| Spring DIY fever is on the way - how will you pay?
Should you be considering home improvements? And if you decide to go ahead, how will you finance them? The obvious answer is to consider a personal loan - and there are plenty of good deals on the market - but since the improvements are tied up with the value of your home, you might find a better deal by remortgaging. Remortgaging tends to be the cheapest way that most of us can borrow money and, if youre going to be adding value to your property, it may well be the most sensible way of paying for home improvements. Remember that you can often take out additional borrowing on a different basis from your existing loan, perhaps borrowing a new tranche of cash with a discounted loan to add to the fixed rate offer you have already, or vice versa. An extra bathroom should pay for itself, as long as it does not replace a bedroom in a small house.
A Loan at Home
Lending money to family and friends is a timeworn tradition--one that probably has worn out more relationships than it has helped. Still, if you've been fortunate enough to sock away some cash, can you say no to a child wanting to launch a business or a close friend who has run into temporary problems? You can. But if you decide otherwise, consider that most business start-ups fail and that temporary problems have a way of becoming fatal ones. In other words, a lot of these loans go bad. About 14% of personal loans end up in default, according to Circle Lending, which formalizes loans between family and friends. That compares with about 1% of bank loans. So don't be surprised if your largesse ends up lost. That may be fine if the borrower is in your will anyway and the wealth transfer doesn't run afoul of federal limits on tax-free gifts.
CRR hike spurs home, personal loan rates
MUMBAI, MARCH 30 (PTI) — Home, personal and other loan rates are set to go up as Reserve Bank hiked key rates of cash reserve ratio (CRR) by 0.5 per cent in two phases and Repo rate by 0.25 per cent in a bid to contain surging inflation. While CRR will go up from 6 to 6.25 per cent in the first phase to be effected on April 14 and then to 6.5 per cent in the second phase from April 28 to absorb excess liquidity of Rs 15,500 crore from the banking system.The Repo rate, which is used by banks to borrow from RBI, has been hiked by 0.25 per cent to 7.75 with immediate effect, making borrowing costlier.RBI has already hiked CRR twice in two phases each and Repo and reverse Repo rates several times as outlook inflation assumed criticality hovering over 6 per cent.Only in February and March , RBI had hiked CRR in two trenches of 0.25 per cent each to mop up Rs 14,000 crore with the economy showing signs of overheating in the face of high GDP growth of over nine per cent.Bankers were quick to react sharply to the move saying it will curb growth and affect profitability and indicated that interest rates on home, personal and other category loans could go up.The RBI also reduced by 0.5 per cent the interest rate applicable on eligible CRR balances— the amount of reserves between statutory minimum CRR and CRR prescribed by RBI.The interest rate on eligible CRR will now be 0.5 per cent from the present one per cent per annum, with effect from fortnight beginning from April 14.The move comes three weeks ahead of the annual monetary and credit policy on April 24 and this is the second time that the key CRR rates have been hiked since the last credit policy in January.As Prime Minister Manmohan Singh, Finance Minister P Chidambaram and RBI Governor Y V Reddy have repeatedly indicated that soaring prices were a matter of concern and today's measures were aimed at containing inflation on an urgent basis.“In the light of the current macroeconomic, monetary and anticipated liquidity conditions and with a view to containing inflation expectations it was critical to take demonstrable and determined action on an urgent basis," the RBI said in a statement.The statement said that liquidity adjustment facility operations announced on March 2 would continue besides the policy of withdrawal of semi-durable and durable elements of liquidity through treasury bills and dated securities under mss.Active monitoring of macroeconomic, overall monetary and liquidity conditions would continue and all monetary policy actions would be considered in response to evolving situation, RBI said.
Payment as important as purchase
Consumers who invest a lot of time in choosing a car should be equally careful when selecting their financing method, according to finance experts.While the most common form of forecourt finance is quick and easy to arrange, it is not always the best deal according to MoneyExpert.com.Hire Purchase agreements, in which the loan is secured against the car and the car is not owned until the last payment, can be set up at the car dealers, but often have APRs in double digits.Dealerships themselves also offer the possibility of deferring a portion of the car's value until the end of the term when the buyer can choose to pay the sum, return the car or swap it for another.While this scheme does involve lower repayments, it is only suitable for buyers who are aware of and can predict their financial situation.According to MoneyExpert.com, the best option is to look ahead and get an agreement on principle on a personal loan.Personal loans do not carry arrangement fees, have lower APRs, and walking into the dealership with an approved loan can give the buyer leverage in price negotiations as they will be treated as a cash buyer.Robin Amlot, senior editor at Moneyextra, concluded: "Drivers should not let the smell of a new leather interior lure them into poor financial decisions at the last hurdle."By taking the time to arrange finance before visiting the forecourt, motorists can be sure that they will enjoy every mile in their new car and be certain that they are getting more metal for their money." .
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