Points to ponder before taking loan
Now a days, banks/ financial institutions are offering loans in multiple ways. To avail loan is never easy than before. Banks are offering personal loans, home loans, loans against securities etc. I have broadly classified loans into three categories.
1. Home loan, commercial property purchase loan, car loan etc. - For purchasing/investment in movalbe or immovable assets
2. Loans against fixed deposits, loans against properties, loans against securities etc.- For monetize investments
3. Personal Loans, Credit cards, Business Loans - For personal use.
Banks and financial institutions are making huge expenditure on marketing side and also taking support of innovative methods for increasing customer base. Quiet often, loans are selling with associated dreams such home loan for dream house, personal loans for doing wedding plan, going to honeymoon etc. However, one must aware about following things before avail loan with any financial institutions.
1. One must adequate made research on google regarding various features of loan.
2. He/She should appoint well-known loan consultant.
3. The main points are rate of interest, tenor of loan. If any person choosing flexible rate of interest. There is a reset clause. In a year, how many time ; your rate of interest is to be reset. By increasing tenor, loan amount eligibility is increased. However, overall interest burden is increased more than the eligibility.
4. Information regarding charges such a bounce charges, prepayment charges, charges on physical interest certificates etc.
5. Know penalties regarding foreclosure charges. This charges are levied by bank for closing loan from third party funds.If anyone has availed home loan and he selling his property, buyers payments towards loan is regarded as third party payment.
6. In India, RBI has waived foreclosure charges on each home loan and loans against property.
6. After sales services provided by financials institutions and consultant.
Person should also do homework about,
1. Carefully, calculate his normal household expense and recurring payments.
2. Ideally, Installment should not exceed 50% of total family earnings.
3 Before taking loan , one must understand his future growth perspective and his retirement age.
4.Person must analyse his expense for upcoming life events such as wedding ceremony, expense of higher education of children, his children's wedding ceremony etc.
5.To save more , one must avoid taking credit cards, overdraft limits and personal loans. These products are spoiling financial habits of customer.
6. Keep habit of maintaining emergency funds at least equal to six months earnings.
7. Person must keeping his watch on appreciation of investments.
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