Types Of Personal Loan Interest Rates

Every bank has a different method of functioning. There are different types of offers and benefits that they offer. They want to keep their customers happy. Hence, they choose to provide user-friendly services.

Interest rate is the rate at which interest is applicable on any amount borrowed from a bank or Non-Banking Financial Company (NBFC). Personal loan interest rates are the critical factors that determine the selection of a loan application. Thus, always compare interest rates from multiple lenders before settling on a loan offer.

There are two types of Interest rates applicable on a personal loan, these are:

• Fixed-Rate of Interest
• Floating Rate of Interest

1. a) Fixed interest rate: In this case, the rate of interest remains constant throughout the loan tenure. Consequently, the monthly EMI amount also remains fixed throughout the loan repayment period. It may help to plan long term monthly expenses.
   
2. b) Floating interest rate: It depends on either the limitation set by the lender or as current market conditions. As a result, the floating interest rate is liable to change periodically, which leads to an increase/decrease in loan tenure or monthly EMI pay-outs depending on whether the rates move upwards or downwards.

Interest Calculation Methods
A personal loan calculator, available on online banking apps, can be used to calculate interest in the following methods:

• Flat Rate method: The interest gets calculated on the total loan amount initially borrowed over the entire tenure of the loan.
  
• Reducing Balance method: As monthly EMIs are paid off, parts of the loan amount and the interest component are also reduced. Thus, the principal loan amount decreases. The interest is calculated on this decreasing loan amount and not the total amount initially borrowed.

Interest Rates for Different Applicants
Most lenders consider some factors when deciding the interest rate applicable to loan borrowers. The following are some points on personal loan interest rates differ depending upon the applicant type:

• Salaried and self-employed: Generally, salaried employees with a stable employment record employed with reputed organizations get the loan at a lower interest rate than independent professionals because they have greater job security and better repayment capacity towards the loan. Self-employed applicants who have stable sources of income can also take these loans from banks.

• Women: Certain banks and NBFCs provide a preferential rate of interest to women. It is to promote salaried women, entrepreneurs, and professionals to fulfil their dreams and be financially stable.

• Pensioners: Pensioners can get special personal loans at a relatively lower rate of interest from banks. Beyond the applicant type, the interest rate depends on the profile of the loan applicant. People with a stable income, decent credit history tend to receive a loan at a lower rate, irrespective of their category.

How do EMI calculators work?

Whenever people opt for loans, they pay it all at once or in instalments, also known as Equated Monthly Installments, as per their loan requirement and loan duration. It is vital to calculate the amount carefully and ensure there are no delays in the payment. Paying late EMIs is penalised, and nobody would want to risk it. However, EMIs make payment facilities organised and structured in a manner where the loan borrower can meet daily essentials without feeling financially helpless.

A simple definition of a personal loan EMI calculator is that it is a tool where loan borrowers enter the amount to borrow, the loan duration, the rate of interest and the processing fee. The calculator will calculate the estimate loan amount along with the amount required for the EMI monthly. Accordingly, the borrower will set a budget to create a balance between the income and the expense.

The device uses a simple formula to derive the loan amount: E = P x r x (1 + r) ^ n / ((1 + r) ^ n – 1).
Given below is the explanation of the formula:

E – It is the EMI amount that the borrower will pay every month
P – It is the amount that the individual will borrow
r – It is the rate of interest calculated monthly
n – It is the duration of the loan calculated in months
Given below are three reasons why loan calculation is essential:

1. Loan amount: It is advisable to borrow loans of amounts that one can pay quickly. People choose appropriate loan amounts depending on the loan EMI calculation so that repayment becomes less of a hassle. By maintaining a low ratio between debt and income, people can avoid defaulting on loan repayment.
   
2. Loan tenure: Shorter loan tenures mean higher EMI payments and lower interest rates. In contrast, longer loan tenures mean lower EMI payments and higher rates of interest. Calculate EMIs for different types of loans using a personal loan calculator designed especially for estimating EMI payments and suitable loan tenures.
   
3. Loan EMI: Loan borrowers with high debt-to-income ratios are at a higher chance of defaulting on the loan. Defaulting on secured loans, like car loans, force banks to repossess the vehicle and put it up for auction, to compensate the loan amount and other dues. Hence, loan amounts should not exceed more than 50 per cent of the borrower’s income.

Manual calculation of loan EMIs leads to human errors. With the advancement in technology, people can use an online personal loan calculator for free. Online banking apps have this feature to help others get accurate and instant results on any type of loan scheme.

Different Types of NRI Account in Indian Banks

An NRI account is opened by a Non-Resident Indian (NRI) or a person of Indian Origin (PIO) with the RBI-authorised bank or a financial institution.

Types of NRI banking Accounts 
It is quite reasonable for an NRI to get confused about what to do with the existing bank accounts. Especially for a person who already has three to four savings accounts in India and is moving abroad for some time, then comes the dilemma of what to do with the bank accounts. The banking services and operations for an NRI account is slightly different from that of regular savings bank account. The following are the different types of NRI banking accounts –

1. Non-Resident External (NRE) Account 
2. Non-Resident Ordinary (NRO) Account 
3. Foreign Currency Non-Resident (FCNR) Account 

Non-Resident External (NRE) Account: 

• An NRE account is opened in India by an NRI to save their foreign earnings. It allows you to transfer your foreign earnings instantly to India. 
• For this, you need to open an NRE account and deposit your foreign currency from abroad. 
• In an NRE account, you can deposit money in any foreign denominations and withdraw it in Indian rupee. At the time of deposit, the amount is converted into Indian rupee and credited to your account.
• The principal amount and the interest you earn from an NRE account is non-taxable in India. 

Non-Resident Ordinary (NRO) Account: 

• An NRO account is an ordinary saving account opened by an NRI.
• NRO account helps NRIs to manage the income earned in India and abroad. This includes rent, dividends, subsidies, pension, or any amount you receive.
• Both foreign and Indian currencies can be deposited in an NRO account, but the withdrawal can only be made in Indian Rupees.  
• Under this account, you can deposit Indian money and manage the services like any other savings bank account. 
• Interest income earned on an NRO account is liable for TDS (Tax Deductible at Source). 

Foreign Currency Non-Resident (FCNR) Account:

• If you are an NRI and wish to open a fixed deposit account in India, then the FCNR account is the preferred choice for NRI services. 
• An FCNR account is opened and maintained in foreign currency. The deposit in FCNR account is not subject to any exchange rate fluctuations. 
• You can open an FCNR account for a minimum of 1 year and a maximum of 5 years. You can withdraw the FCNR amount before completion of the selected term, but the premature withdrawals are subject to penalties. 

There are multiple of NRI banking services available for non-resident Indians to do their banking activities in India. Even NRI online banking is one of the famous banking services for an NRI. 

What are the NRI net banking services available?

Moving to a foreign country for a better standard of living and earnings, but confused about the banking services? This article will take you through the internet banking facilities available for an NRI.

Every bank considers NRIs as its premium customers and provides custom banking tools that fit their requirements. When it comes to banking, there are NRI banking services which extend to online, helping the NRIs to stay back at home (abroad) and do the financial transactions at ease.

NRI internet banking is one of the preferred and most beneficial banking services for an NRI. No more visiting the branch and clarifying the deposit and currency fluctuation rates when everything today is accessible at your fingertip. So, let’s have a look at the net banking services available for an NRI:

• Inquiries – be it an inquiry about your account or a mini statement, with NRI banking online, one can quickly get access to his/her account details, within no time. You can reach customer support for all your queries regarding your account.
  
• Fund transfer – one of the most useful and beneficial banking services of an NRI is the fund transfer. Gone are those days of visiting a foreign exchange centre to transfer the funds to India instantly. Today, the use of mobile banking or internet banking has made it easy for the NRIs to immediately send money, which gets credited in the NRI savings account within seconds.
  
• Requests – this includes chequebook/ DD request, Aadhaar number linking, changing the username or password, changing the two-factor authentication, blocking debit/credit card online, customizing the fund transfer limit, etc.
  
• Alerts – receiving important account-related alerts – including deposit and withdrawal, minimum balance alert, fraud risk management alerts, loan repayment alerts, service breakdown/ server upgrade warnings, etc.
  
• Bill payments – like the fund transfer, NRIs have benefitted a lot with the online bill payment. With a single tap on the mobile, you can pay your utility bills, electricity bills, telephone bills, insurance premium payments, online shopping bills, donations, tours and travels, hotel bills, fee payment, gas/ newspaper bills, etc.
  
• Security features – whether it’s a standard savings account or an NRI account, the security factors are the same for every account. Net banking allows e-security ensuring 128-bit encryption and using second-factor authentication for high-value transactions.
  
• Investment options – these days, every online banking platform provides investment options where an NRI can invest your foreign earnings in mutual funds or SIP or shares. You don’t have to come to India and visit an investment broker for investing in any options.
  
• Loan against deposit online – an internet banking NRI user can avail for a loan against their deposit at any time. The loan will be processed and opened instantly by crediting the loan amount within a day or two.

The online use of NRI banking services is pretty much simple. It has helped the NRIs all across the world to quickly transfer funds from abroad to India without any delay in processing. 

Benefits of Opening An Online Saving Account

Since years, people have been securing their money in the savings accounts of their banks. It ensures mental satisfaction and asset security for all account holders. Those who have a saving account earn interest on it and use it as and when required. They are easily accessible to the respective account holder and offer services like fund transfers from other accounts using IMPS, RTGS, NEFT, or even UPI, where account holders can earn interest on their deposits.

The applicable interest rates range between 3.5 per cent to 7 per cent per annum and differ bank to bank. Customers have the liberty to deposit or withdraw their money by submitting cheques or withdrawal slips. They can also take the help of ATMs to solve the purpose by applying for debit cards linked to their bank accounts.

The key features of saving accounts
A saving account helps customers track the inflow and outflow of money from their accounts. They enable banks to provide passbooks, debit-cum-ATM cards, cheque leaflets, internet banking facilities, bank statements, and even free SMS and email alerts for every transaction made. Bank account holders have unique and personalised account numbers with no limitation on deposits. Linking recurring deposits or even EMIs to the savings account is possible.

Types of accounts available
There are two types of accounts available:

• Minimum Balance Accounts: Initially, customers had to maintain a minimum balance in their account for the same to remain active. This policy varies, like the rates of interest offered by them. The account holder pays a fine for not following the rules and not maintaining minimum account balance.
• Zero Balance Accounts: With a change in banking services, zero balance accounts have also come in to effect. People convert regular saving accounts to zero balance accounts so that they avoid the penalties in future. Zero balance saving account services are also available.

The eligibility criteria
Those interested in opening accounts in banks need to follow some standard eligibility criteria laid down by banks.

1. The account holder should be a resident of India.
2. The age limit to open bank accounts is 18 years and above. Accounts are available for minors as well that are taken care of by parents/guardians.

There are many eligibility calculators online that can help users determine their eligibility to open bank accounts.

Benefits of opening online savings accounts
Technology has emerged as a winner for all the fields of business and banking. It ensures quick and safe connectivity within parties. The accounts used to save resources, such as income, can be tracked and used to make transactions via the internet or mobile banking apps. Online bank account opening with zero-balance helps increase accessibility by making themselves available on online banking platforms. Online documentation services are also available like KYC. Customers can contact helpline numbers through calls and emails for clarifications of queries or report of issues.

What Is A Savings Account?

In a situation where an individual has earned a surplus amount or got funds which they do not want to use and keep it safely, what are they to do? Stuff the funds under their bed? Keep it in a secure location that only they know about? No. Financial institutions and banks have a safe tool that is called a saving account. It is the most lucrative instrument offered by financial institutions and banks. In a situation where an individual has got surplus funds, and they wish to park it in a haven, a saving account comes handy.

The upside to holding an amount in a savings account is that the individual can earn interest on the amount and gets access to it any time they want. A saving account can be helpful in specific situations where imminent funding is required. It is a safe banking tool used by customers to make sure their money is always accessible. Funds can be deposited in the account through cash or cheques. As the name suggests, it is a great way to save funds for future.

One of the most famous by-products of a saving account is a zero balance saving account. Several banks have evolved with the ever-growing technological industry and provided their customers with the online option as well. These features have revolutionised the banking industry and made things easier than ever. Generally, these accounts are offered to individuals with weak economic backgrounds. A zero-balance account holder need not maintain any minimum balance. Primary KYC documents are required for opening these accounts.

Reasons why opening a saving account is a reliable option always –

1. Different accounts offered by these institutes nowadays come with desired features and provide links to pay bills, help in making secure transactions to the account holder as they log into their account.

2. Holding a saving account can quickly help an individual’s financial status as there is a limit on the number of transactions they can make with the account.

3. Generally, a saving account offers an interest rate which is slightly higher than the inflation rate for keeping the value of money stable.

4. Any unexpected situation that requires immediate funding can be dealt with if an individual has the account intact.

5. Financial institutions and banks have also customised the account depending on the specific types of usage.

Online saving account opening at the same bank as an individual’s primary account can provide many benefits, and it can be convenient for them. As transfers between accounts within the same bank or financial institution become convenient. A lot of banks also allow an individual to open more than one saving account that can be handy if they want to keep track of their savings.

All You Need to Know About A Pension Account

Savings account is the most basic type of bank account that banks offer. This account offers interest income along with moderate liquidity as well as a safe avenue to park funds.

Banks offer customised saving account for different types of customers. One type of saving account that they offer is called a pension account. This account is a special one for pensioners to receive credits for their pensions from their companies or from pension funds.

This account can be opened by:

• A Central Government or Civil Ministry employee who is covered under the Central Government Civil Pension Scheme. This scheme is operated by Central Pension Accounting Office, Department of Expenditure and Ministry of Finance
• Defence employees under Ministry of Defence (Army, Navy, Air Force) covered under Defence Pension Scheme of the respective Pension Sanctioning Unit i.e any retired or retiring Officer or Defence Civilian
• Employees working in an organization with 20 employees or more that is covered by Employees Pension Scheme.
• Existing members of ‘Members of Employees’ Family pension scheme.

A pension account is a zero-balance saving account. This means that the pensioner does not need to maintain any minimum balance in the account. The entire pension amount can be withdrawn without any fear of penalties. Generally, for a regular savings account, each bank has some minimum balance requirement. If this is not met, banks debit a certain penalty from the account. However, there is no such condition for a pension account.

Most banks provide regular saving account benefits to this account such as free cheque book, net banking and mobile banking apps, free ATM cum debit card. They also pay some amount of interest on the pension balance. It can be used to make bill payments as well.

The pensioner will need to submit the bank account details to the employer so that it can be added to the pension payment order. This PPO once filled will have to be submitted to the bank following which the pension will be collected. The bank will submit the request to the employer and pensions will get paid to the account every month.

However, this account can’t be opened at any time. It must be opened in the individual’s name after retirement or 6 months before retirement.

How to open a pension savings account?

It is possible to do zero balance account opening online. The account opening procedure is streamlined and once you fill up a form, the bank’s customer care executive will contact you to get your documents collected.

It is very easy to open zero balance saving account offline as well. You will need to go to the bank branch and fill up an account opening form and provide the required documentation. Once this application is processed, the bank account will be opened.

Documents required for a pension savings account

• Passport size photos
• Address proof (Passport, Aadhar card, Voter ID, Driving Licence, Electricity bill, Telephone bill, Gas bill, Lease rental papers, Purchase Documents, Home loan, Ration card)
• Identity proof (PAN card, passport, Aadhar card, Voter ID, Driving License)

This account can be opened in an individual name or jointly with the spouse. It is very easy to operate this zero-balance saving account and it can help the pensioners manage their funds post retirement.