[7dhirenm]

Tiding over rough times with a business loan

I have been in the manufacturing space for almost 5 years with some very good growth year on year. We basically do job work for some of the larger organisations which in turn work with some of the brands like Tommy Hilfiger, Gap and so on. We have a team strength of approximately 300 people with about 180 sewing machines, 40 ironing tables and multiple other job workers. However, back in 2013, I had a small challenge in managing the finance. While the turnover was approximately 3.5 Cr, our profits were diminishing as the clients were squeezing us on margins. Also, there was a challenge in the payments as the cycle had changed from 60 days to 90 days and at times even worse. At this instance, I was in a dilemma on how to manage the finances as we did not have sufficient money to scale and also make payouts for the following month. I had a word with my CA and that’s when he suggested I look for a business loan in Bangalore. While, I had never wanted to take a business loan because of the interest rates, I guess this was the best way forward.

I applied to multiple banks and to my surprise I got some very good offer for the loan. The loan was disbursed based on my eligibility which was in turn calculated basis of my Annual Turnover, profit after tax, the number of years that I have been in business, my personal CIBIL score, the team strength, the kid of company registration, my IT returns for the previous years and many more parameters. Based on the inputs I choose HDFC bank and got a business loan for approximately 15 lakhs disbursed to my company account. The interesting part was the bank with which I had an account could not match the rate of interest offered by HDFC. I guess each bank has its own set of rules basis which we would be eligible for loans.

I submitted all my documents and there were multiple verifications and finally got the loan that I so desperately needed. I used this money to quickly get some more machinery and pay off salaries for the following month. As the saying goes fortune favours the brave, the following month I also got the outstanding payments from my clients. Suddenly there was an excess balance in my account which I used smartly to get some more equipment and people. Having seen this work very well, I went ahead and applied for one more loan in 2014 and this sure has helped us scale at a quicker pace. While I see the valuation game being played, I am very happy raising debt to cater to my needs and run a business efficiently. So remember if you meet the banks eligibility criteria for a business loan, then leverage on that before diluting.

[7dhirenm]

How did we keep our Europe trip costs low?

Well as highlighted in my previous article, I am here to detail on how we kept our costs so low for our trip to Europe. My wife and I travelled across Europe for around 3 weeks visiting 6+ countries. Most of our friends were surprised when we told them about our outflow for the complete trip. But before I get to that, if you recollect we took a personal loan for travel purpose and if you do so please do ensure you avoid the ten mistakes that one makes while taking a loan. You could also use some of the quick tricks that you can find here. Remember the most important part in a personal loan is the interest rate along with other key pointers.

We booked our tickets a good couple of months in advance and ensured that we had the Euro rail pass in place which made our travel across countries economical. We booked hotels via platforms like booking.com, Agoda and the likes which gave us the flexibility to cancel these hotels in case we found a better place to stay. If I remember the number right, I booked hotels in approximately 14 cities and we made changes to almost 10 of these. Before we got to any city, we were aware of what would be the best way to travel within the city. We also tried to choose places close to metros or bus stops for quick travel. This ensured that we also got around the city with great ease every time. Most of the palaces we choose had a breakfast included which helped us start our day on a stomach full. We bought fruits as snacks during our travel through the day and had our Lunch out usually at fast food joints like Pizzas and the likes. Being an Indian we could not stay away from India food for long J.  We had packed Methi theplas and couple of MTR ready to eat packets which helped us relish home food back in Europe too.

Ensure you negotiate hard when you pick up souvenirs along the way. You will also find multiple Asian selling these souvenirs out there especially outside Eiffel Tower. 8sR���u

[7dhirenm]

Low cost high thrill trip to Europe

This is back in 2010 when I was between jobs and wanted to travel to Europe with my wife. We looked up multiple packages but they all were either too expensive or not to our liking. That’s when we put across a plan vis-à-vis which we could do the activities that we liked and at the same time to do spend too much on the trip. You can find multiple inputs in this note that I stumbled upon on article on “How to travel the world with limited finances”.

We went ahead and jotting down what countries we would like to visit, the duration required in each country based on the activities out there and checking reviews of these places to be sure we picked the best of the places to see in a limited time frame. We went on to chalk out a 29 day travel plan which was a little over board as had planned on a 3 week vacation at max. This resulted in cutting down on a couple of countries and we freezed on 6 countries in 20 days. This was pretty exciting as we were going to visit Prague, Rome, Pisa, Paris, Switzerland, Interlaken, Amsterdam, Venice and multiple more places all in just 20 days. The plan worked out to approximately 5 lakhs for the two of us all inclusive. That’s when we were contemplating, because of this article on a travel loan and weighed its advantages and disadvantages. This was more like personal loan which can used for any purpose including travel. We got calling multiple banks to get the best offer and finally froze on HDFC bank for a personal loan. Now platforms like Cashkumar can help you with it.

While we did take a loan, surprisingly the total spend was way below expectations. Our complete trip worked out to approximately 3.75 lakhs which included Hang gliding as well as Jungfraujoch which itself cost us a fortune. We did not hold back on visiting any prominent place in a city including the ice caves at Salsburg which was amazing.

Well more in my spend and the approach in the next article J �����\sR��u

[7dhirenm]

Can I get a personal loan if I have a bad credit history?

A large number of people need loans for various reasons. It may be required to purchase high value assets like a car or a house or for expenses like travel or marriage. You can know more practical ...

Read this article and it seems really interesting!!! worth checking>>>

[7dhirenm]

Top 10 mistakes People Make around personal loans

In the previous articles we understood personal loans and its nuances. Now that we know what a personal loan, the uses of it and the likes; let us understand the top 10 mistakes made by an individual while applying for a personal loan. Most of the points would seem obvious in retrospect 72% of the borrowers forget these pointers while applying for a loan.

1. Not exploring options for the best deal

One of the biggest mistakes that a borrower makes is to take the first loan offer that comes his way. Usually borrowers just visit their Bank to check the offers available on the loan or accept an offer made by customer’s support/call centre. In both these scenarios, though a loan might be disbursed to your account, the probability of it being the best offer is very minuscule. Today customers can ideally leverage on technology to explore options from multiple banks on a single platform like Cashkumar. Based on inputs fed in by the customer such as the company he is working in, his monthly take home, city, current EMI commitments etc, a platform like Cashkumar would highlight the best bank matching the customer’s profile. This process would take just couple of minutes but help customers grab a great deal

2. Focusing only on the rate of Interest

Customers usually keep a close watch only on the rate of interest. Read more about personal loan interest rates here. However, there are other charges too primarily the processing fee that plays an important role. Let’s assume you want a personal loan for Rs. 5,00,000/-. Bank A is offering it to you at 14.5% with a processing fee or Rs. 999 and bank B is offering you at an interest rate of 14% with a processing fee of 2% of the loan disbursed. In this scenario it is evident that though you pay an interest of approx. Rs. 6,000 more with Bank A, you pay a much lesser processing fee with Bank A. In this case, the net saving using Bank A vis-à-vis Bank B is approx. Rs. 3,000/-

3. Other T&C

There is a reason why lending institutes make you sign at dozens of places in the agreement. Every signature of yours is primarily accepting some T&C highlighted in that section or page. So do not just skim through the agreement with the urgency to get done with the paper work. It would always help to go through the finer points to ensure there are no surprises on a later date.

4. Going overboard

Phew! How often have we seen customers default because they miscalculate their potential of repaying a loan? Now that you are eligible for a loan, some lending institutes might try to push you to take a larger loan based on your maximum eligibility. While it is definitely good to see money inflow to the account, you might want to consider your repayment abilities based on your personal commitments. It would help to take a loan amount that you need and take a top up loan if need be

5. Underestimating your Repayment capability

While you might need a loan immediately, there could be scenarios where you could repay the loan prior to the expected tenure. If this is the case you might want to explore a bank which as no or low pre closure charges. Never miss this point in case you looking for an early closure. Cashkumar clearly highlights all these parameters on the site which would help you take an informed decision

6. Hiding some key information

Never hide information or lie to the lender as this could hurt your credit rating or lead to a legal case which sure is not worth the trouble. You might not only be forced to repay the loan immediately but also be charged a hefty fine for this fraudulent act

7. Not being aware of your Credit Score

Remember a customer with a good credit score usually gets a loan provided he meets the banks eligibility criteria. However, if a customer has a Bad credits score, applying for a loan would further hamper your Credit score. In India each loan request via a Bank or NBFC would take a hit of about 5 to 10 points on your CIBIL score (credit score). Multiple rejects could hamper this further. It is always advisable to check your CIBIL score before applying for a loan and also ensure the same is rectified in case of any issues.

8. Using Personal loans for risky investments

While investing is a good thing, taking a loan for risky investments might not be a good idea. A few customers take a personal loan to make some risky investments like a Equity markets or the likes. While the outcome usually will never be disastrous, a wrong pick or change in the Macro or Micro Economics could take a toll on the investment

9. Do not clarify doubts

When the bank representative is sitting across you, please do not hesitate to clarify all your queries however silly they might sound to you. This will ensure that there are no assumptions which in turn avoid any surprises going forward

10. Default on loan repayment

Remember those signatures on the agreement reiterate the fact in multiple ways that you would not default. So put in your best efforts to ensure that you do not default or delay the EMI payment.

With these key points you are well equipped to apply for your personal. So go ahead and choose what’s best for you. Try out the new entrant in this space called Cashkumar.

[7dhirenm]

What is the interest rate for a personal loan in India?

The interest rates for personal loans via banks and NBFC’s start around the 12.5% per annum and go all the way upward to around 28%. This interest rate for such personal loans is usually calculated on a reducing balance implying the interest is calculated only on the balance Principal amount payable. This interest rate is a function of multiple parameters such as the company you working for, the city you stay, your salary, your current commitments and so on. It would be very hard to give you an accurate of the best personal loan interest rate based on just one or two parameters as the logic used by banks is pretty comprehensive. However, you can get a quick look at your eligibility by using a platform such as Cashkumar which has included the personal loan interest rate for most of the leading banks which cater to personal loans. Let us look at some of the profile parameters that could affect a personal loan interest rate

 1. Working profession or self-employed – The interest rates could vary based on you being a salaried professional or self employed person. Under self employed again, the interest rates could be a function of whether you are a self – employed professional such as a doctor or a self employed business person. One of the hypotheses behind this is that a salaried person is assumed to have a relatively steady job which makes the documentation for the loan relatively simple. In case of a personal loan for a self-employed business, the lending institution would closely check on the past financial health of the company. Since personal loan is an unsecured loan, the bank would ideally want to check the repayment ability of the customer.

2. Current company: Each bank has segregated the top companies in to different categories. For ease let us call this as Category A, Category B, Category C and Category D. Other than these categories Banks could also have an open market category which is a list of companies that are not listed in the above mentioned categories. So the company that you are working would determine your personal loan interest rate. For example a Category A company employee might get a personal loan at a interest rate of 13% whereas a Category D company employee might get a personal loan with the same parameters at 17%. In fact there are some banks which do not even offer a personal loan if the company is not listed

3. Monthly take home salary- There are few banks and NBFC’s which offer a better rate of interest on a personal loan to customers who have a higher monthly take home salary. Though all other criteria such as the company, the location you stay in, the loan required and so on is the same, a Bank might just give you a better ROI in case you have a higher salary.

4. City you stay – The minimum salary cut off to calculate eligibility could be dependent on the city you stay in. For instance a Tier 2 city might have a salary cut-off of Rs 20.000/- vis-à-vis a metro city might have a higher cut-off. This is taking into account the cost of living in each city. Along with the eligibility the personal loan interest rate could also vary in some cases.

5. Loan amount required – Some banks offer lower personal loan interest rates based on the quantum of the loan required. This interest rate is usually lower for higher loan amounts. For instance a doctor applying for a 5 lakh personal loan might pay a 15% rate of interest in comparison to a 14% if he takes a 20 lakh loan. This is to help banks up sell loans to credit worthy customers

6. CIBIL Credit score – There is different cut off for banks below a customer would not qualify for a loan. However, a good credit history would help getting a better rate of interest on personal loan

Though these rates are not defined or regulated by RBI, the banks operate around the range highlighted above. Read more details about personal loan interest rates on this page. As highlighted above, using a platform like Cashkumar, you can quickly check your eligibility and would also be guided through the process in case of any apprehensions. In the above note, while we have highlighted some of the profile parameters that play a role from a lending institute perspective, peer-to-peer lending is slowly getting traction in India as the RBI regulations get clear. Under peer-to-peer lending, while the above parameters play a role, the social credit of a person also comes into picture. This is where companies ask one to log in via Linkedin, Facebook as well as Twitter to check out your activity on these platforms. Along with your other parameters including credit score, your social score could also define your interest rate. Recently, Facebook also came up with an article on social credit score but the modus operandi of Facebook on these lines is still unknown. The article around this which states how your friends could also play a role in your social credit can be found here.

Cheers!!

[7dhirenm]

How do I get the Lowest Interest Rate for Personal Loans ?

While searching for a personal loan, one of the first questions that come to mind is “How do I get the lowest interest rate for my personal loan?” The obvious next questions are is there a processing fee, what is the disbursement time, is there a pre-closure charge, and so on. In one of our previous articles we spoke about how to avoid the 10 pitfalls of a personal loan, here we would highlight different ways in which you can get the best interest rate for your personal loan. We would leave it to you to choose the easiest way to approach your personal loan requirement and we are sure you would choose the most efficient way of applying for your personal loan. (Hint: We always believe to leave the best for the last  :) 

1. Walk in to multiple Banks that offer a personal loan

You could identify the top ten banks or non-banking financial institutions (NBFC’s) which offer personal loan. You could share your details with each one of these banks to get the best interest rates that they offer. Create an excel sheet to identify which one suits you the best based on multiple parameters and then go with one of the financial institutions. This will take you approximately 3-4 days to check with multiple Banks. You might get lucky and get the lowest interest rate for a personal loan using this approach but what if you do not get an offer from the banks which would have offered you the best interest rate?

2. Use one of the offline lead gen platforms

Have you ever gone through the harassment when you have called an offline lead gen platform and got multiple calls to share their offers? Trust me it can be an unpleasant experience. While this is an effective way, you go through the cycle of speaking to multiple people and get personal loan interest rates, the bank which offers the best personal loan interest rate might not even contact you. Whats more your will have to do a manual process of validating which is your best offer. Based on the calls that you receive you could get the best personal loan interest rate or hold on do you?? 

3. Applying with an offline Bank partner

This is one of the more comprehensive approaches where a partner has a tie up with multiple banks and highlights the best offer that you could get. However, this is a manual process where an individual support agent goes through the offers on a spread sheets to identify which bank gives the best interest rate for your personal loan. Since it is a manual process, the following could happen. He could get misread the on the offers and suggest a wrong offer, he could push a bank for which he is getting a higher commission but might not be the best interest rate, he will push a case for which he has a personal target to achieve. So could this result in a raw deal when you are looking of the best interest rate for your personal loan.

4. Applying with an online lead gen platform (no built in intelligence)

There are some platforms which can capture your basic details and just share leads with banks without highlighting the best offers. There is also no option of exploring other lending options such as individuals or more. Also the process of getting calls from multiple banks makes it as ineffective as on offline lead gen option. While the bank officials are working towards helping you get the best interest rates for personal loans, do we need to interact with multiple banks when you know what is best for you in just couple of mins post applying?  

5. An intelligent online platform

Though there are a few platforms that have this intelligence built in to a certain extent, a one stop option to explore lending from Banks as well as individuals is hard to find. Cashkumar is the latest entrant in this space where they have tied up with multiple banks and also have private lenders who could cater to your requirement. On placing a few basic details, it shows up a list of banks which could offer you a loan for the tenure requested. You could go ahead and choose from one or more banks to get a call back. Based on your profile we would also help you explore an individual lender(s) who might give you a loan or a part of the loan at a better rate of interest. This would help evaluate all options going forward help you get your lowest interest rate on personal loans.

So why go shopping to the Bazaar’s when your personal assistant Cashkumar is here!