How to get loan without interest in India

 loan without interest in India

 

You can get a loan without any interest by charging a security deposit, which varies in different states Pushpa Lall Mishra, director, Dun & Bradstreet.

 

Loan vs savings:  A senior citizen may have enough money saved and can easily afford to spend it. But what about those who have neither enough money saved nor enough loans/credit on their credit cards? Here’s how to make the most of your money even as you progress into retirement.

 To start off with, assess your goals. Can you travel the world with your saved amount? If so, do you need to spend all your savings in a year to achieve that goal? Or can you cut back on some of the expenses and still get your goal? Once you’ve decided, you’ll know whether you need to be saving cash or paying your credit card bills regularly.

 

Many people make the mistake of putting the entire corpus of their corpus into regular credit cards. That’s one of the reasons why savings rates are so low in India— you spend more than you earn and the returns are negligible. If you can split your corpus, do this instead. Go for the high-interest and low-interest cards (which are also quite available in India) and pay off your bill every month. Remember to deduct all the interest charged from your savings at the end of the month. This can be a lot of money.

 

While a lot of companies offer this, you can also invest it in a range of savings and investment products. You can invest in mutual funds and insurance policies and enjoy better returns. If you don’t want to commit your entire corpus to this, you can start with a monthly investment of Rs100 or Rs500 in a diversified fund or an SIP of up to Rs1 lakh a year, and invest the rest.

 

Get expert advice to maximise your returns. This is one of the most important aspects of making the most of your money. If you have expertise in the field, you can also get help from your bank or credit card issuer and generate more returns.

 

Set up your health fund:   Save for your health needs in a health mutual fund, which is a systematic investment plan where you invest in a portfolio of mutual funds based on your need. One can consider a mix of equity-oriented, debt-oriented, balanced funds and ETFs (exchange traded funds), depending on your age, risk appetite and investment horizon.

 

Mutual funds have low expenses and tax savings. I have seen the returns generated in these over the years and would not recommend them as an easy route to building wealth. It takes a lot of experience and risk tolerance to manage this. At times, you might have to take equity-oriented products for longer periods of time (with a little income). Alternatively, you could also look at fixed income mutual funds and ETFs. This way, you can reap the rewards of inflation, which works out to your income, even when your interest is being paid.

 

To invest in equity mutual funds, you need to invest an amount of Rs10 lakh a year (total corpus at the end of the year). An amount of Rs1 lakh is the minimum investment and the maximum you can invest is Rs50 lakh a year. For those with a higher income, it is advisable to invest a higher amount. The riskier the investment, the higher the returns, provided you are good with your money.

 

You also need to consider your tax liability on the fund that you are investing in. Equity mutual funds get a deduction up to Rs1.5 lakh a year, so, these are good options. You can get tax benefits on dividend as well.

 

 

For more information, go to banks or mutual fund websites. Bank loans or personal loans: It is very common for people to have loans from banks. Many times they are not sure about how they should go about it. From a financial standpoint, what is important is to identify the amount of debt you want to take, the interest rate that you are comfortable with and the repayment schedule for the debt.

 

Also, consider the loan to income ratio (LTR), which is the percentage of your total income used to repay your debt. LTR is lower than your debt to income ratio (DTR). Your DTR is the actual amount you are repaying, while your LTR is the total amount you are paying as interest on all your debt. Generally, if your DTR is higher than your LTR, your finances will remain under control and you can easily make your loan repayments on time.

 

Also, the interest rate of the loan should be similar to the current interest rate that is offered by the banks. Also, you need to make sure that the loan is secured, and it has a repayment schedule to give you ample time to repay your loan. A secured loan will also have certain guarantee.

 

These are the three basics that you need to follow to apply for a loan. From there, you can decide on your personal loan eligibility.

 

• Gain from debt-linked saving plans (DLPs):  The best way to build wealth is to use debt to build wealth. Debt provides you the best asset when you build a corpus for the future. An important thing to understand is that an amount that is available for investment should be held in a liquid form. For the right amount to be used, this should be an amount that is liquid or with a time deposit that can be liquidated anytime. 

      Many people have started to open investment accounts under this scheme or are                looking to open such accounts. You can go through various mutual fund websites              and find good schemes that suit your risk appetite and requirement.

For more information, go to banks or mutual fund websites.

Vaibhav Kapoor, founder and chief executive officer, Paisabazaar.com

 

• Use deposits and fixed deposits:  The best way to earn interest is to keep your money in fixed deposits (FDs) or a bank balance. As the interest on FDs is paid on a weekly or monthly basis, there is no risk of running out of money. Use these accounts to save for your children’s education, career goals and retirement. By using a combination of fixed deposit and saving accounts, one can earn the highest interest rates. Vikas Mehta, founder and chief executive officer, ClearTax.com

 

• Start early:  Financial decisions should be a part of your life from an early age. Start saving money as early as in your teenage years and continue saving from the time you move to the workforce. Invest wisely in equities to get higher returns. By starting early, you are more likely to build wealth faster, by avoiding the risk of ill-timed investment decisions.

Start investing for the future and stop day trading: It is important to invest consistently and intelligently. One should invest money in an instrument that will help them meet their future financial goals. Don’t invest in day trading that can sometimes backfire. I would suggest that you use mutual funds as the lowest cost option. Mutual funds are long term investment options, as the period for investment in a mutual fund is 10 years or more. There is no need to invest in shorter term options such as short term funds, money markets and ultra short-term funds, which often go out of business.

 

Take tax deductions and tax exemptions, invest through right instruments: Make use of the various tax benefits that are available. A variety of tax benefits such as medical insurance, tax deductions on home loan interest and tax-free bonds, are available to investors. Furthermore, there are numerous tax-saving instruments such as equity-linked savings scheme (ELSS) and tax-saving mutual funds. Investments such as ELSS and NSC enable investors to avail a tax break for a minimum investment of Rs1 crore.

 

Investments should be made using the right instruments. Apart from large investments such as house property, the right amount can be invested in small savings such as mutual funds or bank fixed deposits.

 

• Savings:   I nvestors should reduce the quantum of their expenses. Investment helps you build a portfolio that can generate steady passive income that is tax-free. While you can contribute a small portion to a tax-saving mutual fund, it is advisable to save for your children’s education and/or future needs through other avenues .

Amritha Pillai, assistant director, personal financial planning, HDFC Ergo General Insurance Co. Ltd

Start saving early and pay off your loans: Setting up a regular saving plan helps you in avoiding future financial shocks and giving enough capital to earn a higher interest rate on your investment. Make regular investments in the form of term deposits or a diversified portfolio of liquid and ultra short-term investments such as liquid fund, small savings, National Savings Certificate (NSC), gold and recurring deposits. These investments provide a liquid and safe means to earn a decent return while not exposing you to any long-term risk.

As an individual, you can open an institutional SIP of Rs5,000 for up to five years in a mutual fund. You can make it a monthly contribution or a lump sum.

 

• Don’t be a day  trader:  Trading is very risky and it is important to take a serious look at your investment strategy before jumping into day trading or making big purchases. You will end up losing money in the long run. Keep in mind that day trading is not easy. You can use tools such as TMA (Trade Management Analyst) for you to track the performance of your trades. TMA will give you a profit and loss forecast for your trades. Sowkarni and Pillai aren’t investing specialists, and cannot be held responsible for the advice.