Learn all about loan default and how it affects your credit score

While loans are a great way to pay for important commodities that you might not be accessible to you otherwise, if not handled properly, they can have a negative impact on your finances. There are a number of reasons you might not be able to make the payments on your loan.

In the event that you are unable to make the loan EMI payments and fail to reach an agreement with the bank, you will be marked as a defaulter. If this happens, you not only lose ownership of the collateral, but your credit score will also take a hit.

What is Credit Score and Why is it Important?

Your credit score is a number between 300 and 900 that tells potential lenders how creditworthy you are. If your credit score is low, your loan application will likely be rejected by the bank.

Credit scores are tracked by an organisation called CIBIL (Credit Information Bureau India Limited). Banks send regular reports to CIBIL detailing the credit and loan statuses of their customers. If you default on a loan, your credit score is negatively affected and this affects your eligibility for a loan. Most banks these days only approve loans for applicants whose credit scores are at least 750.

Any lower, and you’ll have a hard time finding a bank that will approve you for a loan. Need a home loan so you can purchase your dream home? You need a good credit score, or banks will outright reject your application. If you’re in the market for a Home Loan and have a good credit score.

How Does a Loan Default Affect Credit Score?

Defaulting on a loan will damage your credit score and lower it, making it hard for you to secure loans in the future.

So, how long does a loan default stay on your credit report? Information about loan defaults stays on your credit score for a period of 7 years, during which you will have to make an effort to rebuild your score and show banks that you are a trustworthy borrower.

How to Fix Your Credit Score after Loan Default?

There are no quick fixes for a credit score that has taken a beating. You’ll have to build it again over time, slowly, and with consistently good financial planning.

Some measures you can take to improve your credit score include making an effort to pay off the loan that you defaulted on; applying for a credit card and using it responsibly, to show that you can be trusted to make payments on time; keeping up with all your loan payments also serves the same purpose and will improve your credit score over time.

Another important thing to keep in mind is that you should always have more secured loans, like home loans and gold loans, than unsecured loans like personal loans.

Bajaj Finserv offers Gold Loans between INR 25,000 and INR 10 lakhs with no prepayment charges and a full repayment option.

How to Handle Loan Default?

Avoid defaulting on your loans as far as possible, but if you fear that you won’t be able to make your EMI payments on time, communicate with your bank and they will most likely be willing to come to a compromise. Not talking to your bank is the worst thing you can do when you’re in a bad financial situation, because you won’t be aware of what measures they’re taking. You would also miss out on the opportunity to negotiate with the bank and come to a compromise that would have a lesser impact on your credit score. You can apply for your Home Loan online, with Bajaj Finserv, right now by clicking here.

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Home Loan benefits for under construction property

Purchasing a ready-to-move-in house can be an expensive affair as the prices of residential apartments are continually escalating. Saving some cash is possible, if you consider investing in an under construction property. Generally, under construction properties quote 20% less than completed ones. By opting for an under construction property you may not only be gaining monetary benefits on the cost of purchase but would also get tax benefits on home loan.

Your savings can become even more effortless if you have a reliable lender to guide you through the home loan process. Your overall home loan experience hugely depends on your choice of lender for the loan and Lenders like Bajaj Finserv offer 3 EMI free months on Home Loans to facilitate ease of repayment.

Let’s explore what tax benefits for under construction property that you can avail.

  • As under construction properties are comparatively cheaper, the funds required for them would be relatively low. Hence, the EMI payable on the loan amount would also be modest.
  • As the EMI on the loan is quite reasonable, you can increase your monthly instalments to reduce the loan tenure. This will help you save more on your total interest payment.
  • The person who is availing of the home loan can postpone the deduction of the interest amount paid during the pre-construction phase.
  • The interest amount paid prior to the year of completion is accumulated and 1/5th of this amount is allowed as deduction each year for 5 years from the year of completion. Simply put, the interest paid on the home loan during the pre-construction phase can be availed for deduction in these five equal instalments. In case the property is occupied before the completion of these five years, then the deduction is limited to INR 2 lakh. This is one of the major tax benefits for under construction property.
  • Another one of the home loan benefits for under construction properties is that the loan is structured in a way where time of disbursement of each loan instalment by the lender will coincide with the time of completion of another level of the project by the developer.
  • One can avail tax benefits for the stamp duty and registration fee on the property. These are some tax exemptions for home loan under construction properties.

If you are taking a home loan to buy your house, consider the one that offers low home loan interest rates, ease of repayment, and few additional incentives. Home Loan schemes offered by Bajaj Finserv proposes benefits like nil foreclosure charges and prepayment facility. With Bajaj Finserv you can apply online for Home Loans at interest rates starting from as low as 9.75%.

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What Happens When You Fail to Make Your Loan Payments?

Once you get that loan approval and calculate the EMI for it, comes the next step in the process—the payments. If for some reason you miss out on a payment or find yourself unable to keep up with the monthly instalments, then that is when the term “loan default” comes into play. The article speaks about the loan default consequences you can face in the event of not repaying the loan and the different kinds of defaults possible.

When Do You Default?

There are two reasons that usually lead to loan defaults, which are:

  1. Inability to pay the EMI and the interest on the loan
  2. Lack of willingness to pay the debt

Usually, banks consider even the non-payment of a single rupee as a default. Customer centric financial institutions like Bajaj Finserv are flexible with their policies, so it would be ideal to approach them about your options.

What are the Kinds of Default?

In almost every loan you can apply for, there are chances you can default on them. If we had to mention the various types, then student loan defaults, home loan defaults, and personal loan defaults would top the list.

Student and Education Loan Default

With the number of student loans that are sanctioned every year, quite a few end up with defaults. If after a specified number of days you fail to make the payment, then a red flag will be raised. Further non-payment could lead to consequences which would eventually affect your credibility as a borrower.

Home Loan Defaults

If you default on home loan payments, then the contract that you signed at the start of the borrowing process will give the financier legal rights to possessthe property. As the property or house is categorised as an immovable asset, the institution would first send a notice to the borrower. If you settle the amount in the specified timeframe that is mentioned, then the claim to the property would be forfeited by the company.

Personal and Auto Loan Defaults

If you default on your personal loan payments, then you can talk it over with your financier. If you explain the reason behind the inability to repay, you can devise another plan to help pay it back. In the case of automobile defaults, the institution would have the right to procure and sell the vehicle or asset. If the item is put up for resale, then you would get a notice of the same so that you have a chance to refute it.

Remedying the Default

Instead of wondering what happens when you default on a loan, you can use this article to bring yourself up to speed about what you ought to do if you do default.

  1. Don’t Run AwayYou owe the bank money, which means you are a debtor to the agency. Don’t try to hide from your problem. If you are unable to make the payments, then put that forward to the bank.
  2. Try NegotiationYou can renegotiate your next step together with the NBFC, which ideally benefits both you and the lender. Look into whether a lower interest rate or EMI could put you back on track with the payments. NBFCs like Bajaj Finserv offer good policies and services, which could come in help when negotiating for a change in your current scheme.
  3. Cut Back on Other ExpensesYou could try cutting back on other expenses for a few months while you concentrate on clearing the loan. This would help put you back on the repayment wheel, without having to rethink the EMI or rates.If you think you might be unable to repay your loan and could default on it, then do the needed research about loan default consequences before you decide on your next plan of action. Bajaj Finserv is a people-oriented lender, and could help you in re-adjusting plans if the need arises.

What Happens When You Fail to Make Your Loan Payments?

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Gold Loan Vs Personal Loan—How to Choose Between The Two?

Short term financial emergencies drive many people to take loans so that they can satisfy their obligations. If you’re ever in this position, you’re probably thinking of taking a Personal Loan, which is not a bad choice. But, keep in mind, there is a better alternative to Personal Loans available to you.

Gold is a common investment in India. The ever-appreciating trends of gold prices make people invest their money in gold jewellery or coins. Once they make this investment though, it’s rarely liquidated in a hurry, and most households have gold heirlooms that are simply kept locked away.

If you possess gold and need cash immediately, then use it to take a gold loan instead of opting for a Personal Loan. While Personal Loan interest rates are generally high, gold loan interest rates are more reasonable, and you can avail other advantages as well.

Bajaj Finserv lets you borrow between INR 25,000 and INR 25 lakh on gold loans and doesn’t have any hidden prepayment charges.

Below are some of the advantages of gold loans and Personal Loans you should know.

Better Interest Rates
Gold loans have much lower interest rates compared to Personal Loans. This means that you’ll be paying smaller amounts as EMIs every month, which will put less stress on your finances.

The reason why gold loans have lower interest rates than Personal Loans is that the gold you give the bank is considered as security, or collateral, which they can auction to recover their money in case you default on the payments for any reason.

Because of this, when the bank lends you a gold loan, they are taking a lesser risk than when they lend you a Personal Loan. Lower risk for the bank translates to lower interest rates for you.

Shorter Loan Tenure
The tenure of Personal Loans can be anywhere between three to five years, which means that the burden of paying the EMIs will remain on your shoulders for this entire duration. Even though Personal Loan tenures are considered to be relatively short, gold loan tenures are shorter!

The maximum tenure for a gold loan is usually a year, although you can extend this if you want to. The advantage of a shorter tenure is that the task of paying the EMI will get over quickly, and you get your gold back once you pay off the loan.

Payment Method
Some banks will let you pay only the interest you accrue on the gold loan amount until the end of the loan tenure, after which you will need to pay off the principal amount.

This is a contrast to Personal Loans, as your monthly EMIs for Personal Loans always require you to pay both the interest and part of the principal amount. Clearly, gold loans put much less pressure on your finances.

Applying for a gold loan is also a less arduous and time-consuming process because it barely requires any documents. All you need i the gold, an identity proof, and an address proof that are recognised by the bank.When you apply for a Gold Loan with Bajaj Finserv, a representative will appear at your doorstep, collect the documents and the gold, and walk you through the whole process, making it much easier to obtain funds using your gold.

Personal Loan Perks
If you apply online for a Personal Loan with Bajaj Finserv, you will receive your loan approval in only 5 minutes, which is one advantage of obtaining a Personal Loan. Most lenders don’t give you the option to apply online for gold loan. The other advantage is that if you’re looking for a longer loan tenure, you can benefit more from taking a Personal Loan.

From these factors, we can clearly see that taking a gold loan is definitely more advantageous than a Personal Loan if you have gold with you. But if that’s not the case, then a Personal Loan can give you that much-needed help.

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Everything you need to know about Doctor Loans in India

Physician Loan was a not-so-popular concept in India until the recent past, but of late several financial institutions have begun to offer doctor loans in India. If you’re a physician looking to take a doctor loan, then you must first get acquainted with the subject at hand. Here are a few basic things to help you understand better about doctor loans.

1. What is a Doctor Loan and Who Can Avail it?
A doctor loan is a type of business loan available for physicians who own a clinic/facility and are looking forward to improving their basic infrastructure. Very few financial institutions in India offer this type of funding, and one of them is Bajaj Finserv, who helps doctors by providing loans with quick approval schemes.

2. What are the Eligibility Criteria?
All the finance companies, more or less, have the same criteria in providing a loan for professional doctors. Lenders like Bajaj Finserv, have clearly listed out the basic requirements and documents necessary to avail a loan:

  • An independent clinic owner with an own house.
  • A graduate doctor with an MBBS/BDS degree and a minimum work experience of 8 years.
  • A postgraduate doctor with a DM/MD/MS/MCH/MDS degree and a work experience of 5 years.

3. What is the Maximum Loan Amount You Can Get?
All the lenders offering doctor loans have different cap sizes on the amount (minimum and maximum) of monetary assistance they can provide. For instance, Bajaj Finserv offer up to INR 45 lakh, as an unsecured ticket size.

4. What are the Tenure Options Available?
Lending agencies offer repayment schedule depending on the requirement and the capacity of the borrower. The tenure can range from as low as 12 months to as high as 60 months.

5. How are the Doctor Loan Interest Rates in India?
The rate of interest on doctor loans in India is fairly low, with the rates starting from 10%, depending upon the lender and the amount of money borrowed.

6. Are There Any Benefits to Choosing a Doctor Loan?
Yes, there are a plenty. Doctor loans can be availed through easy instant approval schemes by online means. Also, most of the lenders in India have made it customary to not expect any guarantors or collateral in order to give a loan.
These aforementioned questions will help you secure the loan to improve your business and reach out to a larger crowd. If you’re one of those physicians who need immediate funding, you can apply online for a doctor loan and get it sanctioned very quickly.

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Bid goodbye to your business debts in 7 ways!

Business debt can be a big stress for the business owner and often results in spending more time worrying about how to reduce it than growing the business. While money is required for any business to run before the anticipated profits begin to show, it is prudent to ensure that short term working capital loans are not stretched. Consider a low interest short term business loan from Bajaj Finserv and bid high interest loans adieu.

Here are 7 ways to say goodbye to business debts with ease.

  1. Cut unnecessary expenses
    In every business, there comes a time when although sales are in progress, there is no cash in hand to pay off the debt. This is the time to step back and analyse where the money is getting stuck. Cut unrequired expenses and streamline your business.
  1. Don’t offer customers credit for too long
    If receipts are being delayed, dedicate a team to follow up with customers and collect the money due to you. This will reduce working capital debt and the excess money in the system can be repaid to reduce interest costs.
  1. Extend vendor payment due dates
    Speak to your business vendors to allow yourself a longer credit period so your small business can benefit from the additional time to make payments. This will help when the business is awaiting overdue receipts, as the surplus cash can be used to repay debt.
  1. Prioritize debt payments
    Look into the books to see which debt is incurring the highest interest and work on paying off that debt as the first priority. While your business will lose some money, this practice will also help you to get rid of the additional interest burden.
  1. Refinance your loans
    Once you establish which loans are your high interest loans, a smart move is to refinance your expensive debt with the best interest loan that targets the money where it is required. Bajaj Finserv provides dedicated solutions that include working capital demand loan among other startup business loans, which act as a buffer when required and offer low interest along with hassle-free signup. 
  1. Rework your budget

Recalculate the business budget to cut out unimportant expenses that may have been necessary earlier. This streamlining will free up some cash, which can be used to pay up debt thus freeing the interest demand on debt.

  1. Sell unwanted scrap

Every business generates scrap that is often overlooked. Spend some time to learn the best price you can get for the scrap that the business is generating and start selling it to vendors or even online to generate additional funds, which can be fuelled back into your business.

At Bajaj Finserv, we understand the advantages of a low debt business and our small business loans are geared to provide the flexibility every business craves. From short-term working capital loans to working capital demand loans to secured business loans, all our facilities offer no cost prepayment options and provide competitive interest rates. Find out more here:

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5 Ways To Collect Funds For Your Business

When you start a business or decide to take the leap of expanding your current business, an important question always surfaces: What are the ways to grow business funds? If you need to know from where you can acquire business funds, here are a few methods you can try:

1. Equity Capital

This is a method of raising funds in which shares are sold to the public or financial institutions, granting them ownership of your company. An amount called dividend is paid to the investors every year based on how profitable your company is. It’s the costliest and safest method of financing a business, and reduces your debt to income ratio. It doesn’t just answer the question of how to grow a business, but also gives you enough means to raise the initial start-up capital.

2. Business Loan

A business loan is availed by a firm or individual to pay for business expansions or to fund their start-up expenses. Just like how interest rates are applicable for any loan, business loan interest rates are no exception either. If you’re looking for a Business Loan with low interest rates and other benefits, then you can take one from Bajaj Finserv, where you can avail a loan amount of up to Rs.30 lakh. The documents required for a business loan from individuals like sole proprietors, partners, and directors are nearly the same as those required from private limited companies and partnership firms. To avail a business loan, you need to be paying a minimum of 1.5 lakh as your business’s Income Tax Return, towards the annual turnover. If you apply online for business loan with Bajaj Finserv, you’ll receive an end-to-end service on an unsecured Business Loan.

3. Venture Capital

To know if you have business loan eligibility, you’ll have to sit through a long documentation process. This process is usually time consuming, and will not let you acquire funds as soon as you need them. This is where venture capitalist funding comes into picture. This type of funding is used when your start-up has a high potential value at its initial stage. Venture capitalists are investors who provide you with funds if they are satisfied with the description of your business, and sure of its success. The investors usually have a say in the management and own equity in your business.

4. Overdraft

This is a facility that allows you to withdraw money from your current account beyond the amount that is deposited. There’s usually a prior agreement with the bank, where a limit to the overdrawn amount is fixed along with the interest rates chargeable on that amount. The bank also charges a fee for allowing you to use this facility. In case you overdraw in excess of the fixed amount, the bank can increase the interest rates and charge you a higher fee. It’s the easiest method to obtain short-term finance for your working capital needs; almost like a personal loan where you withdraw funds when you need them rather than as a lump sum. If you need a personal loan immediately, Bajaj Finserv provides instant online approvals on their personal loans.

There are numerous other ways to raise money for your business, including debentures and angel financing. You need to determine your financial requirements and the application of funds in your business before you pick a source of funding.

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Fitness Equipment at the Great Indian Lifestyle Festival

Get all the Fitness Equipment at the Great Indian Lifestyle Festival with Bajaj Finserv

Everyone knows how important it is to maintain a healthy lifestyle. With the incredibly busy lifestyles that we lead, it’s hard to find the time to go for a run or hit the gym on a regular basis. The simple solution to this would be to bring the fitness to you. Simply buy fitness equipment and exercise in the comfort of your own home.

Don’t compromise on your fitness goals, simply buy all the fitness equipment that you need using Bajaj Finserv’s EMI finance during The Great Indian Lifestyle Festival, and you might win amazing prizes and incredible discounts.

Bajaj Finserv has teamed up with top fitness brands like Bodyline Sports, Stayfit, and Cardio Fitness, to make fitness more accessible for you.

What is this EMI Plan?

Through Bajaj Finserv Lifestyle Finance, you can buy everything from treadmills to multi-station gyms right now, and then pay for them over time with incredibly affordable EMI payments.

Bajaj Finserv offers lifestyle financing for amounts up to INR 3 lakhs, that you can then pay off over a period of 2 years. Not only is this EMI financing option flexible, but you are also charged zero interest on your payments. This means that you will pay back only the exact value of the equipment that you buy, plus a nominal processing fee.

With the festival going on right now, you might actually end up getting more than your money’s worth. Read on to see how.

What are these Incredible Offers?

The Great Indian Lifestyle Festival gives you the opportunity to win, and win BIG, when you avail of Bajaj Finserv’s EMI payment options at any of the stores that they are affiliated with.

You can find a list of lifestyle partners click here.

Once you’re done buying your fitness equipment between 1st July and 31st August, all you have to do to be eligible to win is answer this question – THE GREAT INDIAN LIFESTYLE FESTIVAL IS CELEBRATED IN WHICH SEASON?

SMS BAJAJ LIFESTYLE <your answer> to 9773633633, and you could win daily cash back offers of up to INR 20,000, an LCD TV, PSPs, and maybe even a brand new Swift-ZXI!

Sounds Great! Where Do I Sign Up?

You don’t have to go out of your way to register for this awesome offer! All you have to do is turn up at one of the fitness stores affiliated with Bajaj Finserv and talk to the in-store representatives. They will run you through everything you need to know and sign you up in only 5 minutes! How’s that for easy?

What’s more, the documentation is extremely minimal, so there’s barely anything standing between you and that shiny weight rack. Flash your PAN card, driving licence, and other documents, fill in a few details and you’re good to go!

Getting into shape has never been this easy or exciting!

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