Insurance and Credit

Are you making plans to get an unsecured loan? If you are, it’s a good idea to study this article thoroughly. Obtaining the best unsecured loan takes a bit of preparation and it begins with this article.

Checking your credit report is first on the list. Lots of people have mistakes on their credit reports and they are not aware of it. You may be incurring pretty hefty loss of money if one of these errors cause your credit score to drop. Be sure to review your credit report cautiously.

All the mistakes should be taken off from your credit report before you approach a lender. If you do this after you’ve sent your application to a lender, it paints a bad picture in the lender’s mind. Take the time and go through the hassle of checking every record on your credit report.

Comparing offers is essential to getting the lowest interest rates. By comparing loan offers through the internet, you make this job a whole lot easier. Always strive to make an apples to apples comparison. Make sure the loans you’re comparing are the same sum total and have about the same terms.

There are loads of lenders ready to give you an unsecured loan. Throughout every market, there are good and bad vendors. The least you can do is to read up on a lender before you make a decision. Or ask your acquaintances if they know a good lender.

Having a crystall ball that told you if mortgage interest rates would go up or down would be awesome. Particularly in the uncertain times we’ve witnessed lately. We all know that forecasts are not 100% dependable, but we can make a pretty educated guess based on the recent economic events.

Lenders nationwide are telling everyone that will listen about their low interest rates. What most ads don’t mention is that the low interest rate is only relevant for consumers that have credit scores of 700 or above. If you want to get 5 percent interest or even lower, you not only need a credit score above 700, you will also have to make a stiff down payment. Interest rates will be higher if your credit score isn’t as pristine as lenders want it to be.

Interest has declined consistently the past couple of months. But we’re all wondering when interest rates will climb again. Because of the interest rates steadily going down, you may suffer a big loss when you buy right now. But if you delay your decision, and interest rates suddenly rise, you also lose.

During the past couple of months, many people have applied for a mortgage. A few lenders have attempted to slow the application flow down by raising their fees, because they are overloaded with mortgage loan applications. Mortgage interest is positioned to keep coming down, but we will see a bounce in the near future.

Many people will see the bounce as a bad development, but it is not. What you need to do is delay your decision and buy when interest rates are sinking again. You know that the market has almost reached it’s lowest point when the bounce is finished. If you buy and get a new mortgage, consider fixed rate. By making this decision, you lock in the low interest and protect yourself from mortgage interest rates rising again.

There are so many investment options like mutual funds, insurance, ELSS,gold, FD, NSC , PPF, POMIS, Senior citizen saving scheme, Pension plans etc available to Indian investors that it sometimes becomes difficult for him to decide where to invest his hard earned money. While investment decisions are primarily driven by ones investment goals and risk appetite it still requires some research and analysis before one can zero in on the final investment tool/option. So how should we go about it? What should we check before we choose to invest in a plan/policy etc? Well there are primarily 5 parameters on which we need to analyse each and every investment option before we put our money into it. They are

1. SAFETY – First and foremost concern of every individual is to ensure that the money which he is investing is secure i.e. the money comes back to him either more or equal to the amount invested. There should not be principal erosion in the investment. Equities don’t fare too well on this parameter as they can never guarantee that due to their high volatility. While some do well on this parameter. Example :- All debt based instruments like Fixed Deposits, NSC, PPF,Bonds etc.

2. RETURNS -Another parameter on which the investment option needs to do well is return that it offers to the investor since this is the primary reason why people invest. Equities over a longer period of time do give high returns while most of the debt funds give lower returns. Risk and return are inversely proportional and hence funds which dont do well on security will generally do well on returns front. As they say “No guts No Glory”. Investment options which do well on returns are Example:- Equity Based instruments like Mutual Funds, ELSS, direct stock etc. Within debt funds senior citizens saving scheme does give higher returns as compared to other debt funds.Post Office Monthly Income Scheme too does give better returns.

3. LIQUIDITY – You never know when you might need your money and as such liquidity aspect of the invested money can never be underestimated. Funds which allow easy and quick liquidation are generally good to invest. There are lot of options which are pretty bad on liquidity aspect like PPF, NSC etc. The money invested here gets locked in for a certain period and even if you do withdraw, you will have to pay penal charges on it. Example:-Gold,Fixed Deposits in banks,Liquid funds etc are very good on liquidity aspect.Absolute liquid investment would be money in your saving account, but, that is not investment in true sense.One should look at building one’s emergency fund out of these options.

4. TAX BENEFITS – One of the main drivers of investment ,in India at least, is the tax benefits associated with various investment options. Government offers tax incentive to induce saving habit in people . This too is very important parameter as investment in tax saving instrument help you lot of money in taxes which you consider as immediate returns out of the money invested. For example for someone in 30% tax bracket, an investment of Rs 100000 in tax saving instrument like ELSS will save 30000 in taxes , hence we can say that his investment in ELSS gave him 30% return on investment itself. So makes sense to invest in tax saving instruments if you have that Sec 80C limit with you. Example: Sec 80C – ELSS ULIP, insurance, education loan, PPF etc

5. LOAN FACILITY – Some people also look to take loan on their investments. Investment in insurance endowment policies can be used to take loan against them. LIC uses this feature as selling point for lot of its endowment plans.