Borrowing money may not always be the last resort and can be a necessity when one really needs it for something important. But before you take that leap, there are some points to be kept in mind.
• Is that purchase really that important?
Sometimes a person doesn't really realize if he or she does really need what they are wishing for. There is a difference between a need and a want and once that is figured out, you will be able to answer this question for yourself. If it is a house that you want to purchase and you really need to put in that much money for investing in property then you definitely can consider taking a loan from a bank. A lot of banks give good interest on home loans and you can consider it but make sure the banks do a proper portfolio check and better loan portfolio due diligence.
• Is making payments going to be easy?
So, all of these big loans don’t come that cheap and there will obviously be a big chunk of your salary that you will have to shell out every month in order to compensate for the EMI and loan repayment. As mentioned, the banks have strict policies on loan repayment and they have their best credit reviews in place to monitor your repayments from time to time. You need to ensure you pay back on time to avoid any issues or extra fine attached to your defaulting repayments. You have to know that you will need to squeeze your budgets and give up a lot of other financial luxuries in order to make these heavy payments. You should go ahead with the purchase only if you are ready to sacrifice a lot of further purchases in life.
• What if you can’t pay off?
Well, as said, this is going to put you in problems. Even though loan policy modifications keep happening for a bank, it is never going to waive off your repayments! That is one thing the policy will never include so yes, the repercussions can be harsh on you. Suppose you were to lose your job during the tenure of repayment, you will be under the pressure to find another one and if you don’t do that soon, you will be left jobless and penniless. Any late payment affects your credit ratings and that is going to put further future problems in front of you. Poor credit history affects even finding yourself a job! You might never be allowed to take loans again. So if you are unsure about paying off your loan, then you would rather taking it up altogether.
• Can it be paid off as soon as possible
Yes, it can be. In fact your main focus should be to pay it off as soon as you can so that you are not burdened for a long time. The faster you pay the more relieved you will be and you will be out of the cycle of payments much faster. You should avoid being burdened by excess payments, late fees, interests, etc and hence paying off early will only save you from the demons of loan borrowing.
These are the main questions you should be asking yourself before taking the plunge into the loan world. Make sure that you are capable of repaying that amount and only when you are secure about all the questions you answered should you go ahead and borrow money from a bank or from anyone else for that matter. Remember one thing though. A loan is a loan and ultimately has to be paid off by you. You can’t escape repayments and interests because it was never your money in the first place. Be a responsible borrower and pay back what is borrowed, money or anything else.
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