PERSONAL FINANCE PLANNING
ASSIGNMENT # 2
SIR VIKAS ANAND
REG :- 10805151
My financial needs would be as such:-
* To buy a own big car for me and my family.
* To buy our own house.
* To help my younger Sister in her education financially.
* To expand our contingency savings to help us get through tough times if any in future.
All my needs are generally related to long term since in near future I don’t have any such need for which I would like to avail credit from any credit giving institution.
Credit sources available for an individual are:-
* Instalment loans/credit
* Non-installment credit
* Mortgaged loans
* Credit cards
In order to apply for car loan I would like to opt for State Bank of India car loan because of its certain advantages over the other bank’s car loan offers. State Bank of India car loan would provide me with lowest interest rate of 8% which is lowest among most of the banks offering car loans. Other than low interest rates SBI Car Loans also offer easy repayment options, total transparency, no processing charges, finance to include vehicle registration charges, insurance and one time road tax.
Advantage of SBI car loan for me over other loans would be:
* Lowest interest rates
* Longer repayment period of up to 84 months.
* No hidden costs or administrative charges.
* Finance for one-time road tax, registration fee, insurance premium and accessories
* No advance EMIs since some Banks/companies ask us to pay one or more EMIs at the time of disbursement of loan, thereby effectively reducing our loan amount.
* Complete transparency: SBI levies interest on daily reducing balance method. When we pay one installment, the interest is automatically calculated on the reduced balance thereafter. When we pay interest on an annual reducing balance, as charged by many other companies/banks, the interest amount for the coming year is determined on the amount outstanding at the beginning of the year.
In order to apply for a home loan I would opt for Kotak flexi Home loan because it offers fixed interest rate on the loan and that too lowest from all the loan offers from other banks who offer fixed rate home loans.
Certainty of a fixed rate generally comes at a cost while a floating rate may lead to higher outflows in the event of an interest rate rise. Kotak Flexi Home Loan takes the middle path. The interest remains unchanged for 3 years, at the end of which it is reset at prevailing index rate and gets fixed for the next 3 years. This cycle continues till the end of the loan tenure. The impact of any change in the index rate is given after the three year period.
The advantage of Kotak flexi home loan for me would be that I would get protection against interest rate volatility during a 3 year period and also the benefit of any rate decrease at the end of each 3 year period. So I would get the certainty of a fixed interest rate, along with the flexibility of a floating rate. It also provides me the opportunity of lower interest rate compared to conventional fixed rate loans. It also has some other features such as:
* Free Personal Accident Insurance Cover:- Up to Rs. 1 crore along with my loan, that ensures that I am covered for any accidental mishaps and my family is well protected.
* Pre-Approval facility :- I could get a sanction for my loan amount based on the income, assets and employment information I would provide during your consultation with Kotak Mahindra Bank. I might come across a property which I need to close at a short notice. In such a situation, this sanction can help so that I don’t miss the opportunity. The sanction is good for 6 months, giving me time to shop for the home of my choice.
* Insurance options on your Home Loans :- You can also avail of a reducing insurance cover at an exclusive premium, so that you are rest assured that should any unfortunate mishap occur to you, your family is safeguarded from any repayment burdens over the tenure of the loan.
* Simple documentation and speedy processing.
* Doorstep service in India
As per my preferences I would like to opt for SBI education loan because its features tend to attract my attention and comfortably meets my requirements. In SBI education loan whether a student applies for a graduate, professional or postgraduate program or any other course sanctioned by UGC, AICTE or the government, he will be considered eligible for the loan. Therefore it covers almost all the courses a student can pursue. Lots of expense related to a student’s education is also covered by the loan such as:-
* Fees payable to college/school/hostel
* Examination/Library/Laboratory fees
* Purchase of Books/Equipment/Instruments/Uniforms
* Caution Deposit/Building Fund/Refundable Deposit (maximum 10% tuition fees for the entire course)
* Travel Expenses/Passage money for studies abroad
* Purchase of computers considered necessary for completion of course
* Cost of a Two-wheeler up to Rs. 50,000/-
* Any other expenses required to complete the course like study tours, project work etc.
SBI Education Loan Interest Rates
Loan Amount Rate of Interest Loans up to Rs. 4.00 Lacs 11.25% p.a. Loans above Rs. 4.00 Lacs and up to Rs. 7.50 Lacs 12.75% p.a. Loans above Rs. 7.50 Lacs 11.75% p.a.
# The most important thing here is that Girl students availing education loans are allowed an Interest Rate concession of 0.50%, which will certainly be beneficial in My Sister’s Education Loan.
A credit card is a small plastic card with some numbers embossed on it and which helps to purchase the things with no requirement of cash in pocket. It is 3-1/8 inches by 2-1/8 inches in size and has identification information for example a signature or picture.
It permits the person named on it to charge purchases or services to his account charges for which he will be billed periodically. This information is checked where we use it for example by automated teller machines (ATMs), store readers, Internet computers and banks.
MY CURRENT USE OF CREDIT CARDS:- The use of credit cards makes my life much simpler for me. Carrying cash can be cumbersome and dangerous at times. These cards also gives me benefit of being swiped at almost any establishment around the globe. I can also withdraw cash on my credit card. Credit cards offer me an easy way to track expenses, which is necessary for both monitoring personal expenditures and the tracking of work-related expenses for taxation and reimbursement purposes. Credit cards are accepted worldwide, and are available with a large variety of credit limits, repayment arrangement, and other perks such as rewards schemes in which points earned by purchasing goods with the card can be redeemed for further goods and services or credit card cash back.
I currently use Citi bank gold card which is mainly a shopping card. Its main features includes:
* High Credit and Cash Limits.
* Access to exclusive Citibank World Privileges.
* Earn 1 Rewards Point for every Rs. 150/- spent.
Card Class:- Gold
Card Type:- Shopping
Issuer:- Citi Bank
Offered Type:- MasterCard
Credit Card Rates:-
Purchases: Intro Interest Rate 0% per month Introductory Period 6 month Interest Rate 3.19% per month
Balance Transfers: Intro Interest Rate 0% per month Introductory Period 0 month Interest Rate 1.49% per month Min.: Rs 2500 per month Services & Features
Fees & charges
Joining Fee Free for Life. Annual Fee Free for Life. Add On Card Fee Free for Life. Share all the privileges of your Citibank credit card with up to five members of your family. Cash Advance Transaction Fee 2.5% (subject to a minimum of Rs. 250 and US $5 at International ATMs) Penalty Interest Rate Interest initially is 3.19% per month (i.e. 38.28% annualized). This can change periodically based on your spend, payback and utilization patterns. Your rate of interest can increase up to 3.5% per month (i.e. 42.0% annualized), in case of default. All charges are dynamic and are subject to change based on Citibank’s periodic review. Late Payment • Rs. 300 for bills up to Rs.10000
• Rs. 600 for bills from Rs. 10001 – 25000
• Rs. 700 for bills above Rs. 25000 Free Credit Period Min.: 17 days Max.: 55 days Over Limit Charges 2.5% of the amount over the Credit Limit (Subject to a minimum of Rs. 500) Cheque Bounce Fee Min.: Rs 250 Return of Cheque Fee Min.: Rs 250 Outstation Cheque Processing Fee Rs 100 Duplicate Statement Request Charges Rs 100 Replacement Card Charges Rs 100 Railway Booking Surcharge 2.5% Air/Railway Booking Comment 2.5% (subject to a minimum of Rs. 25) on railway / Air ticket purchase or cancellation fee Fuel Surcharge 2.5% Foreign Currency Transaction Charges 3.5% Service Tax 12.36%
# If we compare CITIBANK GOLD CARD with SBI GOLD CARD, the interest rates and charges of SBI GOLD CARD is as follows:
Credit Card Rates :-
Purchases: Intro Interest Rate 0% per month Introductory Period 0 month Interest Rate 3.1% per month
Balance Transfers: Intro Interest Rate 0% per month Introductory Period 3 month Interest Rate 3.1% per month Min.: Rs 5000 per month (The amount transferred should be a minimum of Rs 5,000 or upto a maximum of 75% of your available credit limit on the SBI Credit Card, whichever is higher.
You could chose between two different plans to pay back your balance.
Plan 1 offers 0% interest for 90 days.
Plan 2 offers 0.99% interest for the first 6 months.
Fee of Rs. 199 will be applicable for every Balance Transfer. Service tax extra, if applicable.
Fees & charges
Joining Fee Up to: Rs. 1500/- Annual Fee Up to: Rs. 1500/- Add On Card Fee Up to Rs: 500/- Cash Advance Limit Up to 80% of Credit Limit (subject to a max. of 12K per day, 15K per day for Gold Cards) Finance charges on cash advances /extended credit Up to 2.99% per month (35.88% per annum) from the transaction date, Up to 3.10% per month (37.2% per annum) from the transaction date Late Payment 30% of Minimum Amount Due (Min. Rs. 350 & Max. Rs. 600) Free Credit Period Min.: 15 days Max.: 50 days Minimum Amount Due 5% of outstanding balance or Rs. 200, whichever is higher Limited Lost Card Liability Zero lost card liability. Over Limit Charges 2.5% of Over limit Amount (Min. Rs. 300 & Max. Rs. 500),2.5% of Over limit Amount or Rs 500 whichever is high Cheque Pickup Fee Rs 45 Cheque Bounce Fee 2.5% of cheque amount (Min Rs 300, Max Rs 500) 2% of Cheque Amount (Min. Rs. 300 & Max. Rs. 500 Invalid Cheque Fee 2% of Cheque Amount (Min. Rs. 250 & Max. Rs. 500),2% of Cheque Amount (Min. Rs. 300 & Max. Rs. 500 Non-Bank ATM Access / Balance Enquiry Charges SBI ATMs & SBI Card Cash Points – 2.5% or Rs. 200 whichever is higher
Other Domestic ATMs – 2.5% or Rs. 250 whichever is higher
International ATMs – 3.0% or Rs. 250 whichever is higher
ATM Decline Fee – Rs. 20 Dial a Draft Fee Min.: Rs 199 Duplicate Statement Request Charges Rs 100 Replacement Card Charges Rs 100 Charge Slip Request Rs. 125 per charge slip Air/Railway Booking Comment Rs. 30 + 2.5% of Transaction amount Fuel Surcharge Min.: Rs 400 Foreign Currency Transaction Charges 3.5%, Not Applicable for SBI Gold MasterCard Service Tax 12.36%