Lower your Emis and protection from future Loans
A loan is an amount of money that your borrow and intend to pay back with the interest attached. To have many loans is not an good idea as it ensures most of your earning goes away for paying its emi and interest. Now how can we manage our finances and ensure we take loans which do not lead to instability in the financial life.
Lets talk about first the good loans.
Home loan
IF you don’t own a house and living on rent , then taking a home loan is a very good idea. It will help you to buy an asset and also take away your rental payments which can be used for paying emi. The home prices also increase at a very healthy rate and if helps to create an asset and live life freely.
- Sec 24(b) of the Incomear Tax Act, 1961 saves tax for an individual.
- Under this you can deduct upto 150000 from your income if you have paid interest of this amount as a home loan. For eg if you have paid 300000 as interest in your emi as Home loan in an year and your yearly income is 8 lacs.You will be able to deduct 150000 from your income and save tax on it.
- There are other deductions under Section 80(c) of the Income Tax Act, 1961.
So if you are thinking- Go for a home loan now. Compare all Banks Emi and rates – Here.
- Already taken Home loan. High rates charged by Banks – Do Balance transfer now.
There are times when Nbfcs /Home loan Banks charge higher rates to existing customers and offer lower rates to new customers. For the loan takers doing a balance transfer is a good idea. In current market situation if your rate is higher than 11.5%%, it makes sense to balance transfer.
- The prepayment charges are almost nill in most banks and Nbfs.
This is a huge saving- so don’t just think- do a Balance transfer or try our new calculator which will let you know- how much you can save across. Link
Bad Loans-
Don’t take loans on your Credit Cards. If you use your credit card and don’t pay within the free time allowed- Banks charge 30-45% of interest on the outstanding amount due. At such rates no such loans should be taken at all. If you have such loans on your credit cards- Switch to a Personal loan whose rates are from 14%-30%.For E.g If you have outstanding of 1 lac at Credit cards-
Interest charged will be at 36% =20554 Where as it you take a personal loan at 18%=10016. It saves you 10000 a year approx.To check rates for best Personal loan- Click here.
Use credit cards as a convince of not carrying cash and earn rewards with them. By using your Credit cards better you can save via cash back and discounts. Before you select your credit card- understand your behavior and pick those cards which give you best rewards and saving in the category you use.
For Eg- If you spend more on petrol- take a petro card which will give you rewards and cash back and give you saving.
If you spend more on food and restaurants- opt for credit card which has more offers on restaurants.
To check the right card- See the Credit card options- Click here.
How to protect yourself from taking less loans.
In simple terms if you have enough savings- you will never need a loan, whether it’s a Home loan , Personal loan or a Car loan. Most Personal loan or Credit card loans happen due to low savings and no financial planning. To protect yourself plan well and do not overspend.
For medical expenses – Do take a health Insurance .It will help save you tax and will not create a huge cash requirement in a case of emergency.
To pick the best health Insurance plan – Click here.
- Now if you have loans- do protect your family against them, if in any case anything happens to you.
- The best way to protect is buy a Term life insurance plan which is as cheap at Rs 2000 for 25 lac .
- It’s the cheapest protection and if you have loans- atleast have double the amount of term plan to protect your family.
Go out and check the best Term plan – Term Plan.
Loans are part of our financial cycle and if we manage them no issues otherwise they can lead to debt burden.
