In this cruel world, somebody’s weakness is other’s
opportunity. Well it is a harsh reality which one cannot deny. It can be
understood in another way that everything is business. Anyone who lacks
something gives another an opportunity to earn something and the best example
for this is loan. Ideally everyone should have equal amount of money to fulfill
their desire, but it’s not the real situation and here banks and lenders get a
tremendous opportunity. They provide loans to the borrower and earn money on
interest rates. It is a sheer business but at the time of most financial crisis
these loans are not less than god.
Borrower has to keep certain precautions in mind before
taking loans.
Lets checkout
·
Never
borrow more than you can afford
The first and the most important rule to follow to be a smart
borrower are to take that much as you can pay back. Most of the borrower commit
this big mistake by taking bigger loans than their affordability hence they
lead them to severe crisis. When you take any unsecured type of loan, the
interest charged is always high as a result you have to pay bigger amount as
EMI. So, calculate all your expenses and then decide the correct amount.
·
Shorter
tenure is larger benefit
This is a very significant rule of any loan; however it has a
flip side as well. Basically, when you take shorter loan, your EMI will be high
but at the end you would pay less interest. On other hand if you take longer
tenure loans, your EMI would be less as compare to shorter loans but you would
pay much more than the actual amount. For example, if you take loans for 5
years, say interest would by 50% but if you take the same loan for 15 years,
interest would plunge to more than 100%. So, wisely decide according to your
convenience.
·
Look
an eye on changing rates
To be a smart borrower, you have to be updated. Every new
fiscal year there is an expected change in the rules and regulation of banks.
Suppose if RBI rates cut the repo rate, it would also cut the interest rates on
loan. Beside this, there may be some new deal crash in, which may be beneficial
to you. So, be always in touch with your bank.
·
Ensure
timely repayment
It is something which is known to everyone and probably
everyone does it, but let me tell you why it is necessary. Missing EMI or
delaying a payment could cause a bad effect on your credit score. It would
lower your credit score and it may cause you rejection in the future, if
applied for other loan. Also, there are some legal consequences of banks which
can hurt you. So, it is better to timely do the installment.
·
Better
to be sure
A loan would get you a huge amount of money which can be
spent in any terms especially personal loans. But it is better to invest in
those areas where possibility of gain is. One can do it for education, medical
expenses or buying an entity but avoid investment in share markets or any place
where there is no stability. Also, one should get insurance of cars or home for
safety purpose.
There is no reason to worry, if you are suffering from deep
financial crisis. Some national banks offer less interest rate on few loans
like HDFC Banks Personal loans or
Axis bank loans. You can choose the type of loan according to your requirement
to clear your liabilities.
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