All posts tagged: collateral

Ways to repay loan early!

choose-a-repayment-plan

We encounter many situations wherein we have to rely on loans. And where there is a loan there is a debt that follows.
We often become perplexed and overwhelmed after seeing the debt pile. This is often due to mismanagement. All that is required is a sense of systematic financial arrangement that will allow you to be on time with repayments or even be an early payer.

We will list down some ways through which you can pay off your debts in a much faster way.
1. Go for Bi-weekly Payments. You can choose to pay the lender every two weeks instead of the regular monthly repayment
Paying your loan early will save your money that amounts due to the interest. This will also decrease the overall term of the loan.
With the surplus money, you can do so much with your life. You can invest it, or you can save it for retirement or you can pay off other debts.
However you need to consider this with your lender first. There should be no penalties associated with an early payment.

2. You can speed up the repayment procedure with each salary hike you get.
You can do that by incrementing the EMI account with every hike in your income. Even a moderate increase in the income saves a great deal of interest. For example If you get an increase of 7 to 8 percent then you can easily increase the EMI amount by a 4-5 percent. This little increase in the EMI can lead to the completion of loan repayment at a much faster rate thus saving a lot of interest and time.

3. Choose the path of Refinance when you have many loans in your basket. Taking a loan against your existing asset again helps in waving off other debts in place, and also helps in reducing the overall interest rates that are spread over multiple debts. We will explain how.
Refinancing basically is paying off your existing loan, and going forward with a new one, while using the same property as collateral or security. You can utilise refinancing for reducing the term of a longer mortgage, or for a switch from a fixed-rate to an adjustable-rate mortgage.

4. You can convert the credit card dues to EMI’s. Credit cards are otherwise convenient, but they also give you a hard time, if you spend without thinking.
If the credit card bills become insanely high, then it is time for you to ask your credit card issuing company to convert your due payments into EMI’s. Many of the credit card companies allow the customers to pay off in 6-12 EMI’s. However if the amount is large, then it might even get extended to 24 months.

5. You can resort to rounding up of the payments. Here you will have to spend a little extra money. But this leads to saving your money in the long term on the interest rate, and also shortening your loan period.

6. Most importantly, bring in a wave of change in your lifestyle too. It is important for you to strike a balance between what you spend and what you save. Do not run into recurring debts. Also keep in mind that paying off debts after the due date affects your creditworthiness. So it is advisable to pay on time, and not fall prey to debt traps.

So do not run away from repayments. Investing in the healthy habit of paying on time will help you out to steer clear of debts and will also help you to live in financial stability.

Image Source:Homeroom

All posts tagged: collateral

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.
Image Source:Student Loan Helper