Will Motor Vehicle Amendment Bill Improve Road Safety?

Every year around 1.5 lakh Indians die in accidents. Every four minutes, one Indian is killed on the roads, every day 16 children die in accidents. A man hit by a tempo bled on a Delhi road for 90 minutes on 11 Aug 2016 morning. Hundreds of people drove past the dying man, but not one person came forward to help. Accidents like these keep happening, but the question that remains unanswered is how can we avoid them? What can be done to increase road safety in India? Government has come up with Motor Vehicle Amendment Bill of 2016. Will it improve road safety in India?

Road Safety in India

Road Safety in India is a major issue and reports state that over 5 lakh road accidents happen every year, which results in more than 1.5 lakh individuals losing their lives. Here is a report released by the Ministry of Road Transport and Highways in Jun 2016 (Ref Hindu) road rash in India is as follows

 

Number of road accidents in India

Number of road accidents in India

According to analysis of the report by Save Life Foundation, an NGO that works towards improving road safety in India, a two-wheeler rider is the most vulnerable to fatalities on the road. Peculiarly, the age-group most frequently affected is between 15 and 44, while males constituted nearly 82 percent of the fatalities in 2015.

Motor Vehicle Amendment Bill 2016

The Union Cabinet chaired by the Prime Minister has given its approval for Motor Vehicle (Amendment) Bill 2016. The amendment aims to reduce the accidents and fatalities by 50 per cent in five years. The Government plans on doing so by imposing hefty penalties and fines on traffic offenders. Here are the major highlights of the Motor Vehicle (Amendment) Bill 2016.

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Term Loans VS Working Capital Loans: Which One Do You Need

The need for finance arises during the course of a business. Firms have many alternative channels to choose from various sources of funds. But the bottom line decision is to choose between short-term working capital loans and long-term loans, as both of these sources work differently. Deciding on which source to apply,Term Loans VS Working Capital Loans, for given the circumstances is a tricky one.

Working Capital Loan

Working capital loans are an important source of funding for businesses to generate immediate cash for their daily expenditures. Sometimes, firms are cash-strapped and may require help to cope up with seasonal business demands or to pay salaries to their employees or even the monthly rent. Assistance from such external sources may help to get the business on track.

However, working capital cannot be used for investments in a new project or business expansion activities, as they are short-term liquid loans. Such loans are given only for a period of less than a year. It is comparatively easier to get working capital loans, especially if you have a good credit score. It does not involve much paperwork, as it is provided for a shorter term. The interest rates for working capital loans are high.

Estimating working capital requirement is easier if you use a small business loan calculator. It helps analyze the amount of built up inventory plus the cash you owe from others, minus the amount you have to pay to your suppliers. In a nutshell, it is the difference between your current assets and your current liabilities.

Term Loans

Term loans are usually taken for a longer term; say one to 10 years. Such sort of finance is used to fund major investments, the purchase of machinery or expanding business reach. Such loans involves a huge amount of money, the payment of which is done in a period of years.

Usually, it is considered that working capital is expensive. However, you end up paying more interest on term loans because the interest of the loan keeps building up over the years. You can use the business loan calculator to estimate the total repayment amount with the principal and the interest.

Getting a term loan is not a cakewalk; it involves a number of procedures and paperwork. Financial institutions check the borrowing company’s credit worthiness, bank statements, reputation in the market, collateral and the ability to repay before investing in them.

Understanding the nature of funds and tailoring them as per business needs is crucial for the success of your business. The type of funding largely depends on your business requirements. If you need financing to meet immediate business demands or to pay off a small amount, then a working capital is the best-suited option. On the other hand, if you are considering expansion, modification of business or introduction of a new project, long-term loans are a good choice.

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Two Wheeler Loans and their Benefits

In recent years, two-wheelers have become one of the most preferred modes of transport. Why, you ask? The obvious answer is the congestion on the roads and also the fact remains that two-wheelers are cheaper to purchase and maintain compared to cars. Several car-owners and buyers are preferring two-wheelers for short distance, intra-city transport. Having said that, the price of the mid to high end two wheelers makes a direct cash or one-time-payment purchase difficult. In such cases financial institutions have come up Two Wheeler loans to make purchasing a two-wheeler much easier.

Two Wheeler Loans

Two-wheeler loans have proven to be a boon to consumers who cannot afford to or do not want to pay the entire amount. Interest rates on two wheeler loans are reasonable and can be paid off in easy EMIs.

Unlike some other financing options a two-wheeler loan is relatively easy to acquire. They get processed faster than the normal loans and research shows us that a majority of individuals don’t struggle while repaying it.

Where to avail Two Wheeler Loans?

Several financial institutions in the country at this moment provide these loans. You will be able to connect with them from the showroom you are purchasing the two-wheeler itself. The good thing is that now you can even apply for a two-wheeler loan online! Like any other loan application along with your documents you also need a good credit score. The online loan will take the same amount of time to process as a bank would take.

Benefits

Two-wheeler loan interest rates vary from institution-to-institution and you should be careful while opting for one. But the good part here is that, these loans generally have a low interest rate attached to it, making it manageable. They have a very flexible repayment period, which means there is minimum hassle while repaying them.

Make sure to compare two-wheeler loan interest rates and benefits across financial lending institutions before deciding which two-wheeler to buy.  There are a few leading players in the market that provide two-wheeler loan services which can be considered: Mahindra Finance, Capital First and Fullerton India to name a few. Capital First is a leading NBFC providing instantaneous loan approvals. Know more about it here.

Note: This is sponsored post.

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On Becoming NRI: What to do when you leave India to settle abroad

Indians go abroad, for a better future for self or for one’s children, better work and career opportunities, better facilities to utilise one’s skills or for the simple reason of earning big money in dollar, euro or dirham. If you packing your bags, there are a few financial issues you must attend to before you board the flight.  This article explains what to do when you leave India to settle abroad. What do you do with the bank accounts that are operational at home? How do you service the loans that you might have taken? Should you hold on to your stocks and mutual fund investments? Do you need the life and health insurance covers that you purchased? What are the tax implications of the move abroad?

Who is Non Resident of India or NRI?

When you move out for long periods on such job opportunity, you become an NRI.  A ‘Non-resident Indian’ (NRI) is a person resident outside India who is a citizen of India. An individual is considered a resident in India if any one of following conditions is satisfied.

  • He is present in India for 182 days or more during the financial year; or
  • He is present in India for 60 days or more during the financial year and present in India for 365 days or more in the last four financial years.

A ‘Person of Indian Origin (PIO)’ is a person resident outside India who is a citizen of any country other than Bangladesh or Pakistan or such other country as may be specified by the Central Government. Basically PIO (Person of Indian Origin) holds another countries’ citizenship/nationality i.e. he/she is holding foreign passport. In respect of facilities available in economic, financial and educational field, PIO/OCI is considered the equivalent of an NRI.

NRIs are eligible to invest in India. An NRI requires a bank account and necessary documents to begin investing in India. Apart from the real estate sector, they can choose the mutual funds and stocks. If an investor finds it difficult to operate the account in India, they can choose a person who would manage the entire operation through power of attorney. There are different processes for residents and NRIs for various kind of financial products. Like, if you become an NRI and want to do something with banks, mutual funds, life insurance policies (traditional or ULIPs), you will first have to update your KYC and only then can you do something.

Banking on becoming NRI

Types of Bank accounts that an NRI can have

By law, NRIs are not allowed to hold regular savings accounts in India. So either close it or convert your account from Indian resident account into NRI account. An NRI has 3 options of savings account to choose from an overview of which is given below. Our article Bank Accounts for NRI:NRO,NRE,FCNR discusses it in detail

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Paying Credit Card Bill, Understanding statement,Paying Just Minimum

Credit cards is not free money, but a loan. You need to pay for what you have bought on credit card. If you don’t pay full or pay minimum balance you will have to pay more as you will be charged interest, huge interest. This article talks about Paying Credit Card Bill, how to read Credit Card Statement, what happens If you don’t pay credit card Bill in full? A credit card is an easy-to-use but complex loan product; understand it well and it will be a friend

Understanding Credit Card Statement

As we know a credit card is used by the cardholder to pay for something or to withdraw cash on credit.  Having a credit card doesn’t mean that one can take unlimited amount. The lender puts a limit on how much you may spend on the card The limit is called credit limit.One needs to remember that one needs to pay back. Each month, credit card issuer sends a bill of statement, which has following details. Image below shows the statement .

Paying Credit Card bill

Statement of credit card bill

Statement Date: Period for which you are billed.

Payment due date: This is the date before which your payment (cheque or demand draft) should get credited to the bank to avoid pena. To be more specific, this is the last date by which your payment has to be recorded in your bank’s computer.  This is not the date your bill has to be postmarked, or even the date it arrives at the company’s office. So be sure that your cheque/DD reaches the bank well before the due date so that no late payment fee is levied to you.

Total amount due: This is the total bill amount to be paid — the total unpaid accumulated amount outstanding in your account, including interest and any other charges like late payment fees, if any.

Minimum amount due: It is the minimum amount required to be paid to keep your account in a good credit standing. This amount is usually 5 per cent to 20 per cent of your total amount due. If you do not pay the minimum amount due by payment due date, it will be considered as a default and levied a late payment fee.

Tip to remember: Even if you pay the minimum amount due, you will be charged interest on the total amount due (including the minimum amount due that you paid). If you do not want to pay interest you have to pay the entire total amount due before payment due date. Even if you have paid 95 per cent of the total amount due before due date but there is still some small amount pending, you will be charged interest for the full total amount due.

Credit limit: Credit limit is the maximum amount your credit card allows you to borrow, whether as credit against goods purchased or/and cash withdrawn. The card issuing bank can revise credit limit based on your payment track-record. A good payment track record can help you in getting your credit limit increased and vice versa.

Available credit limit: It is the difference between your credit limit and total amount due. If your credit limit is Rs 50,000 and you have spent Rs 1,500, your available credit limit reduces to 48,500.

Cash limit: Cash limit sets the maximum money you can withdraw as cash using your credit card. Your cash limit is a part of your credit limit and so, necessarily has to be lower than your credit limit.

Rewards point summary: This is the record of the rewards points you have earned/redeemed till date. The summary usually gives an account of your opening balance and the points or credits earned or redeemed. You should not confuse reward points with credit limit or balance outstanding. Reward points and the method of redemption vary from one credit card to another.

Transaction details: The transaction details will have the date of transaction, place of transaction (where you spent the money) and the transaction amount. This helps you verify the charges credited to your card.

It is important that you check your credit card transaction details regularly. This is the only way you will come to know if some transaction has been fraudulently credited to your card.

Paying Credit Card Bill

The cardholder is required to pay back the amount that has been borrowed in accordance with the terms and conditions of the credit card agreement. With most types of credit card you can settle the amount owing in full and without interest (on purchases) within a given period of time, called as the grace period . Mostly companies give 20 to 25 days to make their bill payments. One can also pay off a portion of the outstanding amount and carry the remaining balance forward. Infact one can pay minimum amount due(set by the card issuer) and can continue using the card. Sounds too good to be true!! The catch is that if one does not settle the credit card dues fully, one needs to pay extra, the Interest .

Remember about the interest we talked about, how one earns interest by putting money in the bank or borrower has to pay interest on taking loan. Interest-free period for purchases is in effect only if one had paid all the dues.

If you don’t pay credit card Bill in full

Card issuers give you the option of paying a minimum amount by the due date, which is usually 2.5-20% of the total amount due, along with applicable card fees, overdue minimum payment, and any instalments. Any amount paid that’s less than the total amount will have interest charged on it. Any amount paid less than minimum payment due as on payment due date will also attract late payment charges.

Lets take an example of how much one needs to pay more if one does not pay back all the dues on the credit card. Mr Sharma bought grocery for Rs 100 using a credit card. Let’s say he didn’t pay the entire 100 Rs when the bill comes, so he needs to pay interest. Let’s say credit card issuer charges 1.25% per month. Now if Mr Kumar pays only Rs 20 per month and he doesn’t use credit card for anything else then let’s see how much time and how much extra he needs to pay. Mr Sharma will have to pay Rs 3.93 in six months

As you can see, he will repay Rs 100 in 6 months but he has to repay Rs 3.93 as interest. Rs 3.93 does not seem a big amount but if the amount due is bigger then interest part is also big. If Mr Sharma only paid Rs 10 every month then it will take 11 months to be pay the debt. In that time-period, Rs 7.51 will be paid in interest. For example if the credit is taken for Rs 1000 and only Rs 40 is paid every month then it would take 31 months (almost 2 and half years). Interest of Rs 207 needs to be paid. On the American Express Platinum travel credit card with an interest rate of 3.1% per month, on a transaction of Rs.5,000 if the minimum payment due is paid every month (subject to a minimum payment of Rs.100 every month), it will take up to 75 months for entire outstanding amount to be paid—which will balloon to around Rs.10,000. Calculators Calculator ,Calculator1   can be used to find how much time it would take to repay the credit card debt

Different credit card offers different interest rates so one should try to get the credit card with low rate. If one buys the cycle for Rs 2000 and pay Rs 500 every month then the different amounts one has to pay at interest rate of 8% and 18% is given below

INTEREST RATE TIME TOTAL INTEREST(RS) TOTAL PRICE(RS)
8% 5 months 34 2034
18% 5 months 78 2078

How much time it takes to pay the credit card debt

If you only pay the minimum amount on your credit cards (about 2 percent of the outstanding balance or 10, whichever is higher), you’ll be paying a long time. Also, you’ll end up paying more because of accumulating interest charges. The table below demonstrates how much faster you can pay off your credit card debt when you increase your minimum payment to 10 percent of the monthly balance. Also, if you make more than the minimum payment, you not only pay off your credit card sooner, but you save money in interest charges.

Years to Pay Off Credit Card Debt
Balance 1000 2000 3000 4000 5000
Interest Rate 2%payment1 10%payment1 2%payment1 10%payment1 2%payment1 10%payment1 2%payment1 10%payment1 2%payment1 10%payment1
10% 10.4 3.0 15.3 3.6 18.3 3.9 20.3 4.2 21.8 4.3
11% 11.0 3.0 16.3 3.6 19.4 3.9 21.6 4.2 23.3 4.4
12% 11.7 3.0 17.4 3.6 20.8 4.0 23.2 4.3 25.0 4.4
13% 12.4 3.0 18.7 3.7 22.3 4.0 24.9 4.3 26.9 4.5
14% 13.3 3.1 20.2 3.7 24.3 4.0 27.1 4.3 29.3 4.5
15% 14.3 3.1 22.0 3.7 26.5 4.1 29.7 4.3 32.2 4.5
16% 15.6 3.1 24.3 3.8 29.3 4.1 32.9 4.3 35.7 4.6
17% 17.3 3.1 27.1 3.8 32.9 4.2 37.0 4.4 40.2 4.6
18% 19.3 3.2 30.9 3.8 37.6 4.2 42.4 4.4 46.1 4.7
19% 22.3 3.2 36.1 3.8 44.2 4.2 * 4.5 * 4.7
20% 26.4 3.2 43.7 3.8 * 4.3 * 4.5 * 4.8
21% 33.2 3.3 * 3.9 * 4.3 * 4.6 * 4.8
22% 46.1 3.3 * 3.9 * 4.3 * 4.6 * 4.8
23% * 3.3 * 3.9 * 4.3 * 4.7 * 4.8
24% * 3.3 * 4.0 * 4.4 * 4.7 * 4.9
25% * 3.3 * 4.0 * 4.4 * 4.8 * 4.9
26% * 3.3 * 4.1 * 4.5 * 4.8 * 5.0
27% * 3.4 * 4.1 * 4.5 * 4.8 * 5.1
28% * 3.4 * 4.2 * 4.6 * 4.8 * 5.1

 

1 10 minimum payment in effect if 2% of balance drops below $10. A 1 minimum finance charge in effect if finance charge calculates below 1.

* Not in this lifetime! At these rates, payment exceeds 50 years and in many cases, interest eventually becomes greater than the minimum payment.

Picture (Infographic) below shows how much time it takes to pay the credit card debt

Difficult to pay credit card debt! Pay Credit Card Bill

Difficult to pay credit card debt!

Credit card and it’s problems

Don’t buy what you can’t afford

Credit cards are not a source of free money. In fact, using a credit card is like taking a loan. A simple way to avoid card misuse is to charge only those purchases to the card which you know you will be able afford even at the end of the month. A Rs.20,000-mobile phone may look affordable in the first week of a month, but too expensive in the last week.

Understand the card

Credit cards come with a range of interest rates, fees, and reward programmes. Look for one that best suits your circumstances. If you go to a bank’s or a card provider’s website, you will see that the cards are segregated into various sections; mainly travel, shopping, fuel, cash back, premium or luxury. Some of the important details to take note of are: rate of interest, grace period, membership fees, and renewal or annual fees. Use the comparison tool.

Remember the due date

This is a real killer because interest rates on credit cards can be quite high: from 1.99% a month (that’s 23.88% annually) to 3.5% a month (that’s 42% a year) depending on the type of card. What’s more, the interest is charged on the entire outstanding amount; and it’s applied from the date of purchase, and not from the beginning of the month. The formula used to calculate daily interest is: [(outstanding amount x interest rate per month x 12)/365].

Let’s take the Rs.20,000 phone as example. Say, the interest rate is 3.1% per month, purchase date is 20 April, and statement date is 1 May (difference of 12 days). Now, if you miss the due date, the amount of interest you will be charged is: [(20,000 x 3.1% x 12)/365] x 12 = Rs.244.60

On top of this, there will be a late payment or a delinquency fees. For example, HDFC Bank Ltd, charges a flat fee depending the statement balance due—it’s Rs.700 if the bill is above Rs.20,000.

Late payment and even withdrawing cash using your card will mean losing out on the grace period or interest-free period, which usually varies between 20 and 60 days

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