What is CIBIL and how do you interpret your credit score?

What is CIBIL and how do you interpret your credit score?

A CIBIL credit score is a three digit number that acts like a summary for your credit history and credit rating. This ranges from 300 to 900 with 900 being the best credit score you can get. The closer you are to 900, the better are your chances of getting approved for a loan.

If you don't have a credit history, you will have a credit score of -1. If you have a credit history of less than six months, your credit score will be 0. Credit scores take time to build up and usually it takes between 18 and 36 months of credit usage before you get a decent credit score.

Factors that will reduce/affect my credit score:

1. Late/missing payments

Every time you miss a payment on a loan or are late in paying it by more than 90days, an entry is added to your credit report and stays there for seven years. This proves that you are not able to handle existing debt obligations.

2. Increased spending on credit cards

An increase in spending on credit cards indicates that you are not able to meet cash obligations and puts pressure on you for repayments in the future. While some amount of spending on credit cards is good, too much could be bad. 

3. Large amounts of unsecured loans

Credit cards and personal loans are unsecured loans. While they are the easiest to obtain, they are also the ones that have the highest rates of interests. The larger the amount of unsecured loans, the larger is the payment you have to make.

4. Credit Hungry behaviour

If you have made a lot of applications for loans, lenders will look at you with caution. This behaviour shows that you are suddenly taking on too much debt and may not be able to repay them on time.

Disclaimer - All information in this article is sourced from various websites. This article is compiled by team at Moneyfinder and any content is not owned by us. This information is true as on 28th December 2012

State Bank of Bikaner and Jaipur offers discount on online home, auto loans.

State Bank of Bikaner and Jaipur offers discount on online home, auto loans.

MUMBAI: Now, get discount on online purchase of home loan and auto loan. State Bank of Bikaner (SBBJ) is offering a 10 basis points discount on home loan and 25 basis points discount on online purchase of loan. The country's largest bank State Bank of India is likely to follow its subsidiary.

SBBJ has seen increase in applications with the online offer. For auto loans above 10 lakh, the bank is offering 25 basis points discount. The bank is offering 10 basis points discount on home loans of any amount.

"We have seen good response after we rolled out this scheme," said SBBJ managing director Shiv Kumar. "Large public sector banks are studying our model and would follow us soon."

The bank has waived off processing fee and pre-payment penalty. It is sanctioning 200 auto loans and 70 home loans through online every month. Home loans have grown by 12.1% year-on-year in November, compared with 16.5% in the same month a year ago.

State-run banks are hit by high non-performing loans in the corporate sector. The focus has shifted to retail portfolio. To push retail loans, public sector banks are offering auto loan free with home loan.

Disclaimer - All information in this article is sourced from various websites. This article is compiled by team at Moneyfinder and any content is not owned by us. This information is true as on 28th December 2012

Happy Ending Home Loans by Axis Bank - The Review

Axis Bank launches "Happy Ending Home Loans": Loans with the last year’s EMIs waived

Pay on time, and have your last 12 EMIs waived off 

The Review by Moneyfinder.

Axis Bank, India's third largest private sector bank, today announced the launch of "Happy Ending Home Loan" a unique home loan product with a built-in EMI waiver scheme. As long as customer pays his EMIs on time, the product would waive the last 12 EMIs automatically.

The product would be offered at the same rates as a regular loan, and would be applicable to new customers (Resident Indians) under Floating rate option. The EMI waiver would be offered to all loans with an initial tenure of 20 years or more that cross their 15th year with Axis Bank. Any customer who pays EMIs on time would be automatically eligible for the benefit. As with the standard Axis Bank home loan, Happy Ending home loans would come with zero prepayment penalty.

For a customer taking a home loan for Rs. 50 lac at 11% floating rate, the EMI per lac of loan size would be Rs.1, 032. For such a customer taking a Happy Ending home loan, the EMI waiver would be worth upto Rs. 6.19 lac.

Speaking on the occasion Mr. Jairam Sridharan, Head Consumer Lending & Payments, Axis Bank said, “Every customer wants to pay their loan EMIs on time. When someone has been a loyal customer for a long time, and has been very disciplined with their EMI payments, we would like to reward them for that behavior and show our appreciation for their business. Happy Ending home loans is our attempt to do that.”

Says, Mr Devesh Susania, Head, Research at Moneyfinder. “Axis Bank is offering a floating rate of 11 per cent, according to us, for a loan of INR 40 lakhs for 19 years (as 12-month EMI will be waived off), the effective rate of interest would be 10.75-10.80 per cent,”.

However, for an advantage of 20 basis points, is it worth holding on to debt for 15 years? Maybe not. At present, there are many banks that are offering a lower rate of interest than Axis Bank. Like the country’s largest lender, State Bank of India, is offering a floating rate of interest of 10.4 per cent for loan amounts ranging between Rs 30 lakh and Rs 75 lakh. You will save 40 bps more than what Axis Bank’s product will help you save (assuming the rate of interest will remain constant for the entire loan term).

Similarly, PNB is levying an interest of 10.5 per cent for loans less than Rs 75 lakh and 10.75 per cent for a loan more than that. Union Bank of India is offering a rate of 10.5 per cent for loans up to Rs 30 lakh and 10.75 per cent for a loan of Rs 30-75 lakh.

Says Harsh Roongta of Apnapaisa.com, “It makes sense to opt for a bank offering a lower rate of interest instead.” He adds, “The problem with this product is that the benefits are very delayed. Typically, a loan gets repaid in seven-eight years. Therefore, to wait for 15 years for EMI waiver will be very long.”

Experts say the other advantage for borrowers is Axis Bank is offering the same rates for loans with EMI waiver scheme and ones without this option. Says a public sector banker, “By waiving off Rs 6 lakh, the bank is at very little loss, as its main income is the earnings from interest. As for the customer, the bigger burden is the interest cost. That, towards the end of the loan term (15 years and onwards), is only a small percentage.”

We believe that people looking for long term home loans would be better off with Axis, but others are better of sticking with normal Home loans, wherein shorter tenures with smaller interest rates should suffice.

Disclaimer - All information in this article is sourced from various websites and Axis bank web site. This article is compiled by team at Moneyfinder and any content is not owned by us. This information is true as on 28th December 2012.

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