Four Important Tips to Invest in Debt Funds

Financial Market in India offers different types of instruments to match the risk appetite of different investors. Products in the equity segment are labelled as high-risk entities that reap substantial returns while those in the debt segment are labelled low-risk investment vehicles that guarantee assured returns.

Debt instruments are popular for their assured return rates, which are somewhat lower than their equity counterparts. Since the returns are low, the risk associated with such investments is minimum. As a result they are considered as safe means of investments.

However, debt funds do not offer easy liquidity. So, mutual fund companies provide debt funds to overcome this shortcoming. Unlike debt vehicles, these funds are standardized and the investor does not require extensive financial knowledge to make the purchase decision.

Here are the four simple and easy tips to invest in debt funds:

1>    Plan the tenure

Debt funds invest predominantly in bonds and debentures. All these instruments offer substantial gain over a period of time. As a result, you should invest in debt funds for a long time in order to reap substantial capital appreciation. Furthermore, investment tenure should be more than a year in order to gain double digit returns.

2>    Compare the NAV values

NAV or Net Asset Value plays a crucial role while choosing the right debt fund. NAV value will not depend on the fluctuating market conditions in case of these instruments. However, the value gets affected with the cash flow of the fund. Funds with higher cash flow are often labelled stable as the NAV value does not fluctuate rapidly.

3>    Assess the Credit Quality

Credit rating is a vital parameter considered while purchasing a debt fund. Credit risk analyzing bodies like CRISIL determine the credit rating for all the debt schemes. Schemes that carry lower ratings often compensate their buyers with favorable returns. However, the one with higher ratings are considered the safest.

4>    Determine the Scheme's Portfolio

Debt funds do not necessarily invest in a single instrument. Fund managers choose different instruments in order to get balanced returns as well as to diversify credit risk. Understand the portfolio and determine the credit risk associated with every underlying instrument. This way you can get better insights on how the scheme will perform in the long run.

Top 10 Equity Mutual Fund in India for Ambitious Investor

Mutual funds are often considered relatively safe investment option in comparison to equities. This statement is true as direct investment in stocks involves huge amount of risk. Furthermore, you need substantial amount of working, proven knowledge to convert market fluctuations into monetary equivalents.
To mitigate the equity risk and to tap favorable returns from market fluctuations, Fund managers have launched several schemes. Amongst the various schemes they formulate, equity funds are known to be the top-gainers.

Here are the top 10 equity mutual funds in India that promise double-digit, positive returns to the investors for the year 2014.

1> Birla Sun Life Long Term Advantage Fund
This growth fund is offering a whopping double-digit return of 63.3% for 1 year of investment. Managed by Mahesh Pati, the fund has consistently performed well over the past few years. The standard benchmark for this scheme is S&P BSE 200.

2> Axis Long Term Equity Fund
With an annual return rate of 78.1%, this scheme from the Axis fund house continues to be one of the consistent top-performers. Benchmarked against S&P BSE 200, this diversified scheme invests predominantly in Banking, automotive, and technology sector.

3> BNP Paribas Equity Fund
With an unmatched growth rate of 51.4% for a year, this CNX Nifty benchmarked growth fund continues to lure investors, even today. The portfolio is diversified and returns are equated.

4> Quantum Long-term Equity Fund
Marked against the S&P BSE SENSEX, this growth fund is the best call for long term growth. With portfolio packed with technology and oil/chemical giants, this fund is expected to promise good returns in future.

5> DSP BlackRock Equity Fund
This diversified portfolio fund is a dividend based scheme ideal for regular investors. Managed by Apoorva Shah, this scheme promises substantial returns of 46.3% for a single year.

6> Kotak NIFTY ETF
This CNX NIFT benchmarked fund is offering an average annual return rate of 43.7% consistently. Managed by young and able fund manager Deepak Gupta, this scheme has managed to offer positive returns even during troubled times.

7> Franklin India Smaller Companies Fund
Offering annual returns of 99.7%, this scheme is the cynosure of Mid-Cap top performers. Benchmarked against CNX Midcap, this fund continues to attract moderate risk-taking investors all over the country.

8> Reliance Small Cap
The multifaceted Reliance fund house has managed to show some magic with equities by launching this fund. Grabbing a surprising return rate of 124.2% for a year, S&P BSE SMALL CAP benchmarked fund has attracted several risk-taking investors.

9> Franklin India High Growth Fund
With a stable return rate of 76.1% for a year, this CNX 500 benchmarked has grabbed the attention of several investors lately. With a strong, diversified portfolio, the risk associated with this scheme is relatively moderate.

10> ICICI Prudential and other Services Fund
A strong market player from the ICICI fund house, this service-themed fund offers a double digit return of 61.2% for a year. Themed around the service industry, this fund shows consistency in returns, even during troubled times.

How Used Car Loans Work?

Buying a brand new car can prove to be costly deal. So, many people consider buying a pre-owned or used car. Prices of pre-owned cars are quite lower than their out-of-factory counterparts. Furthermore, used car is the best option to hone and sharpen your driving skills.

The prices of pre-owned cars vary according to their age, type, make and model. You may either pay for the car in cash or use a financing option like pre-owned car loan.

Borrowing a pre-owned car loan can be difficult and substantial amount of time and resources are spent to sanction it. Here is a clear-cut overview of how car loans work and what financiers consider before sanctioning a used car loan.

      1.      Age of the car plays a crucial role

The age of the car plays a crucial role in the loan sanctioning process. If the car is more than 15 years old, than borrowing options get ruled out. Similarly age of the car also decides the tenure of loan. For instance, if your prospect car is 2 years old, then you can easily get a loan for tenure of 5 years.

      

      2.      Model of the Car is a deciding factor

Principal amounts of pre-owned car loans vary according to the model and make of the car, along with its age. If the car model is still available in the market, then you will get a loan easily. However, if it has phased out, then financing becomes difficult.

     

      3.      Buying a car from established dealer aids the loan process

Established car dealers have organized process to take care of cars documentation. Proper documentation speeds up the loan sanctioning process.

     

      4.      Valuation of the car decides the nuances of the loan

On applying for a pre-owned car loan, banks and NBFCs like Magma send valuation experts to examine the car. Valuation is done on the basis of car model, manufacturing year, number of kilometers run, claims history, and the whereabouts of the car. Valuation and credit profile of the borrower determines the interest rate, loan value, and repayment options for used car loan.

Once valuation and loan estimation is complete, you have to submit important documents to the financier. Document processing and loan sanctioning takes around 8 to 10 working days.

Requirements for a Home Loan Eligibility

Nowadays, there are plenty of options in the field of personal loans that are provided by various banks and other financial organisations. Though the exact eligibility criteria to avail personal loans, varies from bank to bank, there are few common norms followed by many of the money lending organisations.

The basic factors that determine a person's eligibility are age, profession, annual income, credit history and outstanding liabilities at the time of applying for the loan.

Every bank has different home loan eligibility criteria, when it comes to lending money to individuals, so as to properly assess your repayment capacity which is based on your monthly income.

The main concern that banks have is whether or not you will be able to repay the loan on time. The higher the disposable monthly income you carry, the more the amount you will be eligible for. A bank typically assumes that about 55-60 % of your monthly income is available for repayment of the loan. As always, the loan amount depends on the loan interest – tenure rate. Banks normally fix an upper age limit for home loan applicants.

Almost anyone and everyone who wish to buy property and also has the means to repay the loan, is eligible to get a home loan. Every bank has a set of requirements that you need to meet before you can avail the loan. You need to have a stable source of income and have attained a minimum of 21 years of age to be eligible to apply for the loan.

The loan amount you are eligible to receive basically depends upon your net income. The bank usually provides home loans up to 60 times of the individuals gross income. If a person is to take home a salary of Rs 30,000 he may be offered a home loan of not more than Rs 18 Lakh. However, the finality of this decision is definite after weighing several factors.

Settle your Car Debt early with Loan Foreclosure

With the growth of economy and evolution of banking system, purchasing power of individuals seems to have increased significantly. Apart from preferring an improved lifestyle, people are now found pursuing comfort and leisure. Even for a small journey across the city, they now prefer private vehicles over public transport. This approach has substantially increased the demand of cars in the country.

The versatile credit system in the Indian economy allows many banking and non-banking bodies to provide easy loans to borrowers. Taking advantage of this opportunity, many car aspirants have now fulfilled the dream of owning a car. With easy installments and quick documentation processing, borrowing a car loan has become simple.

Yet many people don't like their vehicles lying under the burden of loan installments for a long time. For them, financial bodies like Magma are providing special loan-foreclosure or prepayment facility on car loans. The following sections will talk about foreclosure, its benefits and its charges.

What is Foreclosure or Prepayment?

Foreclosure means paying off the entire loan before time, without following the installment schedule. Whenever a loan is foreclosed, the borrower does not have to pay the extra interest, which would otherwise be retracted through the installments.

Benefits of this facility

Car loans are usually secured by keeping the vehicle as collateral. On pre-paying the loan, you get full ownership of the car, and can readily sell it or transfer it to someone, without having to consult the bank. Moreover, you need not have to worry about fluctuating car loan interest rates that are generally linked with floating-rate loans.

Procedure and Charges

For initiating the pre-payment process, the borrower needs to approach the bank personally. Many banks and NBFCs like Magma do not allow foreclosure for 6 months from the date of availing a car loan. After the 6 months span, 5% of the total outstanding amount is to be paid as pre-payment penalty. Nevertheless, this penalty is comparatively lower than the impending interest, which you would otherwise pay on installments.

So, avoid keeping your ride as collateral, go ahead and release it with loan pre-payment.

Applying for Business Loans in India

Loans are extremely popular financing methods which are used for various purposes. It could be to purchase a car, a home, personal reasons, educational purposes, for gold, against insurance policies, against bank fixed deposits, from PPF or EPF, against shares or mutual funds or even for marriage purposes. So, what if you are a young, budding entrepreneur and want to start up a business?

Well, there's good news for you! There are financing options for that as well. Known as 'business loans’, these financing options are similar to other types, only the intent is different. They are taken for the purpose of starting up a new business venture or even to purchase an already existing business or also bring in funds to an existing business to finance its current and future business activity.

It is easy to read about these business loans in India online by visiting the bank or financial institute’s website. One can also get instant online approval as well. There is no need for any guarantor for this process.  All a person has to do is fill in their personal details online such as their first, middle and last name, residence city, mobile number, PAN card number, date of birth and email ID.

After they fill in all the necessary details in the online application form, the bank will verify the data. Banks will pay attention to all the possible factors, even one’s credit score before approving the same. They would also require a business plan, which will demonstrate one’s ability to repay the amount.  

After submitting all the required information there are also certain essential financial documents that are required, besides merely providing information. Banks also want to see hard copies of your PAN card, identity proof, address proof, bank statement of the past 6 months, voters ID card, driving licence, projection of future operations and any other if required. Only after all of the above has been approved will the bank issue the same.

One of the most important and common of these is the SME loan. They are taken for small and medium sized enterprises. These financing options are known to form a major chunk of the general business finance market. They can be taken for many different purposes; working capital requirement, new purchases, expansions, vendor and dealer financing, bill discounting, etc.

Researching about these products and making oneself aware about the features offered for the same is very important. One should also compare the procedure from different banks as well. Only after comparing different banks should one make a decision where they want to obtain their loan.

Commercial Vehicle Loans: Essential Financial Options for these Vehicles

Being one-third the size of the United States, India is known to be the second most populous nation in the world; after the People's Republic of China. Comprising of twenty-eight states and seven union territories, India is also one of the emerging economies in the world. However, a large segment of the population belongs to the middle class and many; sadly live below the poverty line. Public transport is thus extremely important in this country for all strata's of the society, i.e. the importance of commercial vehicles in the country is extremely vital for the economy of the nation.

So, what are commercial vehicles or in other words which automobiles can actually be included in this segment? Every mode of public transport; be it bus, taxicabs, vans, light or heavy commercial vehicles, semi-truck, box trucks, vans, coaches and trains are all included in this segment. Besides this, various vehicles that are used for farming purposes such as plough, tractor’s and harvesters are also included in this segment.

India is known for being the world's largest three-wheeler, third-largest light commercial vehicles, second-largest two-wheeler and heavy commercial vehicles. So, financing these vehicles is of utmost importance in the country. There are a large number of leading finance companies (Banks and Non-Banking Financial Companies -NBFCs) in India where one can get commercial vehicle loans for an entire variety of these vehicles.

Most of these financiers have a Pan-India presence and offer their services online for people to read about the financing option, eligibility and even avail online for the same. Some of the providers include banks such as HDFC Bank, ICICI Bank, State Bank of India, Citibank Kotak Mahindra Prime Limited (KMPL), etc. There are also many public sector banks offering these financing options such as Union Bank of India, Dena Bank and Indian bank. Some of the popular NBFCs include Magma Fincorp, Mahindra Finance etc.

These may include finance for auto rickshaws, three wheelers, multi utility vehicles, pick-up trucks, light, medium and heavy commercial vehicles, container trucks, buses which include both passenger and school buses, and trailers.

One of the most important factors that need to be paid attention to when availing these loans is the interest rates that are charged. In today’s time and age, where these financial options can easily be applied for online, there are competitive rates in the loan segment for commercial vehicles. Magma car loans are offered at interest rates that range from 12% to 16%; depending on a variety of factors. Many banks offer interest rates that range from 10 % to 20% (depending on the type of car it is – new or used).