Loan Planning
Loan Planning
Article Summary…..
Loan Planning
These days its easier to take loans than five years ago. You take loan for different purposes. Because of loans people are able to buy their home at the age of 30, which they used to buy at the age of 50 earlier. Now people buy more than 1 car in their life.
There are lots of things which can be done with loan. But essentially the loans should be planned in efficient manner so your loan works harder than you to create wealth for you, otherwise loans make you work for longer period in life to pay off the loan Child Planning
Types of loans
◿ Home Loans
This is available at cheaper rates and gives you opportunity to buy or construct home. This is a long term debt. It has some Tax Benefits also. Generally it is available on approved properties only. The term of the loan can be up to 25 years.
Some banks offer discount in interest rate if the first applicant is female. Generally these attract interest on reducing balance principal not on fixed amount.
These rates are of two types in nature • Floating rate • Fixed rate If someone feels that the interest rate may go down in future, should opt for floating rate and if someone thinks that the rate may go up in times to come, should opt for fixed rate of home loan. Although the fixed rates may also be revised with PLR
◿Mortgage Loans
This loan is available against residential and commercial property, the rates of this loan is higher than home loan rates. The term of the loan can be from 15 to 20 years. These offer better interest rate than personal loans and these are easier to manage in comparison with personal loan. Since this loan is cheaper this is used by businessmen to fund their business.
◿Car Loans
This loan is used for buying cars or vehicles. This loan is available for new and used or old vehicles. The term of the loan can be up to 7 years. The loans are offered in two terms • Fixed • Reducing Balance Fixed rates are offered lower than the other one, when fixed rates are compared with reducing balance the outgo from your pocket is higher in Fixed Rate Car Loans.
◿ Education Loans
This loan is available for higher education. In this scheme the amount can be large or small depending on the quality of course and Ranking of Institute. This loan empowers youngsters to ensure a good career. Whenever child takes the benefit of this loan in Degree course the child gets stuck after getting degree and he or she has to compulsorily start working to pay EMI and they feel stuck.
◿Personal Loans
Generally this loan is taken for buying consumer goods or for the purpose of business. This loan is available with high interest rate. These should be taken very carefully as these can bring trouble for you. One should try to avoid this loan till the last moment. ◿Credit Card Loans
This loan is available very easily so the interest rate can be up to 40% per annum. This is the costliest loan and should be avoided. Once trapped in these loans, it may take very large part of your wealth from you
◿ Consumer Loans These days this loan is available very easily with purchase of products like mobile, air conditioner, micro wave, vacation, etc. Almost everything is available on consumer loan. There can be some hidden charges in the loan, as most of them write 0% interest. So you need to be careful because in general charges are attached with this loan.
◿Business Loans
This loan can be named as mortgage loan also but there are some additional facilities or features attached with this product. This is good if used for the growth of business.
◿ CIBIL Score
One should know that CIBIL score is checked at the time of loan approval. Small information like Rs. 20 outstanding on your credit card (even not actually taken by you) will cause you trouble. So you should check your CIBIL score periodically. If you find some problem in the report you should contact the concerned bank or institution to resolve the issue.
