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Reasons why you need to add FD in your investment list

FD in your investment list

“When you invest, you are buying a day that you don’t have to work.”

This quote by Aya Laraya explains the importance of investment in people’s life. The current world presents numerous investment options, and this often confuses the investor. Are you unable to choose the correct investment option? Here is an advice for you:

Add fixed deposits to your investment portfolio. Start your saving with a fixed deposit for yourself or your family. Although it is an age-old investment option, it is still regarded as one of the smartest investment choices. Find the best FD interest rates and choose your plan now. You will enjoy benefits like simple online application procedure, high security of your money with assured returns, flexible investment tenure, etc. Diving into the details, the following are the benefits of adding fixed deposits to your investment lists:

1) Zero risks: Most of the investment plans available in the market are volatile. They depend on the overall economic scenario and the profit of the company. The interest availed at the end of the investment period depends on the profit of the company. Thus, these plans have a higher risk of getting lesser interest, and sometimes your funds may reduce at the end of the lock-in period. This is not the case with FD. The interest rates of FD do not depend on the profit or loss of the company. Rather they are fixed at the beginning of the process. Thus, FD provides a risk-free investment environment.

2) Easy loan against fixed deposits: Once you lock your money in FD, it becomes your asset. You can also avail loan on this FD. The maximum amount of loan that can be sanctioned on an FD is 70% of the FD amount along with a competitive interest rate.

3) Assured returns and High security: Investment options like stock-market, mutual funds, share markets, etc. are subject to higher risks as they are dependent on market conditions. But while investing in an FD, you get 100% assurance of the return of your principal amount as well as pre-decided interest. In an FD, you will be totally aware of the return amount that you will gain after maturity. Thus, you can set your financial goals with greater confidence. Moreover, you can invest any amount under an FD depending on your savings.

4) Flexible withdrawal of funds: In case you are stuck in any financial emergency after investing your savings in FD, there are provisions for withdrawing the money before the FD matures. Though you need to pay a certain amount as a part of the fees, the process is not as complicated as the withdrawal procedures in other investment plans.

Thus, a fixed deposit is a highly flexible and secure investment option. Apart from this, it provides attractive returns. So plan your future by building your wealth through fixed deposits. It acts as a treasure for your financial backup and a shield in the time of financial crisis.

“Invest your money today, build your wealth, and enjoy a happy and wealthy future.”

 

 

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Complete Procedure to Get Loan Against Your Fixed Deposit

Around Rs.3.29 lakh crore worth of unsecured loan quantum was disbursed in the last quarter of 2018. Personal loans are easily accessible and available, highly beneficial to meet immediate financial needs.

Even though one can avail a significant amount, the interest rates for such personal loans are higher compared to most other loans. As such, chances of defaulting on these loans are high also. 

To avoid such situations, one can consider opting for a loan against fixed deposit. Interest rates are also more affordable compared to those on unsecured loans. One can also opt for loans against the fixed deposit if they do not have a –

  • Satisfactory CIBIL score.
  • Other assets such as property.
  • Do not meet the required eligibility criteria for personal loans.

Application procedure

To avail a loan against fixed deposit, one needs to apply to the same financial institution with whom they have a fixed deposit account. Top financial institutions even offer online loan application facilities.

One can download the application form from their online website. However, you may have to visit the branch to submit the required documents along with the application form.

Accordingly, you should verify the application process as required by your lender.

Documentation required

One needs to submit the following documents while applying for a loan against fixed deposit –

  1. Receipt of fixed deposit.
  2. Duly filled in application form.
  3. ECS mandate.
  4. Cancelled cheque.
  5. Other related documents as required by a lender during loan processing.

An individual should note that the ECS mandate and cancelled cheque is required only for non-cumulative fixed deposits.

Eligibility criteria

The eligibility criteria to avail a loan against fixed deposit are straightforward and easy to meet. The following individuals with a fixed deposit account are eligible to apply for a loan –

  1. Resident and non-resident Indians.
  2. Organisations including partnership firms, sole proprietorship and group companies.
  3. Hindu undivided family.
  4. Trusts.
  5. Clubs and associations.

Other benefits of availing a loan against fixed deposits are –

  • The loan can be availed against domestic as well as NRI fixed deposits.
  • No processing fees required.
  • Furthermore, the loan amount can be repaid in instalments or as a lump sum.

One can also avail other features and benefits on their fixed deposits besides opting for a loan at attractive interest rates.

Features and benefits of fixed deposits

  1. Online application process – Most financial institutions offer hassle-free online application procedure for fixed deposits with nominal documentation. It enables customers to save valuable time. To apply online, one can visit the financial institution’s official website. Then they have to fill in and submit the online application form along with the required documents.
  2. Multiple deposits with several cheques –     Some financial institutions such as Bajaj Finance allow their customers to pay the amount for several fixed deposits with a single cheque. One can also opt for a different tenor period for separate deposit and fulfil their emergency finding needs by withdrawing cash from any of the deposits before time.
  3. Affordable minimum deposit amount – One can invest a minimum amount of around Rs.25,000 and earn interest on it and grow their wealth. In this way, an individual who has just started his or her career does not have to wait for a significant amount of time to accumulate a more considerable amount to invest as fixed deposit.
  4. Systematic deposit plan – Salaried employees can also avail a monthly investment option like systematic deposit plan for saving for retirement. Under this plan, they have to make a small deposit every month, which will be considered as a fixed deposit. The interest is calculated based on the interest rate on the date of the deposit. The depositor can choose the number of deposits that they want to carry out under this plan which can range from 6 to 48. Each of these deposits will have a maturity period of 12 – 60 months. This plan will enable you to increase your retirement savings over time.

Fixed deposits are one of the safest investment options that assure you significant returns throughout. You can also streamline your financial plan by calculating your interest beforehand using a fixed deposit calculator. Opting for a loan against fixed deposit will, therefore, provide you with the emergency funding that you need without putting a financial strain on you.

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Know Whether You Should Opt for RBI Moratorium on a Home Loan or Not

According to the latest directive issued by the Reserve Bank of India (RBI), borrowers are allowed a 3-month moratorium period on instalment payment. This moratorium period on home loans borrowers is thus similarly applicable on EMI payment for the months of March to May. As a result, individuals have received relaxation from paying both the principal and interest component as EMI for 3 months.

However, notwithstanding the urgency of this instruction, there are some advantages and disadvantages of a moratorium on home loans in general. On the other hand, individuals often wonder whether opting for a moratorium on housing credit EMI is a viable financial option. Therefore, let’s consider some of the positive and negative consequences of choosing a moratorium period on home loans.

What are the Perks of a Moratorium on a Home Loan?

Applying for a moratorium period for a home loan EMI has its own set of advantages. Even though it is merely a ‘grace period’ or a ‘holiday period’, a moratorium has some short-term financial implications. Therefore, it is an efficient option for individuals who are facing some temporary difficulties to meet their home loan EMI obligations.

Moreover, some of the additional perks of home loan moratorium period include the following –

  • A temporary relaxation – A moratorium period on home loan EMI works the best for individuals who have a shortage of current finances. They often face temporary cash shortages that make it difficult for them to maintain paying EMIs. As a result, they often experience worries regarding defaulting on their repayment liabilities.

To overcome this particular scenario; a home loan moratorium comes as way out. With this option, individuals can avoid defaulting on home loan EMI to prevent undesirable outcomes. It is especially so for the ones who are facing delays while receiving their monthly salary. Therefore, moratorium takes into account these unexpected occurrences and ensures maximum financial comfort, albeit temporary.

 

  • Opportunity to manage short-term finances – In addition to temporary relief, moratorium also creates a financial opportunity. Thus, individuals can effectively manage their expenses related to purposes other than EMI repayment. It is possible that they can experience urgent and emergency needs that require immediate financial attention. Therefore, financing both the requirement and EMI payment proves to be an inconvenience.

A moratorium period thus provides a window of opportunity to channelise one’s finances in the most urgent direction. Besides, individuals can also opt for a moratorium period to accumulate excess funds to pay their EMIs in the subsequent months. Consequently, individuals can manage their short-term financial requirements and EMI payment with this beneficial process.

With the discussion on the perks of a moratorium on home loans, let’s move on to the drawbacks of this facility.

What are the Shortcomings of a Moratorium on Home Loans?

Moratorium period on home loans can also be associated with a handful of shortcomings. Since this facility is only a temporary relief, individuals do have to fulfil their repayment liabilities at the end.

Therefore, the prominent disadvantages of this moratorium include the following –

  • The amount of interest on principal accumulates for the months that an individual does not pay home loan EMI. As a result, they ultimately have to pay EMI in a fresh month after the expiry of the moratorium period.
  • The overall repayment amount increases that take an individual a longer tenor to pay back. Therefore, the amount of interest accruing as per the home loan rates increases by the end of the loan period.

However, a comparison between the perks and drawbacks suggests that an EMI moratorium is a beneficial option if you need to adjust finances immediately. There are many other benefits of moratorium period.  Consequently, individuals can gain financially from moratorium periods, especially on high-value home loans like up to Rs.3.5 crore issued by reputed HFCs.

Besides, these lenders also provide pre-approved offers on a range of secured financial products such as home loans and loan against property. These offers additionally make for a time-saving and hassle-free approval experience. You can check your pre-approved offer just by entering your name and contact information.

As for moratorium on home loan EMI, it is a beneficial option to manage short-term finances. Additionally, this allows individuals to pay attention to other financial requirements that may be urgent to attend.

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Here’s Why You Should Pay Off Credit Card Bills Using A Personal Loan

Why You Should Pay Off Credit Card Bills Using A Personal Loan

With spending power that comes with credit cards, it is easy to be trapped in the vicious cycle of debt if one is not cautious. The situation becomes dire when the debt is spread over multiple cards. The situation can be tackled easily through personal loans. These unsecured loans have minimal documentation and no collateral can be used to mitigate immediate financial crunches at feasible interest rates.

Let’s delve further into personal loans and how they can be used to pay off credit card bills.

Personal loans: A glance

With minimal personal loan documents and no collateral submission, personal loans are the most accessible credit options for all regardless of self-employed or salaried applicants. Being unsecured, lenders use stringent criteria for loan qualification. Most lenders rely on the credit scores by CIBIL to determine the eligibility of the applicant. Applicants should note that the eligibility criteria vary from lender to lender. Applicants can verify their eligibility using a personal loan eligibility calculator.

Surmised below are the eligibility criteria for Fullerton India.

 

Parameters Salaried Self-employed
Credit score 750 or above 750 or above
Age limits 21-60 21- 60
ITR Required while submitting documents Applicants should have income tax returns filed for the past 2 or 3 years.
Income A minimum monthly income of Rs 25,000 for applicants from Delhi or Mumbai and Rs 20,000 for other applicants. A minimum profitable income after-tax which should be a viable amount in the respective industry
Work Experience One year One year

How do personal loans help to tackle the overdue of a credit card?

Although a higher spending one can earn points on a credit card, a defaulted repayment can negatively affect the credit score. Especially if you possess multiple cards and the balance is split across, it would be advisable to pay off the due as soon as possible to avoid hefty charges.

The most prominent method to handle credit overdue is by applying for a personal loan. With booming digitization, most lenders provide a personal loan online apply option through their websites or applications, making the process hassle-free.

Let’s check out the benefits of opting a personal loan:

  • Lower interest rates

The interest rates on an outstanding due of a credit card multiplies with each day of delayed payment and is much higher than personal loan interest rates. By adopting personal loans with lower interest rates, you can save your funds from exhausting. One of the easiest ways to compare this fact is using the annual percentage rate of the two choices. A choice with a lower annual percentage rate helps you save better.

  • Consolidating the overdue

If you are a holder of multiple cards, with dues spread across, the best way to combine the debt is to opt for personal loans. With just one monthly repayment at lower interest rates, one can handle their finances better.

  • Flexibility

Personal loans are a popular credit tool among the masses because of the flexibility it offers. It allows the applicant to choose their tenure based on their financial capacity to repay the EMIs. Such flexibility is not available with credit cards.

  • Enhancing credit score

Credit card dues can reduce the credit score of the cardholder. By opting a flexible personal loan option, one can not only pay their dues but also improve their credit scores.

Conclusion

Personal loans are often saviours, especially when one drifts in a rough tide of dues. By choosing the right lenders with best interest rates, one can not only pay off their dues but also improve their credit scores.

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How to Get an Instant Personal Loan For Emergencies in Agra?

Housing the Tal Mahal, Agra is the 4th most populated city of Uttar Pradesh. The city of Fatehpur Sikri, Agra Fort, and Jamā Masjid has an economy that primarily earns through tourism.

A large concentration of populace in the city is employed in this industry. Although low in population, the need for a personal loan in Agra is somewhat high. Numerous financial institutions and NBFCs operating in the city sanction these loans to borrowers and help them cater to emergencies.

Whether personal or business, these loans are helpful for several emergency situations. The competitive rate of interest also makes personal loans affordable. You only have to comply with a few terms and conditions to get a personal loan approved.

Some of these include:

  1. Make sure you have a good credit score

A minimum CIBIL score of 750 is necessary to opt for personal loan in agra. You may also avail a lower rate of interest with a high credit score.

Be advised that some NBFCs may sanction you a personal loan even if you hold a low CIBIL score. In such cases, you need to have a high income, apply jointly, ask for a low amount, etc.

  1. Keep all the documents close

The mandatory documents required to apply for an instant personal loan are:

  • KYC documents – Voter ID, Passport, PAN, Driving License, Aadhaar, etc.
  • Bank account statements of the last 3 months.

Along with the above, salaried applicants have to provide their salary slips of the last 2 months and employee ID card. Self-employed customers have to submit their last year’s turnover audited by a CA and income tax returns of the previous year.

  1. Apply for the right loan amount

The maximum ceiling for a personal loan is Rs. 25 Lakh. The amount you can avail depends on various factors like your income and monthly obligation. Lenders might reject your application for an emergency loan online if they think the amount is too high based on your eligibility. And, such denials can lower your credit score.

You can use a personal loan eligibility calculator to determine the loan amount you can avail. Note that the amount increases when your existing obligations decrease and vice versa. Clearing your credit card debts and foreclosing any existing loan is an ideal way to lower your debt to income ratio.

Some lenders might check your Fixed Obligation to Income Ratio (FOIR) or debt-to-income ratio before sanctioning your loan. Make sure this ratio is not more than 50%.

  1. Check whether you fall within the eligibility criteria

NBFCs like Bajaj Finserv only need you to be within the ages of 22 and 55 years and either employed (public/private company or MNC) or self-employed to avail a personal loan in Agra.

Bajaj Finserv also brings you pre-approved offers that make the process of availing loans uncomplicated and helps you save time. Pre-approved offers are available not only with personal loans but also with business loans, secured loans like home loans, and an array of other financial products. You can check your pre-approved offer by providing only your name and phone number.

Following only these points can help you secure a personal loan for an emergency without any hassle.

Also, consider the following points before applying:

1.  Check the rate of interest and charges

Comparing the rate of interest from different lenders is essential. Make sure you are getting the right interest rates along with all the features you need.

You must also check the applicable charges on a personal loan in Agra. Financial institutions charge processing fees, penal interest, secure fee, bounce charges, and several other fees.

2. Consider foreclosure and part-prepayment charges

Foreclosing enables you to pay off the entire loan before the tenor ends and save on interest. Part-prepayment facility lets you prepay a significant portion of the outstanding amount and lower either the EMIs or the tenor. You need to pay a flat charge along with applicable taxes to avail both these facilities. Check these charges applicable before opting for a lender.

3. Choose the tenor correctly

The tenor determines your loan EMIs and total payable interest. A longer tenor makes the EMIs affordable while increasing the total cost of loan and vice versa.

Consider all the factors mentioned above when availing a loan in Agra. You can also apply for a low salary personal loan without any hassle post checking your eligibility.

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How to Invest Money with Minimum Risk Factors- Bajaj Finance

According to a report presented by the Trading Economics, deposits in Indian financial market saw a year on year growth of 9.5% as of January 17th 2020. According to the statistical data released by the RBI, fixed deposits accounted for 57.7% of these total deposits in the fiscal year 2017-18.

Even though customers are spoilt for option when it comes to how to invest money today, they choose to stick to the safer option – fixed deposits. These instruments focus on stability and assured returns, minimising market volatility. In most cases, FD investments guarantee zero loss for the investor.

Fixed deposits

These are one of the safest investment options for any customer that has substantial funds in hand and looking to invest it. They can reach any government-backed financial company or private financial institutions to invest in one such term deposits. Bajaj Finance is one such name that offers Fixed Deposit as a product that can offer customers a high return on investment which is more than any regular savings account. FD interest rates for senior citizens can go up to 8.35%.

How are fixed deposits a low-risk investment plan?

  • Calculated returns

In case of fixed deposits, customers can know beforehand about the returns they are liable to receive at the end of the tenor. Financial companies offer customers with a tool to calculate the maturity amount and interest payout at the end of tenor for a cumulative or non-cumulative type of deposit. Investors can streamline their financial plan with Bajaj Finance FD calculator and make a wise financial decision.

  • Increased liquidity

The returns to be paid are not subject to change, and customers can expect returns as expected unless they opt for a premature withdrawal. Still, premature withdrawal of fixed deposit is not financially advisable as it can affect the interest payout, and customers may have to pay a penalty for the same.

  • No market interference

Since interest rates offered to the customer at the time of term deposit is fixed, any changes or alterations in the present rates do not affect the terms of FD. Hence, these are pre-empted from market risks.

  • Flexible tenor

Fixed deposits are often the choice of investment for many average investors because of the flexibility of tenor it offers. Whether one is looking to achieve short-term goals or long-term objectives, FDs are suitable for every situation. For instance, Bajaj Finance FDs come with terms ranging between 1 and 5 years.

Keep in mind, longer maturity terms usually result in impressive returns, while lower tenor may limit earnings significantly.

  • No need for a lump-sum investment

Bajaj Finance additionally offers the Systematic Deposit Plan feature on their Fixed Deposit. With this feature, there is no need to invest a lump sum amount to initiate the FD. He/she can invest a small amount every month and still grow a large corpus over the chosen tenor.

How to invest money?

To invest money in a fixed deposit scheme offered by Bajaj Finance, individuals should first make sure of the returns they can expect from the term deposit. They can check new customer interest rates and FD interest rates for senior citizens as per their requirement.

Based on this rate, individuals can calculate the interest payout for the same. They need to input deposit amount, tenor, and rate of interest to check out the interest payable to them.

Once customers are aware of the returns, they can initiate an FD from the official website and follow up the procedure as mentioned. They need to provide KYC documents and deposit the amount using multiple payment options. One can use a single cheque for multiple deposit accounts as well.

It is an investment plan that let users plan their finances wisely by choosing flexible tenor and options for interest payout, and this makes it one of the feasible options.

The pointers mentioned above should help prospective investors determine how to invest money with minimal risks. Plan your financial fruitfully with the help of a Bajaj Finance Fixed Deposit.

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Know All About Mutual Fund Investments in India & How Can You Invest in it

Mutual funds investment in India used to be viewed with trepidation earlier. However, Indians have not only warmed up to this asset class but are embracing it and turning into evolved investors. Although the penetration of the mutual fund industry in India is lower as compared to other countries, the growth of this sector in India is higher than in other nations.Over the previous decade, the mutual fund industry in India has experienced a CAGR of more than 12%.

 

As of[1]  31st December 2019, the Assets Under Management (AUM) had crossed a new milestone and was worth Rs 27,25,932 crore. Mutual funds investment in India has empowered several individuals to create wealth over a long time.

 

If you have been contemplating beginning your wealth creation journey with mutual funds but aren’t sure about how to begin, this article will help you address some important questions.

 

How Do Mutual Funds work?

 

Investors pool in money to form a mutual fund and an asset management company or an AMC is appointed to manage the fund according to various goals. They have professionals who understand how market and money flow works and then there are trustees of mutual funds who monitor the AMCs activities to ensure that investors’ money is protected and is growing. The AMCs’ invests that money in share market, bonds and securities. The high fluctuation in the stock markets does not ensure a subtle growth of the money and so the professionals in the AMCs come up with a better option. For equity investments they invest, not in one, but several industries. Now, if one of the equity stocks fails to give profit, others can compensate for the loss and balance the debt. Likewise, your money is always protected and growing at a substantial rate.

 

After investing your money in mutual funds, you are then given units which represent the money invested in the funds. These units are easily redeemable to get back your money, mentioned along with NAV, that is Net Asset Value. The NAV represents the value of one unit of your investment after all your fund expenses and management fees are paid. With this, you can check the market value of your investment by multiplying the given NAV to the number of units you hold.

 

Types of Mutual Funds Investments

 

Mutual funds investment in India is possible in two ways, through lump sum amount or SIPs, or Systematic Investment Plan. This makes mutual funds accessible for anyone, for entrepreneurs, salaried, businessmen etc. The gains generated from these investments are then distributed proportionately among the investors depending upon their NAV. On the whole, investment in mutual funds is one of the most viable options for common people in India who are not able to devote their time in markets and look to opt for a better solution for the growth of their money.

 

Investing in Mutual Funds:

 

You should keep in mind a few things when investing in mutual funds:

  1. Understand your risk-taking capacity and capability, referred to as risk profiling.
  2. Divide your money between various asset classes, asset allocation.
  3. Compare mutual funds based on investment objectives and past performance, thus identifying each asset class.
  4. Decide in which mutual fund schemes would you be investing in and apply for application online and offline both.
  5. Follow-ups and diversification of your investment are important to get the best out of your investment.

 

Investing in mutual funds will require you to have a well-defined goal answering the question- why are you investing in mutual funds.

 

Documents Required

 

After identifying the risks be prepared with your details like address proof, identity proof, a cancelled check and passport-sized photographs. Use your PAN card to complete your KYC details. After completing all the necessary details, get in touch with someone likely to help you invest your money the right way. This could be a broker, an organisation or through some websites or apps. You will be informed of all the required details and then your capital would be invested in that particular mutual fund for substantial growth. The period of investment will depend upon you, giving you the authority to credit your money back to your account whenever required, with a minimal fee deduction.

 

Understanding the schemes

 

You might have heard the phrase -” Mutual funds investment are subject to market risks, please read all the scheme related documents carefully”. Adhering to this phrase is important, for you are investing your hard-earned money. Reading about all the schemes and plans before an investment is the most important thing when investing in mutual funds. Direct investment or investment through SIPs, both are beneficial but will come at some risk, resulting in giving you a happy profit.

 

Mutual funds are a proven way to create wealth over the long term for the busy or lay investor who finds it difficult to invest directly in equity markets. Mutual funds can also be an attractive option for those looking to invest their funds for a relatively shorter duration. It is important to evaluate one’s goals, objectives, risk appetite and investible amount before investing in mutual funds.

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Application of Gold Loans

Why Gold Loans?

Indian culture has always given importance to gold. It features as a part of traditional Indian practices, both social and religious. It acts as a status symbol for most of the Indian communities. 

Gold Loans have now become a swift growing presence in the Indian industry. This is mainly due to the reliability of the value of gold. There has been a steep rise in gold prices in the past four years. This proved them to be an excellent substitute in place of property or shares to be used as collateral for loans. It is also easier to evaluate the gold price today as compared to property or shares whose prices may fluctuate depending on circumstances.

 

How did Gold Loans become popular?

 

Starting from Kerala based NBFC’s that introduced this into professional financial circles, this practice has now spread to the majority of the significant financial and banking organizations in India. The swift adoption of this practice is majorly based upon the previously unexploited factors about the Indian community and gold. 

The majority of Indian communities have the practice of buying and hoarding gold in the form of ornaments, ritual-based articles, coins, or bars. With the abundance of this highly valued metal being stagnated inside personal lockers or hidden vaults, the new venture of starting Gold Loans was something revolutionary. 

Though in unprofessional circles, the concept of lending money in exchange for gold was not new. But it lacked the assurance and security provided by the current Gold Loan schemes set up by the banks. The financial corporations now exploit this opportunity to provide loans without any risks to themselves. 

This is because the value of gold keeps increasing every year. Even if the borrower defaults on the payment, the financial corporations can recover their losses quickly by liquidating the gold being held as collateral; in fact, they might even make a profit. This makes it much safer for both the borrower and the financial corporations as compared to personal loans that use the property of the borrower as collateral.

Impact of Gold Loans on the social divide in Indian communities

The practices of the rich and the poor vary significantly in India when the topic of savings comes up. The rich generally have methods of investing in a variety of assets like shares of companies, properties in the form of land or housing. The poor sections of the society, however, only invest their meager savings on gold. This thinking is further reinforced by the fact that so many of the traditional practices in India, such as weddings, encourage the use of gold ornaments and ritual articles made of gold.

Gold acts as an asset that helps the poor class of society to be assured of their savings in the form of gold. Gifts in the form of gold are highly sought after in ceremonies. Though the allure of gold might have decreased amongst those belonging to a more sophisticated class of Indian society, among the poor and middle class, it still holds a lot of influence.

Role of Gold Loans in reducing Debt Traps

The rural sections of Indian society, especially the agrarian sections, are highly dependent on loans for their survival. Traditionally they deal with local money lenders who often take their property papers as collateral in exchange for providing them with loans. The interest rate given by these lenders is also extremely high as rules do not restrict them. The high-interest rates make it difficult for the borrower to repay the loan. Yet again, they end up taking a loan for the next year to get supplies for their agriculture practices. This cycle continues further each year, pushing the borrower deeper into debt every year. In the end, the borrow ends up losing their properties to these money lenders.

Advantages provided by Gold Loans

The general preferences of the Indian community have always been to avoid putting gold as collateral for gold. But gold loans have a lot of benefits that can help Indian communities.

The advantages provided are:

Debt trap avoidance: Gold loans are readily available and completely secure in their process. The default of payment only results in the loss of gold instead of debt. 

Swift process: The entire process of getting gold loans is fast and hassle-free. In practical situations, it takes less than 20 minutes to complete the whole procedure and avail the loan.

No Asset Depreciation: Unlike other assets that are used as collateral in loans, gold is straightforward to liquidate and evaluate. Due to its nature of being a liquid asset, the process of securing it is also easily completed.

No restrictions: Gold loans are preferable because they provide a transaction wholly based upon the value of gold placed as collateral. There is no constant surveillance for the loans. The only restriction is that the loan should not be used for any anti-social purposes. Compatibility with the unorganized sector: The gold loan process highly benefits those in the informal or unorganized sector. Unlike other loans, gold loans don’t require the borrower to submit the details of their employment. 

Moral pressure forbidding default of loan: Most Indian households are extremely attached to their gold articles. In most circumstances, they hold deep emotional attachments as they might be a family heirloom or keep significance to specific events. Due to this, it is highly unlikely for them to default on their loans and abandon the gold article placed as collateral. 

Proper application of the value of gold in the global economy: Currently, India ranks first when it comes to the gold that is held by private households. The estimated amount ranges between 15000-20000 tonnes of gold. Before the existence of gold loans in the Indian financial market, all that gold was kept idle in personal lockers and was effectively useless for the economy. Now, however, it is being used to set in motion a chain reaction of economic activity, triggered through gold loans.

 

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How To Repair Your Credit Fast After Bankruptcy

Getting on your life back on track after declaring bankruptcy is so essential to survival. A huge part of getting back on track in life after bankruptcy is learning to rebuild one’s credit. How to rebuild credit after bankruptcy might be a huge question that we may attempt to tackle today in a few minutes’ reading.

Before we go into the process of rebuilding credit, let’s first understand the term ‘bankruptcy.’ Nobody can just declare bankruptcy. There are a few requirements that enable one to file for bankruptcy. There are two variants of bankruptcy, one being – chapter 7 and the other being – chapter 13 bankruptcy.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is a more restrictive form of claiming that you will not be able to pay any of your debts. During this process, you are required to liquidate all of your possessions that could help you repay your debt. When it comes to the liquidation of your belongings, even your home and car are included under that. All of your possessions, according to the court, can be mandated for liquidation. Usually, in chapter 7, bankruptcy is an option for individuals who have a minimal amount of income.

Chapter 13 bankruptcy

This is the more commonly used bankruptcy, which also acts like a repayment plan. During this process, a lot of your debts are immediately wiped away after the liquidation of your possessions. The state of residence and the court set up an arrangement for your payment plan that you must follow for an extended period of 5 years. If you complete all your payments, then the court forgives your debts. You must also keep in mind that while the debts are discharged, things like student loans or mortgage payments will not be discharged. Smaller more insignificant credit such as credit card and medical bills will be taken off your debt, after that giving for breathing space, to be able to pay off a major chunk of your debts, according to the plan.

Having understood these types of bankruptcy, let’s focus on how to rebuild your credit after bankruptcy:

  1. Make sure that your credit reports accurately reflect your bankruptcy details: it is natural for people not to want bankruptcy to appear on the credit report. But looking at from the point of view displaying outstanding or delinquent balances can be more detrimental to your credit score and report it is much better to have a declaration of bankruptcy appear on your credit report. It is always much better to show zero balance on your accounts rather than have a negative balance account. Naturally, creditors should not be able to display negative account information even after the bankruptcy discharges. So check-in, periodically, to see if your credit report is apt. The bank permits want to check their credit report and only once each year. It may cost more to check a couple of months on a regular basis. It is always better to be sure of what your credit report says rather than be in for a shock.
  2. Make sure to keep paying all your non-bankruptcy accounts on time: after the declaration of bankruptcy, not all your accounts will be included in that bankruptcy plan. As discussed earlier, student loans are one such account. So make sure to continue to pay them on time month actively. Doing this your help you improve your credit score easily. The goal is to show that your financial mishaps are behind you at this particular moment. Even though these accounts are not directly stored in your credit report, they will eventually be reported, especially if one begins to fall behind another payment schedule. Making sure that it doesn’t happen to help with your credit score and report.
  3. Look for a credit repair company: If you are a person who finds it very hard to manage your finances and make your payments on time, there are plenty of advertisements of companies that can help you build your credit score again. These credit repair companies can help you repair your credit report easily without you having to take much of a headache figuring out how to pay off all your debts.
  4. Avoid job hopping at all costs: Job changing won’t affect your credit score indicates that you have a problem with discipline for holding onto responsibility. This could become an issue with lenders in the future, and you might not meet the ideal type of borrower on whom Lenders can take a chance.

These are just a few of the ways that you can begin rebuilding your credit after bankruptcy. First, fully understand the type of bankruptcy that you have filed and also follow these steps to help you rebuild your credit after bankruptcy.