Loans

Pledging a collateral when you have a low credit score can help you get a decent deal on loans. This collateral can act as a low-risk bearing factor not just for you but for the risk associated with lending to you. The collateral acts as a leverage for you to negotiate with the lenders to offer you lower interest rates.

The Finance Ministry has clarified that agriculture and allied activity loans aren't eligible for the interest on interest waiver announced by the government recently.

Lenders can proceed for foreclosure if you default on a home equity loan. When you default on your loan, what the home equity lender does depends on the value of your home. Foreclosure will be the first choice of the lender, in case you have equity in your home. That is because there is an actual chance of recovering some of the money after the initial mortgage is paid off. Chances of foreclosure depends on the number of equity left.

As the moratorium period ended on 30th September, the RBI has allowed for restructuring of loans to help borrowers overcome the financial stress caused by the pandemic. The RBI has instructed banks and other lending institutions to come up with a plan for implementing the restructuring. 

Looking to make use of the new loan restructuring benefits, but not sure which documents will be needed? Worry not, we’ve got you covered. Here is a consolidated list of the documents required by banks to recast your loan.

The aim of offering loan restructuring is to provide relief to those borrowers who have suffered unfortunate circumstances like lost their job or whose businesses have not revived or those who have suffered a considered loss in their business. The benefit of opting for a loan restructuring plan is that the borrower may be able to reduce the amount of the EMI or get a moratorium on the loan principal repayments with the hope that the financial situation improves.

The first rule to clearing off your outstanding debts is not to take any more debts, until you settle all outstanding dues. You can follow either of these strategies to pay off your debts quickly.

Refinancing your house, that is, transferring an existing loan to another lender can help you get the best interest rates and better terms of repayment. You would have to meet a few conditions like you should have paid at least the minimum number of EMIs and the property must be ready to occupy or already occupied.

The EMI holiday is applicable for both the principal of the loan amount and the interest. The moratorium will not provide a waiver and the interest will continue to accrue on your EMIs during this 3 month period (from March 1,2020 to May 31,2020) and it will also get added to your outstanding amount. If you have already made payments for the month of March, the EMI holiday will only benefit you for the months of April and May.

The government started the MSME scheme to promote small scale industries with their businesses. Only manufacturing and service companies can register and get benefits provided by the scheme.

People who are employed and have a good credit score wouldn’t have a problem of availing any kind of loan. With a high credit score they would even be able to get low interest loans and high loan amounts. But lenders options are limited when it comes to self employed people. But there are lenders who will be willing to provide funds for your business. A Personal loan is an easy way for a self employed person to procure money for his/her business. As long as you have a good credit score your lender will trust you to make the repayments on time and thus lend to you. These loans are also collateral free.

Small Industries Development Bank of India (SIDBI) and Franchise India has been collaborating to provide financial support to established franchisors as well as to start-up franchisors. This collaboration was started as a funding initiative to help entrepreneurs make franchising models of businesses, which are less intimidating. SIDBI is an institution that helps franchisors procure funds for their business. NBFCs would also be willing to lend to businesses who need funds to expand.

GST is not applicable on loan interest. Before the introduction of GST, service taxes were levied on loans. The rate of service taxes were 15%, whereas the rate of GST is 18%. As there was a 3% increase due to the change in the tax scheme, some people might have assumed that interest rates would also be affected. But GST is not levied on EMIs of the loan or on the payment of interest on the loan. It will be levied only on the processing charges and other charges that your lender would be charging you.

Lenders would want an assurance that you would be able to repay your loans. So they will check your monthly income, to determine whether you’ll be able to pay back your loan in instalments on time. Since unemployed people wouldn’t have an income at the moment, it would be hard for lenders to judge their creditworthiness. And thus getting loan approval without having a job becomes nearly impossible. But payday loans are loans that are not provided by conventional lenders and these lenders grant you loans without credit assessment.

People with unstable jobs or source of income can opt for an unemployed loan. However, the credit terms will be different for an unemployed loan as compared to loans provided to people with a regular income. An unemployed person can avail one of the below loans to start a new business that will generate regular income.

People with unstable jobs or source of income can find it difficult to get an instant loan; instead they can opt for an unemployed loan. However, the credit terms will be different for an unemployed loan as compared to the loans provided to people with a regular income.

GST will not affect your loan repayments. Before the introduction of GST, service taxes were being levied on loans. The rate of service taxes were 15%, whereas the rate of GST is 18%. People might think that the EMI costs will be affected because the rate of GSTs increased by 3%. But GST is not levied on repayment of the loan or on the payment of interest on the loan. It will be levied only on the processing charges and other charges that your lender would be imposing, excluding the repayment amounts and the interest amounts. Charges like the loan processing charges or the prepayment charges.

Yes, ITR is a necessary document to apply for MUDRA Loan. If you're eligible for a MUDRA loan, you'll need to provide two years' worth of Income Tax Returns (ITRs) as proof. 

Pradhan Mantri MUDRA Yojana is a scheme that was launched by the Prime Minister of India for providing loans to micro enterprises. This scheme is aimed to increase the entrepreneurial activities of small businesses. These loans are classified as MUDRA loans and are given by commercial banks, NBFCs, MFIs etc. To avail a MUDRA loan you can approach your lender or you can apply through an online portal called UdyamiMitra. Under PMMY, MUDRA has created three products: Shishu, Kishore and Tarun.  

The Pradhan Mantri Mudra Yojana(PMMY) scheme doesn’t provide subsidies for any loans availed. However it would be an exception, if the loan proposed by the applicant is linked to a government scheme and given a government capital subsidy. This will be eligible under the PMMY. A subsidy is money provided by the government to a business. The price of the product made by the business will be reduced. And this will be done for the welfare of the society. 

The Pradhan Mantri MUDRA Yojana (PMMY) provides loans to small businesses for a maximum amount of Rs. 10 lakhs. You can apply for a MUDRA loan either directly from any bank, NBFC, MFIs, etc. Borrowers also have the option of applying through an online portal. To apply for a MUDRA loan you would need to keep your necessary documents ready before approaching your financial institution. Fill in the loan application form and submit it to your lender. The Shishu scheme covers loans up to Rs. 50,000 for startups. Kishore scheme covers loans up to Rs. 5 lakhs for established businesses. Tarun scheme covers loans of up to Rs. 10 lakhs for well established businesses who are eligible.