Loans

Loans have become an inevitable aspect of our life, required for many reasons including personal or professional. Loans are classified into secured and unsecured loans.

New home buyers often get confused about whether they should apply for a loan from a housing finance company (HFC) or a bank. The liquidity crisis brought about by the Covid-19 pandemic has hit the non-banking finance companies (NBFCs) hard.

A home is a lifetime investment for many in India. So, the buyer wants to ensure that the house they buy meets all their requirements - convenience, location, size, quality of materials used and more.

Payday loans are both easy and deceptive. Without a doubt, you will procure immediate cash in the event of an emergency.

Secured loans give borrowers the option to get funds without worrying about selling their assets or changing their key financial plans and goals.

A payday loan is an ultra-short, flexible amount, high-interest loan that is offered based on your salary. They are also called ‘Instant Loans’ owing to their quick disbursal and completely online application process.

A home loan is the only option for many of us to fund our dream home. Shopping for the best home loan in the market is a meticulous process. The current home loan market is very competitive and most banks offer similar interest rates.

Buying our dream car is an important milestone in everyone’s lives. A vast majority of us allocate a part of our monthly savings towards this goal. Car down payments do form a considerable part of the ‘Dream Car’ project and the higher the down payment, the better the car loan terms you can avail.

In India, gold is not only an investment form, it is considered a status symbol in some cultures and even believed to bring good fortune by many. This is why many Indians prefer investing in physical gold such as jewellery, coins or gIn India, gold is not only an investment form, it is considered a status symbol in some cultures and even believed to bring good fortune by many. This is why many Indians prefer investing in physical gold such as jewellery, coins or gold bars instead of choosing other modes of investments like futures and exchange-traded funds. Many families prefer to accumulate gold and pass it on to future generations as part of their legacy. Some of the other investment options that are preferred by Indian investors include real estate and fixed deposits since these are believed to yield better returns in the future. Real estate requires big investment whereas fixed deposits can be used for small investments. Here, we will explore the distinct characteristics and benefits of gold as well as FD investments. Investors can look through some of the comparative points before making a selection between the two. Why Should You Invest in Gold? In India, certain auspicious days of the year such as, Akshaya Tritiya, Dhanteras, Diwali, etc, see an influx of people who invest in gold. This is because of the belief that buying gold these days can prove beneficial. Apart from the cultural factor, gold is also considered a good diversification to an investment portfolio as it helps in reducing the overall risk. Many experts recommend about 10-15% of gold investment in a portfolio. This can be bought in the form of gold bonds, ETFs, or fund of funds (FoFs). The biggest advantage of gold investment is liquidity. Investors like to invest additional funds in these if they can enjoy the flexibility to withdraw whenever a cash need arises. Hence, liquidity is an important feature offered by gold investment. People can buy or sell physical gold at any establishment that deals in this precious metal. Many banks offer low-interest loans against physical gold as collateral. Why Invest in Fixed Deposits? A fixed deposit (FD) is a hassle-free investment tool offered at all banks. It guarantees a fixed interest, which is told during account opening. You can open it at any private or government bank or NBFC. When compared with regular savings accounts, FDs offer higher interests. Easy opening, safe and fixed returns make them a popular investment choice among Indians. If you’re just getting started with investing, then FDs are a great option. You can choose a tenure ranging from 10 days to 10 years. For years, regular Indian investors have relied on FDs to park their funds safely and to build the habit of saving for a rainy day. Gold vs FD: What are the Differences? Risk Exposure - Both gold and fixed deposits are considered as low-risk-free investment alternatives. While the price of gold tends to be volatile in the short term, it has generated positive returns in the long term. It acts as a hedge against inflation and also currency fluctuations. When it comes to FDs, these offer guaranteed returns as per the prevailing interest rate and are not influenced by external factors. However, the returns generated from an FD depend upon the tenure chosen. The longer the FD tenure, the more returns can be generated. Rate of Return - Gold investments can generate a substantial rate of return in the long term. This form of investment is worthwhile since it provides inflation-beating results as per historical data. Fixed deposits, on the other hand, offer fixed returns which are pre-decided by the bank at the time of opening of the account. FD returns are guaranteed, no matter the amount deposited. Senior citizens can enjoy higher interest rates (0.50% – 0.75%) in FDs as compared to general citizens. Liquidity - Gold investment is a preferred choice among investors who are looking for easy liquidity solutions. Gold investment can be made in various forms like digital gold, Gold ETFs, sovereign gold bonds, Gold mutual funds, etc. These investment forms come without the hassles of storage and making costs generally seen in gold jewellery. While gold investment is liquid, returns on gold largely depend on market factors. Thus, investors must be well-versed with market conditions before trading in gold. Fixed deposit plans can be liquid depending on the financial institution that these are opened with and its policies. While fixed deposits can be liquidated before the maturity date, many institutions charge a penalty on such withdrawals. In case an investor requires cash before the FD maturity, it is best to choose banks that offer a penalty-free liquidation of FD. Loan Against Investment – Many banks and financial institutions offer a loan of approximately 80% value against gold and FDs. Investors can avail of a loan against fixed deposits and gold from banks, NBFCs (Non-banking financial company) and other financial institutions. These are offered at very competitive interest rates and are usually lower than the rates of unsecured loans such as personal loans. Since 2020 saw a surge in the value of gold, RBI announced an increase in the LTV or loan to value ratio to 90%. Thus, a gold deposit of Rs. 1 lakh that would have fetched a loan of Rs 60,000-75,000, can now attract a loan of Rs. 90,000. This can greatly benefit investors. Income Generation - Gold investments are ideally not meant to generate income. Gold can be looked at as an asset and can help in generating wealth in the long run. In the case of FDs, investors who opt for periodic pay-outs with monthly frequency can get monthly returns. This can help in short-term income generation as compared to blocked funds in the case of gold investments. Taxation - Returns from gold are categorized as ‘Capital Gains’ and investors can benefit due to indexation. However, interest earned on FDs is taxable as per the prevailing income tax rates. Conclusion Investors who are looking for long term investments in gold can fetch higher returns and also save tax but are dependent on market volatility. FDs can fetch comparatively lower but guaranteed returns and are generally not affected by market fluctuations. Before making an investment choice, investors must conduct due diligence and weigh their risk appetite against the chosen investment. FAQs Is it better to invest in gold or FD? Gold and FDs offer different rates of return and across different periods. Gold investments are preferred for liquidity and long-term returns. FDs are preferred for guaranteed returns and hassle-free investment. Is it the right time to invest in gold? Gold is one of the most preferred forms of investment among Indian investors. Since inflation is likely to spike shortly, it makes sense to use gold investment as a hedge. Are gold bonds worth buying? Gold bonds fall under the low-risk investment category and are therefore ideal for investors who have a low-risk appetite. Compared to physical gold, purchasing and selling SGBs is cheaper. Hence, for investors who are considering a long-term investment avenue that can generate good returns, a gold bond can be an ideal choice. Can you lose money in a fixed deposit? Any FD investment with a bank is insured under the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme. This covers deposits up to Rs. 1 lakh for principal component and also interest. Thus, in case the bank goes insolvent, the FD investment remains safe. Is it good to invest money in a fixed deposit? FDs are a safe investment option. For investors who are looking to diversify their portfolio and minimise the risk element, FDs can make for a good investment alternative since these offer guaranteed returns.old bars instead of choosing other modes of investments like futures and exchange-traded funds.

Indians are known for their love for gold across the world. India is one of the biggest importers of gold in the world. Gold is considered to carry significant value and also as a source of potential capital appreciation for the future.

Anyone can have a financial emergency. We all try and save to meet such emergencies. However, sometimes you are required to seek loans to meet these emergencies.

No one can predict when an emergency would strike. Often, an emergency results in a lot of financial pressure on an individual’s cash flows. To get immediate cash during an emergency, people opt for a personal loan from banks, NBFCs and digital lenders.

Business loans are required at various stages of business activities like expansions, purchase of working capital, equipment etc., so as to maintain consistent cash flow for ensuring smooth business operations. Business loans carry an interest charge which is deductible as an expense from your gross income.

The current financial scene is flooded with numerous loan products that give instant access to cash for all your needs. Though there are many loan products available in the market, the biggest drawback is that they all take a considerable amount of time for the application process and approval. These loans do not come in handy during emergencies.

In the simplest of terms, debt consolidation is the process of converting multiple debt obligations into one single loan amount with benefits like lower interest rates, flexible payment period etc.

Have you ever found yourself in a financial dilemma where you needed money immediately but no means to get that? There is one relatively-less-popular solution that you can fall back on in such cases - you can take a personal loan on your credit card to meet emergency cash needs. 

A financial need can sometimes push buyers to borrow loans that are easily available from banks and financial institutions. While this is good for the lender, it is not often positive for borrowers.

The Covid-19 pandemic saw various relief measures being approved by the RBI to ease the financial burdens of individual borrowers. These measures were then implemented by banks and other financial institutions to reach each and every eligible borrower.

Loan settlement is often mistaken as loan closure. But they are not the same. Loan closure is when you pay off all your EMIs on time and complete repayments as scheduled. In this case, the lender closes your loan account on payment of the final EMI and issues a NOC (No Objection Certificate).

Moratorium period and grace period are two terms that are often confused to be the same. These two terms, however, have many key differences.

In recent years, factors such as, fast-changing lifestyles and freely available credit have induced many individuals into borrowing large sums of money that may be beyond their capacity to repay.