Monthly Archives: March 2020

Planning To Buy A Car This Festive Season? Here’s a Checklist Before Signing That Car Loan!

Festive seasons in India come along with a lot of offers and deal on cars, adding more festivity to the season. Be it Diwali or Durga Puja, there will be discounts and offers galore on varied products and it is in your best interest to avail them before it’s gone.

The car is one of the most thoughtful purchases that one has to do. It not only is confusing amidst an enormous number of options but is also a little nerve wrecking when a loan has to be taken for the same. If you are planning to buy a car that you have wished for then we have a list of things that should be on your checklist before you hop on to a decision or before you apply for a car loan, making things uncomplicated.

Did You Decide What Car You Would Go For?

The first thing is to plan what car you really want to buy and is also a practical option for you and your family. It is wise to decide a car that fits the needs and does not compromise with your dreams too. As a novice driver, you must not invest in a high-end car or for that matter a new one. Choose the car that matches the purpose.These are few parameters that will definitely help you decide the right car model that will suit your needs:

  • Firstly according to your needs to choose a car category, from a hatchback to a sedan to MUV to SUV, there are many options in the market.
  • Fuel-type – To choose which type of fuel the car will be consuming is important as eventually it will become a major part of your monthly expenses. Petrol, diesel or CNG, choose whichever suits your budget.
  • Thirdly, choose between manual and automatic cars according to your comfort.

Have You Checked Your Credit Score?

Credit score and history should first be in place before you start planning to apply for your car loan. The foremost step is to visit an RBI-approved credit bureau website like CRIF and check your credit-worthiness. A higher score means a better chance of loan approval and lower will be the interest rates. One will have a greater probability of approval of the loan if he/she has a score above 700.

Have You Made a Checklist of the Documents?

The lenders often check your credibility and a list of documents before granting the loan. The list includes proof of identity, (such as PAN, Driving License Number, Aadhaar etc) your income proof (salary slips for last 3 months, Form 16 for last 2-3 years etc), credit and bank history (bank statements for past 6 months), proof of residence (electricity bill, driving license).

How Much Down Payment Can You Afford?

Now a day’s car dealers tie up with various banks and lenders, bringing in the possibility of 100% finance. Though it may sound very enticing once you start evaluating the options you will know that more the loan, higher the EMI. Make sure you have most of the amount ready as the down payment which eventually helps in the lower loan amount, thus a lower EMI.

What is the Tenure of the Loan?

The repayment through EMI depends on the tenure of the loan. It is feasible to take a longer tenure loan (say for 5 years or more) if your income is on the lower side as it reduces the portion of the EMI as the loan amount is spread over a longer time and a shorter one (3-5 years) if you can afford it.

What are the Loan Rates?

Car loan interest rates start at 8.7% per annum, depending on your car model, repayment capacity, employer, etc. At first check with your bank if they have any offers or any deal that gives lower interest rates. Secondly, visit all the online lending marketplaces and compare carefully all the deals to get the best one. Make sure a detailed inquiry is done by you before you finalise on a deal.

What Kind of Credit Behaviour Do You Have?

Do not make multiple inquiries in the same bank as it indicates that you have credit hungry behavior which eventually does affect your credibility and credit score. When you ask for a loan from a bank and get rejected for the same then you should not go back to the same lender again without fixing the glitches in your application profile.

Have You Read the Fine Print?

Lenders charge this fee to cover the cost incurred while evaluating your loan application. This is usually a non-refundable fee. In festive seasons and other offers, many lenders waive off their processing fees to attract business. Ensure that such lenders are not charging a higher interest rate or other charges to offset their loss from the reduction of processing fee.

Finally, Did You Take the Test Drive?

When you choose to buy a new car or an old one never skip the luxury of getting a free test drive. It will help you take a decision which is often one of the biggest dreams that one fulfills with their hard earned money.

Your dream car is an emotional & financial investment and you would not want to take a hasty decision about it. Hoping that buying your new ride is easy now with all the information assimilated in this article. Out of all the steps, make sure to first check your credit score with CRIF before you apply for your car loan.

Checking My Credit Report Affects My Credit Score? Or Not?

We know how important a credit score is in our everyday lives especially in our ability to take loans. Did you know it is equally important to check your credit score at regular intervals? There are a number of reasons to do so some of them are to keep a track on your credit standing and take necessary steps to improve or maintain the credit reports and credit score. While we all know that checking your credit score is important, one thing that bothers a lot of consumers is if checking their own credit report will hurt their credit scores. We are breaking down the entire process to give you a crystal-clear view.

What Does Credit Report Check or Credit Score Check Mean?

A credit report check, also known as an inquiry for credit score is either done by you or by the potential lenders of loan or credit cards such as banks, NBFCs and other financial institutions. A bank checks your credit score usually when you apply for a loan or a credit card to know the creditworthiness of the applicant. Further, a bank can also check your credit history and credit score while you are a loan or card customer of the bank to monitor its portfolio of customers.

Credit Report Check Shows or Not Hard Inquiry Vs Soft Inquiry

A credit report check or a credit inquiry can be classified into a hard inquiry or soft inquiry. Hard inquiries occur when you apply or request for a new credit card or a new loan or a line of credit like increasing the credit limit on a card. Such inquiries leave a footprint on your credit history and show up on your credit reports. Too many hard inquiries over a short duration have a negative impact on your credit score, especially if the credit keeps getting denied.

Hence, it is advisable to limit your applications for credit card or loan. Make sure you’re only applying for credit only when it really is necessary. Select a credit card and a bank after doing research rather than blindly applying for credit with many banks. Want to know about the ways that can positively impact your Credit Score? Read our blog, 4 ways to Build a Great Credit Score.

On the other hand, soft inquiries occur when an individual checks his own credit report and credit score. These are the type of inquiries that do not show on the reports, no matter how many times you check your credit report. Even if these appear on your credit report, these will never affect your credit score despite you checking five times in a single day.

When you are pre-approved for a special credit card offer or personal loan, it is very likely that the Bank would have carried out a soft inquiry on its existing customer base, such as you. Banks periodically review its existing pool of customers for assessing risk of its loan portfolios and finding out good customers whom to make pre-approved loan offers. Since these are soft inquiries, you do not need to worry on any negative effect of these checks on your credit score.

If you want to still keep a record of the inquiries just to stay more informed about them, CRIF can help you with the annual credit report with details of hard inquiries in your credit report.

Keep a Check, Always

Consider your credit scores as a pie that represents your financial being. Your pie is divided into slices, each of which constitutes of different factors. One large slice is your timely payments, another is your length of credit history and yet another is total credit used. And then there is a tiny slice which represents your hard inquiries. It is essential to control your hunger and not to bite this slice. This diet won’t help you to lose weight but can definitely help you gain some points on credit score. It is essential to keep your credit on a check as it gives you an accurate position of your credit standing.

To ease out the hassle of keeping a check on your credit score, you can contact CRIF. It is an RBI-approved credit information bureau that gives trusted and accurate results of the credit score.

7 Surefire Ways To Improve Your credit Score

Your financial health is as important as your physical health. Certainly then, your credit score is a vital indicator of the former. Whether it’s the new apartment you are eyeing or a business that you are planning to set up or simply the medical expenses of your loved ones, a loan could be required anytime. As such, the first thing a bank looks for, before lending money, is whether you qualify with the required credit score for a personal loan or a car loan or a consumer loan. This is to ascertain your risk value to the bank. Following are just some of the key ways to ensure you keep your credit score, well above average.

1. Pay your dues on time: This is the single most important factor which influences your credit score. Clear your outstanding dues on time. When you spend from your credit card, make sure you don’t just pay the minimum amount required to continue the usage but pay in full or the maximum amount which you can afford for that particular month.

2. Cut your Credit Cards: Although there is no restriction on the number of cards one can use, it is better to have only as much as you can pay for. For instance, if you have multiple credit cards, then your total credit increases, but then you may also have to pay a minimum amount to maintain the cards. And It’s easy to lose track of the payment dues especially if they fall on different dates and have a variable amount. A series of defaults is good enough to pull your score down. A better way to increase your credit limit and decrease spend ratio is to have no more than 3 credit cards at a time. If you have only one, and you are paying the dues on time, then nothing like it. One more benefit of minimizing your credit cards is cutting down the probability of identity fraud, by restricting the loopholes leading to your account.

3. Use your Credit Card responsibly: Most of the time, rampant usage of Credit cards is accountable for a low Credit score. It is a good practice to use your Credit card with the thumb rule that you restrict your spending upto 30-35% of your credit limit. If you frequently need more money than that, then you may opt for another Credit card. Think of your Credit Card as a necessity, not as a luxury.

4. Old is gold: A good history of timely payment exhibits responsible behavior. Do not hasten to erase your records from the accounts once you have paid your dues in full, because a trail of paying EMIs on time is actually a score booster. Also, in case of credit cards, if you are planning to discontinue the excess ones, make sure that you retain the older ones and eliminate the newer ones. A credit card with a long history of timely payments indicates a good track record.

5. Limit your loan applications:It could happen that you apply for a loan at a bank, but it gets rejected owing to a low credit score. In such case, do not hasten to re-apply with another bank as they would be able to see your rejection by the previous bank. This could further hurt your credit score & make things worse. In case of Credit cards, applying for multiple cards at a time indicates a credit hungry behavior.

6. Be cautious with inquiries: Whenever you want to buy a new car or a new house, you would want to opt for a loan. And it’s a common practice to enquire with various banks to compare and contrast the interest rates before you crack the perfect deal. However, banks check your credit score everytime you enquire. Such an enquiry is termed as hard enquiry. A number of consecutive hard inquiries is enough to hurt your credit score. In fact, as an immediate consequence, it may even affect the amount of loan that you are entitled to.

7. Keep a track of your Score: Checking your credit score regularly is a good and harmless practice. It helps you keep a check on your financial health and accordingly devise adequate measures to rectify it. You can check your Credit score for FREE and obtain a detailed report by availing CRIF services. You’ll be required to input some basic information and answer a few questions to get to the report. There’s no limit to the number of times you can check as this is a soft enquiry and does not affect your Credit score.

5 Financial Lessons To Learn From Ramayana, This Dussehra!

The festival of Dussehra epitomizes the victory of good over evil. The mythological stories associated with Dussehra teach us to curb our greed and ward off bad intentions that may harm us in the long run. We often draw inferences to conduct our life’s daily routines from our ancient epic saga’s. As you gear up for Dussehra puja this year, we have a suggestion for you! How about taking a new and fresh perspective at your finances in a whole new way? Here we are chalking out a few financial planning lessons that can be acquired from the Ramayana and imbibed for leading a healthy financial life.

1. Destroy the financial evils on your wealth creation journey:

During the Lanka war, Lord Rama along with his army fought with bravery against various hardships to attain victory. Viewing the festival from a finance and investment perspective; the festival imparts a vital lesson of ridding away from all the demons that pose as an obstacle to financial planning and wealth creation journey. Surmounting credit card debts, binge-spending, timing the market, booking losses amongst many other hurdles are the real enemies on our wealth creation journey

2. Lead a disciplined life:
Lord Rama practiced “dharma” meaning one has to be upright, responsible and disciplined in life. The same theory of righteousness can be applied to our finances as well. We must save wisely, spend cautiously and invest smartly to lead a disciplined financial life. It is essential to inculcate good habits like following a financial plan, repayment of EMI’s and bills on time, and many such actions that affect the overall financial health in a crucial way.

3. Protect your hard earned money:
Dussehra teaches us to draw our own “Lakshman Rekha” in order to safeguard our finances. Protecting your money means shunning all the evils that negatively impact your financial well-being. You can always protect your finances by choosing to invest in the right places to save on tax or insure for right cover to protect your family like Lakshman Rekha was there to protect Sita. While you do that, keep a tab of credit scores too as they can paint your financial picture either green or red! CRIF allows you to check your credit score free once a year and what better occasion than Dussehra to do it. Check your FREE credit score now.

4. A life of patience and persistence:
Lord Rama along with Lakshmana and Sita were exiled to the woods for 14 years; he accepted his fate and maintained composure. When the Lanka war broke out; Lord Rama fought with patience and perseverance without giving up or using short-cuts These two incidents in the Ramayana signify the importance of being patient and perseverant in the hardest of times. Irrespective of the ups and lows in the market, as an investor you should be patient enough to let thing start working according to your financial goals.

5. Clean your slate and start fresh:
The Lanka war of 14 days marked the defeat of evil and paved way to newer paths. Undo your bad decisions that you’ve taken in the past related to your finances by making some relevant and good decisions to streamline your financial picture for better money management. The first action you should be taking is improving your credit score as that itself can influence a lot of your decisions. Remember to check your credit score with CRIF, one of the most trusted credit bureau that enables you to keep your financial records straight.

A country, where people know how to spend, will be a country where people will eventually learn to invest intelligently. We are gradually migrating towards financial maturity rather than merely a nation of tight-fisted spenders and savers.