All posts tagged: Bank loan

Rise of Online Lending Platforms

Online money lending

With the evolution in the field of information technology, the lifestyle of people started changing gradually. It started showing its effect on various sectors and one of them is banking and finance sector. Before the evolution, the process of completing a financial transaction was tough and physical presence of both person (borrower and lender) was must. But nowadays everything has changed even the way of money is being borrowed has changed by online lending platforms. One can easily borrow a sum of loan/money from the lender without knowing each other or meeting each other. The transactions are carried out in short time period with the help of information technology.

How it all started?

Lending has existed for thousands of years and has taken on many different forms throughout. At the very end of the 20th Century, First Internet Bank emerged. Consumers could apply for an online loan from their home or office computer, and they didn’t actually have to visit a bank or speak with a loan official. The number of start-ups in the online consumer lending space has grown significantly from a mere 2 in 2013 to 30 in 2015. These firms either operate as NBFCs, intermediaries for banks/NBFCs or serve as a P2P lending marketplace. People conduct all kinds of business transactions online that they used to perform in person. This includes shopping, paying bills, researching business decisions, and of course, applying for loans. As both consumers and business owners grow more comfortable with conducting business over the internet, online lending is also expected to continue to grow.

Today, online money lending is in full swing and only getting bigger day by day with lakhs for transactions and crores of the loan being distributed per month.

How one may lend money online?

The process of lending short term loan online is quite easy. It is divided into the 4 simple steps as shown

Lending Process

For instant loan the borrower needs to apply online, once the lender receives an application they will check for eligibility and approves/dis-approves the application. Once the application is approved the disbursement of the loan takes place.

These online platforms work more like a bank. When a person applies for a personal loan online there is evaluation of creditworthiness and repayment capacity of an individual. The only difference between banks and the online lending platforms is that there will be no executive visiting to collect the documents and provide other services A borrower needs to scan and upload documents for KYC, such as photo, PAN card, Aadhar card and passport. Then, they need to provide income-related documents such as six months’ bank statement, three months salary slip and income tax returns.

We are one of them

We all have gone through the situations where we are left with empty pockets and being broke at the end of the month is a common problem.

We at EarlySalary.com offer quick short term loans to salaried individuals. We plan to help provide a small bridge loan to tide over that short difficult period till your salary reaches your account. The process of applying for a loan on EarlySalary is very simple. It is consisting of three easy steps. The first step is that one needs to log in and apply for the loan after which loan request will be approved or rejected (depends upon credit worthiness) and at last as soon as the request is approved the cash will be transferred into your account immediately.

Sounds good? Let’s try it out here and get your salary in advance with EarlySalary.  
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All posts tagged: Bank loan

The world of Fintech

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The world of Fintech

The combination of Startups and Finance has lighted the thought bubble of Techies.
This has prodded them to move forward to build a space that blends both.
Basically Fintech organisations use technology to help users avail financial services effortlessly and on the go.
Fintech encompasses all technology-based companies operating in insurance, payment, loans, asset management etc.

Fintech is taking the technological space by a storm. With the introduction of these startups, the technical space the distance between technology and money has been bridged.

With the emerging industry of Fintech, there is an increased accessibility to the finance, along with an elevated awareness amongst the users of finance and technology. These firms offer instant, constant and efficient financial services to the users. They also serve as a competition to the conventional banks that exist.

The aim to integrate technology so that various systems in place interact has lead to the seamless processing of information and data transfer. This leads to better decision making processes(for cash, loans, credits etc) and also diminishes the cost.
With the emergence of multitudes of NBFC( Non-banking financial companies), Payment banks , mobile wallet companies etc have rendered a surge in the Fintech sector.

There are various verticals for Fintech
There are numerous startups that have ventured in the services of lending . These startups surpass the conventional financial institutions by offering alternative credit models, and also enhance the accessibility of users to money and money matters. Basically users can gain access to capital much faster and at a cheaper rates through these.

  • • Fintech has also entered Remittance. Remittance otherwise is a lengthy process with unending steps to achieve the goal. This holds true for both outward and inward transfer of funds. Also the costs associated are extravagant in nature
  • • They also provide both private and businesses to accept payments over the platforms of web and mobile. These Fintech startups intend on integrating payment processing into mobile and web apps without putting in extra efforts to maintain the merchant accounts. Steps are taken to ensure that there is no fraudulence that happens. The transfers have to be made directly into the bank account that is linked to the payee.
  • • Yet another bracket of Fintech companies exist that help individuals save manage and invest money. These Fintech companies essentially help in Personal Finance and retail Investment services. Also they help the individuals make better financial choices. Be it them wanting money or them wanting to save it.
  • • The infrastructural pertaining to old-age financial institutions are also be solved by these new Fintech organisations. There supremacy in technology and efficiency in finance is becoming popular amongst the people. They have enormously improved access to financial data and analytics is much easier and quicker now to get through to.
  • • Another intriguing Fintech Platform is providing access to crowdfunding . crowdfunding helps organisations in nascent stage to raise money and develop in the right direction.
  • • These companies initial focus lay on the core of finance, risk management and the incrementing revenues. However now it has expanded to user-friendliness and customer experience.

Fintech has not only disrupted traditional banking institutions, but has also made banking much easier for individuals. EarlySalary is one such organisation in the Fintech world. We at EarlySalary provide loans upto a lakh in minutes through your smartphone. And it is a very simple process! Just login through your Facebook account, fill in a few details and get instant cash. So wanna get some cash?
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All posts tagged: Bank loan

Education Loans

Graduate Piggy Bank

Quality and Quantity seem to come hand in hand. In present scenario, quality education burns a hole in the pockets of parents because of the huge quantity of fees charged for it.
Education loans offered by numerous financial institutions are a boon to the vast sea of students. Students can breathe a sigh of relief with the numerous loan options served across to them, choosing their careers is easier now.
Parents also can be complacent about the fact that they have a monetary pillar to recline on. However there are some factors that we need to be vigilant about.

  • 1. Your educational institution is looked at with a microscope before a loan can be granted. The colleges that offer good placement opportunities are given a green signal. The educational institutions that are not well recognized are given low priority for giving out loans.
  • 2. The CIBIL score for both parents and students is one of the key factors that leads to an approval or disapproval of the education loan. The credit history needs to be up to the mark, and there should be no traces of regular defaults. This holds integral for students, who have just entered college and also have started working. These youngsters might apply for various credit cards with a low repayment capacity resulting into a disrupted CIBIL score. For the parents who are the guarantors, it is imperative to have a good credit score.They are the ones who guarantee the repayment of the loan.
  • 3. Your academic performance also one of the deciding factors for the lenders to grant you a loan. So if you do not fit in the eligibility criteria that the financial institution possesses, then your loan request might be rejected. The banks/financial institution thinks that you would fall in the category of a non-performer and not earn enough to repay.
  • 4. The type of course that you have applied for ascertains the loan approval. If the loan is for a part-time course, then chances are that the bank might reject your loan application. Financial institutions/banks approve loans that are meant for a full-time course abroad or in the same country.
  • 5. The income of your parents is a crucial factor that can turn the tables. Since your parents essay the role of guarantors, and if you fail to repay the loan, then it is on them to repay the amount. If it is fairly low, then the lending institution will not hesitate to disapprove your loan request.
  • 6. Financial institutions do not rely on “Age No bar”. There is a certain age limit upto which loans can be approved and that is 30 years.
  • 7. Whenever you take a loan of more than 7.5 lakhs, then it is necessary to have a collateral and joint borrower in place. If you are unable to provide these, then you might get the loan disapproved. Having a collateral in place, gives a sense of guarantee to the lending elements. They feel that they can recover the amount loaned in case of failed repayment. For an amount lesser than 4 lakhs, you are not required to have a collateral in place. However even such an amount necessitates the involvement of a guardian/parent.
Taking loans for education that is a step taken in many people’s lives. Hence we wanted you to be aware of the obstacles that might come in future planning and career decisioning. Being cautious will help you in better financial planning and control of money.
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All posts tagged: Bank loan

Applying for a home Loan

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Financial planning while taking a home causes us to hyperventilate without fail. This is an integral decision in our lives, where we are financially able to get a house of our own, but we dread the debt that follows to get one.
We need to involve ourselves in comprehensive financial planning, tackle debts and control our money efficiently.

We will discuss about few things that can help us in applying for a home loan without any hassle.

1. Firstly to get a home loan, we need to have a decent salary and a secured job. We should be regular with income tax payments and filing of the returns as well. We should also get our form 16 from our employer.

2. It is extremely crucial for us to have a good credit score. In the absence of a good credit score, the financial institution might reject our loan request.We should be prompt in paying our debt on the due date.

3. We need to also keep a check on any other loans that we have applied for and taken. Financial institutions monitor our capability to repay. For example, If we have taken many loans that occupy 50% or more of our salary, then we probably might not be in the state to repay the loans. Hence a balance is advisable.

4. We need to get a mortgage banker involved in the process of selection of loans. There are innumerable loan options provided by the lender, and we at our part have innumerable questions. Having a mortgage banker leads to us making decisions faster with efficacy.

5. As mentioned, financial institutions evaluate our repayment capabilities. the lending instruments will ask us for all the investment data that we have. We would be required to share the details of bank account/s, post office savings schemes, insurance plans, employment details etc. In case we are freelancers or self-employed, then we need to give the bank the details of our income, income tax return, balance sheets , so that they grant a loan.

6. It is very important for us to assess the kind of property that we choose to get a loan for. It may become a little difficult to get the loan sanctioned if the property is a resale property of age 10-15 years. The financial institutions also evaluate the construction stages of the property. The property needs to be dispute free as well. So it is wise to be safer by going for a property that falls under a good record and is on pre-approved list of the banks.

7. While applying for the home loan, we need to be ready with the down payment. Most of the banks give allowance for eighty five percent of your loan. We need to pay the remaining amount as down payment.

8. The repayment time also is an essential factor to contemplate upon. We can choose the time to repay our loan. But while deciding the time limit, we need to consider the fact that a longer period of repayment time will lead to lower EMI’s but higher rates of interest. We also need to consider our age too at the time of repayment. Will that be the right time and will we have the ability to repay at that age? So we need to make the choice accordingly.

9.The financial institutions do not press on the need to have a guarantor. However having a sense of guarantee ,leads to an increment in our credibility.
Also there are cases where in it becomes mandatory for us to have a guarantor. For example, if we are self-employed, or if we are on a transferable job, if our city of purchasing the property varies from the city where we reside etc.
The guarantor could be our friend or family. And he/she takes guarantee in the legal space. But there is criteria for the guarantor. There are age and income standards that are set by the financial institutions, and if they are not fulfilled then the person can not be a guarantor.
In case we become delinquent, and we are unable to pay back. Then it is our guarantor’s responsibility to repay the loan.

10. If we apply for a certain loan amount, and it is not getting sanctioned, then we can choose to apply for the loan with our spouse. The chances of getting approval increases.

11. Having an appraiser in place helps all the parties aware that you are paying a reasonable price. The financial institutions arrange for an appraiser who essays the role of a third party. The appraiser evaluates and gives an estimate of the value of the house that we intend on buying.

At the stage of closing the process, there is certain paperwork that we need to get done with. It takes a few days for the lender to fund your loan after the completion of paperwork.

Our intention was to draw your attention towards certain basic but crucial points that are required in the home loan process. Hope this article helped! Happy Buying! .

All posts tagged: Bank loan

How to Repair your credit score?

Credit score

Before conversing about fixing damages to the credit score. Let us talk about a good credit score. We often ignore credit score while applying for loans, and many of us unaware of the low score, until the lender rejects our application and informs us.

We should not turn a deaf ear towards our credit score; instead we should monitor it regularly.

What is the Credit score and why is it so important?

So essentially a credit score represents a person’s creditworthiness when he/she asks for a loan. A person’s credit score is determined by the person’s repayment behavior and credit history, and the creditworthiness is constructed around that. The credit agencies maintain a database of credit standings of individuals and commercial entities. The score ranges between 300- 900. Score of 750 and above is considered to be a good score. There are four agencies that are permitted to maintain this database. They are CIBIL, Equifax, Experien, and CRIF highmark.

Why is the score so important?

With a huge array of financial institutions you might feel that money is easily accessible, but this is not the case. The risks associated with lending have always been considered high and it is necessary for the institution to ensure that it’s lending to right person. Hence, the financial instruments rely on criteria that decide whether you deserve the loan or not. Here is where Credit score shines brightly. It is usually the decision making point for lenders to give or to not give the loan to the borrower. Hence it is important for you to maintain a good credit score, and work towards improving if it is low.

What makes a good credit score.?

The credit score, amongst many things, looks at these critical parameters:-

  • 1. Repayment history
  • 2. Loan enquiries and status
  • 3. Loan to income ratio
  • 4. Length of the credit history
There are no short cuts to improving credit scores. The best way is to administer and manage it over time. And gradually things will fall in the right place.

Let’s focus on some things that we can do to better our low credit scores

  • 1. Stop asking for a new credit – If you are aware that your credit score is poor, you should not apply for a loan at multiple banks. The more inquiries the lender puts into your credit score, the lower it goes. You need to be patient till the time you obtain the suitable score.
  • 2. Lessen the debt quotient in your kitty – You should meticulously chart out the credit accounts that you have out of your credit report. You need to stop using credit cards for this situation. Make a budgetary plan, and direct your expenses towards the higher rate interest credit cards first.
  • 3. Keep your repayment balanced: Well it sounds quirky, however repayment does affect your CIBIL score badly. So in this scenario if you drastically pay off all your repayments at once, then this portrays instability in your financial records. Repayments as a process should take place gradually thus reflecting monetary stability and rendering positivity to your CIBIL score.
  • 4. Set up reminders for Payment: We are so caught up in our routines, that we hardly have a breathing space. But we need to be alert, and sensible when it comes to financial planning and decisioning. Some financial institutions offer payment reminders through their online banking portals that can send you an email or text message telling you about the due date. Also there are automatic payments through your credit cards, wherein if you enroll, then payments are automatically deducted from your account and gets received by the lenders.
  • 5. Be vigilant of any sort of mismatches in your credit reports: It is advisable to leave no stone unturned. Sometimes bank authorities can across erroneous entries to CIBIL. So in such case scenarios, you need to approach banks to rectify the mistakes. Also you need to make sure that all the data on positive and timely payments is recorded and submitted by your lender to CIBIL
  • 6. Use your credit judiciously: Whenever you make use of your credit, then you should analyze the credit utilization ratio. This ratio is of amount of credit you have used to the amount if credit available as balance. If you have numerous credit cards, and you use only one of them, then your credit score may get negatively impacted. Hence you need to be smarter and spread your spends over numerous credit cards and not just one.
  • 7. You need to create credit history if you do not have one: For first-timers, there is an absence of credit history. Lenders might hesitate to give them a loan, owing to their zero credit score. So what you can do is open up a fixed deposit and take a credit card against it. And once you have one in your hand, then you can work towards it and improve the credit score.

We recommend you to check the credit score before applying for any loan to ensure that there are no issues in the credit history. Even if there are any, make sure you get them rectified by the agencies before applying for the loan. Our aim for writing this out was to make you understand the importance of a good credit history, and we hope that you take smarter steps towards financial goals.

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All posts tagged: Bank loan

Unsecured Versus Secured Loans

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One of the most common questions that we ask ourselves is “What kind of loan do I opt for?”
We take baby steps towards Loans. Loans are like those tricky questions in our exams, where we have to meditate hard to make the right choice.
Deciding upon which loans to take depends upon numerous parameters such as whether you want to take up a house or cater to your your child’s education or go on a vacation.

Taking loans is a financial commitment, and by agreeing for it, you are basically agreeing to pay a fixed part of your salary till your loan is repaid.
Loans can be majorly categorised into unsecured and secured loans. Sit back and read on further to know about these loans.

Secured Loans:- These loans are guarded by an asset or a collateral Through secured loans, you can get a huge sum of money. Putting your house or your car is a good enough security against the loan taken. Secured loans offer lower rates of interests, higher borrowing limits and longer repayment terms as compared to unsecured loans. The lender has the right to take you asset incase you become delinquent. Also if the selling price does not cover the debt, then the lender can pursue you to settle the difference in amount.

Some examples of Secured Loans are
1. Mortgage wherein your house is taken as security against your loan
2. Auto Loan: Here your vehicle is taken as security against your loan

The perks of Secured loans:-
Cost:- Secured loans are less expensive as compared to Unsecured loans.
Easy Accessibility – Secured loans can be obtained even if your credit score is bad. The lender can seize property incase of failure in repayment.
Tax deduction on interest:– The interest paid on the loans such as mortgage is tax deductible.

The downfalls:-
Losing your assets – You can lose a valuable asset, however the lender loses zero.

Unsecured Loans:- Here you do not have to give the right to your assets to the lender. Lenders are more prone to risks here.
When you apply for an unsecured loan, the loan gets sanctioned by the user on the basis of repayment capability. The borrower is judged on certain parameters such as credit history, capital, collateral , borrower’s current financial situation as well as prevalent economic factors) . His/her character is also taken into consideration to convert decisions to actions.

Some examples of Unsecured Loans are
1.Credit Cards
2.Personal Loans

The perks :-
Secured Assets – You do not lose assets, because the loan does not require a collateral backing them

The downfalls :-
Harder to get – Unsecured loans might be harder to get from the lender. You need to have a good credit rating, and if you do not have one, you might be considered risk worthy.
High Interest Rates – The interest rates may be higher.
Receiving the loan of Lesser value – Also you might not get the desired amount depending upon your credit scores. Hope we have helped you to get a better understanding of loans that exist.

Be smart and take smarter decisions!
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All posts tagged: Bank loan

Default on loan can severely affect your credit score!

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Authored article by Akshay Mehrotra, Co-Founder & CEO, EarlySalary.com

Default on a loan can severely affect your credit history and may dramatically reduce your chance of getting any credit.

Sometimes when we are young we choose not paying credit card for various reasons. Sometimes we just don’t have the money, sometime, the utility of the benefit accrued from the loan is long gone and other priorities calls for money ahead of repayment or Sometimes, we are just outright lazy and keep doing late payments while knowing the consequences.

The fact is if once a delinquent, always a delinquent customer, Banks and other financial Institutions treat you with caution. It is necessary to understand how Financial Institutions look at your repayment track record and what are these credit bureaus. In 2005, CICRA (Credit Information Companies (Regulations) Act) came which paved way for specialized institutions for monitoring and recording all loans taken from Banks and other Financial Institutions. These companies (known as CICs) collect, process and present information about each borrower and assign a credit score. Today, there are four CICs in India, CIBIL, Equifax, Experian and CRIF High Mark. Hence, A credit history of every customer submitted to all four bureaus, which allows Financial Institutions to dive into and judge whether a customer applying is worthy to give loan or not.

Credit information by definition could means any information relating to :—

  • The amounts and the nature of loans, amounts outstanding by a credit institution to any borrower;
  • The nature of security provided by borrower;
  • The guarantee furnished;

Does giving guarantee for someone else’s Loan also impact Scores? – The answer in short is yes. The financial institutions send the guarantor details to CICs, in addition to a person taking loans. Hence it is important to understand that the role of a guarantor is crucial. If the borrower defaults, then you as the guarantor will suffer too as you too will be in the “defaulter” basket. Thus, Think hard before becoming a guarantor.

Not performing on loans and credit products severely impacts your credit score; a credit score basically is a system that enables a credit institution to assess the creditworthiness and capacity of a borrower to repay his/her loan and advance. While it is subjective and depends on Institutions’ internal policies, but according to my understanding a late payment on a credit card will severely impact one’s chance of getting a personal or Home loan.

Hence, taking a loan from one bank and thinking no other bank will know the credit history, is a fool’s paradise. If you are not repaying your credit, the information will be accessed by the financial institution who can lend to you and it will affect their decision.

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All posts tagged: Bank loan

How to come out of debt trap ?

Debt Erased Acknowledging that you are over leveraged is one of most important steps to get debt free. If you understand your finances, you will learn to manage them better. We have all gone through phases in life when we release that we are spending more than what we are earning and its important we understand this and take steps to manage things better. Understand your debt: I have learned to split my debt into 4 parts
    1. Revolver: high cost debt usually linked to credit card spends or cash loans where interest loans are too high and not paying on time results in multiplier effect on outstanding.
    2. Live life debt: EMI loans linked to buying products or holidays. This type of debt is usually not visible as it gets camouflaged under subvention or supplier funding.
    3. Asset class debt: long term loans of cars and homes.
    4. Liquid class debt: using asset class products to take a loan like Gold loan, loan against property.
Some board thumb rules:
  • your loan amount should never be more than 8X your annual salary.
  • Revolver loans should never be more than 50% your monthly salary.
  • Total EMI should not be more than 50% of salary

Quick solutions to reduce debt burden:
  • 1. Balance transfer: Banks offer to people with large outstanding the option of balance transfer from one credit card to another. You can opt for a fixed duration balance transfer(3-12months repayment), in such transfers interest rates are usually 9 – 15% depending on your bank. Some banks also offer a ‘Lifetime duration’ option to make the repayment, though interest rates can be much higher (12-24%). Please note banks also levy process fee, which usually is 2% of the outstanding amount. After the bank verified your details, they will send you the cheque on the demand draft in favour of your existing credit card that you can use to repay.
  • 2. Converting outstanding balance to a EMI: usually if the net outstanding across credit cards is too high I will suggest you can take a small personal loan and repay your credit cards. Please note credit card debt comes at above 2% interest per month (36% – 46% per annum) and also attaches service charge while a simple personal loan will cost between 12-16% per annum.
  • 3. Negotiating lower interest rates with existing bank/institution or look at loan transfer: most institution allow some amount of negotiation usually linked to a bullet payment.
  • 4. Salary cover to paying credit card outstanding : usually credit card outstanding can be managed by paying over two salary cycles and managing funds better. Pay day or bridge salary loans like EarlySalary can be very usual in such stages.
  • 5. Loan against FD’s or Gold Loan: loan against asset comes at much lower interest usually loan against FDs come at 2-4% while Gold loans come b/w 4-8% per annum and thus are very good way to reduce debt burden.

Simple life rule to manage finances be save 30% of salary and don’t leave more than 25% in EMIs.
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All posts tagged: Bank loan

Factors impacting your CIBIL Score

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         Nothing is worse than having a bad credit score, as it can tarnish your social image. How do I improve my credit score, what are the factors which hit your CIBIL score hard and what should we do to avoid them, are some of the common difficulties, most of the people go through but they lack awareness or ignore it. This ignorance is the cause of the diminishing CIBIL score.    Many people are stuck with a bad credit score due to their poor credit behavior of the borrowers or the lender’s mistakes. Having a good CIBIL score can help you get loans easily. Below highlighted are some common mistakes which should not be ignored. (more…)

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