Borrowing today has more meaning than it did in the previous decade. Earlier people would only take a loan when it was really urgent and they did not have the money for it. Today, a loan can be taken for as silly a reason as buying a new phone. Yes, that’s how easy it has gotten.
These are the types of loans offered by Ruloans;
- Personal Loan
- Personal Loan Transfer
- Home Loan
- Home Loan – Commercial
- Used Car Loan
- Car Refinance Loan
- Loan against Property (LAP)
- Loan Balance Transfer Top-up
- Loan Balance Transfer without Top-up
- Credit Cards
- Business Loan
Taking a loan is very easy. But there are many factors you need to keep in consideration. These factors will help you to not only save money but also reduce the stress which comes along with taking a loan. Let’s take a look at the 5 factors mentioned below;
- Your EMI should be affordable:
You must always look at the affordability of the loan and compare it with your earning. Basically you should not be paying more than 40% of your earning on loans. To make sure the burden is less, it’s best to calculate and find out what is the ideal rate of interest that will help you balance the loan and your lifestyle.
- Keep your tenure short:
Always remember that no matter how low the interest rate is, if your tenure is higher, then you will end up paying an amount more than the principal. Here is an example for which we have used the home loan calculator.
Eg: Mr. Krishna had always wanted a home near Virar. His current income got him a loan of 50 lacs with an interest rate of 10% for a 20 year period. At the end of 20 years, Mr. Krishna ends up playing interest worth 66 lacs. This means he will pay a total of 50 lacs (principal) + 66 lacs (interest).
Hence before you could take a call, calculate how much should be the ideal tenure and decide accordingly.
- Take insurance for big loan:
A big loan is defined as a loan taken for over 10 years. Such loans are higher in amount and also take a toll on the person paying it. There is also a possibility that the person taking the loan might die before paying off the loan. In that event his/her family will have to complete the payments which can be a burden if no one is earning.
To avoid such hassle, it’s best to take a life insurance of the person taking the loan. There are clauses where the overall debt of the person is stated and that will help you clear off the debts even after your family member has passed away.
- Switch your loan lender if needed:
When you took the loan from ABC bank for 20 years, they were offering a good rate of interest. 10 years later, you see yourself paying a higher EMI every month. The other banks DEF and XYZ are offering better rates. This can help you lessen the EMI amount. So, it’s best to transfer the loan lender as per your preference if it means you have to pay less.
- Don’t ignore your other financial goals:
When you take a loan for 10-20 years, there is a certain obligation you have every month. Due to this, you cannot always spend money as per your wishes. You try to limit it as the main priority is to save enough to pay off the loan. But that shouldn’t stop you from enjoying life. Sure, you can limit your purchases but you can still buy some things. You might have to reduce your vacations but don’t stop them completely. Also, you can still keep investing a small amount in fixed or recurring deposits, Mutual Funds and in the stock market. This will ensure you can get some extra money to pay off the loan and also enjoy life simultaneously.
Apply for the best home loan!