Your CIBIL score plays a crucial role in personal loan applications. It helps lenders determine your eligibility and the personal loan interest rate. A high CIBIL score can get you a higher personal loan amount at competitive interest rates, while a poor score may lead to rejection or costly loan terms.

In this article, we will discuss how your credit score impacts your chances of getting approval for 10 Lakh Personal Loan or higher loan amount, factors that affect your credit score, and tips to improve it.

Firstly, let’s understand what a credit score is in brief.

A credit score is a 3-digit numerical representation of an individual’s creditworthiness. It ranges from 300 to 900 and is calculated based on several factors, such as an individual’s loan repayment or credit card payment history, their credit utilization ratio, length of their credit history, credit mix, new credit inquiries, and so on. The higher your score, the better your chances of getting approval for a personal loan.

Impact of credit score on your personal loan interest rates

Your CIBIL score determines your personal loan eligibility and influences the interest rate offered on the loans. Lenders offer the best rates for borrowers with high credit scores because they are considered less likely to default. Even a slight difference of 50-100 points in your credit score can have a significant impact on your interest outgo.

Consider this example: Ramesh and Arun both apply for a Rs. 20 Lakh Personal Loan with a 5-year tenure. Ramesh has a CIBIL score of 800 and is offered a 10% p.a. interest rate, while Arun, with a credit score of 650, gets a rate of 15% p.a. Let’s see how this difference affects their personal loan EMIs and total interest paid:

As the above table shows, a higher CIBIL score helps Ramesh save over Rs. 3 Lakhs in interest payments compared to Arun.

Importance of credit score in personal loan approval

• Creditworthiness: Credit scores are used by lenders as a tool to assess the borrower’s creditworthiness. A higher score indicates a lower risk of loan repayment default, giving lenders confidence in the borrower’s ability to repay the borrowed amount. An excellent credit score signifies responsible financial behaviour, making you more creditworthy for a personal loan and providing you quick approval.
• Personal loan eligibility & interest rate: Your credit score directly impacts your loan eligibility and interest rate. Lenders have specific credit score requirements for personal loans. Borrowers with higher scores are more likely to meet those eligibility criteria and receive more favourable interest rates, being less risky. A lower score means a lower interest rate, lower EMIs and instant approval.
• Loan amount & terms: Credit scores also affect the loan amount you can borrow as well as the repayment terms offered by lenders. Having a higher credit score may qualify you for a larger loan amount and provide you greater financial flexibility. Furthermore, individuals with good scores may get more favourable repayment terms, such as extended tenures, lower processing charges, etc., enhancing the affordability and approval chances for the personal loan.

Tips to improve your credit score for instant personal loan approval

• Make timely payment of existing debts: Paying your credit card bills, loan EMIs, and utility bills on time will help you establish a positive payment history.
• Avoid multiple credit applications: Limit the number of loan or credit card applications, as multiple credit inquiries within a short span can lower your credit score. Only apply for a loan or credit card when necessary and conduct thorough research before making applications.
• Maintain a low credit utilization ratio: Keeping your credit card balances low and trying to utilize only a small portion of the available credit limit will help you improve your credit score. A high credit utilization ratio can hurt your credit score.
• Monitor your credit report regularly: Keep track of your credit report for any errors or discrepancies. Address them promptly if required. Regular monitoring of your credit report helps you keep a check on your creditworthiness and take immediate corrective measures if needed.
• Build a strong credit history: Having a limited credit history is not good. Consider establishing a strong credit history by using your own or a co-authorised credit card responsibly. Building a positive credit history shows your ability to handle credit responsibly.

Your CIBIL score is a vital factor in determining your personal loan eligibility as lenders rely on credit scores to assess your loan creditworthiness, approval, loan amount, interest rate, and repayment terms. Maintaining a good credit score is crucial and can be done by practicing responsible financial habits.

Medical emergencies come without warning, disrupting even the most carefully laid financial plans. While health insurance provides crucial coverage, it may not cover all expenses and/or certain hospitals may be outside your insurance network. In such situations, a personal loan can provide you with quick and flexible financial support, helping you manage urgent medical costs without delay.

Here is a brief regarding the key features and advantages of personal loans to help you make informed decisions for managing medical emergencies.

Quicker loan processing and disbursals

Increasing adoption of digital onboarding has made it easier for many banks and NBFCs to disburse personal loans on the same day as the application. Most lenders now offer instant personal loans through fully digital and paperless application process, enabling borrowers to meet their medical expenses quickly and with minimal hassle. For example, HDFC Bank claims to disburse pre-approved instant personal loans to its pre-approved customers in 10 seconds.

Minimal to no documentation

Individuals are usually required to submit their identity-, income- and residence-related documents for availing personal loan. The documentation process is even simpler for pre-approved personal loans, with little to no additional paperwork. This makes personal loans a convenient option for dealing with health care emergencies, especially when quicker turnaround time is critical. For instance, SBI offers preapproved personal loan of up to Rs 15 lakhs through its YONO app to its select account holders without any physical documentation.

Flexible repayment tenure

Personal loans provide flexible repayment options, giving you the time to manage medical emergencies and make repayments through easy EMIs. Lenders usually offer personal loan tenures of up to 5 years. However, some lenders offer longer repayment periods of 6 years and 7 years. For example, ICICI Bank offers personal loans with repayment tenures of up to 6 years while Canara Bank allows loan tenures of up to 7 years.

Longer repayment tenures reduce the EMI, which makes it easier for the borrowers to manage their EMIs and thereby, reduces the chances of default. However, longer repayment tenures lead to higher interest costs. Similarly, choosing shorter loan tenures helps you pay off the loan faster through bigger EMIs but reduces the total interest cost. Thus, borrowers should always choose their personal loan tenure after factoring in  their repayment capacity.

To make an informed decision, one can use Personal Loan EMI calculators available on the lender’s website or on online financial platforms like Paisabazaar. This will allow you to estimate your EMIs in advance and better manage your finances.

No requirement of collateral

Being unsecured in nature, personal loans do not have any collateral requirements. Lenders evaluate your application based on various factors, such as your monthly income, occupation, credit score and employer’s profile. This makes personal loans a preferred option for borrowers who need quick access to funds without having to offer any security or collateral.

Cheaper than credit cards

If you are considering to use a credit card to pay your medical bills or withdraw cash, it’s important to compare the credit cost of credit cards and personal loans. Dealing your medical emergencies through credit card payment would incur no additional cost as long as the dues are paid off by their bill due dates. However, if left unpaid, credit card transactions incur interest cost of 40% p.a. or higher. Cash withdrawals through credit cards would incur similar interest cost but right from the date of transaction, irrespective of the repayment of bills, along with an additional cash withdrawal fee of about 2% of the withdrawn amount.

In the case of personal loan interest rates usually start from 10.50% p.a., with some public sector lenders charging even lower rates.

While credit card EMI options or loans against credit cards may have lower interest rates than the finance charges levied on unpaid credit card balances, the interest rates of personal loans are usually a bit lower than the credit card EMIs or credit card loans.

Thus, if you are confident of your ability to repay your credit card dues by their due dates, then using your credit card for medical emergencies could be a better option. Else avail a personal loan to deal with medical emergencies

Have you ever wondered what the biggest tax mistake businesses make is? It’s not fraud or late payments—it is poor tax accounting practices that lead to costly mistakes and missed opportunities. These mistakes can put businesses at risk of penalties and financial instability. That’s why every small or large business must manage taxes efficiently to stay compliant and financially secure. This is where ACCA Strategic Professional expertise becomes invaluable, helping businesses confidently navigate complex tax practices with confidence.

Let’s break down the essential Tax Accounting practices every business should follow to ensure smooth management.

Essential Tax Accounting Practices for Business Success

Mastering tax accounting is crucial for businesses to stay compliant, avoid penalties, and optimise financial planning. Below are the key tax accounting practices every business should follow to ensure smooth tax management and long-term success:

1.Keep Accurate Financial Records

Keeping correct financial records is one of the most basic components of tax accounting. All transactions—including income, spending, and deductions—must be meticulously recorded to guarantee accurate tax computations. Poor bookkeeping can result in mistakes, incorrect computations, and possible tax penalties. Companies that don’t keep accurate records risk audits or tax issues.

Businesses should methodically arrange all financial papers, invoices, and receipts to avoid such problems. Accounting software can make tracking transactions easier and guarantee that profit-and-loss accounts comply with tax laws. A systematic record-keeping approach reduces noncompliance risks and makes tax filing easier.

2.Understand Your Business’s Tax Obligations

Distinct business structures have distinct tax duties, and knowing which taxes your company is subject to is important. Business profits are subject to corporation tax, and knowing the various deductions can help lower tax obligations. A business must register for VAT and charge it correctly if it exceeds the VAT or Value-Added Tax threshold.

Employers must also deduct income tax and National Insurance contributions from employees’ pay cheques to comply with PAYE or Pay As You Earn requirements. Noncompliance with tax responsibilities may result in serious penalties. Keeping up with tax regulations guarantees seamless operations and assists companies in avoiding needless legal and financial repercussions.

3.Separate Personal and Business Finances

Combining personal and corporate finances can present serious difficulties regarding tax filing. Maintaining financial segregation makes it possible to precisely manage business-related spending and correctly claim tax deductions. Creating a company bank account helps keep transactions transparent and prevents misunderstandings.

Keeping a business credit card makes tracking payroll and investment-related costs easier. Properly separating corporate funds prevents mistakes that could lead to tax audits and increases the efficiency of tax filing.

4.Plan for Tax Payments in Advance

Tax liabilities can become a financial problem if businesses do not plan ahead. Setting aside money for tax responsibilities throughout the year guarantees on-time payments and prevents financial hardship. Businesses should anticipate their tax obligations early in the year to make appropriate plans.

A tax reserve account may be useful for paying off outstanding balances without interfering with cash flow. Quarterly tax payment plans may also be available to some businesses, which help manage tax bills in modest instalments rather than confronting a massive, unexpected charge at the end of the fiscal year.

5.Claim All Eligible Tax Deductions

Many businesses miss out on possible tax savings as they are unaware of their eligible deductions. Office rent, utilities, travel expenses, and equipment purchases are common deductible expenses. Professional development is a financially advantageous approach since team training expenditures may also be tax deductible.

Research and Development and R&D- related businesses may be eligible for tax breaks, drastically reducing their tax liability. Businesses can maximise their deductions while adhering to tax restrictions by routinely examining tax legislation and seeking advice from a qualified accountant.

6.Stay Updated on Tax Law Changes

Businesses must stay informed about the latest changes to tax laws, which occur frequently. Failure to follow new tax laws may result in fines or lost tax-saving opportunities. To stay informed, businesses should attend tax accounting webinars, subscribe to official government updates, and maintain relationships with professionals in the field.

Working with accounting experts specialising in corporate tax laws can help companies negotiate complicated tax requirements and maintain compliance.

7.Seek Professional Guidance When Needed

Even if businesses have a firm grasp of tax accounting, they may still need professional guidance to prevent expensive mistakes. Expert tax accountants can guarantee proper tax returns, help find ways to reduce taxes and offer advice on intricate tax issues, including cross-border transactions.

Since tax reporting mistakes can have serious financial repercussions, getting expert help guarantees that companies maintain compliance while maximising their tax strategy. Additionally, having a trustworthy tax professional on board helps ease businesses’ minds and free them up to concentrate on expansion rather than tax issues.

Conclusion

Effective tax accounting is essential for maintaining compliance, reducing liabilities, and ensuring financial stability. By following these key practices, businesses can avoid penalties and simplify tax management. Staying informed about tax regulations and seeking expert guidance can make a significant difference.

MPES Learning provides valuable resources to help professionals enhance their tax knowledge and confidently navigate business taxation

The capacity for people to work hard declines with age as physical capability starts to wane. However, the need to provide for oneself and the family remains.

To ensure that you keep earning after your retirement, put your savings to use with a retirement plan. Mutual Funds are a good option to serve this goal. You can start saving with SIPs and then proceed to SWPs to ensure regular income.

Further, a Systematic Withdrawal Plan Calculator can assess your returns for accuracy in financial planning.

Getting Started on Retirement Plans

As active as you are now, once you are over 60, all you will want is to complete your bucket list and have a peaceful life. The best way to do both is to have a significant nest egg that allows you to spend when needed while keeping your finances well-managed.

Planning for retirement calls for a disposable income. While you can start planning as soon as you start earning, most do it when they have some extent of financial flexibility and tolerance.

Further, you will also need to chart out your financial goals, how much financial risk you can take, and the amount of liquidity you need to maintain while investing.

Investing after 40: options to evaluate

Though there is no hard and fast rule that you have to start investing at 40, this is the average age of Indians getting started on retirement plans. The biggest reason is that our disposable income at 40 is fairly high. This increases our risk tolerance.

People tend to use the following tools to grow their funds:

●Gold and Real Estate

Fixed assets whose value appreciate over time, this was one of the more popular methods of investing. However, with time and an increase in market rates, this method has become hard to avail for those with limited disposable income.

●Stocks and Bonds

These involve investing directly in the financial market. Though high risk, they also tend to promise high returns. However, investing in these involves proper market research and a certain level of expertise.

●PPFs and FDs

Held with official bodies like the EPFO or banks, these offer safe investments. However, it must be noted that the rate of return on these is fairly low.

●Mutual Funds SIP

With small regular investments, SIP builds your wealth by compounding the invested amount with the help of Mutual Funds.

●Mutual Funds SWP

Though similar to SIPs, the Mutual Fund SWPs have an added advantage. They allow you to draw small amounts from your investment and offer more financial flexibility.

Further, online tools like a Systematic Withdrawal Plan Calculator for Mutual Funds can help investors understand the risk vs reward of their investment plans.

Systematic Withdrawal Plan: the Mutual Fund Option for Retirees

While there are multiple options to build your nest egg when you are earning, everyone needs a source of income after they retire. Thus, an investment that offers a small regular payout serves as an ideal situation.

To meet this demand, the Systematic Withdrawal Plan for Mutual Funds was designed. Catering to those who already have a certain amount of savings but low disposable income, SWPs offer regular payouts. This makes it the best option for retirees.

Using a Systematic Withdrawal Plan Calculator you can calculate the amount of returns that you can get from your investment.

Things to Know

When opting for a Mutual Funds SWP, there are certain things to keep in mind:

• You must have significant savings to avoid depleting them.
• You should diversify your investments to ensure capital generation.
• All investments yield based on market risk.
• Seek expert advice to evaluate your risk-taking capability and the best investment route.

Exploring the Benefits of SWP

With Systematic Withdrawal Plans, you enjoy the following:

• A steady income source.
• Better management of market volatility due to steady withdrawals.
• Financial flexibility to investors.
• Lowered tax liability.

Using the Systematic Withdrawal Plan (SWP) Calculator

A mathematical tool, the Systematic Withdrawal Plan Calculator calculates your expected returns with the help of the below formula:

A = PMT ((1+r/n)^nt – 1) / (r/n)

A → The expected amount you intend to receive

PMT → The withdrawal amount

r → The rate of return per year (or period)

n→ Number of compounding taking place per year (or period)

t → Period of investment

Though returns may vary with market conditions, the Systematic Withdrawal Plan Calculator makes a fairly accurate assessment to ensure that you make a well-informed choice.

Evaluating Risk vs Rewards for Your Retirement Plans

Once you start researching investment options, you will find a number of plans. However, investors need to choose wisely based on their financial goals. One of the easiest options for a retirement plan is opting for Mutual Funds SWPs.

If you have already retired, SWPs offer steady withdrawals that serve as your earnings without depleting your savings. For late investors, SWPs can help meet simultaneous financial needs as well as save for the future.

With a little help from a Systematic Withdrawal Plan Calculator, investors can learn how much they stand to gain. This helps them ensure accuracy in financial planning, especially for their retirement.

Building a Retirement Plan with Mutual Funds

A moderate-risk yet high-reward investment tool, Mutual Funds are the top choice for many. Further, it allows various modes of investing to cater to investors from all walks of life.

While options like SIP can help grow your investment easily at an early stage, SWPs offer financial flexibility to investors. Though the option for withdrawals is available, ensure that this does not deplete your actual investment for maximum returns.

Use a Systematic Withdrawal Plan Calculator to evaluate your returns, make considerations for market risk, and start investing today to enjoy a peaceful retirement.

Term insurance is crucial for those above the age of 50, particularly those looking to financially secure their futures. While many may feel that life insurance is more suited for younger individuals, multiple insurers offer options tailored for seniors as well. These plans ensure financial protection for loved ones and peace of mind for the insured. To make informed decisions, using a term insurance calculator can help estimate premiums and coverage, ensuring the chosen plan fits your needs. Here is a guide to the best term insurance plan in India for senior citizens and all other necessary modalities.

1.Why Term Insurance for Senior Citizens?

Seniors over the age of 50 will find term insurance useful for the future security of their families, if and when they are not around anymore.

Term insurance has another purpose for senior citizens, which includes providing a one-time lump-sum amount to the beneficiaries covering outstanding loans, or even upholding the current lifestyle of the family. Unlike investment-linked policies, these plans are highly affordable and provide only pure life coverage.

2.Features of the Best Term Insurance Plans for Seniors

1. a) Extended Age Cover

The best term insurance plans in India can give you extended coverage till 75 years of age and, in rare cases, up to the age of 85. Thus, it ensures safety for a longer duration without any hassles. This extended cover is essential for senior citizens who need financial protection during their retirement years.

1. b) Affordable Premiums

Although the premium for senior citizens is much higher compared to other age groups, some insurers still offer competitively reasonably priced policies. A careful comparison can allow one to have a reasonably priced term insurance plan in India.

1. c) Critical Illness Add-Ons

Health risks are comparatively higher for those who are older. Some term plans will give you options to add riders to your policy. These ensure added financial support in a variety of situations, right from being diagnosed with critical ailments to suffering from a disability arising due to an accident.

1. d) Easy Application

A few insurance companies offer plans for seniors with simplified medical underwriting. However, many plans still require medical tests, especially for higher sum assured amounts. This makes buying a policy slightly more challenging for some individuals.

3. Best Plans for Senior Citizens in India

The selection of term insurance is majorly based on what exactly one evaluates and compares in a market. Therefore, here are some key areas:

• Sum Assured: The coverage amount should be sufficient to take care of your family’s needs, including debts and daily expenses.
• Affordability of premium: Find a policy that provides the right balance between the benefits and premiums. Often, annual premium options provide ease of budgeting.
• Claim Settlement Ratio: While this ratio ensures seamless processing of claims made by your family in the future and gives an overall idea of an insurer’s performance, it is advisable to also review their specific claim handling process for term insurance plans.
• Medical Requirements: Most policies for seniors insist on medical tests, but some plans may waive these for lower coverage amounts.

4.Key Advantages of Term Insurance Plans for Senior Citizens

• Financial Independence: This keeps your family from turning financially dependent immediately after your demise.
• Tax Benefit: Premiums for term insurance are allowed as a deduction under Section 80C of the Income Tax Act, subject to the overall limit of ₹1.5 lakh for eligible investments
• Peace of Mind: It comforts your mind to know that your family is well taken care of financially during your retirement years should you pass away.