Personal financial planning

THIRD ASSIGNMENT

Submitted to Lovely Professional University

Submitted by: Supervisor:

SURENDER PAL SINGH, Mr. Lalit

RS1902(A05)
DIFFERENT FINANCIAL LOAN FOR DIFFRENT FINANCIAL LOAN

1) TO RUN THE BUSINESS-:

Business Loan--A business loan is designed for a wide range of small, medium and
startup business needs including the purchase, refinance, expansion of a business,
development loans or any type of commercial investment.

2) TO PURCHASE HOME—

Home Loan---A Home Loan is a loan secured on your home. You can unlock the
value tied up in your property with a secured Home loan, and many people choose to
do so with this kind of loan.

Home Improvement Loan

A Home Improvement Loan is a low interest loan secured on your property. With a
Home Improvement Loan you can borrow money with low monthly repayments.

Remortgage Loan

A remortgage is changing your mortgage without moving your home. Remortgaging is

the process of switching your mortgage to another lender that is offering a better deal
than your current lender. This process is done to help you save money. A remortgage
can also be used to raise additional finances by releasing equity in your property.

3) TO PURCHASE CAR
 Car Loan---The basic types of car loans available are Hire Purchase and
Manufacturer’s schemes. Hire purchase car finance is arranged by a car dealership,
and in essence means that you are hiring the car from the dealer until the final
payment on the loan has been paid, when ownership of the vehicle is transferred to
you.

4) Payday Loan

Payday Loans also known as Cash Loans are arranged for people in
employment who find themselves in a situation where they are short of
immediate funds

--DIFFERENT CREDIT SOURCES AVAILABLE TO FULFIL NEEDS—

1) Commercial bank- A financial institute that offer the full range of

financial services to individual and government agencies.

2) Consumer finance companies- a finance company that makes loans to

people who have trouble getting a bank loan
 3) Credit union- A user owned non profit , cooperative financial institution i.e
organised for the benefits for its member.

4) life insurance companies- these companies give life insurance cover as

well as loan to the consumer-

COMPARISION BETWEEN THE DIFFERENT CREDIT

SOURCES

Type of credit sources Pros Cons

Retail or traditional banks • Widely available • need to have a good

credit rating
• May offer better rates
for existing customers • Might not offer the lowest
rates possible

Savings & loans • Might offer lower • You need to have a good
rates than traditional banks credit rating

• Might not exist in some

states

Savings banks • Might offer lower • You need to have a good

rates than traditional banks credit rating

• Might not exist in some

states
Credit unions • Can be easy to • Need to be a member of
establish if you're a the organization or group
member

Consumer finance companies • May not need an • Rates may be higher due
unblemished credit history to the additional risk the lender
may face

Sales financing companies
• Can be easy to apply • Rates may be higher due
for a loan to the additional risk the lender
may face
• May offer favorable
terms during promotional • If you default on the loan,
periods you may lose the item you
purchased as well as payments
you've made

USES AND BENEFITS OF CREDIT CARD-

• They allow you to make large purchases on credit without carrying around a lot of

cash.

• They allow convenient remote purchasing - ordering/shopping online or by phone.

 • They allow accurate record-keeping by consolidating purchases into a single

statement.

• Carrying a Credit card is more safe & convenient than carrying cash or a cheque book.

• Credit card may also offer a rewards program where you get cash back, frequent flyer
miles or discounts on services and merchandise.

COMPARISION OF CREDIT CARDS

1) STANDARD CHARTER credit card

Purpose :
To meet the credit requirements of personal requirementindustrial unit, retail trader, artisan,
Small Scale Industry (SSI)

Assessment
(TAX) Charges-
The small business credit card limit can be fixed as follows :

For small business, retail trader etc. 20% of the annual turnover declared for tax purpose
or last twelve months turnover in the operative accounts, whichever is higher.

 For professionals and self employed persons, 50% of their gross annual income as per
IT return shall be considered as the limit for issuing the SBI credit card.

Fee charges for customer:-

• Late payments or overdue payments

• Charges that result in exceeding the credit limit on the card,called overlimit fees
 • Returned cheque fees or payment processing fees

Interest rate :
As per extent instructions issued from time to time relating
the market segment. Now its 12% annually .

2) HDFC Cash Plus credit Card

We uses our HDFC Bank Cash Plus Card for cash withdrawal from ATMs.

We uses it for making the payments for purchase made at the merchant establishments.

HDFC card provides customers with an option, in addition to the existing banking credit
facilities available. With an HDFC card customers can enjoy hassle-free credit facilities.

Purpose :

To meet the credit requirements of small business units,

industrial unit, retail trader, artisan, Small Scale Industry (SSI)
and tiny units.

Eligibility :

Customers of the following segments with a satisfactory track record for the last two years
enjoying credit facilities:-

 Small industrial units (SSI and tiny units including

artisans)
 Small retail traders (Under SBF)
 Professional and self employed persons

Fee charge to customer:-

• Late payments or overdue payments

• Charges that result in exceeding the credit limit on the card,called overlimit fees
• Returned cheque fees or payment processing fees
• Membership fees (annual or monthly)
• Exchange rate loading fees

Interest charges
• Credit card issuers usually waive interest charges if the balance is paid in full each
month, but typically will charge full interest on the entire outstanding balance from the
date of each purchase if the total balance is not paid.

• the interest rate on a particular card may jump dramatically if the card user is late with
a payment on that card or even if the issuing bank decides to raise its revenue.

Other fee

1.Interchange fee: In addition to fees paid by the card holder, merchants must also pay
interchange fees to the card-issuing bank and the card association.

2. Interest on outstanding balances:Interest charges vary widely from card issuer to card
issuer.