IMPORTANT FINANCIAL RATIOS OFTEN USED FOR LOAN PROCESSING AND EVALUATION
When someone applies for a loan either a Home Loan, Personal Loan or Business Loan or Credit Card the Banks and Issuer evaluates the loan application and eligibility of the person or the business entity on the basis of certain financial ratios. These ratios play a critical and justifying role for approval or rejection of a loan application. These ratios are the touchstones for the loan eligibility check and helps a Banker to take a calculative and intelligent decision to either sanction the loan or not. Those important financial ratios for loan are enumerated below; 1. ACID TEST RATIO The acid test ratio is also known as the liquid or the quick ratio. The idea behind this ratio is that stocks are sometimes a problem because they can be difficult to sell or use. That is, even though a supermarket has thousands of people walking through its doors every day, there are still items on its shelves that don't sell as quickly as the supermarket would like. Similarly, there are some items that will sell very well. This ratio helps in arriving... Read More
How to Manage your Financial world as an Individual?
India has seen a paradigm shift from being a country of “Savings” to “Expending” populace. Our forefathers believed more on saving for future and less spending for the present whereas the today’s generation has catapulted into a contrarian view, i.e., send today, even if you have to take credit, and think later about the future when it comes. The world is undergoing a change and today’s millennials they want to leave in present and don’t want to compromise their present with any future benefits, seen and unseen. Having said that it becomes pertinent for the current generation to, at least, inculcate a sense of financial discipline to ensure that the one does not get trapped into “debt trap” and has enough resources to manage its needs and responsibilities. Personal Loans and Credit cards have become norms of the day and nobody is shying away from availing them even beyond his financial capability of repaying them. In my view there is no harm as long as ne has a control over the expenditure and payment cycle for these types of credit... Read More
Home Loans Interest- Fixed or Floating, which is Better?
Buying a house is one of the foremost desires of individuals and they toil and plan a lot for that. For an average Indian buying a house and erecting a home for himself is an easy job especially from managing financials point of view. Invariably most of us end up taking a Home Loan or Housing Loan from banks and NBFCs to buy a home for ourselves as cash deals are not that easy to have given the socio-economic conditions and purchasing power of the Indians. Since last decade the Home Loan market has seen a great spurt in growth as not only the demand has gone up but also the Banks and Financial Institutions have started marketing the Housing Loans big time. India being on the growth path has enabled many youths to join the job bandwagon and thus they have been financially enabled to pay the required EMI for the home loan. Home loans are long term loan which means the repayment period for home loans are quite large usually, on an average, ranging between 15 to 25 years. The reasons for such a long term are, one, the loan amount- the... Read More