Archive for: January, 2024

CIBIL Score and Car Loan

Jan 18 2024 Published by admin under Uncategorized

Credit Information Bureau (India) Limited (CIBIL) is a credit company keeping all the records of credit-related activities of individuals as companies, including credit card and loans. This so-called CIBIL score plays a major role in determining one’s eligibility to avail a car loan. This series lies in the range of 300-900, a good score is 750+, and a poor is 650 below, a good score increases the chance of eligibility to avail a loan, and a poor score hinders it.

CIBIL report:

A consolidated report containing the customers’ credit history, bank statements, loan information, personal information, employment information values and validates the consumer’s loan eligibility at great length.

Factors affecting CIBIL score:

The cibil score is generated by a complex algorithm that looks over the following criteria

Credit history: Credit history makes up 35% amounting to the individual’s timely payment of loans and debts. It has the complete knowledge of your Equated Monthly Installments, thereby making it necessary for one to pay on time.

Credit Mix: This shows a credit mix of secured and unsecured loans and is good if either or both types of loans are availed as they might increase your future possibilities.

Public Records: Apart from the personal information the report also looks over the public record of the customer if they have a criminal record or have bankrupted.

Credit Inquiries: Whenever a lender looks over the individual’s credit report the inquiry number keeps adding. So the more the number of credit inquiries, the more the number of loans taken. The potential lender may sign in green or red depending on the timely payments and the loan types.

Credit utilization: This amounts to 30% of the credit report which refers to the credit per cent you have used and the remaining percent you can use. The higher the percent, the higher the risk of borrowing. Good credit utilization should be below 50%.

New credit: Every time you take a loan the new credit adds up, meaning taking multiple loans at a time isn’t very good and hinders future chances of taking a loan.

CIBIL score and car loan:

CIBIL scores determine the individual’s loan eligibility widely. A car loan is no different from that, the more the credit score, the higher the eligibility.

Loan Approval: The loan approval for an applicant depends heavily on the credit score, you have a high score, your process is faster and hassle-free. If not getting to sanction your car loan is much harder and in some cases not possible.

Tenure: Sometimes the applicants want the longest time of period to pay their principal and interest and the tenure time is affected by the credit score at great length. If your score is less or poor the chances of getting the tenure you want is low.

Rate of Interest: The interest rate is a part of the total amount calculated in percentage that the loanee needs to pay every month for the loan amount. The credit score affects this, for a lofty CIBIL score the interest rate is less (scores like 800), whereas though few banks might approve for loans there is a giant chance that the bank increases your interest rate for each month, thereby making you pay more than what is necessary.

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How do I choose best mutual funds to invest for SIP?

Jan 18 2024 Published by admin under Uncategorized

Traditionally, Indians have preferred investments that offer a fixed return and safety of their capital. However, mutual funds have emerged as one of the popular investment avenues due to the potential capital appreciation over the long term that has the potential to exceed the returns from fixed income instruments. The Indian Mutual Fund industry has recorded Rs 31.42 lakh crore AUM, 9.79 crore folios, and 3.73 crore active SIP accounts as per AMFI data released on Mar 31, 2021. Investing in fixed deposits may not significantly grow investor’s income over the long term. For those looking to build wealth over the long term with market risk can consider investing in equity mutual funds.

Before setting out to choose the best mutual fund to invest in, Investors need to firstly determine their financial goals and their investment horizon and most importantly their risk-bearing capacity. Age, income, financial commitments all add up to your risk capacity. Based on these parameters, investors can then go on to shortlisting the best mutual funds to invest that meet their requirements.

Instead of focusing on the last one-year top performers, investors need to go a bit deeper to select the best mutual funds to invest in 2021. Last year’s best mutual funds may not continue their performance this year or the future. A good yardstick to measure the best mutual fund to invest is to evaluate their performance across market cycles. Assess the mutual fund performance across 1 year, 3 years and 5 year periods. Other criteria to assess a mutual fund performance can be:

What is the mutual fund expense ratio?
What is the portfolio churn rate?
What is the portfolio composition and their underlying concentration levels?
Qualitative Factors can include:

Investment processes and systems
Fund manager experience
Funds managed by the fund manager
As regards starting out an SIP investment. There is no one best mutual fund to invest which is suited for SIP mutual fund. An SIP can be started with any ticket size and does not burn a hole in one’s pocket. Anyone can start with as low as Rs. 500 per month. There are different types and varieties of mutual funds to choose from.

All mutual funds have the option of investing by lumpsum or by SIP mode. However, if you are ready to take market risk and looking for long term risk adjusted returns then one of the best mutual fund for SIP investment could be equity mutual fund which is a volatile asset class. SIPs average out the cost of investments over the long term. Equity mutual fund is generally considered as the best mutual fund to invest in for the long term. However, in case of returns, an SIP does not guarantee a better performance over lumpsum. This is because returns in equity mutual funds may not be linear. In short, if investors do not have a duration of 5-7 years, then they should not consider equity mutual funds.

Similarly, there is no one best mutual fund to invest in for lumpsum investment. However, lumpsum investments are by far suitable for investors who want to time the market.

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PMAY Subsidy: How to Claim PMAY Home Loan Subsidy?

Jan 18 2024 Published by admin under Uncategorized

The Pradhan Mantri Awas Yojana (PMAY) has delivered a series of benefits for first-time homebuyers. A subsidy on your home loan interest is one of the highest benefits that PMAY extends to you. Claiming the PMAY subsidy on your home loan may be a simple foundation of your eligibility, just in case you apply for the Pradhan Mantri Awas Yojana as per your income and buy a home that fulfills the carpet area norms began through the scheme.

Eligibility Criteria for Pradhan Mantri Awas Yojana:
You must apply as an unmarried individual or a relative of a relative with your parents, spouse, and unmarried children to urge PMAY benefits and subsidies. aside from these fundamental eligibility requirements, you’ll also get to meet a couple of income requirements and other PMAY eligibility components to urge home loan subsidies.

The following are the eligibility requirements for the housing loan subsidy program:

You are not allowed to possess any pucca houses within the country.
The annual household income cannot exceed 18 lakh rupees.
You must not have previously received any aid through a government housing initiative.
A female family member’s name must get on the deed or property paper. Co-ownership with a female member is additionally permitted.
The system applies to all or any towns as of Census 2011, also as people who are notified since then.
Within 36 months after receiving the loan amount, the building, extension, or renovation of the property that a house loan has been obtained must be completed.
Already built houses don’t come under the coverage of the scheme.
What is the utmost PMAY Subsidy that you simply can Claim?
Under the Pradhan Mantri Awas Yojana, you’ll get a subsidy of up to Rs.2.67 lakh on your home loan. the quantity of subsidy you’re eligible for is decided by your income group and therefore the total carpet area of the house you buy. Here’s what you ought to remember.

If you fall under the EWS or LIG categories, you’ll get a 6.5 percent credit-linked subsidy on a home loan up to Rs.6 lakh. If you apply under the EWS category, the carpet area of the property you purchase should be 30 square meters, and if you apply under the LIG category, it should be 60 square meters.
A credit-linked subsidy of 4% on a home loan of up to Rs.9 lakh is out there under the MIG I category. If the house you purchase features a carpet area of 160 square meters, you’ll apply for this discount.
A credit-linked subsidy of three on a home loan of up to Rs.12 lakh is out there under the MIG II category. If the house you purchase features a carpet area of 200 square meters, you’ll apply for this discount.
The process to say PMAY Interest Subsidy Benefit
The following steps can assist you to acquire a home loan subsidy under the PMAY scheme:

Check your income threshold: If you’re thinking of applying for a PMAY subsidy on your house loan, you ought to first see if you meet the scheme’s income requirements (EWS, MIG, or LIG). The carpet area for your residential home against which you’d be eligible for the PMAY scheme is going to be determined by your income criterion. you’ll use an online housing loan EMI calculator to work out what proportion you’ll save on your house loan.
Fill out the PMAY application online: The PMAY application is often completed both online and offline. While offline application filing may be a time-consuming process, you’ll apply for pmay online by following the procedures outlined below.
Visit the PMAY website at https://pmaymis.gov.in for further information.
Select the category that you would like to use for the scheme under the ‘Citizen Assessment’ page.
To link your Aadhar Card to your application, fill out the shape below (This is mandatory)
You’ll be taken to the appliance form, where you’ll need to fill in your other personal information.
To save your PMAY application for future use, click on the ‘Save’ button.
What are the advantages of the CLSS Scheme?
The following are the benefits of the housing loan subsidy program:

The subsidized rate of interest on your home loans up to a specified level.
The subsidized amount is deposited directly into your account under the plan. As a result, both your outstanding principal and your EMI are decreased.
You can extend the term of your loan up to twenty years.
The amount of the loan has no upper limit. If the sum exceeds the indicated limits, interest is going to be charged at the lender’s normal rate.
You may be eligible for tax benefits as a result of the government’s home loan subsidy, as indicated within the tax Act of 1961.
Things to stay in mind about PMAY CLSS
Only residential loans are eligible for the PMAY CLSS subsidy.
The highest loan amount which will be wont to take advantage of this program is INR.6 lakhs.
A maximum subsidy of INR.2.67 lakhs is out there to the applicant.
To be eligible for this plan, the applicant must not own or be the owner of a “pucca” dwelling in his or her name or the name of a loved one.
If the applicant or any member of his family has previously taken advantage of an identical housing program offered by the Central or State governments, he or she is going to be ineligible for the PMAY-CLSS program.
It is critical to possess a female owner. If the applicant may be a man, he must enlist the assistance of a female loved one (wife, daughter, or mother) to become a co-owner of the property.

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