IDFC First Bank - IDFC First Bank Vehicle Loans

Money can be a big problem for many people when they wish to buy the things they would like. Whether it is buying a new home, funding a marriage, finding a child’s education or buying a new car, or buying a commercial fleet of vehicles, money can be a problem.

The good news is that there are banks like IDFC First which offers you a Commercial Vehicle Loan. This loan is one of the best options for helping you in growing your transport business.

In this article, we’ll tell you the features and benefits of IDFC First Commercial Vehicle Loan.

Let us come to the features first.

Features and benefits of IDFC First Commercial Vehicle Loan

• You can get loans for both new vehicles as well as used vehicles. That means you can get the loan even if you are buying a used vehicle or second hand vehicle. And, as you know, there are distinct benefits in getting a used vehicle. These are used, but that does not affect its performance by a huge margin when compared to first hand vehicles. Besides, buying such vehicles is much cheaper than buying first hand ones. The market value of first hand vehicles decline sharply right after being bought. And thus, getting a used one is a smart move.
• You can get a loan amount anywhere between Rs. 1 lakh to Rs. 2 crore. This is a considerable benefit as you can get the amount you want or need.
• You get a flexible loan term between 1 year and 5 years. Depending on the amount, you can pick a suitable time to repay the loan.
• It is easy to get the loan as it involves minimal documentation. You’ll get the loan disbursed fast so that your life goes on as normal.
• You can get up to 100% of the total cost of the Small Commercial Vehicle or Vehicles.
• USP and Benefits of the IDFC First Commercial Vehicle Loan
• You can get up to 100% of the total cost of the Small Commercial Vehicle or Vehicles. You won’t find this anywhere else.
• You don’t need to have any prior experience for commercial transportation.

What are the eligibility factors?

People who can apply can be:

• Individuals
• Partnership firms
• Proprietorships
• One-person company
• Private and Public companies
• Trusts
• Limited Liability Partnership
• Hindu Undivided Family

Documents you’ll need:

• KYC Proof including ID and Address proof.
• Passport size photo
• Give links (individual and non-individual)
• Experience proof documents like driving license, current account statement and registration copy of owned commercial vehicle
• Income proof documents like bank statement of last 1 year, income tax return records, or audited financials for the past 2 years
• Fleet list, which is the list of all vehicles you own along with their supporting documents

Effect of Co-signing Car Loan on Credit Score

Maybe you know someone, a family member or a friend, who needs to purchase a car but cannot do so due to their bad credit score. They really need someone to cosign their car loan. They call you one day since they know you have an impeccable credit score, and now they want you to co-sign their auto loan.

They tell you that this is only a formality, and even promise that their payments to you shall always be on time. You trust and love the person and really want to help them. We know you do, but we would also like you to know that there are certain obligations and risks involved.

Don’t jump in just because a loved one is telling you to do this, since this is a matter of your money. If you lose, it shall be your loss alone. Your concerned loved one won’t be able to help you out. Your credit score may take a hit, which can mean you won’t be able to take loans easily next. Looking out for yourself does not make you selfish. Only when your wealth grows and is protected can you help others.

What does co-signing an auto loan mean?
First of all, it is important to know what you’re getting yourself into. What does it mean to cosign an auto loan? It meanTs that you’ll share the responsibility of repaying the loan on time, just as if it were your loan. If your loved one, family member or friend cannot repay the loan, you are obligated to repay it.

How does it affect your credit?
There are two ways in which co-signing a car loan, or any loan for that matter, can affect your credit. The first way is my affecting your credit score. You, as a co-signer of the loan, are obligated to repay the loan if the primary borrower is unable to do that. In such a case, it shall be entirely your responsibility. A co-signed loan will be seen on your credit report, as if you have taken the loan. If the primary borrower makes a late payment, your credit report and score will be affected. And you know what low credit score means.

Here’s one thing to keep in mind. You are not the main or primary borrower, and thus won’t get monthly statements or late payment notices. You might now even know about your lowered credit score unless you keep getting credit reports every couple of months or so. You may want to get a new credit card yourself and be unpleasantly surprised. Due to the primary borrower’s missed payments, you are not able to get a new credit card or loans when you need them most.

The second way it affects you is by affecting your ability to get a loan. As we said before, due to the primary borrower not making timely payments or missing them entirely, your credit score will be affected. Too much of that, and you yourself won’t be able to get new loans. Pretty infuriating, right?

Advantages And Disadvantages Of Prepayment And Partpayment

Personal loans have the highest interest rates, apart from credit card interest charges for unpaid amounts. The interest of personal loans ranges from 15% to more than 20% at times. These have a premium interest since these are unsecured loans in nature.

Unsecured loans are those which do not ask you to give any form of collateral or security or guarantee of payment. Thus, the lender takes a huge risk by giving such loans. To offset this risk, they seek to get as much of their loan amount as soon as possible by exacting a high interest rate. So for instance, if the loan was for Rs. 100000 and the interest rate was 20%, their given amount would come back to them within five months, but if you take more time than that to repay, you’ll end up losing a lot. Even Rs. 20000 interest for a Rs. 100000 loan is a big amount. However, for borrowers looking to get unsecured loans, this is the thing they need to deal with.

A personal loan, a kind of unsecured loan, is very popular in India as it helps to get over temporary financial problems. These are used to finance weddings, buy medical items or get someone treated at a hospital, finance a vacation, buy a home, or anything one wants. Different banks have different charges and fees for such loans. A customer will have some benefits if they pay either partly or by prepaying the loan.

Full prepayment

If you prepay the loan early on in the loan’s tenure, you’ll be saving a lot on interest especially if it is a personal loan. Generally, personal loans have a lock-in period after which one can prepay the whole outstanding amount.

For instance, if your personal loan is of Rs. 2 lakhs and if the interest rate is 15% for a term of 5 years, your monthly EMI comes down to Rs. 4758. You pay Rs. 29039 within the first year towards the premium along with Rs. 28057 as interest. If you decide to prepay the rest of the amount at this time, you’ll be paying Rs. 57422 less in interest!

The real trick is to prepay the whole amount early on in the loan’s tenure. This allows you to enjoy all the benefits of the loan without suffering the disadvantages which high interest brings on. Even if one reaches almost the end of the loan’s tenure and has some excess cash left, one can prepay the rest of the amount. One still saves money that way.

However, some banks do charge a penalty for doing so. The penalty charge is between 3% to 5% of the loan if you want to prepay. Recently, the RBI has told banks to stop charging this penalty for customers who are prepaying loans.

Very often, banks do charge a penalty for prepayment.

However, this directive still applies only to loans that are taken on a “floating interest rate” basis. If the interest rate for your personal loan is fixed, your penalty shall not be taken away. However, some private and public sector banks do not charge this. Thus, if you have idle cash at hand, you can easily prepay the loan at no extra cost.

Can Paylater and Postpaid Services On E-commerce Platform Affect Credit Score?

On most e-commerce platforms online, when you are buying things, you’ll see an option before paying: Pay Later. This option is very useful of course, but the brutal fact is that this option is there to incentivise people to purchase more. In other words, it is there to ensure that more and more people keep buying at these e-commerce platforms.

These online platforms partner with lenders who are the ones actually giving this service at either a fixed fee or at zero cost.

What you may not know is that paying later at e-commerce stores can affect your credit score. Here’s an example. Capital Float partners with Amazon India and ICICI Bank to offer pay later services to give the facility to Amazon India’s customers. When, while buying anything, you choose this facility, you’ll see this credit line approved by the lender in your credit report.

Here’s another example. Aditya Birla Ltd or ABFL partners with Ola Money to offer pay later service. If you are subscribed to Ola Money Postpaid, ABFL will sanction the transaction which shall be shown on your credit report.

According to industry officials, this type of credit facility is known as Embedded Finance. It is a type of credit card facility or a personal loan.

When using postpaid schemes or pay later services, there are few things to know. During your onboarding processing when you buy something, the e-commerce platform shall tell you who the pay later service partner is. Make a note of that like you would of a credit card company. Treat them as your lender. If you miss payments or delay them, your credit score shall fall. It will get affected.

See the pay later service partner as a credit card company.

Generally, for a certain period the credit is free. However, some lenders can charge a one-time flat fee after you sign up. You need to know of these charges from beforehand.

Again, treat these services or facilities just like a normal loan. Don’t use it unless you really need to. If you have money in your account to pay for the stuff, why use this facility? If you are in a cash crunch, try delaying the purchase for a few months. Chances are, you’ll have more than enough money to buy the things you want.

Additionally, don’t buy too many things with the pay later facility, or use it too many times. As said, this is similar to taking a loan. And when you take several loans within a short span of time, your credit score falls as well.

What is Loan Amortization? - Benefits of knowing about amortization

Amortization is the process which deals with how loan payments are applied in various types of loans. Generally, the monthly payments remain the same as before, and these monthly payments are divided into interest costs. By doing so, your loan balance is reduced, which is also known as paying off the loan’s principal. Doing this also reduces your other expenses like property tax.

Your final loan payment shall settle any amount which may remain on your debt account. For instance, after exactly 360 monthly payments (yes, that means 3 years), you’ll be paying off a 30-year term mortgage. To understand how loans work and how they can aid you in predicting your interest costs and outstanding balance, you need amortization tables.

How does it work?

The best and easiest way to understand the process and phenomenon of amortization is by seeing an amortization table. Anyone taking a mortgage is given an amortization table by the bank or the lender. These help you a lot.

The table is actually a schedule which tells you how much you’ll have to pay each month in EMI, and how much of the EMI will comprise of interest and how much of principal. Regardless of which table you have, all tables contain some common items like:

• Scheduled payments: The monthly payments you need to give are listed month by month individually for the whole duration of the loan.
• Principal repayment: In this variation, after you have paid off the interest, the remainder of your EMIs shall go for meeting your principal amount of the loan.
• Interest expenses: Of your monthly EMIs and expenses, a portion is given for paying off the loan’s interest. This is calculated by multiplying the remaining unpaid balance by your monthly interest rate.
  

While the total payment remains the same for each period, you’ll be giving the loan’s principal and interest in separate amounts per month. At the start of the loan, the interest cost is at its highest. With time, as you keep on paying EMIs per month, you’ll have to pay less and less interest each month.

Types of amortization loans

While there are various types of loans you can get, it is important to know that they don’t all work in the same way. For instance in the case of instalment loans, these are amortized and one has to pay the whole balance with level payments.

These include:

• Auto loans: These are typically for the short time, often for 5 years. You repay the loan with a fixed monthly EMI payment. You can get longer term loans, then you’ll have to give more through interest and even have the risk of your loan exceeding the auto’s resale value.
• Home loans: These are over the long term, typically for 15 to 30 years. These loans do have a fixed amortization schedule, but there are also ARMs or adjustable rate mortgages. With an ARM, one can adjust the interest rate on the repayment schedule.
• Personal loans: These loans are available from banks, online lenders, and credit unions. These are typically amortized, and have terms of 4 years generally, along with fixed monthly payments and fixed interest rates.

Loans which don’t get amortized

There are some loans which don’t get amortized. These are:

• Credit cards: These allow you to repeatedly borrow through the same card, and to choose how you’ll be repaying each month as long as you give the minimum payment.
• Interest-only loans: These loans do not amortize, however, that is only in the beginning of the loan’s life cycle.
• Balloon loans: This loan requires you to make large principal amount payments at the very end of the loan tenure. During the tenure’s early years, you make small payments.

What are the best passive income generating ideas in 2021?

There are many ways to generate an income online. If you’re someone who wants to be location-independent, a passive income stream, or several of them, can work wonders for you!  All you need is a computer and a good internet connection.

Dropshipping

Dropshipping is the action of managing an online retail store to sell items, and using a third-party supplier and perhaps even a dedicated delivery agent to fulfil orders. The difference with Dropshipping and managing your real life store is that you do not need to keep physical inventory. So how do you fulfil orders? You buy inventory as needed from wholesalers or manufacturers.

The benefit with this model is that you do not need a lot of capital to get started. You don’t need to purchase products yourself. In practice, you are merely connecting the manufacturer or wholesaler and the customers. You get a big percentage of the transaction. There is no need to stock inventory and do other administrative functions. You don’t need to know how to create a website, nor do you have to code. All of these you can hire people for. Better yet, you can save a lot by getting ready-made e-commerce websites from sites like Wordpress.com.

Blogging

If you have a hobby you want to write about, or have a hobby, you can start a blog and make good money out of it. A blog is short for web blog. It is an informational website or even an online journal showing the info you put in. The latest posts appear near the top of your websites, and the older ones below. Even better, readers can comment on your posts. You follow up with such comments, keep on giving fantastic posts, create a strong following, and make money in due time.

As to how your blog can generate money, it can do so in several ways. You can do affiliate marketing, display advertisements, and even sell your own digital products. If you want to go the display ads road, you’ll have to have strong SEO skills yourself, or hire one who does. Once related companies see that your blog is getting traffic consistently, they may come to partner with you.

To start a blog, you need to think about a niche, a blogging platform, a domain name, a hosting service and minimal to no design skills.

Digital courses

You can make serious money out of this one. We all have considerable knowledge about something or the other. It can be how to play a sport, how to do coding, how to do business, how to be happy in old age, and so on. You may not know it, but people are actually looking to get help in these things, and they’re willing to give good money in return. This is where you come in. If you can give them digital courses or online training on the things they want to know more of, or to get better at, you can earn a lot. And this is passive income. Make the training once, and watch it earn you money on autopilot. However, this can be expensive upfront since you have to record and develop the course.

E-books

These can earn you passive income too. If you are skilled in something, let’s say in personal finance, your advice can matter to a lot of people who’ll pay good money for it. And once you start getting positive reviews on your ebook, you can start charging even more!

Digital downloads

These are pretty useful as they offer a quick solution to a problem your target audience is having. This is not an e-book, but is a separate product which can still add value to your customers. These can be as simple as something as an excel sheet to develop a budget plan, printable checklist on SEOB and content best practices, social media templates and much more. To make this type of product, you’ll need to do a lot of market research. Only when you know what the customer is looking for and at what price, can you give them that.

Affiliate marketing

You can earn a lot from affiliate marketing when you do it right. Remember this is not a quick solution if you need money fast. It takes time, but can earn you serious money, even on autopilot much like blogging. In affiliate marketing, you promote a product or service. These can be your own, or others, in which case you’ll get a nice commission each time there’s a sale. There are places where you can promote affiliate links like social media, YouTube, blog, podcast, email marketing, and more. You’ll also need to pick a good affiliate marketing platform. Authenticity and trust matters a lot in this business. Selling bad quality things can spoil your reputation, and no one will buy from you. But create a reputation of selling high quality things, and people will come to you themselves in time.

Real estate investing

It costs a lot, and takes considerable time and investment, but it can give you a passive income greater than all the rest combined. However, you also need to know a lot about the real estate world, and your local real estate as well. Remember, there are many types of properties in which you can invest.

Investing in the stock market

This is one of the easiest options since you don’t need to do anything, but you do need to have a sound knowledge about the stock market itself. You earn from capital gains, compound interest and dividends over time.

Investing by Age - How Should you be Investing According to your age

If you are planning to build your retirement savings, you have to know how to invest. After all, it is only when you save and invest over the years before retirement from your job that you can get a big-enough egg nest retirement fund.

It is also essential to know that the same investment strategies are not suited all your life. What works in your 20s won’t work in your 40s. How you invest at each age determines the success of your retirement.

Asset allocation

Before you even start to think about investing, it is important to understand the concept of Asset Allocation. In investing, there are various classes of assets like:

Stocks

Bonds

Cash and equivalents

Commodities

Real estate

Futures and various other derivatives

Each of these asset classes have different levels of risk and reward in returns. These behave differently over time, depending on the economy and several other factors. For instance when the economy is booming, you have confident investors who withdraw money from the bond market and invest in stocks where there is a likelihood of higher profits. The opposite is true when the economy is not good. Generally, bonds and stocks are negatively correlated, but during any financial crisis it is not the case. However, generally, bonds help in the volatility of the stock market.

If you put all your money in one asset class, you’ll lose everything when this asset faces a loss. This is why everyone says one needs to diversify one’s investment portfolio. Diversification enables you to save money in case one asset class fails or goes through a loss. For instance, even if you lose on stocks, you may not have too many problems since most of your savings are on mutual funds and bonds. Asset Allocation is the arrangement of allocation of assets in your financial portfolio. Depending on your age and the number of years you’ve been doing investing, asset allocation can look quite different.

Asset allocation by age

Here is a suggestion of asset allocation through one’s various life stages. Remember, these are suggestions and recommendations only. Your investment decisions shall still depend on your age and circumstances. It’ll also depend on your risk appetite.

A financial advisor can help you considerably, as can online brokers.

Regardless of your age, you should first have 6-12 month’s living expenses saved in the money market, savings account and liquid Certificate of Deposit.

Investing during your 20s

Suggested asset allocation:

Stocks: 80-90%

Bonds: 10-20%

Even after graduating from college, you may still be paying off your student loans. This is a good time to start investing. This can be through a Provident Fund, a Savings Account, or something else. Save what you can, even if it is 10% of what you earn. If you start investing now, you’ll have a huge advantage over those who start investing later. And a lot of people do so. This is also a good time to go for aggressive investment strategies.

Investing in your 30s

Suggested asset allocation:

Stocks: 70-80%

Bonds: 20-30%

If you haven’t started investing in your 20s, this is the best time to do so. This is the time you are or already have established your career. You are still comparatively young to reap all the rewards of compound interest, but still are old enough to be investing a meagre 10-15% of your income.

Contributing to your retirement fund should be a top priority now, regardless of what loans and credit card debts you may have now. You still have at least 40 years of working life left, so make this time count. You can be somewhat aggressive in your investment, but it’ll pay to be play it safe now. Buy bonds for safety.

Investing in your 40s

Suggested asset allocation:

Stocks: 60-70%

Bonds: 30-40%

If this is the time you’re starting your investment at, it is high time to get serious about it. If you started already in your 20s and 30s, it is now time to consolidate and deepen your financial portfolio since during this time you are earning the most you will in your life. To beat inflation, invest in aggressive stocks, but always take advice from a financial advisor.

Investing in your 50s and 60s

Suggested asset allocation:

Stocks: 50-60%

Bonds: 40-50%

You are getting quite close to your retirement age, and so don’t lose focus now. This is also the time to make conservative investments. Switch to stable and low-earning funds since these come with less risk.