Skip to main content

Education Loans offer Tax benefits and Home loan offer Interest rate benefits

Download Tax Saving Mutual Fund Application Forms

Invest In Tax Saving Mutual Funds Online

Buy Gold Mutual Funds

Leave a missed Call on

94 8300 8300

 

Going to a financial planner for the first time? Be ready for this question — How much have you borrowed? But a financial planner won't consider all loans as bad. If there is a big amount on the credit card, he will ask you to pay it immediately. If you are short of cash and the bill is too high, he may even advise you to take a personal loan. After all, a personal loan comes at 15- 20 per cent whereas credit card companies charge over 40 per cent annually. But some loans like an education loan have actually created an opportunity for the generation to fund themselves even before they are his goals achievable. It boosts his capacity to acquire assets. It gives an individual confidence to fulfil his materialistic aspirations.

Provides tax advantage

There are two loans that immensely help an individual by getting her some tax relief. These are home loan and education loan. Any time any individual takes a home loan from an HFC ( housing finance corporation) the interest that he pays and the principal payback up to 1 lakh gets exempted from tax liability every financial year during the lifetime of a loan account. The interest amount is capped at 1.5 lakh if it is for a self- occupied house and if it is for a let- out property, there is no cap on the interest amount exempted An education loan creates a culture encouraging youngsters to pursue their academic dreams and not feel paralysed due to unavailability of funds at their personal level. This deduction u/ s 80( E) is allowed only if the education loan is taken from any financial institution or approved charitable institution. Education loans from relatives and friends do not qualify. Also, the exemption u/ s 80E is allowed to be claimed in the year in which the individual starts paying the interest on the education loan and in seven succeeding years.

Building credit history/ score

Any loan taken from a financial institution puts the borrower's PAN under observation throughout the loan period. The Cibil ( Credit information transaction details of every borrower from the financial institution that lends the money to the borrower. Since the records are centralised with Cibil, every bank before processing anew application checks the applicant's PAN with Cibil to check if the borrower has had any defaults on his part on previous loans. The credit score plays a critical role in the loan approval process. An individual's Cibil credit score provides a credit institution with an indication of the probability of default of the individual based on his/ her credit history that is, the past pattern of credit usage and loan repayment behaviour. Credit history is an important part of financial record. And loans play an important role in building one's credit history.

Inculcating a sense of financial discipline

When an individual is taking a loan he is giving a commitment to the lending institution to pay equated monthly instalments for the lifetime of the loan. He is ensuring that his accounts have sufficient balance to pay an instalment every month for the loan he has taken. This builds a sense of financial discipline in the person. The person also understands that if he defaults, he would be ruining his credit record with Cibil which will make his/ her new loan applications in future difficult to get approved.

Financial independence

Gone are the days when you would turn to family and friends for financial help. With the loan eligibility an individual can always borrow money from a lending institution and set out on the path of financial independence. The only favour you would need from your close relatives and friends is to ask them to be your guarantor and assure them of your repayment capability through EMIs. Loans have helped people become responsible and mature in their financial transactions. On a softer side it has benefited individuals become confident and competent in managing their financial life. When should loans be avoided? Watch out for the following when deciding to take a loan.

Is a loan being taken for an appreciating asset or depreciating asset? Any loan taken on an appreciating asset like a house or education loan that builds human capital value, creates financial leverage i. e. the borrowed money creates more money than it costs. Tax exemptions, capital value appreciation and increase in human capital value drive leverage. Loans on depreciating assets like electronics and cars must be avoided unless you don't have the lump sum to make 100 per cent down payment. Is this loan an unsecured one? Home loans and auto loans ( commonly known as secured loans) are likely to be better than unsecured loans because secured loans are cheaper and secured loans impact one's credit score favourably. Credit card loans and personal loans are two prime examples of unsecured loans that must always be avoided. Is a loan being offered at a competitive rate? Understanding the cost of borrowed money is very important. If the loan product is not competitively priced, it must be avoided.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Franklin India Bluechip
      4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
      4. Birla Sun Life Front Line Equity Fund
      5. Franklin India Prima

C. Mid and SmallCap Funds Invest Online

      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
      5. Birla Sun Life Dividend Yield Plus
      6. SBI Emerging Businesses Fund
      7. HDFC Mid-Cap Opportunities Fund
      8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

      1. DSP BlackRock MicroCap Fund

2.Franklin India Smaller Companies

E. Sector Funds Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
      3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

      1. DSP BlackRock Tax Saver Fund
      2. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund
      4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

Popular posts from this blog

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

Mutual Fund Review: HDFC Index Sensex Plus

  In terms of size, HDFC Index Sensex Plus may be one of the smallest offerings from the HDFC stable. But that has not dampened its show, which has beaten the Sensex by a mile in overall returns   HDFC Index Sensex Plus is a passively managed diversified equity scheme with Sensex as its benchmark index. The fund also invests a small proportion of its equity portfolio in non-Sensex scrips. The scheme cannot boast of an impressive size and is one of the smallest in the HDFC basket with assets under management (AUM) of less than 60 crore. PERFORMANCE: Being passively managed and portfolio aligned to that of the benchmark, the performance of the index fund is expected to follow that of the benchmark and in this respect, it has not disappointed investors. Since its launch in July 2002, the fund has outperformed Sensex in overall returns by good margins.    While every 1,000 invested in HDFC Index Sensex Plus in July 2002 is worth 6,130 now, a similar amount invested in Sensex then wo...

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...

National Savings Certificate

National Savings Certificate Here's everything you need to know about the 5-year savings scheme offered by the Government This is a 5-year small savings scheme of the government. From 1 July 2016, a National Savings Certificate (NSC) can be held in the electronic mode too. Physical pre-printed NSC certificates have been discontinued and replaced with Public Provident Fund-like passbooks. What's on offer The minimum amount you can invest in them is Rs100 and there is no upper limit. Under this scheme, all deposits up to Rs1.5 lakh qualify for deduction under section 80C of the Income-tax Act, 1961. The interest earned is taxable. You can invest in multiples of Rs 100. These certificates can be owned individually, jointly and also on behalf of minors. The interest rates for all small savings schemes are released on a quarterly basis. The effective rate for NSC from 1 October to 31 December is 8%. The interest is calculated on an annual compounding basis and is given along w...

Different types of Mutual Funds

You may not be comfortable investing in the stock market. It might not seem like your cup of tea. But you can start by investing in Mutual Funds. Many first-time investors invest in Mutual Funds. This is because they do not know how to invest in individual securities. Basic information on Mutual Funds People invest their money in stocks, bonds, and other securities through Mutual Funds. Each Fund has different schemes with specific objectives. Professional Fund Managers look after these schemes. Your Fund Manager could help you invest in a scheme that suits your financial goal. Functioning of Mutual Funds You could make money through Mutual Funds in different ways. A single Mutual Fund could hold many different stocks, bonds, and debentures. This minimizes the risk by spreading out your investment. You could earn dividends from stocks and interest from bonds. You could also earn capital by selling securities when their price increases. Usually, you could choose to sell your share any t...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now