Tips to avail personal loan.

Bangalore: Planning a luxurious holiday but budget seems to be a constraint? Need to make a huge purchase and you are running out of funds. In such a scenario one opts for a personal loan. Personal loans are not restricted in terms of how the money is used.

Personal loan is an unsecured loan which can be used for any purpose that the borrower deems necessary. The amount of loan can be ranged from  50,000 -  20 lakh & the tenure for repaying the loan varies from 1 to 5 years.

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Advantages of Personal loan

No security required: To avail a personal loan you are not required to produce any assets to bank as a security or collateral. This is different from a secured loan

Minimum Documentation: The time required to acquire a personal loan is less when compared to a secured loan. A Personal Loan can be accessed with minimal paperwork or documentation. The documents required would be:
a.Proof of Identity (Passport Copy/ Voters ID card/ Driving Licence)
b.Address Proof (Ration card Tel/Elect. Bill/ Rental agreement / Passport copy/Trade licence / Sales Tax certificate)
c.Bank Statements (latest 3 months bank statement / 6 months bank passbook)
d.Latest salary slip or current dated salary certificate with latest Form 16

No specification about the end use of the loan amount: You are not required to disclose the end use of the money borrowed, Banks are concerned about the fact that whether the borrower is able to pay back the loan with interest before the due date or not and they confirm this by checking the income, employment or business & other factors of the borrower.

Loan amount not restricted: when you have to fulfill a bigger loan a personal is taken. You can take a loan ranging from 50,000 to 20 lakh.

Tips to look out for before you decide to avail personal loan

1.A detailed market survey to get information on various options like the interest rates, the pre-payment charges, terms and conditions is very essential.

2.Interest rates are the most critical of all the costs that you pay. Hence it is advised to opt for the cheapest option. Beware of banking terms like flat personal loan interest rates that appear to be cheaper but are in fact the most expensive. It is always advisable to choose a monthly reducing balance option than a half-yearly reducing option or flat-rate option. This means lower effective cost for the same stated interest rate. Interest-free loans are sometimes too good to be true but view them with suspicion.

4.There will also be other costs such as processing charges. You should ask for zero processing fees.

5.Also ask for zero-penalty for pre-payment option. If this is not available, then lowest cost would be better. Make sure you work out as to how much these other costs add up to. So even though the interest rate may be lower, it usually adds up to being expensive.

6.Usually the EMIs may come out a lot more than what you can afford on a monthly basis. But keep in mind that you should know that lower tenure will reduce the loan amount and lower loan amount will reduce the tenure.

7.Don't forget to take a letter with the relevant details in a banks letter-head mentioning the likes of, exact rate of interests, processing fees, pre-payment charges along with interest-schedule. Do check the terms and condition before signing the paper.

8.Don not produce false information and do not sign on any blank document. ..

State gets $132 mn ADB loan for power projects

PATNA: The Asian Development Bank (ADB) on Wednesday entered into a phase of long-term partnership with Bihar, as its representatives, along with that of the Centre and the Bihar State Electricity Board (BSEB), signed a new tranche of loan worth $132 million in Delhi for strengthening the state's power sector.


Of the total loan provided by ADB, $130.3 million would be utilized to finance infrastructure development, which includes installation of transmission lines and renovation (modernization) of both the transmission and power distribution facilities. The remaining $1.9 million would be used for the capacity building of the BSEB.


BSEB PRO Hareram Pandey here said that the $132 million (or around Rs 606 crore) is a part of the $153.9 million (or around Rs 708 crore) worth of the project in the power sector that the ADB had earlier sanctioned for the state. The ADB amount is coming as loan to the state, while the Bihar government would provide the monetary value of the remaining 14 per cent (or Rs 102 crore) to the BSEB.


ADB's India Resident Mission officer-in-charge Prodyut Dutt, on the occasion of inking of the loan agreement with the Centre and BSEB, said that his bank's "development partnership" with Bihar had strengthened significantly since 2008, when the bank's loan worth $420 million for the state's State Highway Development Project, phase-I, was approved.


Given the state's strong implementation performance of that loan, the second State Highway Project loan was approved in 2010, he also said, adding that an active consideration of the loan for urban development this year and another tranche for the second Power Improvement Project would be provided in 2014. According to Dutt, all these steps would further deepen ADB's partnership with Bihar.


The signatories to the $132 million loan agreement for the strengthening of the state's power sector were joint secretary (multilateral institutions) in the Union ministry of finance Venu Rajamony on behalf of the Centre and Dutt on behalf of the ADB. Besides, the power project agreement was signed by BSEB secretary Ganesh Prasad and state government joint secretary Shambhu Nath Mishra and Dutt on behalf of the ADB. BSEB chairman P K Rai, along with officials of the ADB cell in the BSEB, was also present on the occasion.


The approved power project valued at $153.9 million is expected to be completed by December 31, 2015. It is aimed at providing\transmitting additional over 4.72 lakh megawatt-hours (MWh) to consumers annually by the end of 2015. It would also help in reducing system losses by three per cent by 2016 in the seven districts of the state -- West Champaran, East Champaran, Begusarai, Bhojpur, Buxar, Samastipur and Nalanda. ...

HDFC sees 20 per cent annual loan growth

MUMBAI: Housing Development Finance Corp (HDFC), India's largest mortgage lender , aims to post an average of 20 percent annual growth in new lending in coming years, its chief executive said, despite surging interest rates and competition. 

Demand for home loans will be helped by rising incomes in burgeoning middle-class households and a low penetration of housing loans in Asia's third-largest economy, Keki Mistry, who is also the vice-chairman of the company, said on Wednesday. 

HDFC competes with India's top commercial bank State Bank of India , No. 2 ICICI Bank and a host of other banks and financial institutions for a bigger share of the mortgage loan market. 

"Housing is still affordable in India. The penetration level of mortgages ... is very low at 9 percent of GDP and in most Asian markets this ratio is over 20 percent. In the UK and U.S. it is over 80 percent," Mistry told Reuters. 

"So, we continue to believe that we will grow at an average rate of around 20 percent for a long, long time to come." 

HDFC, in which Citigroup sold a 1.5 percent stake on Tuesday to lower its holding to 9.9 percent, posted a rise of nearly 20 percent in loan disbursements in the fiscal year that ended on March 31 to 603.14 bn rupees ($13.5 bn). 

LOAN MOMENTUM 

Strong economic growth, rising consumer confidence and the launch of attractive products have helped lift demand for loans in India, where the aspirational middle-class mostly rely on bank credit for purchasing homes and automobiles. 

But a series of interest rates hikes to tame stubborn inflation has triggered concerns about the banking sector's loan growth momentum, as well as a possible rise in defaults. 

Still, Mistry said HDFC did not see an adverse impact of the rate hikes on its loan growth target due to underlying demand for homes and rising income levels. 

"Historically, we have not seen a very close correlation between interest rates and demand, particularly from middle income customers," he said on the Reuters Trading India chatroom. 

"The important thing is not just interest rates or property values, it's also the income of the individual," he said. "If the house is affordable in the context of the individual's income ... he would buy the house irrespective of interest rates a percent up or down." 

HDFC's provisions for bad loans could come down in this fiscal year through March 2012 as asset quality remains strong, Mistry, an accountant by training who joined HDFC in 1981, said. 

He said the company's spreads, the difference between borrowing and lending rates and a key gauge of profitability, would remain in the range of 2.15 percent to 2.35 percent. 

On Citigroup's decision to pare its stake in HDFC, Mistry said the move was prompted by the requirements of new global banking standards, known as Basel III, and it would not have any impact on the mortgage lender...

4 ways and more to start on a methodical savings plan!

Do you have money put away for a rainy day? How will you manage if there's a family emergency? What about a down payment for a home, or a fund for higher education, or retirement? Do you have loans to repay?

In this era of recession, deflation, and job cuts, it is especially important for you to consider where your hard-earned money is going; financial security is the key in today's unpredictable world. And the first step towards gaining that security is to have a Saving Plan.

Still not convinced? Then ask yourself why you need to save. The answer's really very simple: so that your money can start earning money, and work towards reducing the effort you put in everyday.

START SAVING NOW: HERE'S HOW!

a) You might wonder how to begin saving if your income is already over-committed. Efficiency and discipline are the answers.

b) You need to first find out where your income is going. Maintain a diary for the month, noting down everything you spend on, to the last paisa. You will be
surprised at the amount of random purchases you make - from coffee breaks to grocery bills. These are the best places to start trimming.

c) Then, make a budget. This isn't as difficult as you think. All a budget does is create a plan for spending, by stating expenses and goals. Make sure to cover fixed and regular expenses such as mortgage or rent, utility payments, and car or loan/credit card payments. Then set limits on necessities like groceries and clothing, as well as nice-to-haves like entertainment and travel. It's also important at this stage to factor in a savings amount.

d) Now, your first priority is an emergency fund, if you don't already have one in place. And the easiest way to do this is to have the amount deducted from your salary every month and put into a Fixed or Recurring Deposit. Give yourself a pat on the back if you find yourself adding that little extra to your fund because you managed to save a little more this month. You might find it easier to stay within budget if you use cash or debit cards for the necessities and frills.

e) As your emergency fund accumulates, your next task is to find more money for savings and even investment. Begin by paying off your credit cards. If you spend a little time examining your monthly statements, you will be amazed to see how much money you're losing just by way of interest!

SAVING Vs. INVESTING

At this point, we need to address the differences between saving and investing.

Savings provide for emergencies and fund specific purchases in the near future (within two years). The primary goal is to store funds and keep them safe. However, you invest to increase net worth and work toward long-term goals. Also realise that investing involves risk, where you could lose some of your original investment. Only consider an investment plan when you have in place an emergency fund, insurance, control over credit use, and a retirement plan.

IN THE LONG RUN

Now, consider making a long-range savings and investment plan. When beginning to plan for investments, consider your goals, the amount of time you will be able to spend on nurturing these investments, how much you know about the funds, how much money you have to invest, whether you can tolerate risk, and handle loss. Remember that your ultimate goal is a financially secure future for you and your family.

If you look back over all that we've discussed so far, you will realise that we've told you how to begin saving money, in small, manageable chunks. The final objective might be to set aside enough for you to retire so that you don't have to work another day, but your immediate goal is to start the process and become habituated, so that saving becomes a way of life, and a chance to improve how you live....