIL TransUnion Score 2.0 is a score that is calculated based on various parameters on the consumer’s credit history and predicts the probability of default by the consumer. This credit score helps the banks in understanding the risk profile of its customers and accordingly take their lending decision.

One of the key changes and improvements in CIBIL 2.0  is that it also calculates a score for a new loan borrower with less than 6 months of credit history. In the previous version, any borrower who had less than 6 months of credit history would have got a score of 0. But, with CIBIL 2.0, the borrowers will get a score of 1-5, where 1 represents the highest risk of default and 5 represents the least risk of default.

The score is dependent on various parameters such as loan type (secured or unsecured), past credit seeking activities (like number of loan enquiries), 3 months overdue in any month for the past loan period, demographics (like age and location) etc.

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This feature can be especially helpful for those borrowers who have a short credit history of less than six months and need to take another urgent loan. In the past, even though the customer met the eligibility criteria, there was a possibility that his loan might get rejected by the banks for want of adequate credit history.

However, with CIBIL 2.0, even the new loan customers get a credit score, thus improving their chances of getting a new loan again within a short period.

In terms of credit score for borrowers who have 6+ month of credit history of any type/form of funding, the credit report will provide a score of 300-900. Banks may apply cut offs different from the cut-offs they used on the earlier reports while taking a loan decision. For instance, an 800+ in the previous report should now be equivalent to a score of 600-700 in the newer version.

The new CIBIL Score 2.0  is very helpful in determining a prospective borrower’s repayment capability. The report incorporates India specific factors related to customer demographics and the changing customer behaviour while calculating the score. 

CIBIL 2.0 has been tested on old data records of lenders and is being seen as an important tool in studying and modelling the behaviour of customers with high risk profile.

This article should have provided you a good understanding of CIBIL 2.0 and its implications for new loan borrowers. If you need further clarifications on CIBIL 2.0, please feel free to get in touch with us at care@myloancare.in.

5 Reasons Why I Love EPF Deduction from Salary

Do you feel depressed looking at the PF deduction in your salary slip every month? After reading this post, you will probably not feel so bad about it. Every month, 12.33% of your basic salary excluding other heads like HRA, DA, and other allowances is deducted every month towards Employee Provident Fund (EPF).

Today, in this article I will share why I don’t feel bad about the PF deduction reflected in salary slip.

1. For every Rupee deducted, your employer contributes another Rupee towards your EPF and Pension Fund. As per the EPF scheme, employers are required to contribute the same amount as deducted from your salary.  The entire amount deduced from your salary and two-third of that contributed by your employer is deposited towards EPF. The balance one-third of the amount contributed by the employer is deposited towards Employee Pension Scheme (EPS), whereby you create a corpus to earn pension post retirement.

2. EPF is totally safe, secure and tax-free:  The EPF fund is managed by the EPFO, a government of India organization and is invested only in government or government approved securities. The return on EPF is also fixed by the government every year. 
So, EPF money carries almost nil risk. The income from EPF is also totally exempt from income tax. In case your PF is managed by a company trust, even then the trust is governed by EPFO rules and investments are to be made strictly as per rules. So, even if the company goes bankrupt, it is unlikely that there would be any risk to the amount invested in your PF.

Useful Links:

•  Search BankBranches Details by IFSC Code
• Gold Loan Interest Rates Feb 2015
• Fixed Deposit Schemes, Interest RatesFeb 2015 of all Banks in India
• 2015 Mumbai Ready Reckoner Rates
• Loan against Property Interest Rates
• Personal Loan Interest Rates, Schemes

3. EPF cannot be attached in case of bankruptcy: Say, if you happen to default on a loan  taken from a bank or you need to pay some government dues. Banks and tax authorities can attach your personal property and even bank account. However, balance in EPF account is exempt from being attached under any circumstances and can be claimed by you without any problem.

4. You can nominate your near and dear ones for your EPF:

EPF offers nomination facility on all accounts. Nominee will be contacted by the company or EPFO in case of death of the employee and balance will be paid to the nominee. In case the nominee is not registered, the balance can still be claimed by your legal heirs but the process may take longer.

Now, are you more comfortable with EPF deduction just like I am? 
I hope so. So, how about putting some extra money in your EPF account? Yes, you have the option of investing more in your Provident Fund in the form of Voluntary Provident Fund (VPF).  However, note that there is no matching contribution in case of VPF.

Still not convinced that EPF deduction is a good thing? Here’s what you can do. You can opt out of EPF if you want. Yes, it’s possible to opt out of EPF. It may seem surprising for many people. If you earn a basic salary of more than Rs. 6,500 per month, you have the option to out of EPF. In such case, you will not see any EPF deduction in your monthly salary slip. However, you have to opt out of EPF only in the beginning of your job.