Am I doing the right thing of taking a loan? Most of us in today’s world need to ask this question. Thanks to the rising interest rates and inflation, the thought of acquiring a home has become a huge deal! It is not wrong to take a loan when necessary. But always be in a position where you have benefited from an asset when you availed a loan.
For purchasing your dream home:
Well, It definitely is an asset builder. But you need to bear a couple of things in mind before going for such a loan:
1. If you have purchased your house for Rs 60 Lakh and have availed a loan amount of Rs 52 Lakh then, if the property prices fall, you may have to pay the difference between the amounts. If you do not pay, then, the bank will make you a defaulter.
2. If the property value has appreciated over time, and you do not have money for financing your purchase, then you need to take up a top-up loan.
For purchasing your car:
If you are a business person, then buying the car you always wanted will be feasible since the depreciation and interest benefits when summed, reduces the overall cost of your loan since the benefits of owning the car outweighs it.
If you are a salaried employee, then you need to think twice, before purchasing a car. It is not wrong to available an auto loan in this case but, see to that you finance 50% of the loan amount from your savings. It is advisable to do so because, the depreciation value of your car is multiplying more than your principle amount on the loan.
For purchasing consumer durables:
It has become a common fashion these days for young earners, to purchase LCDs, washing machines etc through EMIs. But before you too adopt this measure think twice. You think you are not paying an interest amount on these EMIs but the processing fees itself is as high as 20% on such schemes. So it is best advised to save 6 months prior you intend to make purchases.
For financing your higher education:
Investing in one’s education is definitely a good loan since higher education will enable you to enhance your career. But make sure that, all loans except for your home loan should not exceed more than 30% of your salary.
Remember, the more you get into a stronger debt the lesser control you have on your finances. Plan and save wisely .