New Gold Loan Might be a Game Changer

A new loan in the market is turning heads and could set a new trend in loans against gold in the market. Kerala Fashion Jewellery (KFJ) has introduced an innovative scheme called the GL Plus loan. The way this loan works could help solve a few problems that the jewellers have been facing. At the same time, customers stand to benefit from this scheme.

What happened earlier

A couple of years back, the Central Government levied restrictions on gold imports. This led to a shortage of gold supply in India. Jewellers resorted to providing incentives to their customers to trade in their gold for cash. They even offered rates higher than the prevailing rate for customers to bring in their old gold. Incentives of Rs.50 to Rs.100 on each gram were offered.

What’s happening now

Earier in 2016, the Government had proposed to levy excise duty on non-silver jewellery. This led to a nationwide strike by the jewellers. The strike was eventually called off and the Government was forced to reconsider its plans. Currently, many of the restrictions have been lifted in comparison to three years ago. But jewellers still face a number of woes as the domestic market price of gold stands at 2.5% to 3% lower than the prices in the global markets. This means importing gold is more expensive than selling the gold in the country. This gap indicates trouble for jewellers who source their gold from importing banks who in turn buy their gold at higher rates of the London Bullion Market Association (LBMA).

What’s next

The new interest-free gold loan offered by the Chennai-based jewellery could change the current situation. The GL Plus loan is a product of Gold Concepts, a consultancy company with a mission to help jewellers grow their businesses and help the common man invest wisely in gold. If this initiative works well, other jewellers may climb on board. With this scheme, both the jewellery and the customer stand to benefit.

How it works

A customer can pledge their gold and get a loan worth 70% of the gold pledged. For example, if you pledge 10 grams of gold, your loan will be sanctioned for the value of 7 grams. Every month you will have to repay about 0.58 grams. The loan will be available in tenures of 12, 24, 36, 48 or 60 months. Here’s the catch, when you repay your loan, you will be repaying it at the rate of gold in that month. If the rates are lower, your instalment will be low and you stand to benefit. But on the flipside, you also stand to lose if the rates are high, but that’s the risk you have to bear. Once you have repaid your loan, you can redeem your gold in the form of new jewellery from KFJ. Your old jewellery will no longer be available as it will be melted and used to make new jewellery. This may not please some people, but another good catch here is that there are no wastage or making charges on the new jewellery. If you pre-close the loan, then there will be wastage and making charges levied.

How the jeweller benefits

As a jeweller, you will get a better supply of gold for your business. The monthly installments paid by the loan borrower also adds to the working capital. Though the loan is interest-free, there is a processing fee applicable. The value of the loan is determined after removing any stones and the gold is weighed. Melting charges for loss of gold while melting will also be applicable to the customer.

If jewellers source their gold from banks, they get a credit term of 6 months with an interest rate of 3% to 4%. Banks require a guarantee and a mandatory deposit to be maintained. This is usually 30% of the gold sourced. This leads to an increase in the cost of sourcing gold. If the rates in the domestic market fall lower than the bank rate, jewellers face a loss. On the other hand, if jewellers source their gold from customers through gold loans, they don’t need to keep a safety deposit from the pledged gold. The whole amount of gold pledged can be used. Furthermore, they don’t have to pay any interest to the customer.

According to reports on gold supply, the domestic market is facing a world of trouble in meeting demand. Gold sourced from mine production and old gold amounts to 10% of the domestic market supply. The rest of the gold is sourced through imports. This new scheme could give recycled old gold a boost in the market.

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7 Things to do before Applying for a Personal Loan

Applying for a bank loan can be a daunting experience. The never-ending paperwork, contradicting documentation process, uncompromising verification and approvals can make you nervous during a financial crisis. However, planning in advance and knowing what you are getting into can save you a lot of time.

Here are 7 things you should know to make your loan process hassle free.

1. Check your Credit Scores
 Banks sanction personal loans based on your credit history. If you haven’t missed paying your bills on time, you don’t have to worry about this. A good credit score attracts higher loan amount and other benefits because you have a good reputation in the lender’s eyes. You can check your credit score online by paying a nominal fee.

2. Check your Options
We understand walking into many banks and enquiring about the loans they offer can be tedious. Make use of technology and compare loan offers online. BankBazaar website compares loan offers offered by several banks based on your eligibility within few seconds.

3. Don’t ignore the boring Fees Section
Yes! We all ignore the small table with fees and charges listed in our loan document. It is very important to know the fee you’ll be charged with as it is a part of your loan amount. Choose a bank which charges less fees and charges and don’t regret after you accept the loan offer.

4. Read about Interest rates
Banks usually charges two type soft interest rates namely, fixed interest rate and variable interest rate. When it comes to personal loans, fixed interest rate is the way to go as it will remain constant and will not change in the future. To add on, variable interest rate calculation can be confusing and you will land up paying more.

5. Get a Loan Insurance
Prevention is always better than cure. Personal loan protection helps your loved ones cover repayments just in case something happens to you. Getting a loan insurance means you will have one less thing to worry about.

6. Know the Penalties
You may be a prompt payer but there may be situation where you payment aren’t made on time. Banks charge heavy penalties if you miss a payment. Check for the penalties that will be charged in case of any such circumstances. Make sure you can afford the penalties.

7. Question your Intention
Before you apply for a bank loan, ask yourself if this is need or greed. If your intention is genuine, go for it. Applying for a personal loan to gamble or invest in stocks is highly not recommended. Don’t be stuck with an existing loan when you need funds during an emergency situation. Apply for a loan only when you need it the most. 

We all face financial crisis in life. Applying for a loan may be stressful but it is a great way to fund your expenses. Avoid falling for a sales pitch and base your decisions on facts and figures. Use a Loan Calculator online to check your estimated Monthly Equated Instalments and if you can afford it, go on.

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Is your start up not starting up?

You’ve got the idea to make billions but you need to get the ball rolling! You’ve conceptualized, written down, and clearly detailed your entire business plan on paper – and are just waiting for the funds to get started. I know I’m describing you, you young entrepreneur. Many of the richest and most successful people on Earth started off broke in funds but rich in ideas and enthusiasm.

Funds honestly aren’t that difficult to come by these days in India. There are angel investors, venture capitalists, rich uncles, and even secured loans. All these people / establishments are excellent sources of funds, but will demand a piece of the action once you hit the big time money after your big idea clicks. Now, you obviously don’t want that. The idea is yours, the dream is yours, because the struggle was all yours. All they did was give you the initial money to get started.

Looking through this selfish-but-fair glass for clarity, many young entrepreneurs wanted a source of funds that would only request in return the funds that were borrowed (plus appropriate interest) and not a part of the profit share of the business. That’s when they turned to personal loans.
Taking a personal loan to get your business started is one of the best and most hassle free ways to get your business started – or to turn your hobby into a profession – or even to kick-start your start up! Here’s why:

-    No hassle of pledging valuable assets as collateral: Unsecured personal loans are the best sources of collateral-free credit. You won’t lose your car / home if you aren’t able to repay on time, you’ll merely be slapped with some penalty interest and charges which you can pay off when your business takes off.

-    No requirement for a guarantor: Your dad / uncle won’t have to sign anything that says that they are in any way responsible for ensuring that you repay your loan. You will be the master of your own destiny in this regard. If you repay properly, you’ll see the benefits, and if you don’t – nobody will suffer but you.

-    No hassle of having to submit progress reports and stick to deadlines: You can do your business your way and generate profits at your own speed. You’ll have no “investors” to answer to, and you can truly be your own boss.

-    No fear of disinvestment: Angel investors turn into devils when they don’t see progress or any work happening through their investments, and venture capitalists have earned the name “vulture capitalists” because of similar behavior. Once venture capitalists pull funding, they leave you stuck having to explain a difficult situation to all those people that believed in you and your employees will probably file cases against you for non-payment of salaries.

-    Freedom to operate: Anyone who “invests” in your start-up / idea / business is only doing so in order to see a profit. The trouble with this otherwise perfect setup is that investors demand to see profits almost immediately, and will constantly bug you for updates, etc. They will also keep trying to alter your business model to generate quicker profits regardless of how that would affect your business, and totally regardless of your own preferences. Choose the freedom to operate by cutting out the investor and only keeping the investment through a personal loan for business.

-    Quick processing: Your funds / working capital / initial capital / investment requirements can be met almost immediately through personal loans, which have been known to be disbursed within a week in many cases. All you have to do is figure out your exact requirements and borrow just how much you need. Convincing the bank won’t be hard if you have a solid business plan put down on paper.

-    Easy settlement: Most banks that offer personal loans for business understand that all businesses take time to start generating a profit. It is for this reason that they allow you a grace period of up to 8-12 months in which you can spend the loan amount disbursed on assets and processes that could get your business up and running. Once this grace period is over, the EMIs will start becoming due, by which time you should have been able to turn a decent profit with which to repay your investment.

-    No claim or stake in business itself: The bank or lender who lends you a personal loan won’t legally have a claim over anything but the return of the borrowed funds. There have been many cases and instances where all the hard work of an entrepreneur has been taken away by venture capitalists and angel investors who hijack successful businesses through carefully worded investment agreements. They later sell the carcass of the business to someone else, rendering the hopes, aspirations, and dreams of the original entrepreneur useless.

-    Easy to apply for and have approved: Personal loans for business are easily approved by banks, if and when the applicant has managed to explain the requirement specifically and has also explained the intended usage for the funds and the potential of that investment to generate a profit. Banks are only interested in lending if they’re confident that the borrower can repay – and will approve a loan higher than your eligible limit if you’re able to convince them to do so with a solid plan.

In addition to these obvious advantages, it’s worth mentioning here that the government is currently pushing entrepreneurship and MSME development right now. Loans under “Make in India” and “MUDRA” etc. are incredibly easy to secure and are offered at low interest rates as compared to actual personal loans from established banks.

Micro and small scale manufacturing units or commercial establishments that provide employment and produce Indian made goods that reduce our dependency on foreign imports even slightly are being offered excellent support and funding.

In house production on a national scale is what the current government wants to achieve. Producing what we need in a more decentralized way not only reduces costs by breaking into monopolistic markets, but also has the potential to affect the country’s balance of payments by reducing our dependence on imports.

Working capital requirements can be easily met through personal loans, which not only get approved fast, but also have the added advantage of not being too intrusive in the functioning of the business.

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Home Improvement Loan Application Process

Owning a home is an experience of its own. After years of hard work & sound planning, we invest in a house to secure the future of our loved ones. After all, it's one of the basic necessities in life, isn’t it? Having a home that we can call our own has multiple benefits. It not only provides shelter, but also acts as an investment apparatus.

Home improvement such as renovation, furnishing, repainting are some of the activities which are a part of living in a house. Some aspects of the house need periodic maintenance in order to keep them strong and going. The costs involved in carrying out home improvement services can be a burden on your savings depending on the quantum of work carried out. It has the potential to take a toll on your monthly budget as well. In such situations, it makes perfect sense to rely on a Home Improvement Loan offered by banks and NBFC (Non-Banking Financial Corporations) to get the work done. It works similar to a conventional housing loan.

Let's explore the process of applying for this loan along with per-requisites. Homeowners can apply for this type of housing loan.

In case of co-ownership, all owners are required to jointly apply. Applicants who’re not co-owners can also apply to add monetary weight to the application.
The first set of documentation consists of the application form, identity & address proof of the applicant(s) along with recent photographs and income proof documents such as payslips.
On the property front, documents such as title deeds, an estimate of works provided by an engineer/architect should be provided as second set of documents.

Once the paperwork has been submitted, the processing begins. Depending on the quantum of loan applied for and other determinants such as the creditworthiness of the applicant, a decision on the loan application would be made within the stipulated time. You may be required to provide additional paperwork during the processing phase.

Security 
The property for which the loan has been availed will act as the collateral until full repayment of the loan. Some banks may even require an outside guarantor or additional monetary security other forms depending on multiple factors.

Loan Mechanics
Depending on the bank and other factors, you may be offered anywhere between 80-90% of the project costs as loan. Once approved, the loan amount may be offered as lump sum or released in batches depending on the schedule of work.

Repayment Process
Repayment of the borrowed amount along with applicable interest charges will be on the basis of EMIs (Equated Monthly Installments). Normally, the tenure offered is up to 15 years, depending on the offer.

Before applying for a home improvement loan, it's imperative to compare offers from various lenders and make a wise selection. Aspects such as processing fee, pre-payment penalty and others should be taken into consideration before zeroing down. The easiest way to learn about the products will be to scout for available resources on the internet. You should also use an EMI Calculator to work out the financials.

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Check List – Eligibility criteria for a Personal Loan

Money rules the roost in our world and financial emergencies can arrive at our doorstep at any moment, putting us in a quandary. The extent of these financial requirements can alter the course of our live, throwing our plans out of gear, typically backing us into a corner. Now, like most other problems, financial situations can also be handled, thanks to a number of products offered by banks and NBFCs. Choosing the right tool is critical to combat such issues, with a personal loan being the best bet to suppress immediate financial emergencies.

Growing competition has ensured that banks, NBFCs and private lenders are more than happy to provide financial support, at certain interest rates of course. While private lenders do not typically insist on eligibility criteria to avail financial aid, established players like banks and NBFCs have a number of requirements which need to be fulfilled. The ability of an individual to overcome a financial emergency through the use of a personal loan depends on his/her ability to satisfy certain basic eligibility criteria.

Factors which impact your Personal Loan Application:

Earning money is hard, and making money in a short period of time is even harder, which is why banks, NBFCs and private lenders are willing to provide financial assistance to those in need, subject to them satisfying a few basic personal loan eligibility criteria. 

Income - Gone are the days when people could borrow money and repay the loan without interest, with all lenders typically charging an interest on their “investment”. Repayment of their loan becomes a key factor, which directly hinges on the amount of money a borrower makes. Almost all banks and NBFCs look at the income of an applicant, gauging his/her repayment capacity before sanctioning a loan. The higher the income of an individual, the higher are the chances of him/her availing a loan, with a direct correlation often seen between these two factors.

Job description and status – We live in a world where the type of work we do matters immensely, be it in our social life or in our pursuit for financial aid. Banks and NBFCs typically look for people who are in a steady job, having a good record of being in the same company for a particular period of time. Applicants who work in hazardous industries (armed forces, mining, forestry, etc.) can be viewed as negative by banks, with it possible to have their application rejected. Similarly, those who work for top companies or in government sectors stand a chance of getting their loan application processed faster. This boils down to the judgement of the lender and could vary from case to case.

Personal standing – The relationships we maintain in pour lives can have a deep impact during certain situations, which is true even in the case of loan applications. Most lenders look at the relationship a prospective borrower has with them, with it easier to avail a loan based on this criteria. Individuals who have a good personal standing with a bank or NBFC could see faster approvals and simplified documentation compared to those who have no personal standing with the lender. Additionally, the reputation of a person in society can speak volumes, with lenders keen to ensure that their customers have a clean rep. 

Banking history – It is often said that history provides a glimpse of the current world, with it being especially true in the case of banking. The financial history of a borrower plays a critical role in determining whether or not his/her application is approved or rejected. A history of timely repayments and sensible banking functions is a huge positive, with banks and NBFCs fast-tracking the application of such individuals. Similarly, members who have defaulted on loan repayments in the past or have a dubious record might find it harder to get the loan sanctioned.

Credit score – A credit score is perhaps the most important tool which determines the personal loan eligibility of an applicant. Almost all banks and NBFCs rely on this score to gauge the application of an individual, with the score providing information about past loans, repayment history, other applications, etc. A good credit score is often sufficient to avail a loan, with scores in the range of 600 – 700 considered good in most cases. Individuals can check their credit score before applying for a personal loan, thereby availing an opportunity to improve on it, if required.

Age – The age of an applicant can play a role in the application process, primarily on account of loan repayment. Lenders are typically cautious in the case of young borrowers (those who have just passed out of college, into a first job) and in cases of elderly borrowers (those approaching retirement). This is because most youngsters might not be in a position to repay the loan on account of lifestyle changes and habits, whereas those approaching retirement might be unable to repay the loan on account of diminishing financial income. While not an extremely important factor, age can impact a loan application.

Assets – Individuals who own assets and are willing to provide them as security are likely to get a loan application sanctioned faster than those who don’t have such assets or are unwilling to offer them as security. This is because a collateral ensures that a borrower has repayment on his/her mind and is less likely to default. In addition, the fact that a property/gold/investment is attached to a particular loan provides additional incentive to a borrower to repay the loan on time.

Loan amount – The amount of money one requires can determine whether an application is accepted or rejected. Typically, the loan amount should not exceed a particular benchmark, with this benchmark determined on a case to case basis. Asking for an amount which is over the required limit could make lenders cautious, which could eventually lead to an application being denied. Choosing an amount which offsets the requirement without leaving additional income is perhaps the best way to proceed, with lenders happier to provide loans for smaller requests.

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How to get Personal Loans against Fixed Deposits

Many top banks offer their customers personal loans against fixed deposits. One of the main advantages of acquiring personal loans against fixed deposits is that the interest rates offered are comparatively lower compared to stand alone personal loans as the former is secured against deposits. It is important to note that loan seekers can avail of personal loans to fulfill their financial requirements without liquidating their fixed deposits.
Features of personal loans against fixed deposits

Some of the salient features of personal loans against fixed deposits are listed below:

Eligibility: Personal loans against fixed deposits can be availed by individuals above 21 years, private limited companies, sole proprietorship, private limited companies, partnership firms and stock brokers among others

Rate of interest: Most banks charge around 1 to 2% higher than their fixed deposit interest rates for personal loans against fixed deposits. Consequently, borrowers can save a lot of money which otherwise would have to paid as interest for conventional personal loans which are unsecured

Interest on fixed deposit: Fixed deposit holders can continue to earn interest on their fixed deposits even after they availed personal loans against the former

Convenient: In most cases, banks offer loans against fixed deposits courtesy the overdraft facility against the fixed deposit

Loan amount: In most cases, banks provide a loan against 70 to 90% of a fixed deposit account. However, the actual amount may vary from bank to bank and the fixed deposit amount

Apply for Personal Loan

Repayment: In case an individual does not repay his loan on time, the bank may foreclose his or her fixed deposit account to recover the loan amount. In other words, the duration of a personal loan taken against a fixed deposit account does not exceed the residual tenure of a fixed deposit. Loans against fixed deposits can be paid in the form of EMIs

Accessibility: Personal loans against fixed deposits are easier to obtain than standalone personal loans as the former requires simple documentation such as fixed deposit receipts,  overdraft agreement and lien letter among others

Prepayment penalty: In most cases, banks do not charge any prepayment penalties in terms of repayment of personal loans against fixed deposits

Loan foreclosure: Most banks do not levy any penalties for foreclosure on personal loans against fixed deposits

Processing fees: In most cases, banks do not charge any processing fees for loans against fixed deposits. However, some banks may levy low processing fees for the same

Fixed deposits: It is important to note that fixed deposit account holders cannot break their deposits after availing of loans against them owing to the ‘right to lien’ clause imposed by most banks

Tax benefits: Loan seekers cannot avail of any tax benefits for interest on personal loans against fixed deposits

Facilities: Individuals can avail of various facilities such as cheque book, internet banking and debit card on personal loans taken against fixed deposits

Documentation required: The most common documents required for acquiring personal loans against fixed deposits are listed below:

Signed Loan Agreement

Filled-in Application form

Fixed Deposit receipts

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Loans she can take, for her business

With start-ups mushrooming across the country, women entrepreneurs are not left behind. Today, women have a ray of hope when it comes to financing their dream. In order to promote entrepreneurship among women, many commercial and nationalized banks are willing to provide women entrepreneurs with finance for their businesses. Whether it is setting up a beauty parlour, restaurant, bakery, food catering, tailoring unit, etc., banks are very eager to provide women with finance to turn their aspirations to start a business into a reality.

The kinds of loans available for women entrepreneurs

Many banks are offering attractive lending opportunities for women entrepreneurs, these loans will be advantageous in terms of interest rates and provide them with relaxation with respect to collateral as well. Interest rates for these loans will be based at the bank’s discretion, but the will generally tend to be lesser than regular loans.

●   Bharatiya Mahila Bank (BMB), an all-women’s bank, provides women with collateral free loans, in order to promote their self-sustenance. Women can apply for loans from the BMB f or amounts up to Rs. 1 crore, without the need of collateral.

●    The Stree Shakthi Package for Women Entrepreneurs, provides loans to small businesses which are owned by women, with at least a 50% share. With this scheme women will receive assistance to start a business with a concession on the rate of interest of 0.50%  for a loan amount of at least Rs. 2 lakhs.

●    Cent Kalyani scheme, this is a loan scheme provided to women entrepreneurs, from Central Bank of India. With this loan women can start a new business venture or expand an existing one. It can be availed for retailers, women entrepreneurs in agriculture, village and cottage industry related, etc.

●   Annapurna scheme is applicable for women entrepreneurs who are running a business in the food industry. This can be applied for as individual business or partnership firms. The loan will be a term loan, and will be a maximum amount of Rs. 50,000, which can be repaid in 36 months. The women can use this finance as working capital for purchase of raw materials, small equipment’s like water filters kitchen equipment, utensils, etc. The purchases made with this loan amount will be considered the collateral for this loan.

●  Mahila Udyam Nidhi Scheme will provide women entrepreneur’s financial assistance up to Rs. 10 lakhs. This loan will be available under the Small Industries Development Bank of India. This will help with setting up of new small scale industrial ventures.

There are many more schemes, offered by various banks such as State Bank of India, Canara Bank, they have special cells to help women entrepreneurs get the required finance. If you plan to start a venture of your own or know any women who may need the assistance, go ahead and let them know of this option offered by almost any bank in the country.

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