PERSONAL FINANCE TOP-UP: AN ANSWER TO YOUR EMERGENCY FINANCIAL REQUIREMENT
In many times in life, raising money is necessary, whether it is for a medical condition, owning a home, or buying a brand new automobile. After all, many loans have been deliberately structured to strip away our requirements and demands. The personal loan is one the loan which we will be explaining in this article. For a century, the loan has been famous because of its services and attributes. Some of its main benefits include the unrestricted existence of collateral and no limits on end-use.
Everyone is stressed over receiving financial help at a time of serious fiscal crisis. Personal loans often sit on top of the numerous ways to get financial assistance. For those, who have already an outstanding personal loan, therefore, the most accessible and easy alternative continues to use a top-up personal loan. Banks accept this loan quickly when they already have the records and background history of the client.
Personal Finance Top Up
A top-up personal Finance is a service to expand the borrowing of current personal loan holders. Undoubtedly, this is the perfect choice for an emergency situation as it does not require any paperwork and takes relatively little time to get allocated for the loan amount. For any personal use that works in the applicants' favor, a top-up personal Finance may be provided.
ELIGIBILITY REQUIREMENTS NEEDED FOR TOP-UP CREDIT FACILITIES REQUIRES—
- A good track record for continuing personal loan repayment.
- Career security
- Healthy CIBIL
- The applicant should have paid the required amount of EMIs in compliance with the qualifying requirements for the loan. In several providers, the deposit varies from a minimum of twelve EMIs.
BENEFITS PROVIDED BY PERSONAL FINANCE TOP-UP
Rapid Disbursal-
As the borrower has to go through the same loan process on his first personal loan, for a top-up on personal finance gets rapid clearance and allocation. In addition, the structure is not a new one between the provider and the applicant. Thus it requires the applicant less time to do the confirmation. This makes top-up personal finance best for crises when you have no ability to go through the fresh loan approval procedures and inconvenience.
Ancillary free-
Top-up personal finance is also unsecured, like any other personal loan, and therefore does not require any collateral or guarantor to be backed up against the debt.
Multifunctional of Essence-
Top-up personal finance includes the same benefit as an extension to the existing personal loan. And the end-use of the loan number, which makes it a multipurpose loan, is not restricted to one such facility. It can be used for health emergencies, restoration of houses, traveling, higher education, purchasing devices or to support the company's short-term demands.
Cheaper than Personal Loan-
The cheaper interest rate is one of the perks of top-up personal finance. The interest rate paid on top-up personal finance is typically a little smaller from what personal loan costs. During the whole period, having it even for 1% cheaper prices lets an individual save a lot.
THE DIFFICULTY.
Beneficial only to the existing client-A personal finance top-up is only available to people who were already operating a personal loan with the same lender. So if a person needs the lender to alter, then this service is not going to appeal to him.
No tax benefits-A personal finance top-up could not carry any tax advantages. Taxes on top-up loans can only be saved if the debit balance is used for house maintenance or education purposes.
Personal Loan Vs Personal Finance Top Up
- In order to obtain resources, a personal loan, and a top-up loan both will be used. If a person is already maintaining a personal loan then the best choice for them is top-up Finance. This is because disbursing a top-up personal Finance takes far less time, although it will take more time to obtain a new personal loan.
- If the person has a decent repayment background and has a decent credit score, so having top-up finance is not hard for him. Whereas it can be a little difficult to get a personal loan as it has some thin eligibility criteria.
- The overall duration of a personal loan is five yrs. while top-up finance will go up until the end of the personal loan, but can only be provided if a minimum of twelve EMIS has already been provided by the applicant.
- When a client goes for a new loan, he has to start all from the beginning. Examining the right provider, filing for the loan, providing documents, etc. Whereas the need for a top-up loan just requires a much smaller procedure, that is, the loan agreement is signing.
- A personal loan is more costly than top-up Finance when we calculate the expenditure of loans.
- A client is free to apply for a personal loan with any of the lenders, while an applicant is limited to applying with the lender from whom he/she has his / her personal loan when using top-up finance.
Top-up Personal Finance is a very useful weapon at the moment of emergencies to tackle monetary crises. It is necessary, however, to have an existing personal loan to benefit from this facility. Before making any decision, it is extremely recommended to evaluate the criteria along with the pros and cons of a top-up Finance.
FUNDAMENTAL FACTORS WHICH EFFECT OF YOUR PERSONAL FINANCE PLANNING
SIGNIFICANCE FACTORS YOUR PERSONAL FINANCE PLANNING
One of the primary reasons we refuse to financially protect ourselves is that we are ignorant of the things that can be done for it. We're doing what we know like the best thing to do, but it might not always be enough. Therefore, understanding what are the main elements that you need to work on when developing a road map for your financial well-being is important today.
We will speak about various factors of personal finance in this blog to offer an idea of how your full financial profile could look alike.
It is important to point out that there are 5 vertices to one's complete financial picture before looking deeper into the problem. They are saving, investing, financial protection, tax planning, retirement planning, but in no particular order.
HERE ARE THE FOLLOWING FIVE ASPECT / FACTORS WITH A WHOLE FINANCIAL PICTURE:
A.Financial Security/ Protection: In life, we can develop many dreams and establish investment strategies to make those dreams come true. Although if we do not cover them with a safety net, the same thing will become a liability. That safety net is security.
THERE ARE 4 TYPES OF POLICY THAT WE ALL REQUIRE. AND THE BELOW ARE:
- Insurance for Mortgage Protection: When you die during the mortgage period, mortgage protection insurance paid off the mortgage. It means that if you die early, the debt or lease on your house, vehicle, land, etc. does not become a burden on your family.
- Term insurance scheme: It is a form of life insurance that makes sure that if you die early, your family or dependents do not have to go through financial distress. The amount insured by permanent insurance, as opposed to some health insurance policies, is higher than the premium amount. Today, whether you measure it right, you will pay for your family's day-to-day costs, your spouse's investment corpus, the obligations such as home loans, and children's schooling in the sum guaranteed.
- Personal Accidental Insurance: When you have an injury and get seriously injured or are partly or completely injured, the insurance provider will pay the sums guaranteed to offset the medical costs and even the loss of profits. In the future, the lump sum fee will be paid to the family members if you die after an accident. However, the liable amount is based on the accident's fatality.
- Insurance for Wellbeing and Serious Illness: Getting health care assures that whether you or any of your family members have become ill, you will not have to pay from your savings. Health care covers the insured medical charges, such as hospitalization, Medical Bills, pre and post hospitalization bills, etc. In the meantime, along with your standard health benefit, you can choose for vital benefits. The insurance provider will pay you the amount agreed if you are afflicted with one of the crucial diseases listed in your agreement.
B.Saving: The urgent requirement of money will arrive at any point. It may be, as ordinary as a car failure or as serious as losing your work. These disaster incidents will, indeed, be resolved provided we have sufficient resources to satisfy the need for. The fund for your unexpected costs should be three to six months of your expenditures as a thumb rule.
Debt tools such as Liquid Funds are perfect ways to store the money expected for emergency purposes. And the three explanations to justify the thought:
- Liquid funds, even though there is no guaranteed return, offer marginally better returns than your savings account.
- These funds are extremely liquid, so after 7 days, you can withdraw the money.
- They bear a marginal risk of credit and interest, therefore your cash is secure.
C.Retirement plans: Retirement is one of the most significant periods of life, and depending on how you have prepared for it, it may be as joyous or as unhappy. For financial preparation, it remains true too. Now, preparing retirement funds is a two-step process. Firstly, saving for retirement, and secondly, generating income after retirement from your assets. and, here are the two phases -
Phase I: Creating a Retirement Corpus: For two key factors, planning for retirement is crucial: income reduction and enhanced life expectancy. Let's say you're going to retire at 60 and live up to 85. How do you intend to cover your bills at a time when you do not have any stable income for 25 years after retirement? Plus, the expenditure will be much higher after retirement than it is now, given inflation, i.e. the increase in costs of goods and services for daily use. For instance, if your monthly expenses are Rs 35,000 right now, in 20 years, it will be Rs 80,000 per month, And you would like to maintain a comparable quality of life. It is now a continuous process to create a fund as large as a retirement portfolio. So, the sooner you start investing, the easier it will be.EPF, NPS, and Mutual Funds Investment Option to Construct Retirement Corpus
Phase II: Revenue generation after retirement: As much as it is necessary to ensure that you save enough for your retirement whilst you are employed, it is equally vital that after retirement you properly manage that corpus. Having the right investments would guarantee that, as long as you work, you have a stable income.
Phases III: Investment opportunities for retirement income generation: STP withdrawal/transfer from mutual funds, an annuity from life insurance, and rental income.
D.Investing: Investing is often confused with savings, or they are considered synonymous. While saving is about setting aside money, investing is putting money/buying assets such as securities, shares, mutual funds, etc., to let your money expand.
Today, in terms of investing, mutual funds, if done correctly, are an outstanding investment choice. Even so, it is important to be aware of selecting the right fund for your investment when investing in mutual funds, else it may become inefficient. It is therefore necessary to make your investment according to the need and horizon of your investment.
So here, the rule of thumb is to turn your dreams into financial targets and place a timeline for them. Then choose a mutual fund that fits the timeline for investing.
TODAY, WHAT FUNDS DOES ONE PRIORITISE ACCORDING TO THEIR FINANCIAL OBJECTIVES?
1 . Long-term goals: Significant milestones such as graduation, schooling for children, their marriage, i.e. the goals for which the period is at least 5 years, are considered long-term goals.
Better opportunities for investment options: Multi-Cap Funds, NPS (only for retirement), Large Cap Funds
2. Mid-term objectives: If you have set yourself a target that needs to be accomplished within three to five years, such as a house downpayment, it may be referred to as mid-term objectives. Hybrid funds, ELSS, short term debt funds such as banking and PSU debt funds are the safest investing options:
Best opportunities for investment option Short Term Debt funds like Banking and PSU Debt Funds, Hybrid Funds, ELSS,
3. Short-term objectives: Short-term goals are the priorities that need to be accomplished within three years. There are several occasions for which one needs to plan funds during this timeframe, from saving for a holiday to save for a phone.
Top opportunities for investment option: Ultra short-term funds. Liquid Funds,
E.Tax Saving point Preparation: Although we are expected to pay taxes according to tax slabs, we will minimize our taxable income to a certain degree with the correct form of investment/purchase. There are, in truth, as many as opportunities for exemptions and deductions from which we can limit our taxable profits.
FOR TAX DEDUCTION, BELOW ARE THE 2 MOST COMMON SECTIONS:
1. Section 80C: Section 80C is the highest tax-deductible pool. You will claim a deduction of up to Rs 1.5 lakh for making separate contributions and expenses under this section. EPF, PPF, NSC, NPS, ULIPs, children's tuition charge, life insurance premium, 5-year tax saving FD, ELSS, Senior Citizen tax saving instrument, SukanyaSmriddhi Yojana, home loan principal sum, are some of the famous tax saving methods under this bucket.
2. Section 80D: You can also claim a refund under Section 80D for the premium cost you pay for your health care coverage and that of your family.
CONCLUSION FOR BETTER END RESULT:
Two aspects that we think are harder than finding Nirvana are being in charge of your finances and getting the ability to make a life decision without caring about money. Nevertheless, getting all the components of a full financial image in one frame means that the financial future is just a dream image!
Regards
Indian financial consultancy corporation private limited
