Friday, 16 March 2018

Which is the Best Credit Card?

If you are looking for a credit card, you will be surprised by the number of options available. While it may seem like a good thing as this means there is card available that suits your exact requirement but finding the right card amongst so many options available could be a challenge. So here we try and help you choose the right card as per your requirement.
Understand Your Requirements:
As we said earlier there are so many options that making a choice could be challenging. The first thing is to understand what your requirements are and then choose a card that matches it.  Without being sure of your own requirements choosing a suitable card for yourself is not possible. If you travel a lot then it makes sense to have a card that can be used with ease internationally, if you spend a lot on shopping then a card that offers an attractive reward structure and so on. It is also important to be sure about the kind of credit limit you want. A low credit limit could harm your credit score if you usage is usually higher than 30% of your sanctioned limit but your credit limit cannot be based solely on your choice. It depends on your income levels and also the eligibility criteria as specified by the card company.
Best Credit Cards As Per Features:
Below is a list of few cards that suit different requirements and hence you may find it useful.
Ø  Citibank Premier Miles Card:
This card is best suited for those who travel a lot. The user gets access to premium airport lounges across the world, 10000 miles are awarded on activation and subsequently there is attractive reward structure that lets the user earn miles on bookings and other transactions. These miles can be redeemed at over 100 airlines. The annual fee is steep at Rs. 3000 which may prove to be a deterrent and the card is issued only to those who already have another credit card, so it is not suitable for first time card applicants.
Ø  Standard Chartered Platinum Rewards Card:
This card comes at a nil annual fee; the applicant may be charged a joining fee of Rs. 250 upfront but that will be waived off when the card is used within first 90 days. This card is suitable for salaried people who use the card for a host of transactions. The rewards structure includes reward points for registering for online banking, using the card for dining and fuel and also cash back on Uber rides.
Ø  SBI Simply Click Credit Card:
This card is best suited for people who are in love with online shopping. The annual fee of Rs. 499 can be waived off if the user spends Rs. 1 lakh within a year of getting the card issued. The card is issued only to salaried applicants. Users get a voucher from Amazon worth Rs. 500 on joining; the card offers an attractive reward structure when shopping online with special benefits for Amazon, Cleartrip, Fabfurnish and many more. You can also get waiver on fuel surcharge and get an e-voucher from Cleartrip. 
Ø  Standard Chartered Super Value Titanium Card
This card could be a great choice for first time applicants who spend a lot on fuel, phone and utility bills. There is no annual fee for the first year, second year onwards there is annual fee of Rs. 750 which is waived off on case the user spends more than Rs. 60,000 in a year. The joining fee of Rs 499 is also waived off when the user spends more than Rs. 30000 in a year.  The user gets 5% cash back when paying for fuel, utility bills and phone bills.
Ø  ICICI Instant Platinum Card:
As the name suggests this card is available instantly, so if you are in a hurry then this card is for you. This card also offers another advantage; it is suitable for first time applicants who are finding it difficult to get a credit card issued for some reason. This card comes with no annual fee and can be issued against an FD which makes it a great choice for those who do not have running source of income.  The credit limit of the card is linked to the deposit amount. The card also comes with some attractive rewards but will be difficult to get one without holding a deposit with ICICI bank.
As we said right at the onset of this discussion the choice available for credit cards is huge and it’s not possible to discuss all of them. We have just picked a few based on the different features and utility they offer. There are many great choices available depending on what you need.

Wednesday, 7 March 2018

What To Do When You Have Too Much Debt On Your Credit Card

You would rarely find a financially independent person in current times who do not own credit cards whether single or multiple, multiple is more likely.  Most shopping and other transactions whether online or offline are done using the credit cards. These cards not only offer the most obvious convenience of buy now and pay later but also eliminate dependence on cash and of course there are attractive reward structures. So here is the good part but there is always a flip side, not being careful with their use could easily mean that you have too much debt on your credit card. What can you do if you find yourself in such a position?
Dealing With Too Much Debt on Your Credit Card:
Too much debt on the card has a lot of problems associated with it. This can be the cause of low CIBIL score, a high debt means the high incidence of interest and fines and of course it could be a potential debt trap. Here we offer a few suggestions that can help you deal with the situation:
Ø  Consider a Balance Transfer:
A balance transfer is an option of transferring the balance from one credit card to another; this could be done in the case of multiple cards too. While even after opting for a balance transfer you still have to pay the dues but you get a reprieve of 90 days in this case. The new card company allows you a credit free period of 90 days which may give you some time to get your finances in order and then pay the dues. Additionally, you could opt to shift your balance to a card with lower APR, thereby reducing your interest cost.

Ø  Start Paying Dues With Highest Interest Cost:
Credit card debt is known to be very expensive but there is a variation in the interest charged by card companies depending on their policies. APR (Annual Percentage Rate) on credit cards could be as high as 36% in certain cases. So when you have collected a large debt on your card, the first thing to do is to check for the APR of each card. While it is not advisable to miss paying any card dues but it’s a good idea to focus on the one where the interest cost is highest and pay that one off the fastest to reduce your interest cost and burden while continuing to pay the minimum dues on the rest.

Ø  Pay the lowest overdue balance first:
Another strategy that one could adopt is to start with clearing the dues on the credit card that carries the lowest outstanding balance. If you have more than one card then it is obvious that all cards will not have the same outstanding balance. Pay off the lowest balance first so that at least one of the cards balances is off your report. Then you could go on to the next credit card balance. So you could pay the entire dues on the card with the lowest balance and for the rest pay the minimum balance in the meantime.

Ø  Start Being a Disciplined Card User:
This may seem to be the easiest of all the above suggestions but yet the most difficult one to follow. Most likely (barring a few unexpected situations like a medical or personal emergency), the cause of too much debt piling on your credit card is being undisciplined while using your credit card. Spending more than you can pay at the end of the month, being an impulsive spender, paying only the minimum amount due on your cards frequently are some of the reasons that can lead to this situations. Thus being disciplined in paying you full dues and not carrying them forward and not missing any payments can help you overcome this problem. Budget your card expenditure and stay within it, avoid impulsive buying so that you do not add to the already existing debt burden.
Well, in an ideal situation one must not pile up too much debt on their credit card but in case this has happened, little planning and disciple can help you deal with the problem.

Monday, 26 February 2018

I Am In Transport Business Can I Get Loan To Buy A Truck?

Every business requires loans to expand its operations. Same is true for a transport business. If you wish to expand your fleet and are looking for funds to buy trucks you can get loans from various financial institutions. Just like home loans and car loans most banks like ICICI, HDFC, Yes Bank and even NBFCs offer commercial vehicle loans.  Mostly people who are engaged in transport business rely on them for financing needs of owning a commercial vehicle. Loans are offered for both new as well as pre-owned vehicles. One can also avail for balance transfer or top up loans.
One needs to fill in the application form and provide several necessary documents. These include proof of address, proof of experience in this field, bank statements of last six months, income tax returns of past 2 years, balance sheet and profit and loss statement of the business, list of vehicles already owned and RC books of the same, transportation contracts etc. After the submission of the required documents, banks take up to seven days to verify the documents and make an approval decision. In most cases, the loan amount is disbursed directly to the dealer.
The commercial vehicle loan amount varies from Rs 1 lakh to 5 crore. It depends on the specific requirement of a particular business. You can get funding up to 100% of the chassis. In case the quantum of loan is high, you may need to bring in a guarantor. Alternatively, you can get a co-applicant. Your relatives in case you are an individual self-employed, your partners in case of a partnership firm or directors in case of a private ltd. company can co-apply with you. Usually, the vehicle itself serves as collateral and one may not provide any additional security. The loan tenure ranges between 6 months to 5 years.
The interest rate varies from 10% to 15%. The financial institution fixes a specific rate depending on various factors. They consider the customer segment (self-employed, partnership firm, corporate) vehicle segment (truck, bus etc.), business turnover and past loan repayment track record (CIBIL score) to determine the rate of interest to be charged. The summary of your past credit experiences is a reflection of your future behaviour. Many banks have a minimum credit score requirement, below which they disapprove the loans. So check your CIBIL report and score before filing a loan application.  A bad score may not allow you to get the best interest rates and loan terms and conditions.
Apart from the interest rate, one must also consider the processing charges levied by the bank. Most banks charge 2%-4% of the loan amount as processing fee. Stamp duty is also dependent on the quantum of funds borrowed. The loan amount is repaid through monthly EMIs. Prepayment of the loan usually attracts a penalty of 2%.
If you have a very good credit score, you may also avail a personal loan to buy the vehicle. The personal loan amount can be used for any purpose that the borrower wishes. The interest rate on these loans largely depends on the past credit behaviour. A high CIBIL score gives one an upper hand while bargaining for personal loan interest rate.
Commercial vehicle loans provide timely credit to transport operators who are either starting off in this field or looking at expanding their fleet of vehicles. A good credit score and experience of at least 2 years in the field and good revenues in business can help you get 100% financing. With no experience in the transport industry, you would require an excellent credit to qualify for the loan. You would need to pay 10-20% of the amount as down payment. With a bad credit history, no collateral and not enough money for the down payment it may be hard to find a lender.

Thursday, 22 February 2018

Do Rich People Have Better Credit Score?

Credit Bureaus have been around in India for more than a decade but despite that, the awareness about them is still not so high. As per a survey done by us at CreditSudhaar, about 53% of the polled sample was not aware about credit bureaus and credit scores, while only 15% knew their own score. Thus it is easy to estimate that there would be many myths that surround credit scores and what impacts and does not impact the score calculation. One such myth is related to one’s income levels and wealth and its impact (if any) on credit scores. Does being rich mean that you would have a better score?
Do Rich People Have Better Credit Score?
Before we discuss the above question it is important to know what impacts the credit score calculation. There are five factors that are factored in when credit score for an individual is being calculated:
Ø  Repayment History
Ø  Utilization Ratio
Ø  Credit Mix
Ø  Credit Length
Ø  Credit Inquiries
The five factors mentioned above in various proportions decide the credit score of an individual. So whether one is rich or poor has no bearing (as it is not amongst the list of factors that are factored in when calculating the score) upon them being on the loan defaulter list or not being there. What will impact your credit score, is how many credit enquiries you make or how long you have serviced a loan and not how much you have in your bank account.
Someone who is wealthier than another person may have a lower score than a person who has lesser wealth. This might be due to the fact that despite being richer, they might not be disciplined enough to pay their dues on time or because they depend too much on their credit card. On the other side somebody who might not have much of a bank balance but manages to pay their due on time, is disciplined enough not to make reckless card usage and credit enquiries will manage to have a higher credit rating.
Rich or poor makes no difference as long as the borrower is disciplined about paying their dues; they keep their old debt, are not reckless with their card usage and have a health mix of secured loans like housing and auto and unsecured ones like personal loans and rolling credit..
Is there a relationship between income and debt?
While as we discussed above there is no relationship between wealth and the credit rating but there is a relationship one’s income and debt. Whenever you apply for fresh debt the prospective lender will consider your income and also your current level of debt before they sanction the loan to you. For some loans their might be clear cut minimum eligibility criteria for the applicant to get a loan sanctioned while for other loans the lender may consider the income levels in light of many other factors for the loan to be sanctioned.
Lenders want to know whether the borrower can service the amount of loan they are seeking with the flow of income. So along with how much they earn is also important to know and also what is the current level of the debt they already have. If the existing level of debt is already high then even with a handsome income level the borrower might find it to service additional debt. Thus generally a debt to income of less than 40% is considered to be optimal if you are looking for any kind of additional debt. This means that not more than 40% of the borrower’s monthly income should go towards paying the EMIs.

When one applies for a credit card then also the card issuing company sanctions the credit limit based on the income levels of the applicant. Thus income does impact how much debt one can have and service; however being rich or poor has no bearing on the credit score.

Wednesday, 7 February 2018

What Is the Eligibility Criteria for 4 Wheeler Loans

Buying a car is more of a necessity these days than a luxury. In the fast moving life of the urban city or a subtle life in the village, Cars are the easier and faster way to commute between destinations.  But not everyone can afford a car. Afford in this case is not only money wise but also maintenance wise. Because, when you buy a car, it’s just not buying a car, as a onetime investment, it needs maintenance at regular intervals. Petrol prices are also on hike every time. But still, you surpass all this and plan to buy a car which is not very expensive. But still, you cannot pay the entire amount at one shot time! And hence, you plan to take a car loan.
Now while thinking of applying for a car loan, you should check a few things before regretting. Whichever loan you think of taking, always check your credit score. A credit score is a number between 300-900 which shows how responsible you are in making the payments. A better credit score will not only help you in getting a loan faster but also would help in getting the lower interest. Also, check if you are not on a loan defaulter list. Suppose, you had taken a loan/s in past, and you were unable to make the payments because of any reasons, and the account is still pending, and not closed, there are high chances that you would be in that list. If you are the one from it, make sure you take the required steps in order to get out of it. Else, it becomes too difficult to first of all get a loan or second of it at a lower interest rate.
Now, Let us check the criteria’s for taking a car loan with different banks.

Age bracket (in years)




Net Salary/Profit Per Year.


Job / profit criterias

Total employment  or ITR  of 2 years, and Should be In the same job since 1 year
Total employment  or ITR  of 2 years, and Should be In the same job since 1 year
    Minimum 1 year of continuous employment.
Total Employment or ITR Of 2 years

The Above mentioned table gives an idea of car loan eligibility with few of the banks. We can see here that more or less it is similar in all the cases where the age bracket is 21 years or above upto 65 or 70 years. Also the net income in case of a salaried person or self-employed individual who files ITR, should be of 2,40,000 per year. The total employment tenure for salaried person is mostly 2 years and 1 year in the current organization and for self-employed it is minimum 2 years or ITR filed.
While choosing any of the banks to take your loan, always take the following points into consideration.
  1. Amount of down payment you have to make
  2. How much loan amount bank will sanction
  3. Your credit score
  4. Interest rate what bank will offer you.
Like any other loan, the disbursal procedure and documentation would remain the same, like the KYC documents, photograph, income proof, etc. Only with the logic that for a car or an auto loan you need to have a license as well.

Make sure whatever decision you take in buying a car or talking a loan should be the most feasible one for you. It should not burden you at any given point of time in life. Buy the car whose EMI you can pay easily, and take a loan which costs you the least interest rate. Dreaming big is always good, but making an impulsive and non-futuristic decision will not help you in anyway but just add difficulties and burden in your head.

Wednesday, 31 January 2018

Can I Get A Personal Loan Of Rs 50000?

Are you falling short of funds to meet your current financial needs? A personal loan is the best solution for your immediate cash requirements. The funds can be used for any purpose be it travelling, medical emergency, education, wedding, home renovation etc. These loans are mostly unsecured and do not require you to provide any collateral. But to ensure the safety of the investments banks usually, go through the applicant’s credit report and check their score. They approve the loans of only those applicants whose CIBIL score is more than their set benchmark.
The eligibility criteria for personal loan varies from bank to bank, but in most cases, it includes your age, income, occupation and capacity to repay your loan. Whether you are a salaried individual or self-employed you must have a regular income source along with a good credit history in order to secure a loan. The loan tenure usually ranges between 1-5 years. The maximum loan amount that one is eligible for is based on the income; such that the EMI should not go beyond 50% of your monthly salary. Most banks also set a minimum loan amount that one can borrow. For most banks, this ranges between 1 lakh to 1.5 lakhs.
So it will be difficult to find a bank who offers a personal loan of Rs 50,000 or less. A good alternate option is to ask your friends and family to help you out. If you are in good terms with them, they would lend you such small amounts if they find your problem genuine. Such funds are usually interest free.
You can also contact small private lenders who offer loans of a lesser value. Private lenders are non-institutional lenders who lend money to others. Apart from the fact that you can approach them for smaller loan amounts, there are several other benefits of borrowing from them.
1.      With banks and financial institutions, you cannot dream of getting a loan without a credit report check. They have very strict lending practices. If your credit score doesn’t match the bank’s requirement, or if you do not have a past credit history your application will most likely be rejected. Private lenders do not have very stringent eligibility criteria. They usually do not base their decisions strictly on credit score. They consider many other factors for lending.
2.      Banks usually have a time consuming application process. With private lenders, you can be assured of quick disbursal of funds. When you are in need of funds in case of an emergency, contacting private lenders will be a quicker option. If you meet the requirements, you can get cash in a day.
3.      With private lenders, less paper work is required than the banks.
4.      There are usually no prepayment or processing charges.

But there is a flipside too.
1.      Private lenders often charge a high personal loan interest rate. There is no regulatory authority that monitors their activity. So they make their own rules. The rate of interest may be as high as 40% depending on the tenure. A personal loan from these lenders would turn out to be a costlier option than the banks.
2.      Direct lenders want a faster return on their investment. Hence the repayment tenure is not very long. They expect the money back within weeks or months. This results in higher monthly payments.
3.      High personal loan interest rates usually make it difficult for the borrower to repay the amount as agreed. Failure to repay the amount within the agreed tenure, may result in taking over of your property or other valuable belongings like jewellery; even unethically.
4.      Many illegal lenders create forged documents to transfer the borrower’s property in their own name when they fail to repay the amount.

Hence though private lenders can be approached for smaller loan amounts one must exercise caution while dealing with them. One must carefully consider the risks associated with borrowing from these lenders before proceeding. One must deal only with licenced lenders and borrow money from them only if one is sure of one’s ability to repay the amount back.

Thursday, 25 January 2018

I Always Pay My Full Credit Card Bills: Will That Help?

With the growth in the Indian loan market, people are waking up to the importance of maintaining a good CIBIL score. They are working on their credit habits to ensure that they have a good CIBIL rating. After all, a good credit score not only helps in getting loan approvals, it also helps in bargaining for lower interest rates.
While everyone knows that paying loan instalments and credit card bills on time is a must if you wish to maintain a good CIBIL score. There is a lot of confusion on the correct usage of credit cards that will bring positive results.
One such confusion relates to the amount paid against the credit card bill. Making the minimum payment will take care of the “Payment history”; factor that affects the credit score. Your payments will be recorded as “on time”. But should one carry some balance on the credit card in order to demonstrate that one can handle credit responsibly or should one pay the entire bill amount? Well, it is a myth that one should carry some balance to yield positive results for your score. Carrying a balance will not only add to your interest costs but also increase your utilization ratio.
Credit utilization ratio has a major influence on one’s credit score. The credit scoring models look at the balance on your revolving accounts and compare them with your credit limit. The percentage of available credit that you use should not go beyond 30%, if you are aiming for an excellent CIBIL score. A high utilization signifies over dependence on credit. Paying off the entire balance in full each month frees up your limit and helps in keeping the utilization level low. In fact it is a very good practice to charge small monthly expenses on the card each month and pay off the entire balance. This way you avoid paying interest, establish a strong payment history and demonstrate that you can manage credit card debts well. It leaves your credit limit open for new purchases.
So, by now you must have realized that paying the credit card balance in full each month will help your credit score, but is that all you need to do to ensure a good rating. Well, there is a catch. The credit utilization levels will remain low in the credit report only if the issuer reports the balance to the bureau after you have made the payment. Many issuers report the balance at the end of the billing cycle when the statement is generated and before the payment is made.
In such a case if you have spent Rs 80,000 on your card which has a limit of Rs 1 lakh, then your utilization levels on the credit report will show 80% even if you pay the amount in full at the end of the billing cycle. So it’s not just a high outstanding balance that you carry over on your card month after month that makes you a risky borrower, high credit card usage can also be responsible for a low CIBIL score.
So is there a way to get around this situation? Yes, if you heavily depend on credit cards for all your purchases and payments, make it a habit to pay twice a month. This way the balance reported by the issuer to the bureau will be less, and your credit utilization ratio will be low too. One thing to take care here is not to pay the entire balance before the end of the billing cycle. Because then your utilization will be 0% which will not be good for your score either. You need to have some balance reported on your statement to demonstrate that you can use credit effectively.
So pay the credit card balance in full each month, but if you utilize more than 30% of your available credit, then consider making the payment every 15 days to keep utilization levels low.