Know about the Loan, Eligibility, Features and Required Documents with Web Online CA

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    31-May-2024

Documents Required

  • itr filing Form 16
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  • itr filing online Details of Other Income

Loan - What is loan? Types, Eligibility, Features, Advantage and Required Documents

When individuals and businesses lack the funds needed for specific purposes or purchases, they often resort to borrowing money from lenders to meet their needs. In such situations, individuals and businesses/firms/institutions choose to borrow money from lenders.
Loans are financial instruments that enable individuals and businesses to access funds for a variety of purposes ranging from personal expenses to business investments. Understanding the different types of loans available can empower you to make informed financial decisions. In this guide, we'll explore the basics and different types of loans to help you effectively navigate the borrowing landscape.

What is loan?

A loan is a sum of money borrowed from a lender, usually a financial institution such as a bank, credit union or online lender. The borrower agrees to repay the loan amount with interest over a specified period, as per the terms and conditions outlined in the loan agreement. Loans can serve a variety of purposes, including purchasing property, consolidating debt, financing education, or covering unexpected expenses.

Types of Loans

There are many types of loan. Read the below for details.

Secured loans

Secured loans are granted with collateral. Borrowers must provide security to obtain secured loans. With secured loans, lenders encounter reduced risk of borrower default. If the borrower cannot repay the loan, the lender has the option to sell the asset to reclaim their funds. This is the primary reason secured loans typically have lower interest rates compared to unsecured loans.

Unsecured loans

Unsecured loans are those which do not require any collateral to be given. Instead, the bank looks at the borrower's history, their credit score, and other factors to decide whether they should get the loan. Because the bank has no guarantee if the borrower is unable to repay the loan, the interest rates for these loans can be high.

Education Loans

Education loans, also known as student loans, are specifically designed to assist individuals in financing their higher education expenses including tuition fees, books, accommodation and other related costs. Education loans may be offered by government institutions or private lenders. They typically have lower interest rates compared to other types of loans and offer flexible 
Before choosing an education loan, explore scholarships, grants, and work-study programs as alternative funding sources. Evaluate the terms and conditions of different loan options, considering factors such as interest rates, repayment plans and borrower benefits.

Personal Loans

When you are short on cash, you may consider taking a personal loan. People use personal loans for many things such as paying off old debts, going on trips, putting money down on a home or car, dealing with medical emergencies, or buying expensive things like furniture or electronics. Whether you can get a loan depends on how you have treated the lender in the past and what your credit score is. Personal loans generally do not require collateral, making them unsecured. They offer fixed or variable interest rates and flexible repayment terms ranging from a few months to several years.

Vehicle loans

Vehicle loans cover the cost of purchasing both a motorcycle and a car. Vehicle loans, commonly known as auto loans or car loans, enable individuals to purchase vehicles including cars, trucks, motorcycles or recreational vehicles. Auto loans are secured by the vehicle purchased, making them less risky for lenders. They offer fixed or variable interest rates and repayment terms that typically range from two to seven years.
Determine your budget and preferred vehicle type before applying for the loan. Consider factors such as down payment requirements, interest rates, loan terms and total borrowing costs. To get the best deal, compare loan offers from different lenders and find the most competitive rates.

Home loans

The mortgage is designed to obtain funding to purchase a home/apartment, build a home, renovate/repair an existing residence, or acquire land to build a home/apartment with the lender providing collateral. They offer fixed or adjustable interest rates and various loan terms.
Assess your financial readiness for home ownership, including saving for a down payment and maintaining a good credit score. Compare mortgage options including conventional loans, FHA loans, and VA loans to find the option that best suits your needs and financial circumstances.

Features and advantage of loan

You can select the loan type to suit your needs and eligibility.

There are many types of loans classified according to different criteria.

Some loan types and lenders may impose penalties for early loan repayment.

Many loans offer flexible repayment terms, allowing borrowers to choose from different repayment schedules such as monthly, bi-weekly or quarterly payments, depending on their financial situation and preferences.

Loans come in both secured and unsecured forms. Secured loans require collateral such as a home or vehicle, which can lead to lower interest rates and higher borrowing limits. Unsecured loans do not require collateral, but they may have higher interest rates.

Loans may offer fixed interest rates that remain constant throughout the loan term, providing predictability in monthly payments.

Lenders set interest rates based on guidance from the Reserve Bank of India.

Some types of loans, such as home mortgages and student loans, may offer tax benefits, such as the deduction on mortgage interest or student loan interest, reducing the borrower's overall tax liability.

Some loans, especially loans offered by government entities or regulated financial institutions, come with borrower protections, such as grace periods, forbearance options, or loan forgiveness programs, which provide peace of mind to borrowers.

Eligibility for loan

Lenders use your income to assess your ability to repay the loan.

A good credit score.

You generally must be of legal age to enter into a contract to qualify for a loan.

Having a steady job can improve your eligibility for loans. Lenders often prefer borrowers with stable employment records.

Document required for loan

Proof of identity (government issued ID)

Proof of Address

Bank Statements

Salary slip

Loan Application Form

Employment Verification

credit report 

FAQ's

What are the advantages of e-filing?

E-filing is a fast, convenient, secure, and sometimes free way to file taxes. E-filing is processed quickly, even if you wait until the last submission date.

If you file electronically and direct deposit your refund, the funds will be transferred to your bank account within a few days of receiving and processing your return. If you have a balance, you can pay by direct debit. And with e-filing, you don't have to worry about making mistakes, as errors are corrected immediately.

How does Online Income Tax Return Filing work in India?

Taxes imposed on the income of individuals, corporations, and other legal entities are formally called income taxes. There is no uniform tax rate for all income ranges, and it varies by industry and region, and in some cases, lower incomes are eligible to pay income tax.

There are two types of taxes: direct and indirect. A direct tax is a tax that is collected directly from the taxpayer, whereas an indirect tax is a third-party tax such as a value-added tax.

An Indian Income Tax Return (ITR) is a form for filing income and tax details with the Income Tax Authority. The tax eligibility of the taxpayer is calculated based on income. Sometimes, taxpayers are bound to get refunds from the Income Tax Department if their income tax returns show excess tax paid during the previous year.

All registered taxpayers with taxable income must file their Income Tax Returns online. However, people over 80 who do not have income from regular business or profession can also file paper returns.

 What is a GST return, and how many GST returns are filed?

GST Return is a document giving details of income that a registered GST dealer must submit to the Government of India's tax authorities. This return confirms the payment of the registered GST dealer and calculates the tax liability.

GST returns are filed monthly or quarterly, or annually by GST-registered dealers depending on the nature of the business and whether there is an option to file returns monthly or quarterly. 25 GST returns should be filed in a year.

Taxpayers who have opted for Quarterly Return and Monthly Payment Plan (QRMP) must file eight quarterly returns and one annual return. Hence, 9 GST returns are to be filed in a year.

What is the role of a Digital Signature Certificate?

A certificate serves as proof of a person's identity for a specific purpose. For example, a driving license identifies someone legally driving in a particular country. Similarly, a digital certificate may be presented electronically to identify a person, access information and services online, or digitally sign certain documents.

A licensed Certificate Authority (CA) may issue a digitally signed certificate. Certificate Authority (CA) means a person licensed under section 24 of the Information Technology Act, 2000 of India to issue Digitally Signed Certificates.

How do I register for MSME Udyam Online in India?

MSME stands for Micro, Small, and Medium Enterprises. There was no clear definition of MSME till the Atma Nirvana package was announced by the Finance Minister in May 2020. These companies were classified based on manufacturing and service industries. But after the Atmanirbhar package, this distinction between manufacturing and service industries has disappeared. The classification of these companies is currently based on investment and sales. Earlier, this process was known as Aadhar Udyog Registration.

MSMEs can register through MSME Govt Portal only. Users can register for a new MSME through this portal or re-register an already registered Udyami Aadhaar Memorandum Part II (EM-II) or Udyog Aadhaar Memorandum. The Ministry of Small and Medium Enterprises manages and operates this portal, so it is safe and reliable.

What are the benefits of having a FOSCOS/FSSAI License/Registration?

Consumers are becoming more aware of food quality, standards, and hygiene in this information age. It is more convenient for online grocery stores to be personally FSSAI certified before buying anything from outside, as it provides better assurance of food quality without contamination or foreign ingredients.

Legal Benefits: Most people still believe that getting a food license is a slow and challenging process with lots of paperwork and paperwork. There is also a need for clarification that getting a food license costs much money.

Use of FSSAI Logo: FSSAI licenses only those businesses that meet minimum hygiene standards. If you have a food sales license, you can display it on menu cards, pamphlets, packaging bags, etc. The FSSAI logo on the food will show the products in the competition.

Business expansion: All newly established companies want to expand their operations to all other places and explore new markets and consumer bases.

Customers should feel comfortable buying new products as they set up their business in recent locations. A valid food license also makes expanding your business to new places or opening new stores easier.

Quality upgrade: An FSSAI License/Registration facilitates the provision of high-quality food products and improves the overall performance of your food business.

What is a Store or Establishment License?

A shop and establishment license is a legal document issued by a state government that allows a business owner to operate legally. This license indicates that the owner has complied with the labor laws, welfare rules, and safety rules related to the store or establishment. Employers can also avail of benefits provided by the government, such as employee wages, insurance, and sick leave.

Who should apply for a Stores and Facilities License?

A store and convenience license is a mandatory registration that all businesses operating at a physical location must obtain. The specific requirements for obtaining a license may vary depending on the state in which your business is located. Generally, companies such as stores, restaurants, hotels, cafes, theaters, and other commercial establishments operating in physical locations must apply for a store and establishment license. Businesses that work from home offices or coworking spaces may also require this license. Standard documents required to obtain a store and facility license include proof of address, identity, and PAN card. Getting a license usually involves completing an application and submitting the required documents to your local municipal or state labor office.

Why is it essential to obtain a trademark registration?

Public Notice of Trademark: A registered trademark is a visible expression of ownership of a brand. Trademark registration also establishes a brand's reputation and lets consumers know that the products or services associated with the trademark meet the brand's quality and control standards. It is an acronym that helps consumers make purchasing decisions by quickly identifying and differentiating their products and services from those of their competitors.

National Validity and Ownership Estimates: Trademark registration applies nationwide and provides a presumption of trademark validity and trademark ownership. Under federal trademark law, all registered trademarks are deemed to meet all critical USPTO registration requirements and have actual requests with the trademark registration owner.

Resistance Against Trademark Infringement: Trademark registration allows us to stop competitors from infringing our trademarks and tells the police how our brands are being used. You can ask the infringer to stop using your marks or use the social media provider or online marketplace to remove the infringing content.

What is company registration?

Before filing for company registration, let us understand the concept of a company. What is a company? A company is a business entity having at least two directors and employees/shareholders. It is a legal business entity established under the Companies Registration Online Rules established under the Companies Act 2013.

So how do you register a company in India? Although the process is simple, it requires the assistance of a company registration service provider. Web Online CA provides end-to-end support, guiding you through every step required to register your company in India.

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