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If you have a pressing need for cash, then a <keyword id="180660" type="UNKNOWN" weightage="20" keywordseo="personal-loan">personal loan</keyword> is one of the options available to you. Their easy availability is one of the biggest draws. While it is certainly a good way for <keyword id="2788759" type="UNKNOWN" weightage="20" keywordseo="handy-cash">handy cash</keyword>, they are expensive and you are best advised to look before you leap into them. 
 So, today we are going of share some smart tips about personal <keyword id="6360217" type="PERSON" weightage="20" keywordseo="Loan">loan</keyword>s, which would help make this loan product work in your favour instead of creating a problem. 
 
#Tip 1: Do a smart all inclusive comparison When you plan to take a personal loan, you would observe that <keyword id="6371181" type="UNKNOWN" weightage="20" keywordseo="interest-rates">interest rates</keyword> vary from bank to bank. The best way to get an optimal loan would be not just to compare the rate of interest or EMI, but also take into account the processing charges, documentation charges and pre-closure charges. 
 
# Tip 2: Examine other options 
Secured loans such as loan against gold or other securities usually come at a cheaper rate of interest. Hence, if you do have security that you can use, do examine that option before swinging in for a high interest personal loan. 
 
#Tip 3: Do not over-shop for the loan 
When you apply for a loan you leave a “footprint” on your credit record which lenders check before approving a loan. Too many loan applications bring down your credit score. 
 As a result lenders will see you as more of a credit risk, so your latest loan application is less likely to be approved or the rate of interest will be higher. 
 
#Tip 4: Read the loan document 
Before signing on for a personal loan, read the document properly. Ensure all the terms and conditions are filled in completely and match on those that were agreed upon while taking the loan. Very often, personal loans are marketed by agents who are more interested in meeting sales targets than giving accurate updated information to the customer. So beware! 
 
#Tip 5: Use the money productively 
Use the home personal loan for productive purposes. Personal loans are easily available, but do remember that you have to repay them and they do come with a high interest rate. It is wise to take a loan if you really need it or if it is being used to generate income that will help you repay the loan and interest. 
 
 
About the author: Rajiv Raj is the director and co-founder of<a href="http://www.creditvidya.com/">www.creditvidya.com</a>.

5 smart tips to follow before taking a personal loan

Managing liquidity is an important aspect of personal <keyword id="25455" type="ORGANIZATION" weightage="100" keywordseo="finance">finance</keyword> planning. Even individuals with good investment portfolios find it difficult to manage liquidity. A sudden requirement of cash can push one into a situation where he/she may have to sell assets, sometimes at a discount to fair value. However, if smartly used, the traditional bank fixed deposits can come to your rescue. Banks offer personal loans against bank fixed deposits and you can raise short-term money without breaking your fixed deposits. 
 Another advantage that the borrower enjoys is the low <keyword id="37018" type="UNKNOWN" weightage="100" keywordseo="interest-rate">interest rate</keyword>, compared to other <keyword id="180660" type="UNKNOWN" weightage="100" keywordseo="personal-loan">personal loan</keyword>s. Most banks offer personal loans at an interest rate ranging between 16% and 24%. But a personal loan taken against a <keyword id="74427" type="UNKNOWN" weightage="100" keywordseo="fixed-deposit">fixed deposit</keyword> ensures that you pay just 1% more than the rate of interest payable by the bank on the fixed deposit. 
 
For example, if a bank pays 9% interest on a three-year fixed deposit, the rate of interest payable on the personal loan raised against it will be 10%. This saves a lot of money that you would have paid as interest, had it been a traditional personal loan, backed by no security. 
 
Personal loan against a bank fixed deposit is easy to obtain and the process generally takes less than one day. An individual has to submit the application form duly filled, along with fixed deposit receipts and other documents, such as pledge/lien letter and overdraft agreement as notified by the bank. There is no prepayment penalty charged by the bank on the repayment of personal loans against fixed deposit. Banks do charge a small processing fee while providing this loan. But if you have a long-standing relationship with the bank, it may choose to waive half the fee. 
 
Banks generally offer 90% of the value of the fixed deposit. For instance, if you have made a fixed deposit with a bank just one month ago, the bank will be offering you a personal loan to the extent of 90% of the amount you have invested. If the fixed deposit has already run for two years, the bank will be comfortable to lend you a bit more money than the amount you invested as some interest has been accrued on it over the past two years. Simply put, the amount of loan offered against a fixed deposit will be closer to 90% of the value of the fixed deposit. If the borrower fails to service the loan, the bank has the right to foreclose the fixed deposit to recover the money it has lent. This also means that the tenure of the personal loan given against the bank’s fixed deposit cannot exceed the residual tenure of the fixed deposit. 
 
Banks also offer overdraft facility against such fixed deposits. This enables borrowers to have access to liquidity. A borrower can use funds for a short period of time and repay the money much before the due date. In this way, he pays interest only for the time he has availed the cash from the bank. 
 
For example, an individual has a fixed deposit of Rs 1 lakh. The bank’s approved credit limit is Rs 90,000 against the FD and the tenure is 15 months. If the person draws Rs 50,000 on the 1st of the month and then repays the money on 17th of the same month, he is supposed to pay the interest on Rs 50,000 availed for 17 days. 
 However, when you take a loan against a fixed deposit, it should be free from lien or encumbrance, and the deposit should not be in a minor’s name. If this deposit is made under joint names, say a husband and a wife, all holders of the deposit have to execute the loan documents. The liability to repay the loan will lie with all holders of the deposit. The deposit holders will continue to receive interest on the underlying deposit. However, they need to service the <keyword id="6357050" type="COMPANY" weightage="100" keywordseo="EMI">EMI</keyword> on the loan against the deposit. 
 
A personal loan against fixed deposit can help you in times of liquidity crunch. But you should be looking at it as a means to raise short-term money. If you go overboard with a personal loan against fixed deposit and cannot repay on time, you stand to lose your bank fixed deposit as the bank forecloses that fixed deposit to recover the money it has lent. Also, it shows in your credit report, popularly known as the CIBIL report. Such default can pull your CIBIL scores down. Therefore, when you are raising personal loan against bank fixed deposit, do it responsibly. 
 
About the author: Rajiv Raj is the Director and Co-founder of <a href="http://www.creditvidya.com">www.creditvidya.com</a>.

Looking For Quick Cash? Get A Personal Loan Against Fixed Deposit

Mumbai (Maharashtra) [India], August 18 (ANI): <keyword id="6354335" type="General" weightage="100" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> on Friday said regulated entities (REs) have the freedom and they must offer all categories of retail loans either on a fixed or <keyword id="1104583" type="General" weightage="20" keywordseo="floating-interest-rates" source="Orion">floating interest rates</keyword> basis. At the time of sanction of EMI-based floating rate personal loans, RBI said regulated entities are required to take into account the repayment capacity of borrowers to ensure that adequate headroom or margin is available for elongation of tenor and or increase in EMI, in the scenario of a possible increase in the external benchmark rate during the tenor of the loan. In the wake of rising <keyword id="6371181" type="General" weightage="20" keywordseo="interest-rates" source="Orion">interest rates</keyword>, RBI said it had received several grievances from consumers related to the elongation of loan tenor and or increase in EMI amount, without proper communication with and or consent of the borrowers. "In order to address these concerns, the REs are advised to put in place an appropriate policy framework meeting the following requirements for implementation and compliance," RBI said. As a part of the new rules, the central bank said: At the time of sanction, regulated entities shall clearly communicate to the borrowers about the possible impact of change in benchmark interest rate on the loan leading to changes in EMI and/or tenor or both. Subsequently, any increase in the EMI or tenor or both on account of the above shall be communicated to the borrower immediately through appropriate channels.At the time of reset of interest rates, regulated entities shall provide the option to the borrowers to switch over to a fixed rate as per their Board approved policy. The policy, inter alia, may also specify the number of times a borrower will be allowed to switch during the tenor of the loan. The borrowers shall also be given the choice to opt for enhancement in EMI or elongation of tenor or for a combination of both options; and, to prepay, either in part or in full, at any point during the tenor of the loan. All applicable charges for switching of loans from floating to fixed rate and any other service charges/ administrative costs incidental to the exercise of the above options shall be transparently disclosed in the sanction letter and also at the time of revision of such charges/ costs by the regulated entities from time to time. REs shall ensure that the elongation of tenor in case of floating rate loan does not result in negative amortisation. RBI said regulated entities shall ensure that these instructions are extended to the existing as well as new loans suitably by December 31, 2023. All existing borrowers shall be sent a communication, through appropriate channels, intimating the options available to them, RBI said. (ANI)

Banks must allow retail borrowers to switch between fixed and floating rates: RBI

You might have done all comparisons and zeroed on the best <keyword id="6354730" type="UNKNOWN" weightage="80" keywordseo="Home-loan">home loan</keyword> interest rate. But did you go through fine print and read about “other charges” before making the big purchase? 
 
It is important to go through all charges as the sum of all the “other charges” is sometimes big enough to burn a hole in your pocket. And as the wise men say, knowledge and awareness are the keys to avoid getting ripped off in real estate transactions. So, make use of the below mentioned tips and find way out of the loan fee maze. 
 
Application fee 
This fee is collected while processing loan application whether your loan is sanctioned or not, and it is non-refundable. In case you change your mind after applying for a loan, this application fee will be the minimum cost you will have to bear. 
 
 Processing fee 
This, too, is non-refundable and has to be paid with loan application. However, many banks offer the option of paying a part of this fee along with the loan application and clear the balance fee before disbursal of the loan. Depending on the organisation, this fee can either be a flat fee or a percentage of the loan. It is up to the lender to provide a relief on this fee. Your negotiating skills can definitely help here to have this fee waived off or minimized. 
 
 Mortgage deed fee This is one of the major charges you need to cough up when you opt for a home loan. It is generally a percentage of the home loan and forms a major chunk of the total fee amount you need to pay for availing the loan. Some institutions waive off this charge to make the home loan look more lucrative. Before you make this as an evaluation factor to choose the lender, check for the <keyword id="6371181" type="UNKNOWN" weightage="80" keywordseo="interest-rates">interest rates</keyword> or any other charges wherein this may be compensated. 
 
 Legal fee 
Institutions generally hire lawyers to verify the legal status of the property. The fees charged by the lawyers for this is passed on by the institutions to the clients. However, if the said property has already been legally approved by the institution then this charge is not applicable. You must check with the institution to find out if the project wherein you are investing has already been approved by them or not. Else, you will end up paying the legal fee. 
 
Prepayment penalty 
When a borrower pays the entire or a part of the outstanding loan before the due date, it is termed as prepayment. Prepayment results in an interest rate loss for the lender. Hence, a penalty is charged to cover this loss to some extent. These charges vary according to the lender and the type of loan availed. However, the Reserve Bank of India has directed all the banks not to charge prepayment penalty on home loans that are on floating interest rate basis. For fixed rate home loans, however, there is a prepayment penalty charged at a flat rate, which is typically around 2% of the prepaid amount. So in case you have home loan pre-payment in mind, this factor must be considered. Also while evaluating, check if a floating rate of interest is more feasible for you. 
Commitment fee 
Some institutions levy a commitment fee in case the loan is not availed within a stipulated period of time after it is processed and sanctioned. It is the fee charged by a lender to a borrower for an undisbursed loan. For example, in case of a construction linked loan, the project completion stages are crucial for disbursal. The lender keeps this line of credit open for you but charges a specific amount so that you can avail it in the future.This fee is typically charged as a percentage of the difference, between amount sanctioned and amount disbursed. 
 
(Rajiv Raj is the Director and Co-Founder of <a href="http://www.creditvidya.com/">www.creditvidya.com</a>) 
 
(Image: Thinkstock)

Don't let 'other charges' keep you trapped in the home loan maze

Ashwini Dutta has a <keyword id="6354730" type="UNKNOWN" weightage="40" keywordseo="Home-loan">home loan</keyword> of Rs 40 lakh that he availed at an <keyword id="37018" type="UNKNOWN" weightage="40" keywordseo="interest-rate">interest rate</keyword> of 11.25%. The tenure of his loan is 15 years. After making payments for 3 years, he wants to refinance his home loan for the remaining tenure at an interest rate of 10.50%. Will this be a wise decision? Let us check out. 
 
Refinancing one’s home loan essentially means that a new loan is being taken to pay out your existing mortgage. Here are four good reasons why refinancing could be a good idea. 
 
Interest rate is crucial. 
This is the key factor to be considered while refinancing one’s home loan. If you are getting a difference of 0.75-1% between your existing rate and the rate of refinancing, you will end up saving money in the long run. 
 
Switch from floating rate to fixed rate of interest benefits you. 
If you are currently on a floating rate of interest and getting the chance of refinancing at a lower rate, you may want to lock yourself in the low fixed rate. This will protect you from interest rate fluctuations that happen due to the impact of macroeconomic factors. 
 
Refinancing can shorten your loan tenure. The loan tenure is inversely proportional to the <keyword id="6357050" type="COMPANY" weightage="40" keywordseo="EMI">EMI</keyword> payments you are making. This means the higher the tenure, the lesser the amount of your EMI and vice versa. If you have had a substantial jump in your salary because of a job switch, promotion, etc., you can choose to refinance your mortgage for a shorter tenure and increase your EMI. However, this should only be done if your EMI outflow is less than 50% of your monthly income. 
 
You can deploy money elsewhere. 
If you are planning to make another investment or start a business, cashing out on some of your home equity could be a wise financial move. If you are the kind of person who can manage your debts responsibly, refinancing your home loan can really pay off well. 
 
Refinancing your mortgage will save you money, but one should not forget that refinancing comes at a cost. There are two parts to the cost of refinance. First, there is the pre-payment penalty, which may be 1% for a public sector bank and up to 3% for private sector banks. The loan processing charge of the new bank is the second part of the cost that should also be considered as a high processing fee may make the new loan quite expensive. Instead of taking a hurried decision about a refinance, consider your options carefully and take a decision based on your abilities and your financial goals. 
 
Rajiv Raj is the Director and Co-Founder of <a href="http://www.creditvidya.com/">www.creditvidya.com</a> 
Image: ThinkStock

Four
Good Reasons To Refinance Your Home Loan

Even a good loan repayment track record and strong financials can’t make you pay less interest than someone with poor financial credentials. However, when it comes to corporate customers, Indian banks charge interest based on their so-called credit rating. 
 
This, despite the fact that they get less profitability from lending to companies, because of the negotiating powers that these corporates possess and the bad loans that they are capable of making. Then why individuals with high credit score end up paying high interest rates for even secured loans? 
 
The reason is that retail lending, which is just about two decades old in India, does not follow the practices of the developed world and corporate lending, suiting banks to charge high rates from retailers who can’t express their concerns in a strong voice like that of a corporate. 
 
"Loan pricing in India is not only about credit scores, it is about many other things," Saurabh Tripathi of Boston Consulting Group told ET. "But banks should differentiate between good and bad customers. It is administrative convenience not to differentiate between customers. In retail, you advertise one rate and you go to the market. The business has not matured and evolved enough to reach that stage, but it will come there, it's a life cycle." 
 
These credit ratings are assigned by information bureaus like CIBIL, who assign ratings to individuals deciding whether they are trustworthy or are unlikely to repay loan. The ratings range from D to triple A. 
 
In the United States, customers with different ratings are charged with varying interest rates, but this is not the situation in India. 
 
"Retail lending in India is portfolio-based, meaning there is no differentiation in the pricing of the loan," says Pralay Mondal, senior group president, retail &amp; business banking, at Yes Bank. "Banks in India do not lend below a certain threshold of credit rating. Any person beyond that threshold is denied a loan, so there is no case for differential rates." 
 
With credit ratings, banks make sure that there are less chances of bad debts, but despite this reduced risk, banks don’t pass on the benefit to customers by lowering interest rates. This is also partly because of the absence of consumer activism in India, and also because the regulator don’t push banks to end this discriminatory stance. 
 
<a href="http://cdn.publishyourarticles.net/wp-content/uploads/2015/07/loan.jpg">Image source</a>

You Searched For "personal loan interest rates" and got 6 results

5 smart tips to follow before taking a personal loan

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