credit card

What is a Credit Card?

Credit cards are issued by banks and financial institutions, allowing the customer to make purchases and pay for different services by borrowing money from them. A credit card also offers you benefit from rewards, cashback, interest-free period, and much more. The demand for credit cards into the Indian market is increasing rapidly, and for that reason, the banks and the financial institutions have launched plenty of credit card options for the customers to choose.

There is a variety of credit cards available in the market having different features and benefits linked to them. The most popular of them are premium credit card, business credit card, lifetime free credit cards, cash back credit card, co-branded credit card, fuel credit card, and many more.

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Loan Default

loan default

What is a loan default?

Loan default occurs when the borrower breaches a material term of their agreement. The common reason in loan default is that the person is not able to make the loan payments he had once committed. When a loan default occurs, the lender has the right to take legal action against the borrower. Thus, negatively impacting the credit history of the borrower.

What happens when you default on a loan?

This, indeed, is based on your lender and the type of loan. Some lenders would be counting even one missed payment as default. However banks wait until you have missed multiple payments, or banks and other financial institutions wait till at least 30 days before considering your loan as a default.

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FAQs on Unsecured Loan

FAQ

“Risk comes from not knowing what you’re doing.”
Warren Buffett

You might be having many questions in your head regarding an unsecured loan. We’ve answered some of the most frequently asked questions (FAQs) for you.
An unsecured loan is your saviour during the financial emergency or when you face the situation of financial crunch. We all that to get an unsecured loan is the easy, quick, and paperless work.

1. What is an unsecured loan?
An unsecured loan is usually given by banks and the non-banking financial company (NBFC) to the customers. Based on a few things like age, credit history, income, and employment history. An unsecured loan means you don’t have to provide the lender with the collateral like property/gold/ machine to avail it.

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loan default

What happens when a borrower fails to repay a loan?

There are critically two significant consequences of failing to repay your debt.
The first one is that your credit score will take a beat. All credit-related information of the owner and credit card user is sent to CIBIL and other credit rating agencies. They would know your credit history from head to toe. We all know that every loan nowadays is been approved based on the credit history of the borrower. While if you are defaulting your payments, your credit score will take a hit. And this will make it difficult for you in the future if you would want to apply for a loan again.

Second, the lender can auction the property which was used as collateral for the loan after following the due legal process.
The bank will send first notice to the borrower mentioning the due amount with interest. If the bank realizes that the customer is willingly delaying the repayment, then it could lead to legal proceedings. The follow up from the bank will start soon as a single repayment is missed. The legal procedures will not emerge when the customer is willing to repay the amount after a break. (Sometimes there are situations like death, illness, or accidents that can cause a break in the repayment of the loan amount. So, in this case, banks will give holidays to the customer or his family. Also, as per the guidelines of the Reserve Bank of India, banks should provide time to the customers to pay the loan amount. And should not use their muscle power to recover the loan amount.)

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unsecured loan

Remember these points before you apply for an unsecured loan

A number of people have taken loans to finance the major events of our lives. One must have Several people take loans to finance the significant events of their lives. One must have taken a loan for buying a car/ house/daughter’s marriage or paying for a medical emergency. We all know this thing that taking a loan helps us to circumvent our lack of large sums of liquid cash. Sometimes there are circumstances when we are not able to repay our loan EMI on time. The inability to repay a loan can lead to the unaccepted relationship between the borrower and the lender. Such a situation needs active management.
Don’t miss out on these reminders when you apply for a loan.

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consumer durable loans

Why should you take a consumer durable loan?

Timely return of a loan makes it easier to borrow a second time.

Consumer durables have instilled a sense of convenience in life. From refrigerators to high-end mobiles, we are always on the hunt to upgrade our life as per our convenience. The consumer durable loan allows the users to buy refrigerators, washing machines, TVs, high-end mobiles, and other durables at affordable EMI.

What is a consumer durable loan?

It is a financing scheme offered by financial institutions to help the customers pay for the purchase of consumer durable items.

One should consider the following things before opting for consumer durable loan:

1. Hidden cost
There are a few 0% interest rate options available in the market for the loan. But these schemes have hidden costs like processing fees that get deducted from the loan amount that you receive. Once you opt for a consumer durable loan, make sure you check for hidden costs.

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short and long term loan

Short and long term loan

A loan that needs to be repaid in regular payments over some time is called a term loan. The tenure of most of the term loan is between one to ten years. The tenure of the term is decided at the time of application by the bank or financial institute. The categories of the term loan are secured loans and unsecured loans. The loans which are for short duration usually less than one year are called short term loans and loan which have a span of five or more years are classified as long term loan. In some instances, customers have the option to choose between a fixed rate of interest and a floating rate of interest. A fixed-rate of interest stays constant throughout the term loan, which means that the borrower will pay the interest based on the rate set at the time of loan application.
On the other hand, a floating rate of interest fluctuates with market conditions, which changes the installment amount as well. A fixed-rate of interest is advisable for long term loans the borrower of short term loan can take floating rate interest.

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unsecured vs payday loan

An unsecured loan vs. a payday loan

Unsecured loans and Payday loans are used to pay the expenses or purchases that you might not be able to afford. We all know that it’s sometimes hard to predict when a sudden need for cash will arise.
Unsecured loans and payday loans represent two different approaches to obtaining extra cash in terms of loan size, loan period, cost, and qualifications.

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. Examples of unsecured loans are credit card purchases, personal loans, and student loans.

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loan against mutual fund

Loan Against Mutual Fund

“Vision without execution is daydreaming.”
-Bill Gates

Financial crises can occur at any time. Loans are handy and are the first option most of them opt for. So today we would look into one the topic: -Which is the better option between loans against mutual fund and a personal loan? The answer is a loan against mutual funds because it allows you to borrow by putting your mutual fund investment as collateral with the bank. And since an asset class backs the loan, the interest rates are usually lower than the personal loan. You cannot redeem the mutual fund units as long as they are pledged with the bank but can redeem if you default.

Each bank offers a loan against mutual fund as per the list of approved mutual funds. It’s the agreement that banks own, on sale and hold your investments. The banks have all rights to sell your funds in case of default or non-payment of the loan amount.

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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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