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GET A LOAN IN THE FESTIVAL OF LOHRI 2020

Posted on Monday January 13th, 2020

Providing a loan or loaning is an entrusting capital which is carry from one person to another. A loan has three elements the principal or the borrowed amount, rate of interest and tenure or period for which the loan is availed. It is one of the major economic properties of any bank or NBFC that is a Non-Banking Financial Company proposes.

There are several types of loans and the familiar categories of loans that people serve as:

• Home Loan
• Car Loan
• Education Loan
• Personal Loan
• Business Loan
• Gold Loan


These Junctures a bank mainly consider to Applying for any of these Loans

Bringing a loan is a huge economic judgment that compels you to create conscious options. Here are some options:


• Credit Score: When you will apply for loan, you have to review your credit history. The history of Credit score is a certificate of your last borrowings, if any, and reimbursement certificate. This will illustrate if you are accountable for repaying or if you have declined payments in history. A credit score of (750 and above) is great.

• The Interest Rate: Check the loan interest ratio before you apply for one. Loans that compel collateral security commonly have lower interest rates than loans that don’t require.

• The Processing Fee And Other Charges: When you try to apply for a loan, and if you lose your payment deadlines for your loan, you will be liable to spend a processing and punishment fee equally. These payments and taxes rely on the loan proportion.

• Research To Get The Best Rate For Your Loan: Research and compare from different banks & NBFCs to get the best interest rates, EMI, tenure, and other charges that best suit you.

Eligibility to have a Loan

• Salaried and Self-Employed persons can Apply For a Loan.

• The Age limit is from 23 years to 58 years for salaried and 28 years to 65 years for a self-employed person.

• The income should be Rs.25, 000 and yearly for salaried and minimum turnover of Rs.40 lakhs for a self-employed person.

• The CIBIL Score should be Above 750 for both.

Documents for Loan Application

For both salaried and self-employed persons, these documents are mandated to apply for a loan

• Application form with photograph
• Identity and Residence proof
• Last six months bank statements
• Processing fee cheque
• Latest Salary Slip for salaried
• Proof of Business for self-employed
• Form 16 for Business Profile and Previous three years Income Tax returns (self and business)


How to apply for a loan?

Applying for a bank loan is easier than one would believe. However, before you pertain for one, you should be conscious of your economic circumstance, lent you will have to compensate the loan proportion later. With all the paperwork implicated and several eligibility standards, you first comprehend your necessity and if you believe it’s a favourable way out for you. In the festival of Lohri 2020, apply for a loan to have several benefits and make you a Happy Lohri.


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SOME REASONS YOU SHOULD KNOW BEHIND LOAN DEFAULTS

Posted on Thursday January 9th, 2020

In India, loan defaults and frauds are the major reason behind unpaid loans. Lenders believe lending is risk free when borrower have a good credit score and a regular income source but recent slowdown in economy, vanishing jobs and increased unemployment in the country has led to a rise in number of loan defaulters. The majorly popular loans in India are Home loan, loan against property, Gold loan, Used car loan, Machinery Loan, Business loan, Personal loan etc. These loans have been classified into two categories; one is secured loan and second is unsecured loan. There are Some Reasons You Should Know Behind Loan Defaults such as delays in salaries, job loss and business turn down are some of the top reasons for debt defaults.

Delay in Salary: It is the most common reason behind 40% of the loan defaults in India. The salary delay is common whether you are in government job or private job. Therefore, borrower is no left with any other option of delayed payment of loan for more than a month affecting your credit report.

Job Loss: As the Indian economy has been slowing down after demonetization, the number of job losses has increased and in such a case, borrower is left with no money to repay his/her ongoing monthly installments.

Business Loan: Business is always unpredictable where nothing is sure and most of the business owners take a working capital loan for the smooth operation of their venture. In case of any loss or failure, the repayment of the loan becomes tough leading to loan default.

Frauds: It might sound unrealistic but fraud is one of the major reason of loan default because some people take loans with a pre-planned intention of not to repay it. It is difficult to qualify for a loan without having legal documents still some manage to do so. Some of them misguide the lender and get underground not to Repay the Loan Amount.

The defaults are most common in business loans and personal loans as they are unsecured, so in that case of fraud borrowers do not pledge collateral equivalent to the borrowed amount and later on they do not repay. The consequences related to loan defaults are additional charges and penalties, drop in credit score, less chances to qualify for future credit, loss of ownership of collateral with lots of stress and tension. When you are not able to repay the loan for more than 3 months, the lender will send you a legal notice if you do not take any considerable step. The court will provide you a time period to repay the amount but if you failed to utilize that time, then your collateral will be considered as non-performing asset.

In order to lessen the defaults in country, every lending institution needs to tighten their loan eligibility and have a thorough check on the borrower’s repayment history and job security. Moreover, in case of business loans, every lender needs to be more sure about the repayment before they lend.


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SOME FINANCIAL TIPS TO WELCOME THE NEW YEAR 2020

Posted on Monday December 30th, 2019

Wishing a Happy New Year is the best way to close an eventful year and to introspect the year gone by and look forward at 2020 with optimistic approach. Year 2019 has been a volatile year with surprises ranging from the unnerving fluctuations in the price of gold and oil, a sharp fall in the rupee and the gradual implosion of taxes. However, in these unwelcomed circumstances, there have been Some Financial Tips to Welcome the New Year by ShubhBank. Let us focus on such learnings to carry forward into 2020.

Goal-based approach to investing: if you don’t have any financial goals to reach then it is unlikely you will get anywhere. You should have approach towards investing in equities and bonds at random; it is unlikely that you will get too far in making wealth. It is always advisable to start your investment journey with your goals in mind. Outline your goals such as retirement, child’s education, vacations etc. Once you extrapolate the amount needed for these goals, you can create a core portfolio.

It is good to take some risks: A liquid fund will result in 6% annualized return which will come to be 4.50% after taxes. Forget about wealth creation because you cannot beat inflation; so you must take the risk of equities. When you have long term goals, you must look at equities as the preferred asset class.

A rupee saved is worth than rupee spent: The time when you spend the money, it is gone and so is its future value. If you save and invest the money in productive assets such as bonds and equities, it creates future value. With the passage of time, not only the principal amount but even returns generate the additional returns. There is an effective power of compounding in such cases. The goal of wealth creation remains extracting optimal savings out of your income.

No wealth creation with too much debt: Many people do not realize the consequences of large borrowings till they actually fall into debt trap. It not only puts burden on your cash flow but also reduces your potential and capacity to take financial risks. Some of the debts such as home loan or vehicle loan are inevitable but high cost debts such as outstanding credit card payments and personal loans are best kept at the minimum margin. The main concern of your financial planning should be repaying high cost debts first, if you have any of them.

Don’t panic about factors you cannot control: it is so natural to worry about the price hikes; return of same powers etc. but the fact is that you do not have any control over either. Being an investor, your focus must be on looking at existing risks and managing them. Most of the triggers are out of your control but the things that are in your control are stock selection and portfolio mix.

Hope, you may have a financially rewarding year with these tips. Happy New Year 2020!


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MAKE THESE FINANCIAL MOVES BEFORE STEPPING INTO 2020

Posted on Friday December 20th, 2019

Have you achieved your financial goals before the New Year knocks at your door? Everyone is gearing up to welcome the New Year with pomp and splendor, we would suggest you to spare some time to assess the year gone by, especially in terms of finances. It is not a difficult task as we are always there to help you get head start. Here we are presenting some financial moves that you must take, if you want to be financially sorted for the coming year.

Status of your financial goals: Have you charted out how far have you reached in terms of achieving the financial goals? We understand that some of your goals are long term, hence, would take long time to achieve but what about your short term goals? It is high time to review the status of your goals. It will help you to figure out what’s been working or what’s not. Moreover, this outlines can help you priorities your goals or set the new ones for the coming year.

Revise your budget: If you don’t have your budget in place, it is better to start working on where you have been spending and if your priorities are in place or not. You can also re-outlay your budget for the New Year to maximize savings.

Make a strategy to pay-off after evaluating your debts: Your financial health can be affected by too many debts. So what’s situation you are in, how much loan do you have to repay and credit card dues you have? Ask yourself about unnecessary and unexplained expenses that can be cut down. It’s time to take complete control of your finances, cut down on expenses and dedicate your income towards clearing debts and savings. If your credit report is messed up, get focused on repairing it as it is important for your financial future.

Re-balance your financial portfolio: You have to invest somewhere to face the emergency situations in life. It is must to re-balance your finances at least once a year and the end of the year is the best time to do so. You must re-balance your portfolio only if your financial objectives have not changed otherwise you may consider changing your asset allocation. Re-balancing gets your investment portfolio back to its original state.

Review your insurance policy: Change is the way of life. Getting an adequate Insurance Policy can help you tide through unpredictable life and uncertainties thrown by it. It is advisable to review your insurance plans at least once a year to accommodate any changes. Changes may include from getting married/divorced to having a child to buying your dream house. As the magnitude of the change increases, you may consider increasing your insurance cover.

ShubhBank have got your back when it comes to financial assistance. Just click ShubhBank.com to start exploring whether you want to start your own business, to plan a long international holiday or invest in something that interests you.


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WHAT IS THE IMPORTANCE OF FUTURE FINANCIAL PLANNING IN LIFE

Posted on Tuesday November 26th, 2019

You might be in your late 40’s and you are working twice as hard to get half the reward to lead a comfortable life and you might be forgetting something very important to your future. After some years when you retire, there will not be any cushion to protect your backbone as you will not be drawing the salary that time. You need to lay out a plan that your life after retirement will be as pleasant as now. Retirement is an important event in one’s life as it marks the end of one phase. It is necessary to be financially fit at that age but for achieving this, you need to plan carefully to lead a good life. In this article, we are going to discuss what the importance of Future Financial Planning In Life is and why you should secure your future early.

REASONS FOR SECURING YOUR FUTURE EARLY IN LIFE
You might be wondering what it is required to plan so early in your life. There are some reasons mentioned below that why should you start planning immediately.

Quality of Life: If you are really planning to lead the life as you are leading now such as with your maximum salary, then you have to start planning early to maintain the same quality of life. The long term plan will enable you to save significantly. On a flip side, you will have to scrimp after your retirement and finances will become more of a restriction.

Income: You may have the income sources in future like pension, side business, rent etc. but you will most likely have a little income. It is good to start a calculation now and try to save up from now for a better future.

Medical Expenses: Aging is sure to bring along some diseases and illness. As per saying, “Man is not immortal.” Now you might be fit as fiddle but after a certain age, your health starts deteriorating and there may be some medical expenses. If you are aware of such things then you should save up now to afford your medical expenses after retirement.

Other Expenses: In coming years, you might want to fund your grandchildren’s higher studies or their wedding; with this view you should probably start saving up immediately. On contrary, you have to liquidate some assets to fulfill these requirements, ultimately leading to the bad quality of life.

Moreover, life is always unpredictable. You might plan something and life may have something totally different in store for you. You should be prepared for unforeseen events such as medical emergency or any other financial need. If you have saved up a substantial amount of money for future, you can use it in dire consequences as well. Saving up early in life is always advantageous because your earnings have more time to compound and grow. So planning for your future is more like an ongoing process which pays off after your retirement.


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EASE YOUR WISH TO CLOSE YOUR EMI

Posted on Monday August 6th, 2018

Ease your wish to close your EMI before tenure with below suggested ideas from shubhbank.com
Pre-Payment is not the only way to close your loan faster. To close the loans faster we can follow the 4 different methods.
Lets have a look on few reasonable tips in this context and detailed discussion hence forth for each ideology.
1. Increase your EMI
2. Make a part-payments
3. Loan as OD account product
4. Monitor you loans and correct to lower rates when ever possible.

Let me explain in detail of each of the method
1. Increase Your EMI :
This option to be used when you have more monthly savings and want to be debt free faster. Very important here is more monthly savings.Keep the sufficient buffer from your salary for living expenses and additional 10% as the buffer so that you don’t by increasing the EMI later day you don’t have tough time.
Increasing the EMI is much better option if you have steady flow of income and if you are planning to save some money and make a part-payment, then mathematically its better to increase the EMI. For example if you have to increase your EMI by Rs 5000 or saving Rs 5000 every month and after 12 months you make a saving of Rs 60,000/- and make a part-payment. Option 1 is better as it would contribute towards principle every month compare to after 1-year. You might be saving at-least extra Rs 2000 more.
One important thing to note is , most of the banks allow you to increase your EMI but very few allow you to decrease the EMI amount. So think before you do.

2. Make a Part-Payment :
This option to used when you have a lump sum amount received in the form on Bonus or when you have sold something and received the amount. Its said to keep things simple and stupid always clear your loans when ever you get a lump sum amounts.
One important thing to note is , each bank follows specific rule while receiving the part-payment. In case if you are walking to the branch mostly minimum part-payment should be 1 month EMI. If you are planning to pay via online it might be minimum 3-months EMI. Note each bank has its own policy, so please check.

3. Loan as OD account product:
This option can be used if you have availed a special loan product which provides OD facility. Let me explain what is OD Facility for the Loan. If you have availed a 50 Lac loan and say you have got 10 lac as bonus. Now if you transfer the 10 Lac to your Loan OD Account then Interest would be charged for only 40 Lac amount. Now after a 1-year, if you like to withdraw the 10 lac, then you can withdraw the amount as its parked. Then from that day what ever is the principle left, bank will be charging interest on the pending amount. What ever interest you have earned on 10 lac will be adjusted toward the principle. This allows to close the loan faster.
All banks don’t provide this products. Banks like Bank of Baroda, SBI , Standard Charted & IDBI have this option. These days banks are charging 0.10% to 0.20% more for this product. So avail them only if you are receiving a lump sum amount and want to use it later day or else make a part-payments to close the loan faster.

4. Monitor you loans and correct to lower rates when ever possible:
This option is least used but most powerful one with very little payment. When ever rates fluctuate one need to compare how his/her interest rate compare to ongoing market rate. In case if you are paying higher rate then ongoing we need to check are you going to really pay higher next change or not before correcting.
Interest rate has two components,
Interest Rate = MCLR(Base Rate) + Margins
When you avail your loan in variable rate, the margin gets fixed. So say you availed a loan at 8.50% where in MCLR is 8.00% and Margin is 0.50%
Interest rate = 8.50% = 8.00% + 0.50%
Next change if MCLR(Base rate) changes to 9.00% then your rate would be 9.50%
if it become if MCLR(Base rate) changes to 7.00% then your rate would be 7.50%
Now suppose, if you are paying 9.50% at a given time and in the market if the new customer is getting at 9.25% then we have to check why is he paying 9.25%.

There can be 2 cases .
1. He is paying lower margin then you. Say MCLR(Base Rate) is at 9.00% and his Margins are only 0.25% then its a time to correct your margins from 0.50% to 0.25%
2. He is paying higher margin then you. Yes its possible if the MCLR(Base Rate ) is at 8.50% and Margins are at 0.75% then he would still pay 9.25% 0.25% less than you for 1-year. But later after 1-year if the MCLR(Base Rate) changes to 10% then you would be paying 10.50% where as this person is going to pay 10.75%.