What Are The Challenges With Traditional Education Loans?

With skyrocketing costs, higher education is beginning to seem like a far-fetched dream for many aspiring students. Even if, for a moment, we put studying abroad aside, securing admission in leading educational institutions within our home country itself has become very expensive. Due to these cost challenges, students find themselves struggling to pay for their college education.

During the desperate need of college money, education loans have proven to be a great source of support for students. Not surprisingly, as a last resort, a large number of students prefer to apply for education loan to cover expenses on higher education.

Education Loans in India

In India, education Loans were made available to the public back in the year 2001 by the central government. The government of India launched the scheme after consulting with the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA). Since then, lending almost 95% of the total student loans of the country, public sector banks have been the dominating players in the education loan sector.

As per the guidelines prescribed by the RBI, students studying within the country can avail maximum ₹10 lakhs as education loan. While for those who go abroad for their education, the maximum limit is ₹20 lakhs. Furthermore, through its guidelines, RBI also establishes that an amount of up to ₹4 lakhs can be sanctioned to education loan seekers without requiring them to put any collateral. However, any amount exceeding the ₹4 lakhs limit would require a third-party guarantor and collateral security. 

The Challenges with Traditional Education Loans

Student loans are indeed helpful in securing funds for studying within the home country or abroad. However, getting an education loan might not be as easy as you think. While you can easily apply for best student loan scheme available, to have your loan approved can include numerous hurdles. Another important thing to consider is education loan interest rate that is generally very high compared to other types of loan.  

These are not the only problems with education loans. Here are some major challenges faced with traditional education loans:

Collateral

As mentioned above, only educational loans of up to ₹4 lakhs can be sanctioned without needing a collateral and guarantee. However, education costs have become so high that students seeking admission in premier institutions would need more than ₹4 lakhs. This compels students to apply for education loan amounting higher than ₹4 lakhs limit. In such cases, students are required to present a guarantor or put up something as collateral, and complying with these conditions is not feasible for every parent or student.

Highly Riskier for Both Parties

Education loans involve high risk for both lenders and borrowers. Student loans are full of uncertainty than any other loans because repayment of education loans is highly dependent on the likelihood of students completing the course and securing a job. If students don’t finish the course or get a job on time, lenders may face loan default while students get bad remarks on their credit profile. On the other hand, high interest rates on education loans put a lot of pressure on students and may affect their repayment capacity.

Insufficient Loan Amounts

Students applying for education loans often complain that lenders are not sanctioning the required amount or the sanctioned amount is insufficient to cover other expenses. However, lenders are also not in the wrong here. When giving education loans, lenders face a high possibility of defaults so to lower the risk, lenders often sanction the amount that they deem reasonable in given circumstances.

New Opportunities

While it may not be possible for you to get higher education without student loans, traditional lenders are not the only place where you can apply for education loans. Due to a large number of loan defaults, bakers are becoming more cautious in giving education loans. With instant loan apps like EarlySalary offering options such as School FeEs, it’s certainly far easier for parents and students to adequately power their education. 

In addition to addressing the multiple challenges above – such as the lack of collateral, risks, and more – School FeES goes a step ahead and truly works as a modern credit offering of its time. With direct partnerships with educational institutions, it is possible to have your school fees paid directly to them in the form of EMIs. Borrowers can get access to up Rs 5 lakhs, and select their own flexible repayment options.

In short – you can get the best student loan deal at reasonable interest rates. All you must do is you apply for the education loan and have it sanctioned in a seamless process. 

Why You Should Use An Online Loan App For Your Finance Requirements

India is changing, along with evolving mindsets, practices, and habits. For example, today, taking a loan is no longer a taboo. Young Indians take a loan for a variety of purposes— such as studying overseas, financing holidays, renovating their homes, buying a car, and also for their weddings! To fulfil this growing demand, many organizations have begun to offer instant loans online to fuel the dreams of the ambitious people of today.

Online loan apps in India are slowly becoming popular due to the many benefits they offer – customized repayment plans, cheap credit, simple application methods, and 24X7 tracking. Multiple instant loan apps in India today offer a quick, paperless, and trouble-free way to get quick access to funds to make a dream come true during a financial emergency.

So, why should you use an online loan app? 

Personal loan apps provide a quick way to apply for loans, anywhere, anytime. Before this era of apps, one of the biggest challenges remained visiting a bank to obtain relevant information first, and then visiting again to apply for the loan. However, with online loan apps, not only can you know all about the loans on offer, but you can also apply for an online loan instantaneously from the comfort of your home. 

Besides, you can also monitor the progress of your application. Of course, you will also be able to view the details once the loan has been approved.

On a high level, here are some of the biggest benefits of using an instant loan app:

  • Quick approval: Online lenders will tell you more or less instantly if your loan is approved or not, how much you can borrow, and how your repayments will be structured. Many traditional banks are different: you may be able to complete an application online, but it may take a while to get an answer (someone may need to review the request, and you may even need to visit a branch in person).
  • Better rates: You always pay to shop around, and online lenders often charge less than traditional financial institutions. Money lending apps provide lower interest rates and lower service charges (if any). Online lenders do not have the same overheads as bank and credit unions with local branches, and they do not face the same regulatory costs. In the end, that means you can pay less.
  • Easier approval: Over the years, banks and credit unions have grown skittish. If you have great credit, it’s easy to get a loan. And if you are still building credit or you’ve been through some tough times recently, you won’t get any benefits from a poor CIBIL score. Online lenders are more likely to accept lower credit scores and use “alternative” details to determine your creditworthiness (such as transactions for services and even social network data).
  • Saves time: In the case of traditional banks, to get your loan approved, you may need to constantly monitor the process and wait for days. But with instant online money lending apps, the application and approval process is quick and easy, thus saving time, effort and money.
  • Unsecured loans: Many online loans are unsecured, which means that you are not pledging collateral to help get approved. This makes borrowing safer. If you do not repay an unsecured loan, your credit scores will drop, but your assets will not be repossessed, and you will not face foreclosure.

The bottom line

With several personal loan apps in the market, the options for quick cash loans are available in a wide range. An internet search and a quick comparison among India’s various online loan apps for fast online cash loans brings up a multitude of options. For a borrower, there’s never been a better time for access to credit. 

Stretch Your Christmas Budget and Enjoy Fully, with Instant Cash Loans

Christmas is nearly upon us as we all scramble to make the full of our winter holidays. Sometimes, our finances can play spoilsport and deflate some of our plans. Of course, it is frustrating seeing your plans crumble down in the most exciting month of the year. What is a holiday if you cannot truly enjoy it while it lasts? 

Christmas is a time when family and friends gather to celebrate together. Naturally, it is also a time of gifts, celebration, decoration, and so much more. While you may have a budget set aside for these merry celebrations, you don’t want to find yourself running short at the wrong time. Despite stretching our budgets, we often find ourselves short of money with things still left to buy. What do you do in such a situation? 

One solution is, of course, to cut down on the expenses and live a little tight. But that is not very Christmassy, is it? Well, no need to keep worrying about money when you have Christmas to celebrate. EarlySalary will help you by offering a much better solution to your problem- an instant cash loan!

Why Choose EarlySalary for Instant Cash Loans?

EarlySalary is a leading a new virtual financial revolution by offering you instant access to credit. Traditionally, banks and money-lenders were the only options we had for financial loans. Times have now changed, thanks to technology. Now, banks form just one part of the financial institutions we can use to fulfil our loan needs. You will find countless online financial establishments today. EarlySalary stands out amongst them with the most appealing service and the trust it enjoys from its customers.

While many still prefer resorting to banks, the mindset of the people is certainly changing as they understand how EarlySalary functions. The most essential element of the relationship between a person and their financial institution is trust. With EarlySalary, this is fairly easy to cement once we understand their processes and services. 

What Sets EarlySalary Apart?

As we’re all well aware, availing instant cash loans from conventional institutions like banks, whilst a popular option, hasn’t been entirely stress-free. The problem with this model is that it requires considerable patience and efforts. The process is by no means an easy one; you have to go through large amounts of paperwork and processes to just to apply for a loan. Post this, you have to wait for approvals and disbursement.

Now, while we have always been used to all this paperwork, formalities and waiting to get a cash loan, EarlySalary has been working hard at disrupting this entire process. Wouldn’t it be much more satisfying to get instant cash loans without much work on your part? Or get the instant cash loan in a matter of hours rather than days? 

Say you are preparing for the upcoming Christmas and you realise you do not have sufficient funds. What do you do? Should you decide to avail a cash loan from a bank, you’ll have to go through their tedious processes and then wait till you finally get your hands on the funds. With Christmas right upon you, you can hardly afford to waste so much time on it. This is where the instant cash loans from EarlySalary will help you out by saving your Christmas.

With EarlySalary, you can skip waiting. Take advantage of instant cash loans up to INR 2 lakhs with minimal documentation. All you need to do is download the EarlySalary app, check your eligibility, and proceed to apply for the quick cash loan. While this in itself seems compelling enough, there are other benefits. EarlySalary enables you to repay the loan on your own terms. You can choose to repay the amount before the decided repayment terms without having to pay extra charges. 

  • Repay loan amount on your terms. No prepayment charges.
  • The interest rate charged only for the number of days you use the money.
  • Services available 24/7. Transfer the instant cash loan amount to your bank account at any time.
  • Quick approval and Instant disbursal.

The fact that availing instant cash loans can be so easy is certainly a boon for many. Check the following criteria to make sure you are eligible to apply for an instant cash loan.

  • Applicant must be between 21 and 55 years of age
  • Applicants must be salaried individuals with a minimum salary of INR 18,000 (Metro cities) and INR 15,000 (Non-metro cities)
  • Applicant must be a resident of India

Post your application, EarlySalary will begin working on your expedited approval process while you can continue with your Christmas plans and preparations. You no longer have to alter your Christmas plans just to fit your budget; EarlySalary is here for you to enjoy the holidays as they are meant to be.

What Will HR Look Like in The Next Decade?

The Human Resource department plays a very crucial role as a manager, mediator and recruiter, among other job functions. The rapid pace with which the corporate future and business laws are changing it is natural for the HR to adapt and evolve as well.

Globally, leaders are constantly sharpening to keep the competitive edge and the HR plays a huge role in recruiting and managing top talent to build an efficient workforce for the future. HR functions of the future will experience a great shift, here are a few of the paths the career is going to take in the next decade:

Technology and Analytics

Today’s employers face interesting challenges as they transition deeper into their digital infrastructure that is transforming business functions. It makes for an evolutionary tact for HR departments to use new developments to their advantage.

Basic HR functions like interviewing and testing a job candidate, tracking statuses, solving employee grievances, and many other simple tasks are now being taken over by tools that provide personalised assistance. So, when a worker needs to enquire how many sick or vacation days they have remaining or what procedures the company’s health insurance plan covers, they can rely on the automated chatbots for a personalised conversation to resolve their queries.

Freed from such mundane tasks, the HR will have more time to move into strategic planning. The role of the HR in the future would be fully utilised at this juncture, when they can use the data to analyse the queries and challenges posed to the computer assistants. This digital integration can help HR to assess employee retention, recruitment, business strategies or successful financial wellness programs

Focus on the Human Resource

The emergence of tech doesn’t mean that humans will be out of the HR equation. Embracing technology gives better insights to focus on the individuals, enhancing recruitment and retention as well. Tech is capable of bringing a level of intelligence to HR that would be capable of ensuring better execution of business strategies and mitigating risks.

Ready For The Evolution Of Workforce

The HR’s primarily responsible for the workforce, and the new workforce of 2025 will not only include full time employees, but also transient workers and gig workers who work on a daily or project basis. The HR function should also be ready to tackle challenges that automation may face. Reskilling those employees who were affected by automation while analysing which tasks that can be automated in the organisation would also be a role undertaken in the future.

Create attractive benefits package

Talent sourcing is an important HR goal, and essential to stay competitive. Post hiring, retaining that talent in the fast-paced industry is all about culture, job satisfaction, and benefits packages.

Modern times require modern solutions. Recruitment marketing in the future could witness a slew of benefits that appeal to the modern day worker like parental leave, caregiver leave, personalised financial wellness programs which are now available on EarlySalary.

A happy, motivated workforce is the key to productivity, and understanding what benefits drive the people is the job of the HR. Events and workshops, on-demand training and focus on holistic employee wellbeing should be served as a top priority.

Updating with HR certifications

Automation not only impacts the workforce but will also some functions of HR. Hence, it is essential to  expand domain knowledge and upgrade the skill set if the function is to evolve and grow. Consider this 2018 PayScale survey, which found that certification increased the odds of being promoted within five years.

In the near future, HR leaders will be primed to administer business strategies and decisions, where they will help make those decisions as trusted workforce advisors. The evolution of HR at a workforce is a parallel necessity for smooth transition into new agile organisational structures of the future.

Should You Incentivise Your Benefits?

Most organisations today are justifiably focused on sourcing and retaining top talent. With the popular belief that incentives or bonuses are the right way to go about increasing productivity, organisations may be failing to generate that crucial RoI from their talent pool. Some of the popular incentives are bonuses, health insurance, benefits for commuting employees and extra vacation days, all of which sound very exciting at first. A formal process, or system, to measure the productivity outcomes and their profit margins is surprisingly lacking in many organisations. Of course, this makes it significantly challenging to set a structured incentive plan in place. Another often occurring issue is one when the plan isn’t clear to employees, which usually happens with the discretionary model which could lead to them being confused and in turn demotivated.

When structured and executed the right way, incentives go a long way in improving the overall productivity of the organisation and yield a better return on investment. Different employees seek specific incentives and respond differently and because of that, companies must come up with a unique system where each employee feels recognized for his/her work. There are several ways of looking at incentive models and if they work:

Increase in Sales

One of the most important questions to ask is if incentivised benefits would lead to a more effective increase in sales and client numbers. According to a study conducted by Harvard Business School, monetary incentives do work in most cases when they are properly administered to motivate and reward workers. Another result which can be seen from the study is that employees respond better to quarterly bonuses compared to annual bonuses, especially for sales people who usually work on a commission. Due to short term incentives, employees in sales also work beyond their quota which goes to say that incentives may increase the sales of the company when executed properly. 

However, there are a few areas a company can go wrong with their incentive plan for sales employees – for example, if it is solely based on making sales because products/services sold at a loss would not turn out to be the best precedent for a bonus.   

Motivation and Turnover  

As an employee, one would be happy to know that their work is appreciated and recognized by their employer. Putting a monetary value for these recognitions are perhaps one of the highest forms of motivators out there. Sure, this is materialistic but contrary to popular belief, most people enjoy the bonus and tend to work even harder to keep it going. Appreciation alone is enough to boost morale and mayb  even attract prospective employees from other areas which would inevitably lead to better overall performance. There are certain instances where an employee could feel demotivated to work because of an incentive plan for instance, when an employee just misses their threshold to gain a bonus, the employee would feel frustrated and may even feel demotivated the next time.

What To Remember

While organisations may want to embark on incentivising benefits, they’d do well to keep the following in mind too while they’re at it:

#1 Micro-Management

Having that constant feeling of being on a leash at work is something the new age workforce is much more intolerant of than any in the past. They’d rather have work independence, even if it comes with more stringent follow ups and penalties. Organisations are increasingly evolving in this direction, and the results are coming in backing up this model. Multiple studies report employees report being more productive at the end of a workday where their own methods of work were encouraged and they were free to work as per their requirements. 

#2 The Healthcare Question

A healthcare plan being offered as an incentive is unlikely to go down well with your workforce for a variety of reasons. Due to ethical, and even cultural sensitivities, healthcare can be one of those items many would consider essential. Further, an incentive plan here may mean that certain folks may healthcare benefits while others may be held back. Such a scenario is likely to negatively impact team dynamics and job satisfaction levels. On the other hand, if healthcare benefits are offered on a more universal level, it’s value can often be underrated – since it impacts multiple other aspects of the employees’ lives – such as their financial wellness.

The Conflicts Associated With benefits plans

There are times when incentive plans may backfire and turn out to be a problem. Employees might find themselves in a very competitive environment where they’re all competing against each other for a limited share of reward which could turn into a very hostile environment to work in, even if the incentive plan is outlined perfectly. 

Sometimes an incentive plan might also lead to office malpractices, especially if there is a loophole to be exploited. 

Taking a step back for a broader view, however, it’s reasonable to conclude that the pros outweigh the cons here. Incentivising your benefits with a well structured incentive plan is the best way to go about providing employees with the recognition and appreciation they deserve, while also locking in their loyalty and increasing overall company performance. 

Improving Organisational Culture: 5 Tips

Keeping up with a modern workforce dominated by a generation of millennials is all about embracing the impetus for change in the traditional ways of work structures and employment patterns. To attract and retain critical talent, organisations need to go beyond focusing on their teams in the context of measurable and attainable goals. Sure, metrics, key performance indicators and other tangible factors are important to indicate an enterprise’s success. However, intangibles – such as employee engagement, ideologies, culture, authoritarianism, etc are also vitally important in the impact they have on the productivity levels of your human capital.

Company culture is an aspect that largely influences employee experience, satisfaction and talent retention. A strong organisational culture lowers the stress for management to develop and regulate formal rules and regulations. This makes it important for organisations to invest time and effort in improving it.

Corporate culture can be defined as a shared understanding members have about the organisation. It is the perception held by employees about the characteristics of the organisation. Company culture therefore forms a basis for how things are meant to be done and how members are expected to conduct themselves.  Let’s dive into some of the ways organisations rely on to foster and propagate positive workplace culture.

  1. Communicate 

When communication from upper management is clear, direct and free from ambiguities, the code of conduct and code of ethics are conveyed with clarity. It’s crucial that the organisation’s perspective on ethical behaviour is communicated both top down and in parallel on all levels as well. After all, a code of conduct and ethics are the primary values an organisation would expect its members to follow, and developing a perspective on their consistency is likely to help.

2.Reward and Penalise

It is important to invest time and effort in reviewing the means taken to achieve the said goals. A positive culture follows an ethical code of conduct and those acting in accordance with it must be rewarded visibly. At the same time, it is equally important to to penalise unethical behaviour – perhaps more so, as such moves communicate the organisation’s values and intolerance for what it may consider unacceptable. Encouraging employees to report unethical behaviour without fear of reprimand may be another corrective step in this direction.

3. Train to Gain

Training can pave the way in elevating organisational culture, as it can help employees learn about the practices that may or may not be permissible. Employees are assisted in clarifying and reinforcing the organisation’s standards of conduct. Employees should be trained to focus and follow righteous actions and behaviour congruent with the system.

 4. Endorse Transparency

Transparency plays a significant role in building the trust of employees in their organisation and employer. As many would agree, trust forms the foundation of a company with an admirable culture. Transparency in the decision making and distribution of rewards can assist in achieving fairness  at all levels. This further helps the employee to resonate with the organisation and to stay with it. 

5. Encourage employee participation

The behaviour of top management is a force that plays an important part in sustaining culture. Employees’ participation in decision making, autonomy, liberty to communicate and bottom-up feedback are some of the characteristics that help to create a strong culture. With higher employees’ participation, expect your employees to exhibit the right behaviour and produce higher product quality. 

Conclusion

An organisation’s culture is its essence. Whether they intend to or not, its founders and top management will be perceived as role models whom employees will look up to as a benchmark for the most appropriate and accepted behaviour. Therefore, actions from the top are going to be a reflection of how things are expected to be done. 

This does assign disproportionate responsibility for this concept to the upper management, but justifiably so. Culture is indeed set top-down. Authentic leadership can enlighten the road to a positive and strong culture that ultimately generates cohesiveness, loyalty and organisation commitment from the top talent available. 

Factors That Affect Your Personal Loan Interest Rate

Personal loans have witnessed a huge surge in demand and continue to grow at a rapid rate. People may require quick personal loans to settle their different financial needs, be it a wedding, vacation, tuition fee, event organising, renovation projects, medical emergencies etc. Being multipurpose, typically unsecured, and in some cases, no credit score checks, make personal loans well suited for most people and also explain their growing demand.  

As tempting as they sound, there are still a few things that should be considered before applying for a personal loan. Even if you have ascertained your ability to make full repayment of a potential personal loan, interest rates can still be a major factor affecting your repayments.

For home loans and car loans, the rate of interest is fixed for all borrowers. But personal loans’ interest rates are constantly fluctuating and may be different for each borrower depending on the eligibility criteria set by the lender. Therefore it is highly recommended to know all the important factors that can affect your personal loan interest rate.

Here are some key factors that can or will affect the interest rate on your personal loan:

1. Your Income

Your income is the most critical element that determines the interest rate on personal loans. It’s an obvious truth that individuals with high income are more likely to fully repay their loans on time than those with lower incomes. High income of a borrower provides a greater level of confidence in borrower’s repayment capacity. 

It can be easily observed in the lending sector that individuals with high and stable income tend to get away with lower interest rates on their loans. However, lenders may levy higher interest rates on loans given to low-income individuals to safeguard themselves against potential risks.

2. Your Credit Score

It is common knowledge nowadays that credit score plays a critical role in loan approvals. However, for personal loans, your score becomes even more significant because it will not only decide the loan approval but also impact the interest rates. The credit score reflects the financial performance of a person in terms of previously taken loans or other credits.

Each timely repayment against your loan will increase your credit score while delayed payments or defaulting will have negative effects. In other words – taking an instant loan can boost your credit score. A higher credit score conveys a higher level of trust in the borrower’s repayment ability, allowing them to take loans at lower interest rates. Typically, a score above 750 is considered a good credit score.

However, many digital lending platforms such as personal loan apps provide personal loans online for bad credit scores. 

3. Your Employer’s Status

Since personal loans are typically unsecured, lenders seek different factors that provide some trust in borrowers, and the reputation of your employer is one among them. The reason behind this logic is fairly simple. Borrowers who are employed in a renowned organisation are considered more financially stable and responsible for making timely repayments. Sometimes, lenders may also have more relaxed lending policies borrowers working for specific organisations.

4. Your Debt-to-income Ratio

Assume you are employed in a well-known company and earn a relatively high salary, but you have a decent part of your salary going in debt payments. In this scenario, all your previous debts are certainly going to affect the interest rate on any potential personal cash loan. Debt-to-income ratio is calculated by dividing all your debt payments by your total income. A higher debt-to-income ratio means more obligations on the borrower’s part, and the lender may charge a higher interest rate on your loan just to be on the safe side.

5. Your Relationship with the Lender

Developing a sense of trust in one another after interacting for longer periods is part of human nature, and this is also true for you and your lender. Banks usually are more lenient in charging interest rates when lending to a trusted customer. However, this trust doesn’t build overnight. It takes a lot of time and responsible behaviour by customers of the bank to maintain their loyalty. When lenders see your loyalty toward their institution, they are likely to offer you a better deal than what newer customers would get.

Closing Word

Apart from the above-mentioned factors, several other smaller elements can affect your personal loan interest rate. For example, some lenders may offer you a lower interest rate if the loan tenure is short. Individual negotiation skills may also be effective in getting a good deal sometimes. Nonetheless, by knowing all the elements that factor into personal loan interest rates, a person can be better prepared when applying for a loan.

Are Personal Loans Tax Deductible In India?

Quick personal loans are a ballooning trend these days, and thanks to instant personal loan platforms, this trend is gaining momentum everyday. Since personal loans are unsecured and can be availed easily, a larger number of borrowers find themselves going for these loans to procure funds for their personal needs. These requirements can be anything, such as a wedding, vacation, various education expenses, or other personal projects.

Although personal loans are a quick way to arrange funds, fluctuating interest rates are always a subject of concern for borrowers. This makes tax deductions on personal loans a much needed benefit by borrowers. But the most important question here is, do we actually get tax deductions on personal loans?

Does India’s Income-tax Act (ITA) Allow Tax Deductions on Personal Loans?

When we talk about tax deductions on loans, there are two aspects of any loan, and each aspect is tackled differently by India’s income-tax act in terms of tax benefits. These two aspects are: 

  1. The principal amount of the loan
  2. The interest charged on the loan

If one is to answer the question about the possibilities of similar tax deductions on personal loans as we get on other types of loans, the plain and simple answer would be “No.”

The Income-tax Act of India does have rules and guidelines for tax deductions and tax exemptions on both the principal and interest of certain loans, such as home loans, education loans, business loans etc. However, the income-tax act does not specifically entertain any tax deductions on your income-tax returns when it comes to personal loans. 

Due to the lack of direct mention of tax relaxations on personal loans interest rate and principal in the income-tax act, the end-use of loan money will decide whether tax should be levied on a personal loan or not.

Another key factor here is the source of your loan be it a traditional source or an instant personal loan app. The principal of a personal loan can become taxable or non-taxable depending on the source from which you acquire the loan.

If you take a personal loan from a bank, NBFCs, other legally approved financial institution or applied for personal loans online using an instant loan app, your loan’s principal amount is considered a liability and is not taxable. However, if the amount is borrowed from a friend, relative or other non-professional lending sources, it is viewed as your income and is added to your gross income at the time of income-tax calculations.

But what about the interest paid on personal loans. Can borrower enjoy tax deductions on the personal loan interest? As discussed above, there are certain conditions and the final use of the loan money that will be considered for any tax relaxation.

Here are three circumstances under which a person can avail tax benefits on personal loan:

1. Personal Loan Used for Business

If a borrower ends up investing the personal cash loan in his business, the interest on that loan becomes a liability for that business. Here, the interest paid is considered as an expense and can be deducted from the net profit of the business. This brings down the total amount of taxable net profit. Furthermore, the income-tax act has set any limit on the amount that tax-deductible liabilities of a business. This means that entire interest on the person can be tax deductible if used in business.

2. Personal Loan Used for Buying or Construction of a Residential Property

Section 24 of the Income Tax Act, titled “Deductions from Income from House Property” makes it possible to enjoy tax benefits. According to Section 24, interest paid for funds acquired through a personal loan can be deducted from the net taxable income from residential property, if the money is used for purchasing, constructing or renovating the same property. 

Since section 24 of ITA does not specify the type of loan, personal loans are also eligible for said tax deductions. However, the borrower would need to present the required documents to prove the use of personal loan money for buying, repairing or constructing of house. Up to ₹2,00,000 can be claimed as tax deductions on the interest of personal loan if the borrower occupies the house.

3. For Purchasing Assets

If the borrowed funds are used for acquiring jewellery, shares, or any other non-residential assets, the borrower cannot claim any immediate tax relaxation at the time purchasing said assets. However, the interest paid on loaned money used for buying the asset is added to the total cost of acquiring that asset. Therefore if the borrower ever sells the particular asset, the paid interest as part of the acquisition cost is also deducted from the capital gains, effectively reducing the taxable profit.

Closing Note

Instant personal apps like EarlySalary have provided easy access to fast personal loans. Although The income-tax act of India does not explicitly provide any guidelines on tax deductions on personal loans, the vagueness allows other ways to ascertain tax deductions on personal loans. However, tax benefits on personal loans can only be availed if borrowers fulfil certain eligibility criteria by presenting the necessary documents. So it is very crucial to keep safe all documents, bills and certificates relevant to the loan or the use of loaned funds.

5 Essential Financial Tips for 2020

2020 is almost here and it’s time for new resolutions. However, if your finances are the beating heart of your plan, then it’s also time to manage them. Having a solid grip on your finances is the best way of taking advantage of new opportunities and weather storms.

In this post, we discuss 5 essential financial tips to help you enjoy the upcoming holiday shopping season without derailing your financial goals for next year. These tips can help you stay on track by mapping your goals now so you can start off on the right foot and avoid quitting a few weeks into January. 

  1. Establish Your Savings Goals 

The first step towards financial planning is establishing saving goals. Define your future personal finance savings goals. Plan the major expenditures such as house purchase, wedding, children’s education, etc. Do you need a down payment for a home? 

Make a list  of what you are saving for and prioritise them. If you have already started saving, map your progress. See if you can add more and analyse if they are dipping. Re-establish your savings goals and create a plan to stick to them. You must have specific, measurable, realistic and time-bound goals. 

2. Take action immediately

Goes without saying – it is critical to begin working towards building retirement and investing savings. If you have specific retirement goals, you may need to increase your savings, investment and let compound interest generate more earnings for you. Certain factors constraint our ability to save for our retirement account. This number can depend on your age at which you begin  making contributions and the type of retirement account you have. Doing so can also help you take advantage of tax-saving policies.

Setting aside money on a regular basis can act as a cushion in emergencies such as job losses and allow you to leave your investments alone in case you fall on hard times.

 3. Pay Off Credit Card Debt

Excess leveraging can be dangerous. Credit card debts, when on the rise, can become the number one obstacle in your journey towards financial wellness. Look at your balances, see what you can do about reducing your debt burden, review interest rates and strategise a prudent debt management strategy. To decide whether or not a debt must be repaid, consider the opportunity cost. If the present value of money is higher, then you may get more value of money. You could consider taking an instant cash loan from EarlySalary – where you can borrow up to Rs 2 lakhs for as low as Rs 9/day. The instant loan option from EarlySalary certainly works out to be significantly cheaper than the cost of credit card debts.

4. Prepare for Taxes Early

Gathering tax receipts, determining reductions, income proof and tax consultation to evade the tax preparation hustle in March and early April can put you in the position to get an earlier refund. While also giving you the time to discuss any issues with the IRS before they become unreachable in March. You can optimise your tax efficiency by making the most of allowable deductions for contributions to retirement savings before the financial year ends.

5. Invest in a Diversified Portfolio

Don’t keep all your eggs in a single basket. With investment instruments such as equity markets, mutual funds, annuities, real estate, etc., investment diversification has become much easier. If you are consistent and careful with your investments, you will be able to generate a significant savings pool. However, remember that as you near retirement, the weight of equity investment may be changed. 

Don’t just follow these financial tips right off the bat. Assess what’s best for you, allocate money in a way that maximizes returns. It is important to not just buy into the conventional wisdom but also take the time to think about your own financial situation. Re-evaluate you financial goals every year and don’t let your financial vigour slip through the cracks.

Why is there an increase in demand of personal loans?

As the indebtedness of the average Indian grows, we cannot ignore the surge of retail loans over the past five financial years. As we cast our eyes on the rise in the number of loan accounts, we observed that retail loans have clocked a compounded annual growth rate (CAGR) of 16.4%. However, the CAGR of the number of loan accounts is just 7.5%. This is an indication of the increase in loan value per account has increased.

In this post, we explore the reasons for the rise in borrowings and an easy way to get an instant personal loan for all your needs. 

How much are Indians borrowing?

The average increase in Indian borrowing exceeds the growth in what the income would warrant. This can be inferred from the comparison of per capita loan amount versus per capita GDP growth. As per FY 2018, the growth rate of per capita GDP was 8.5%, while the per capita loan amount increased 17.9%. There’s enough evidence that the average Indian is not loathed to borrow and spend.

The unbridled growth in loans for banks as well as for non-banks such as instant cash loan apps signals the growing consumerism. Public and private banks are also happier lending to retail borrowers. Saddled by the dud corporate loans, banks are now extending flexible loan repayment options. Historically, the ratio of bad loans has not been more than 2%  while those for farm loans and industrial loans have been far higher. Moreover, credit scores and instant cash loan apps have made it easier for individuals to avail loans from the comfort of their homes.

What are Indians borrowing for?

The sharpest growth in indebtedness has been observed in unsecured personal loans. Young Indian borrowers are opting for EMIs (equated monthly instalments) to fulfil a variety of their desires ranging from international travel to luxury goods. Indians are also increasingly spending on discretionary expenses such as vehicle upgrades, electrical appliances, house furnishings, etc.

There have been no major delinquencies despite an increase in the interest rates. This was because when the high-interest rates from the banks pinched the borrowers of unsecured loans, they moved to cheaper, short-term loans from non-banking institutions. The increase in interest rates has pushed retail borrowers towards instant cash loans which offer quick loans at lower interest rates. This has also been facilitated by the institutions tapping into different types of credit. Growth of online lenders, eKYC norms, expansion of digitally enabled lending technologies have been the major catalysts for the rise in demand for personal loans. For example, EarlySalary’s instant cash loan app provides instant cash loans for every purpose, no questions asked. 

Instant Cash Loans: The Next Wave 

With the growing demand for consumer credit, the financial institutions are gearing up to provide a more efficient means of lending. There are now more opportunities for lenders to tap the demand for consumer loans and credit cards. Fintech-powered loans are also on the rise as they can leverage technology and facilitate application and approval processes more speedily as compared to the traditional lenders who still use time-consuming, antiquated processes. 

As the fintech sectors opens new doors for innovative solutions, personal lending is set to turn online personal loan apps into the single most popular destination for customers looking to secure quick personal loans or payday loans. Fueled largely by millennials and their unlimited aspirations,  easy personal loans are all set to grow. With a personal loan app like EarlySalary, borrowers can apply for loan within minutes and receive an approval within 8 to 24 hours. These personal cash loans allow the borrower to gain immediate and unfettered access to borrowed funds secured through bank transfers. Many justifiably believe that personal loans are the type of loans to serve customers’ needs for immediacy and availability and now with personal loans online, new segments can be served better.