Rules To Follow When Taking Any Loan
In these days, any type of debt is a tool of survival for all people. Loans get you the time of need in a hassle-free manner. The biggest advantage of having a loan is that you do not need to borrow from your family/friends and the interest you have to pay with your loan is very pocket-friendly and affordable. In addition, repayment options with any loan are in the borrower’s favor as it is repaid in monthly EMIs.
Some Smart Rules To Follow When Taking Any Loan
Here, we are going to focus on the most important rules to follow when taking any loan.
Always Compare
Nowadays, you go to many different stores to compare the quality and price of a particular product when you consider buying it. Whether it is a big thing or a small thing, all of you are active in terms of buying and providing a good deal. In addition, the same approach is required as well in case of any financial items too especially loans. In these days, many banks and other financial institutions are offering different types of financial items at different rates. But it is another matter that the rate of any product can vary from lender to another lender.
Short Tenure
Generally, often loan applicants can go for long term loans because in this case, monthly EMI is a lower and loan applicants enjoy good tax breaks on the loan. But it is a big thing that overpaying on interest ends the long period. However, through tax advantages given brings the effective cost of the loan down.
Many people such as low-paid young salaried employees may not be able to afford a shorter tenure as monthly EMIs are always higher in short-term loans. But then it is a good option to repay the loan as soon as possible by increasing the monthly EMI. And monthly EMI should be increased with an increase in income.
Affordable EMI
It is a very important point to note that the monthly EMI of your loan should never be a burden on you. Your home loan EMI should not exceed fifteen percent of your total monthly salary, while your personal loan monthly EMI should not exceed ten percent of your net monthly income.
Do the Math
Generally, keeping more money than all your needs – it is tempting itself through having more income. Thus, this good temptation leads to applying for loan money that exceeds the needs. This may seem like a good and smart option to you but it can be a burden for your future. If any amount of loan is extended then it does not come alone. Thus, the loan amount increases with EMI, tenure and other things. Therefore, it is always the best idea to borrow money which is equal to the money you need.