Top Five Tips to Avail a Business Loan

You may have the simple desire of starting your own business, or expand the current production line. For all such entrepreneurial ventures, financial bodies in India offered dedicated business loans. Such loans are offered to business owners or aspirants who plan to start one.

Small business loan are classified as SME loans in India. SME stands for Small and Medium-sized Enterprises. As the name suggests, such loan is only offered to emerging businesses. To avail such borrowing, here are the top five tips that you should take a look at.

1.   Who provide SME Loans

The needs and financial requirements of every business are different. After considering such diversified financing needs, banks and NBFCs provide loan. There are several NBFCs in India that offer competitive SME loan interest rates over lending, versatile repayment options, and active customer service to turn your business dream into reality.

     2.  What are types of SME loans


There are different types of SME loans which are provided with various objectives. The three prime objectives include increase in working capital, expansion of business, and margin money funding (to purchase additional machinery). So, before you file an application for the borrowing, make sure you know your borrowing motive.

     3.  Get acquainted with the Loan Process

Availing such loan is quite simple, only when you follow the mentioned procedure. During the time of application submission, ensure to submit the valid documents.  Also, develop a good rapport with the credit manager if you look forward to speed up the process. Once all documents are verified and loan application is assessed, you will get the required funding.

     4.   Avoid over-drawing

Many banks provide the facility of making additional withdrawals apart from the borrowed principal amount. However, the borrower should understand that such service is only provided as a privilege and should not be abused. Furthermore, there are separate charges levied on the additional borrowings. So, avoid over-drawing.

    5.    Check the Tenure Options

Loan duration will vary on the basis of borrowed principal amount. SME loan tenure can range from 12 months to 48 months. Only self-employed individuals such as doctors will get extended tenure of up to 60 months.

Three Reasons to Invest in Fixed Income Schemes

What are Fixed Income Schemes?

Fixed Income Schemes invest in securities such as bonds, debentures, government securities, money market instruments and other similar instruments. The main purpose of such schemes is to invest is to generate a steady income against a balanced investment risk.

Fixed Income securities carry minimum investment risk as the main motive is to offer the promised returns to the investors. On the other hand equity securities have no such obligation to pay back the investors. Though the promised return is comparatively higher, equity funds have high risk of investment loss. So, conservative investors prefer going with fixed income schemes.

Following are a few schemes that offer investment benefits to investors:

More tax efficient

Fixed Income Schemes are more tax efficient than several other investment instruments. After a year, the invested income is always treated as a long term capital and is taxed at 10% or 20%. If you hold the debt fund for a longer duration or period, then the indexation benefit is higher. For instance, DSPBR Banking & PSU Debt Fund offers extensive tax benefits to investors by heavily investing in debt and money market instruments, which have special tax exemption.

Better returns

The longer the period of investment, higher are the returns. Funds that invest in long term bonds are not applicable to changes in rate which occur in short-term debt funds’ investments. For instance, DSPBR Government Securities Fund has a longer lock-in period and directly invests in GOI bonds. As lock-in period is longer, it offers better returns as compared to other short term funds.

More flexible

Fixed Income Schemes are more flexible than others and a person can invest small amounts in them every month. Certain schemes primarily invest in money market instruments that offer combined benefit of liquidity and growth. For instance, DSPBR Money Manager Fund has a portfolio of money market instruments that offer better gains than regular debt instruments.

Plan Your Golden Years after Retiring with a Retirement Planner

What is a Retirement Planner?

Retirement Planners are extremely useful to understand your financial goals in the long run. Basically, they are used to figure out your post-retirement goals that assess the amount of money required to sustain the regular flow of life.

A retirement planning calculator keeps track of your accumulated financial assets along with pensions, home equity, social security, part time work, etc as well as ascertains the future projections of the investment growth. Good retirement planning is essential for maintaining steady retirement income.

Why do you need a Retirement Planner?

Since most people are busy in their lives and work, it is difficult to multi-task and also plan for your future. This is when a retirement planning calculator is used. It helps you to achieve long term financial goals through periodic small investments in MF schemes.

How to plan your retirement using Retirement Planner

1. Decide the age for retirement.
2. Decide the annual income you'll need for your retirement years.
3. Add up the current market value of all your savings and investments.
4. Determine a realistic annualized real rate of return (net of inflation) on your investments.
5. If you have a company pension plan, obtain an estimate of its value from your plan provider. 
6. Estimate the value of your social security benefits. 

Steps to use Retirement Planner

It is an extremely simple process and requires you to fill in the form, providing your basic details. Please read below steps to use the DSP BlackRock Retirement Calculator.

• Enter your present age.
•  Now enter your monthly expenses.
• Now enter number of years left for your retirement.
• Annual inflation rate by which you expect your monthly expenses to increase.This  needs to be entered in percentage form.
•  Your expected life expectancy, in years.
•  Annual return you expect to earn on your retirement corpus pre-retirement. Please  write in terms of a percentage.
• Annual return you expect to earn on you retirement corpus post-retirement. Please  write in percentage form.

This retirement planning calculator helps you work towards your client's retirement corpus and tells you the amount your client should save today to achieve the desired savings corpus at the time of retirement.

Best Fixed Income Mutual Funds in India

There are different types of mutual funds available in the market. Each comes with its own set of benefits and purpose. It is always ideal to consult your finance adviser before you zero on any mutual funds.

Today, we shall discuss one of the many mutual funds available in the market, fixed income mutual funds.

What is Fixed Income Mutual Funds?

As the name suggests, these mutual funds come with a fixed rate of returns. They are of the likes of government bonds, investment-grade corporate bonds and high- yield corporate bonds. They major objective of these bonds is to earn money on a regular basis. This is possible with the interest earned through the funds. However, high-yield corporate funds are generally riskier than funds that hold government and investment- grade bonds.

Let us look in to some of the well- known fixed income mutual funds in the market.

DSP BlackRock Bond Fund

An Open Ended income Scheme, seeking to generate an attractive return, consistent with prudent risk, from a portfolio which is substantially constituted of high quality debt securities, predominantly of issuers domiciled in India. As a secondary objective, the Scheme will seek capital appreciation.

Birla Sun Life Income Plus

It is an open ended growth scheme. It is an ideal investment for investors looking for stable income with capital growth ranging from medium to long term tenure. The corpus is invested in debt and money market.

HDFC Income Fund

The major objective of this scheme is to generate income while maintaining a balance of safety, yield and liquidity. The investments come with a low risk on your investments.

DSPBR Government Securities Fund

It is an open ended income scheme, seeking to generate income through investment in Central Government Securities of various maturities.

Franklin India Income Fund

The fund is positioned in the long term bond fund category that focuses investment in high quality fixed income instruments across segments such as G Secs, Corporate Bonds and Money Market instruments.

How to Arrange Loan for Used Cars

Many of us prefer to invest in a second hand or used car once you get a driving license. It is always an advisable step to take. It is any time better to hone your driving skills with a used car rather than going for a new car.

The best part, now you can even avail of a loan for used cars. There are more and more of banks and non-banking institutions that are readily providing with loans for the same reason. We list down some of the things to consider applying for a used car loan.

Age of the car speaks a lot about it

When it comes to new cars, you can easily avail the necessary finance. However, the same cannot be said about a used car. There are a lot of parameters that are taken into consideration when zeroing upon whether to grant you a loan or not.

One such factor in used cars that plays a vital role is the age of the car. It is determined by certain factors such as the condition of the car, the number of kilometers it has been driven for, and the model of the car. Based on it the car determines the percentage of loan to be provided.

It comes with a higher rate of interest

The rate of interest levied from you depends on two factors. One is the condition of the car and second is your relation with the bank or the NBFC personnel. Based on both these factors you can avail up-to 70% of the value of the car as loan.

Get through an organised dealer

The number of people selling their cars and buying new ones has soared of late. Therefore, there is no dearth of getting hold of used cars. However, it is advisable to get through an organised dealer to make your car purchase. As the cars aren't made available to you after a good screening but also comes with financing facilities.

So get all the above mentioned things checked and avail of the loans for used car easily.

Everything about Fixed Maturity Plan

Fixed maturity plan (FMP) are on the same lines that of a fixed deposits of a bank. However, they come with a slight difference. FMPs are debt schemes that invest in fixed-income securities. 

• Where do FMPs invest?

The corpus invested in Fixed Maturity Plans is directed into many avenues such as certificate of deposits (CDs), commercial papers (CPs), money market instruments, corporate bonds and sometimes even in bank fixed deposits. The fund manager invests into the above mentioned avenues based on the tenure of the investment. Say if the FMP is for a year, then the fund manager invests in paper maturing in one year. The expense ratio generally varies from 0.25 to 1 per cent.

• Tenure of FMPs

 The tenure of the plan depends on the plan and its maturity period. It can range anything from one month to three years. They are closed-ended in nature, which means that once the NFO (new fund offer) closes, the scheme cannot accept any further investment.

These FMP NFOs are generally open for 2 to 3 days and are marketed to corporates and well-heeled, high net-worth individuals. Nevertheless, the minimum investment is usually Rs 5,000 and so a retail investor can comfortably invest too.

• Actual return Vs Indicated Return

When compared to bank fixed deposits, the actual return tends to differ slightly from that of the indicated return. As banks print the exact amount expected on the maturity of the plan on the FD receipt. 

• Tax Implications

• The dividends are exempted from tax in the hands of an individual investor.

• If the growth in FMP is less than one year, then the returns are combined with         income and taxed accordingly.

• If the investment in the growth option of the FMP is for over a year, than either 10% capital gains tax without indexation or 20% with indexation.

Tips to cut down on your Car Loan Interest Rate

Investing in a car is the second largest investment any individual ever makes in his or her life after a house. Many of us always finance our car dreams through a car loan. However, amid-st the excitement of getting a new car we really don't try to look into the intricacies of different finances associated with it.

Do you know with few calculations and alterations you can cut down on the premium you pay for the car insurance and also the rate of interest liable on the loan you have borrowed. We list down few tips to take into consideration on how to reduce your car loan rate of interest.

Keep your credit score in check

It is very important to know your credit score. It is one of the first thing lenders take a look at when lending you money. Also, accordingly define the rate of interest over your car loan. Therefore, higher your credit score, lower will be your rate of interest.

If you feel just paying off your debt is all enough to keep your credit score good, then wait and have a keen look. It is also important to pay your debts on time. For instance, a delay of even 30 days is taken into consideration.

Shop around

Do not stick to just one bank or non-banking institution to provide you with your car loan. It is very important to shop around and look for options provided by few in the market. Look for the rate of interest applied by few institutions based on your credit score and accordingly take your call.

Bargain with your existing loan holder

It is always advisable to go with your existing loan provider. However, if you are getting a car loan at a lower rate of interest, then bargain with your loan provider and discuss the offers you are getting from other banks and non-banking institutions.

Finally, choose the institution that provides you the lowest rate of interest and a convenient mode of payment.