Factors influencing the approval of an unsecured loan

Factors influencing the approval of an unsecured loan

It’s not a salary that makes you rich, it’s your spending habits.”
-Charles A. Jaffe.

What is an unsecured loan?

An unsecured loan is a loan that is not backed by collateral to guarantee the repayment. Unsecured loans are given on the creditworthiness of the person. The creditworthiness of the borrower is assessed based on the five C’s of credit: character, capacity, capital, collateral, and conditions. An example is unsecured loans are credit card purchases, personal loans, and student loans.

What are the factors influencing the approval of an unsecured loan?

1. Job-status
A lender or a bank will be interested to know that you are a salaried person or a self-employed person. One should have a steady source of income every month. On the other hand, if you are a salaried person, you have to provide your offer letter from the current organization as well as the salary payslips. In case you are self – employed, you would be asked to show proof of continuity of business and proof of ownership.

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Education loan

Education Loan

The roots of education are bitter, but the fruit is sweet.

A good education leads the path to success. Quality education is what every parent looks after their children. However, nowadays, the cost of education has risen, and the fact that the price of studying at reputed institutions is already quite high. Hence, parents who want to provide their children with the best education, invest their money in FD (fixed deposit), Insurance plans, and Equity for the long term. However, sometimes in spite of planning so well, there are chances of deficit in finance. So an Education Loan could be an ideal solution for your dreams.

Features of an education loan:

  • One can opt for an education loan if he wants to study in India or even abroad.
  • The Rate of Interest can be as low as 6.6%, to even as high as 15.2%
  • The guardian or parent of the student needs to be co-applicants for the loan application.
  • The student can apply up to a certain amount (basically 7.5 lakhs)
  • The maximum amount of loan varies from bank to bank
    • If the applicant wants to study in India, the bank can grant 10 lakh worth of loan
    • if the applicant intends to study abroad, the bank can give a loan of 20 lakh.
  • Usually, the tenure for repayment of the loan is 5 to 7 years, but flexible repayment options are available. An applicant can also opt for more extended repayment periods that can go up to 10 to 15 years.
  • The EMI of an education loan does not begin immediately or during the period. They provide one year time until the applicant gains the regular income.
  • The interest on the education loan amount is eligible for tax rebate under section 80E of the Income Tax Act.

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advance salary loan

Advance Salary Loan

“The most important investment you can make is in yourself.”
-Warren Buffett.

A shortage of funds may occur many times before getting the salary to your bank account. In that situation, advance salary loan help. In another manner, one can say that advance salary loans are temporary loans offered to salaried professionals who are working in India. Like a personal loan, the interest rate of these loans is calculated every month or sometimes daily by some lenders. The foremost advantage of these loans is that they are available to those individuals with an average credit score. It does not take more then half an hour if the person is opting for an advance salary loan. And due to this, there is a high factor of risk involved. Hence, advance salary loans come with a high percentage rate.
One is advisable to opt for an advance salary loan in an emergency when no other options are available.

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credit_score

Do you have the right Credit Score?

One might require a loan for various reasons. However, it’s also important to know what criteria have to be met to be eligible to get a loan, and one such important factor is your credit score. A credit score is a financial tool that helps to determine the loans you can get and the interest rates you pay. Even Insurers use credit scores to set premiums. So today let’s understand more about a credit score.

Credit / CIBIL score

A credit score is a three-digit number that measures an individual’s ability to pay back the borrowed amount. It is the numerical number that shows the creditworthiness of the person. A credit score by CIBIL ranges between 300-900 and 900 being the highest. A higher credit score offers you several benefits and helps you at the time of getting a loan or a credit card. Having a low credit score means that you are not able to pay back the borrowed sum amount. If you have a high credit score, you are entitled to get discounts on the interest rates. Moreover, a high credit score gives you the additional power to negotiate for better rates of interest on loans.

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Health-Insurance

Reasons to buy a Health Insurance

“The task we set for ourselves is not to feel secure but to be able to tolerate insecurity.”
-Erich Fromm.

Health insurance is essential for every individual. A medical emergency can devastate anyone, anytime and impact an individual emotionally and financially. It is advisable if you to buy a health plan early in life. Here are the top reasons to convince you to purchase health insurance:

1. Start early

The health insurance premium is highly dependent on age, and there is a pitch in the premium slab post 30. For instance, if you purchase a health plan of Rs. 5 Lakh at the age of 25 years, then you need to pay a premium of Rs. 5000 but the same policy would cost you more at the age of 35, even with a change in your health indicators. Hence, buy a policy as early as possible to pay a lower premium.

2. Incidence of illnesses have increased

You don’t have to be 60 to buy health insurance. Inactive lifestyle has increased the occurrence of lifestyle disorders involving heart, cancer, lung conditions and stroke, stress-related hypertension is affecting young corporates who have no idea how unhealthy they are until something severe happens, and they wake up to reality. Moreover, health insurance policies offer annual health checks ups to encourage health awareness. Also, preventive services include counseling, screenings, and vaccines that help you to manage your health better.

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defined_benefit_plan

Understanding Defined Benefit Plan

Health insurance covers your unfortunate medical expenses. Your hard-earned money can be utilized for better. The cover you buy also includes pre and post hospitalization expenses and other benefits. On the other hand, defined benefit plans policy work the same.
Defined benefit plans are the type of health insurance plan where a predefined payment will be made to the policyholder on the occurrence of predefined events irrespective of how much expenses have been incurred as hospitalization expenses. Thus, the sum assured is not dependent on your hospitalization expenses — no need to furnish hospital bills or any other bills to claim the benefit.
Under the defined benefit plan, we have

  1. Critical illness plan
  2. Hospital Daily cash plan
  3. Any other health insurance plan which makes pre-defined payments to the policyholder on the occurrence of a pre-defined event irrespective of whether and how much expense has been incurred on treatment.

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indemnity-plan

What are Indemnity Plans?

Like other plans, an Indemnity plan will reimburse the cost of medical expenses to the policyholder. This plan will refund the actual amount incurred as an expense during the medication, and the reimbursed amount should be within an assured medical cover.
Indemnity health plans are also known as:

  1. Traditional indemnity plan
  2. Fee- for service plan

For example, the cost of cover is Rs 5 lakhs, and a hospital billing amount is Rs 2 lakhs. The company has to pay Rs 2 lakhs to the policyholder. The balance amount is left with the company until the maturity of the policy.
And this agreement with the company will be predetermined. The best example is the “Mediclaim Insurance Plan”- a popular health product.
Generally, this plan has a predetermined deductible. The part of medical expenses will be paid to the policyholder, and the insurance company will pay the remaining amount, and this is “co-pay.” Some health insurance plans will not have any deductibles, where the insurance company will incur the entire cost.

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Personal Loan

Let’s understand Personal Loan

What is a personal loan?

A personal loan is a multi-purpose loan that does not require any collateral. One can use a personal loan to meet personal expenses and business expenses.

Features of personal loan:

1. Simple documentation process.
A personal loan requires minimum documentation. Your loan can be approved within 48 hours after applying.

2. Flexible tenure.
In a personal loan, the borrower gets flexible tenure of up to 5 years to repay the loan amount, which is preferable than a credit card loan or gold loans.

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types of unsecured loan

What are the various types of Unsecured Loans?

What is an unsecured loan?

An unsecured loan is a loan that is not backed by collateral to guarantee the repayment. Unsecured loans check the creditworthiness of the person. The creditworthiness of the borrower is assessed based on the five C’s of credit: character, capacity, capital, collateral, and conditions. Let us look at some of its types:

1. Personal loan

A personal loan is the most common type of unsecured loan. The personal loan can also be paid in installments. You can repay the loan in equated monthly installments (EMIs). Banks and NBFCs (non-banking financial companies) offer personal loan through online and offline process.

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active, passive and balanced funds

Active, Passive and Balanced funds

Investing can be a scary endeavour without a road map. Each investor has a different mindset when they invest. The final goal of an investor must be to choose funds planned as per his/her financial goals and strategies. Here is the breakdown of how one should opt for active or passive funds when it comes to investment.

What are Active Funds?

Active investing is a strategy that involves buying and selling assets to make profits that outperforms and sets the benchmark in the index. A fund manager is an example of an active investor.

Investors in actively managed funds will have to pay higher annual charges for the expertise of the fund manager, the interest is usually between 0.6% to 1.5%, and sometimes it could be more, depending on the type of the portfolio they are running. So it is up to you to decide whether the cost of a fund investment is worth the potential returns you could receive.

What are Passive Funds?

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