Here’s how to pass the income verification test!

The current economic situation of India shows a sharp increase in the number of people opting for loans to meet their needs. Some want to own an asset while others have immediate personal needs. A loan amount is directly related to the borrower’s income and therefore the key question that governs the situation is how do lenders verify income?

Customer Segregation for Loan
Loan benchmarks are not the same for all individuals. Customers are classified into a multitude of segregations. But here we will only take into account two possible and generalised differentiations of salaried employees and self-employed customers. The distinction will further make it easy for us to analyse how the dynamics of loan approval mechanism works for the end consumer. Also Read: How much credit score is needed to apply for a Home Loan?

Steps of Approval
The first step to getting a loan approved and understanding how do lenders verify income is by submitting the right kind of paperwork for the amount required. In case of a Personal Loan, the documentation required is far less as compared to a Home Loan or Auto Loans. Also for personal loans, one can upload the documents online and get a quick approval after basic checks but in the case of a more elaborated loan, the process is a little longer with more steps involved including different kind of income verifications.

So how do loan companies verify income? Below is a list of documents you must provide to the lender. Once these are thoroughly vetted, the next step is the verification of these documents which begins with checking an individual’s credit rating. Also Read: Great ways to improve your credit score in India

  1. Latest credit score
  2. Bank Statement
  3. KYC Document
  4. Registration Papers
  5. Income Statement
  6. Property Papers
  7. IT Returns
  8. Credit cards
  9. Auto Loans
  10. Home Loans
  11. Any other Loans


How do Lending Institutes verify income?
Lending clubs before investing a certain amount of money in an individual ensure a person’s ability to repay. A good credit history is something that interests the lenders immensely. Your monthly / annual income, your present debts, and a clean title to the asset offered in case of bigger loans are some of the key criteria that the lender will research in detail about.

Key points that the lenders will probe into
Here are some key verification parameters that your lending organization will dig into:

  1. IT Returns: Do lenders verify tax returns? Indeed they do! Your tax return is one of the most important document (especially if self employed) in order to prove your capacity to repay. You will need to show IT Returns for the past three years. The average income of two to three years will judge the bearers ability to repay. A salaried individual also must show IT Returns.
  2. Current fiscal profit and loss statement: An in-depth analysis of the current year profit and loss account will justify if the self-employed bearer will be in a situation to repay or not. The health of your business is a parameter that your lending institution will be interested in.
  3. Salary Accounts: Do lenders verify bank statements to verify income? Yes they do! The bank will probe into the average earning capacity of a salaried personnel and their expenditure patterns to understand their ability to pay. It is mandatory to submit one’s salary statements to justify the loan that one has asked for
  4. Net worth of the bearer’s assets: The lender will assess an individual’s assets to undermine whether the loan is recoverable in case of any lapse or default. In case of self-employed, they assess the net profit, consider the value of your home, add depletion and depreciation, and calculate your income.
  5. Credit Report: The credit report is a testimony of one’s financial character and holds the records of every past dealing and present liabilities. An individual with a good and balanced credit record is a clear winner in such a case.

Banking institutions and lenders do their homework thoroughly and it is recommended that you provide documentation with complete transparency. Ensure you monitor your finances in order to pass the lender’s verification test for a quick approval as well as to qualify for a good rate of interest.

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Timing Right With Home Loans

Getting Your Timing Right With Home Loans

Owning a house gives an individual a sense of independence and achievement. Whether your dream is to construct a house on a plot with a garden or to redecorate your cozy apartment overlooking the ocean, you require the right amount of funding. Obtaining the right kind of loan is a process that requires you to do your research well and make the right choices along the way. A Home Loan must fit your budget, your ability to repay and your preferred timeline.

The various types of loans available are home purchase loans, land purchase loans and home construction loans. There are various types of Home Loan interest rates available as well such as a floating interest rate and a fixed interest rate. In a floating interest rate, the interest rate changes with market fluctuations. And a fixed interest rate remains the same over the course of the loan.

A key deciding factor while taking a Home Loan is the tenure i.e. the duration of the loan so that it is easy for you to make your payments and be in good graces of the lender. While refinancing your loans at a later stage, or foreclosing your Home Loans are options available to you as well, the tenure is critical in deciding the length of your financial responsibility. Let us look into a few key areas while deciding whether you want a 5, 10, 15, or a maximum Home Loan tenure such as a 25 year Home Loan.

Key Factors While Choosing Home Loan Tenure

  • Your Age Factor:

    Age is a very important factor while deciding on a Home Loan because your loan tenure is directly proportional to your earning years. Some lenders have withdrawn the option of loan payment post retirement. So make sure that your age criteria is covered. In some cases, you can allot a younger applicant to continue paying your loan after retirement.

  • Income:

    Your income dictates your ability to pay back the loan. This directly affects the term and longevity of your Home Loan. To get the best Home Loan tenure, be mindful of the amount you are borrowing keeping your income in mind. Sometimes, individuals take a higher EMI but a shorter term loan. Considering a large chunk of your EMI will be deducted straight from your salary, this could be a risk factor for some. Do keep in mind the number of years you may require to safely pay off a loan while also maintaining a safety net in place for unexpected expenses such as a medical situation or a wedding in the family.

  • The Reason Behind Your Loan Application:

    There could be many reasons as to why you are thinking of obtaining a Home Loan. For investors, a short term loan is less expensive and long term loan becomes draining on the pocket. If your aim in buying a house is to sell it for a profit, then opting for a minimum Home Loan tenure will provide a better return on investment compared to a longer loan term.

In order to ensure you are getting a good loan, ensure you follow these rules as these factors decide the tenure of your Home Loan which will directly affect your finances:

  • Ensure You have Flexible Options of Repayment:

    You never know when you might face a financial crisis.

  • Ensure that the Interest Rates are not Very High:

    Always compare the rates of different banks and opt for an interest rate that suits your convenience. Try to avail a good interest rate that may reduce your EMI and loan tenure.

  • Earnings Determine the Type of Interest Rate:

    Always choose between fixed and floating interest rates according to your earning.

  • Think of Including a Co-Signer:

    Sometimes it is good to allot a co-applicant who can continue paying the loan after you, just in case you run out of money.

  • Loan Type Based on Your Purpose of Purchase:

    There are certain loans that offer money for the improvement of your house like interior designing, reconstruction, and renovation. In such cases one should opt for loans specific to these purposes only.

While deciding on how to reduce your Home Loan tenure, ensure you review the final draft of a legal document as it can be incomprehensible. It is better if one discusses each point (including the tenure) with a loan expert from the lending institution in order to understand each and every clause.

These are the key points that you should remember while deciding on a Home Loan tenure. Taking all these into consideration along with aiming for the best possible tenure of your Home Loan, you are sure to get a good deal.

Apply for Home Loan Online Check your Home Loan Eligibility

Reduce Home Loan Tenure

Home Loan Tenures don’t have to be Long

What is Home Loan Tenure?

The joy of living in a house of your own is one that everyone wants to experience which is why today, one of the most common loans that lending institutes offer is the Home Loan. The Home Loan offered by the bank or a lender is usually given on the basis of a few creiteria such as the salary of the borrower, the property value, and the rate of interest on the principle amount. This amount, usually given at 80% of the total property value, with the interest is paid to the bank usually through Easy Monthly Instalments or EMIs. Usually the process involves a minimum Home Loan tenure of 5 or 10 years depending on the principal amount. Sometimes it can go up to 15 or even a maximum Home Loan tenure of 30 years. That is a lifetime worth of EMIs. This time period or lifetime of a Home Loan wherein the borrower returns the money is called tenure.

Why Spend More Money?

If the interest rate is higher then your EMI naturally becomes a bigger amount. This means more money is spent in paying off the Housing Loan. In order to reduce the total amount of money spent on repayment you can look into reducing the tenure of your EMIs.

Ways to Reduce Your Home Loan Tenure and EMI:

Prepayment of the Home Loan:

One of the ways to reduce your Home Loan EMI and tenure is through the process of “pre-payment’. If you get a raise or bonus then you can pay back the entire loan or a huge part of the loan to the bank. This automatically reduces the principal amount to be paid thereby reducing the Home Loan tenure and subsequently the EMI.

Higher EMI amounts:

Another way to ensure early completion of your Home Loan is by increasing the amount of EMI you pay to the lender. This may not be the ideal solution, but paying a higher EMI means that it is to be paid for a shorter period of time.

Frequency of EMIs:

Take a scheme where the frequency of the EMIs is more. A good example of this is where you pay a monthly EMI for 5 years rather than a quarterly EMI for 15 years. Doing so will ensure that your Home Loan tenure is not very long.

Lower Interest Rates:

If you are a long standing customer of the bank or the lender, it is possible to bargain with them for a lower interest rate. This helps in lowering the tenure because the lower the Home Loan interest rate, This helps in lowering the tenure because the lower the interest rate, the lower the EMI resulting in a quick repayment of your Home Loan.

These are few of the ways to reduce the Home Loan tenure as much as possible. Why not reduce the financial strain on you and ensure mental peace for yourself and your family? Once your Home Loan is paid, it is truly a joy to call your house your own! Therefore, do consider rearranging your finances to take advantage of the various ways to reduce EMI and loan tenure.

Calculate Savings on Balance Transfer Apply for Home Loan Balance Transfer

Home Loan Foreclosure

Home Loan Foreclosure? Checkout the Do’s and Don’ts

If you are a real estate buyer and are considering foreclosing on a Home Loan, then be sure to evaluate the pros and cons of this type of transaction. A through research is suggested before starting the foreclosing process. Yes, the RBI did remove all foreclosure charges in June 2012 for borrowers. But that doesn’t mean that you have to rush to close out your loan. Given here are some points to will help you understand the complete process of how to foreclose Home Loans.

Complete Process How to Foreclose Home Loans:

What Percentage of Your Income is your EMI

The percentage of your monthly income that you’re allocating as an EMI payment should not be more than forty per cent as this can hamper the smooth budgeting of your financial planning. In case the EMI percentage is more than the given number then it is suggested to pay off your Home Loan amount as early as possible. You must also consult your loan officer for every change that is made on the transaction in order to help you avoid the cons of getting into the process of foreclosing a Home Loan.

Evaluating the Impact of Losing the Tax Benefit

One of the disadvantages of opting for a Home Loan foreclosure is missing the opportunity to claim certain tax deductions. A complete evaluation of the impact of foregoing certain tax benefits when you plan to foreclose a Home Loan is thus necessary.

How a Foreclosure can have an Impact on the Rest of your Financial Planning

Financial planning includes some important factors like education funds for the children, retirement plans, insurance payouts, health care bills and many more expenses. Therefore, always check that your foreclosure is not creating any hindrance against these priorities. The amount of repayment on a Home Loan foreclosure should always be from your surplus funds left over after all essential payments have been made.

Removing the Burden as soon as Possible

It is not recommended to foreclose your loan within 6 months of taking it as doing this might lead to a higher processing fee. However, a late repayment of the principal amount of the Home Loan is also not recommended.

Calculating the Trade-Off between Interests Paid and Returns on Other Investments

Your surplus amount can be invested in numerous ways and you might find it alluring because of its good returns over a period. However, an exception can be made where you are about to retire and your salary income is going to get over, in such cases foreclosure could be more attractive. Read this post to know the Charges other than interest associated with Home Loans

Buying a Foreclosed Home

There are pros of buying a home that has been foreclosed. However it depends on the phase of the process. Some people view buying a foreclosed home as a “steal”. This is because the seller is usually in dire need of funds and is willing to make as many adjustments as possible to facilitate the sale. The buyer can also avail a regular mortgage to finance the foreclosed home. However, the cons of buying a foreclosed home include a fast sale, a sale not below the loan amount owed to the bank by the seller and the lender’s approval of terms and conditions as well as the price of the home.
All of us want to get a good deal when it comes to Home Loans whether we are buying a foreclosed home or we want to get rid of the long-term responsibility of paying off for the loan. Complicated procedures are involved in the process and the above pointers can help you in taking the correct decision for your future. You must understand the bigger picture and take decision optimally. Do you research and after assessing all the pointers deeply, if you find everything is positive then definitely opt for the foreclosure of your Home Loan. Read this post to know How to choose best Home Loan repayment

Calculate your Home Loan Savings

Apply for Home Loan Balance Transfer

5 Ways To Combat A Business Loan Rejection

First of all, don’t take it personally! It is important to understand that small business loan rejection is not a reflection on the business owner. There are a lot of reasons that a bank or financial institution rejects a loan to a small business. Typically the bank should in their rejection letter explain the reasons for having denied a loan. We take a look at some typical errors that small businesses may be making.

Sometimes a business loan rejection can be a good thing in the long run. The experience helps the business owner address the weak links in the business.

Here are the reasons for rejection of a business loan and possible solutions:

  • General and financial information:

When applying for a business loan, pay meticulous attention to all the documents required by the bank or financial institution. The lack of documents often causes the bank to re-evaluate its position. Further, ensure the financial documents show the same projections that you have been verbally stating to the bank and that all the numbers mentioned tie up at the end. The business plan needs to be clear and concise, and you should be clearly able to show where the business currently stands.

  • Collateral or not?

Most banks and financial institutions ask for collateral that the business owner can provide. Collateral is a physical property that is used as a guarantee in case a loan is not repaid. Small business owners are typically unable to put up sufficient collateral to back their loan requirement. This is where Collateral Free Loans from Bajaj Finserv play an important role to keep the small business rolling.

  • Is there cash in the system?

While a business may be running well, banks analyse if the cash flow allows for the monthly EMIs to be paid. The cash flow statement shows how much cash was received and how it was spent through the system. Just as profitability is important for the business, for the banks it is necessary to know that there is sufficient cash surplus to ensure loan payments.

Also Read : Get A Business Loan To Expand Your Small Business

  • Small Loans

Typically small businesses require loans that are low in value, while still being important for growth. Banks on the other hand spend the same amount of money to process both high value and small loans. Therefore the banks prefer to underwrite high value loans as they earn more from interest on higher loans. Lenders like Bajaj Finserv provides small value loans that help small business owners scale up their business and offer benefits like easy part repayment of the loan amount.

  • Credit History

Every bank and financial institution will look into the credit history of a business owner, typically by generating a CIBIL report. Ensure that you have made timely payments for previous loans and that there is no reason for a negative remark in your credit history. Lapses in the credit history will be viewed unfavourably and often lead to loan rejections.

Bajaj Finserv has revolutionised the small business vertical with easy and stress-free loans with minimal documentation, easy withdrawal options, low interest and easy repayment options. Further, businesses have the advantage of paying interest only on the funds availed from the sanctioned limit. With these advantages it is easy for a small business to benefit from business loans.

Apply for Business Loan Online Check your Business Loan Eligibility

A small business with big dreams

A successful small business runs with under 100 employees and can cater to any sector of the market in any industry as long as it is a profit generating entity. Entrepreneurs are typically averaging 2-3 years in breaking even these days. Technology based businesses are the latest trends. However the good old manufacturing and import/export businesses also face similar challenges like those faced by the new age business start-ups. With more than 50% of India’s population in the age group of twenties and thirties, there is a fresh breath of air injected into the small business arena in India with young blood carrying big dreams.

Big Dreams
These small businesses with big dreams are usually looking for funding. One way of funding a small business entity is a small business loan. If you are wondering how to get a loan to expand a small business, you can take advantage of a small business loan as well. Normally, the small technology run businesses in India can easily apply for a small business loan online. Read ahead to know more:

Why do you need a small business loan?
A small business loan is usually a short-term loan approved by the lender to a business owner or someone intending to start a business to cover expenses and keep the business moving in the right direction. Choose a reputed lender financially sound enough to lend working capital. Regardless of the type of business you run, there are times when you would require some extra funds to cover expenses such as buying machinery, increasing stock, expanding the workshop, engaging skilled labour to meet order deadlines or marketing costs.

How to get a small business loan
Remember the key to being successful at getting a good small business loan: 1) a reasonable rate of interest and 2) minimum documentation. Do a comprehensive research to find out which type of lender is the best fit for your business loan needs. To approve a small business loan, the lender would require a few documents for business loan, and certain information.

  • Personal and business credit history
  • Your profile details
  • Personal and business financial statements
  • Detailed business plan
  • Cash flow projection at least for a year
  • Personal guarantees from all principal owners of the business

How to get your loan approved?
Bankers and institutions that lend money as small business loan are often cautious in making the decision. To get a business loan approved show cash flow sufficient to make the loan payments. Establish a track record of profitably owning and operating a similar type of business. Assure that your financial reserves and personal collateral are sufficient to solve the unforeseen problems. Underwriters will also consider where the business is located, what type of building the business operates in and even the character of its ownership to assess and project the future.

Looking to expand your small business?
Let’s get to the burning question of how to get a loan to expand a small business? To get the loan first decide what the money is needed for and what loan amount you are looking for. Research and find a list of potential lending institutions. Before you apply for the loan, gather some basic documentation about you and your business. Get your accountant on board to prepare your loan application properly and be polished at your interview. If required you may seek expert advice to avail the loan and expand your business. Get referrals from clients and close business associates.

Eligibility for small business loan:

  • Minimum age of applicant at the time of loan application should be 25 years
  • Business continuity plans should be vetted
  • Minimum turnover numbers should be provided with proof
  • Profitability should be proved
  • Income tax returns
  • Net worth

Here is a list of the documents required for small business loan:

  • Application for business loan
  • Bank statements from the previous three to twelve months
  • Financial statements and tax returns for previous three years
  • Business license and other certificates required for running a business
  • Copy of office lease or statement from landlord
  • Copies of agreements with key suppliers and clients

If you wish to enjoy a hassle free, quick loan process for all your small business needs from the comfort of home or office then you can certainly apply for business loan online. Expand your small business with utmost positivity and always let your dreams be bigger than before.

<< Click here to Apply for our 100% Online Buisness Loan >>

Don’t Let A Bad Credit Score Slow Your Business Growth

Having bad credit is alarming but it does not necessarily mean that it is impossible to get a business loan. It might be that your circumstances didn’t permit you to establish a good credit history but it doesn’t mean you will not be able to do so in the future. There are definite measures to improve your credit score. However, let’s look at the various ways of applying for a business loan with bad credit.

Yes, lenders or creditors will hesitate to loan you money as they think it is a very risky venture but applying for a business loan with bad credit is possible. Firstly, make sure that you have proper paper work to show to the lender to support your cause.

Also Read : Small Business Suffering With Bad Credit? Here Are Few Options For You

But if you are a new businessman and you do not have enough documents, you can provide a strong business plan. Show enough cash flow that your business can generate or has generated which will allow you to repay the loan that the bank gives you. Even so, the bank assesses the credit risk determined by the credit score, which is what the lenders will check before giving you a loan.

Bear in mind that the interest rates are inversely proportional to credit score. Interest rates are higher with worse credit. Having said that, the chances of getting a business loan with bad credit is higher if you can furnish some collateral. This doesn’t seem so bad considering you have all your plans intact and the chances of your business surviving are greater than fifty percent.

Starting a business loan with bad credit may not seem like an easy task, but it is possible to do so with a bit of help. This can be done in a few simple steps.

  • Get your personal credit report from your lender
  • Formulate a good business plan
  • Apply for a loan with a lender known to give loans to people with bad credits
  • Find someone who has good credit who is ready to sign the loan with you
  • Take a loan from family or friends to show working capital in your business
  • Set aside some collateral to attach with the loan

The more impressive your business plan, the higher are your chances to secure a business loan with bad credit. Your business plan must include pointers on how technically sound you are, the amount of knowledge you have pertaining to the business. It should also have a strong financial plan, human resource plan, and contingency plan along with a brief study of your target audience. Don’t forget to include what are the advantages you have over competitors.

Also Read: Great Ways To Improve Your Credit Score

When it comes to attaching some collateral, bear in mind that property, jewellery or other assets can be given as security to the lender. This instils trust towards you in the lending organisation and the bad credit score is almost forgotten.

A few ways to improve credit scores is by paying off your entire balance, balance transfers and fixing your outstanding balances in part payments. Our lending institutions are always ready to help those who want to help themselves. Don’t let a poor credit score bring your hopes and dreams to a standstill. It’s time to learn from the past and take your business to a new level of success by working on your financial history and showing your willingness to make things better in every aspect of your life.

Apply for Business Loan Online Check your Business Loan Eligibility

6 things to know about the new, simplified ITR forms

When the Government initially proposed a comprehensive, 14-page ITR form that demanded a whole lot of unnecessary information, it stirred up quite a controversy. The original proposal required not only the details of your foreign journeys, but also information about your dormant bank accounts. Soon after, the Finance Ministry had announced that it was going to simplify the process, doing away with many redundancies.

True to its word, the Government has recently unveiled the new, 3-page Income Tax Return forms. Here’s what you need to know about them:

  1. The New ITR-2A Form
    This form is for Hindu Undivided Families (HUFs) and individuals who don’t have any income from professions, businesses, or by way of capital gains, and who also don’t hold any foreign assets. Instead of the details of foreign trips—which was required by the original 14-page form—the new ITR-2A form asks for the passport number of the tax filer, with the words, “if available”.
  2. Transitioning to the Internet
    In the new set of ITR forms, filers will need to submit their Aadhaar card numbers and any 2 of their email addresses. This has been done to encourage the online filing of IT returns in the country.
  3. Choose Your Own Account for the Refund
    Apart from providing a space to fill in the your bank’s IFSC code, the new income tax form also gives you the option of choosing the account you want your refund credited to.
  4. Extended Deadline
    The Government has also extended the deadline for income tax return filing to August 31st. The new income tax return filing date ensures that you have more than sufficient time to get your finances in order.
  5. No More Information about Dormant Accounts
    The new income tax returns form 2015 requires all filers to declare the “total number of savings and current bank accounts” that they had “at any time during the previous year (excluding dormant accounts).” (Also Read: What is the right amount to invest in SIP?
  6. Foreign Assets to be Declared
    As for individuals and HUFs who have income from professions or businesses, the new IT forms require them to submit details of any foreign assets they might hold. These tax filers also need to report any sources of income that they have outside the country.You can quickly download the simplified ITR form from the online website of the IT department. Filing it is just as easy once you fill it in.

    If you’re looking to get some fat tax deductions this year, then you should check out the wide range of financial services offered by Bajaj Finserv, ranging from money-saving insurance schemes to low-interest home loans.

<< Click here for a 5-minute online Personal Loan approval >>

<< Click here to Apply for our 100% Online Buisness Loan >>

<< Click here for a 5-minute online Home Loan approval >>

<Click here to check your Home Loan eligibility>>

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