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                                   LOAN: WHATs and HOWs

 

Obtaining loan means borrowing of money by keeping valid security that the lender, who might be a person or an institution demands. Loans can be classifies as secured or unsecured. Secured Loans are the type of loans that witnesses the backing of collateral or financial assets that the borrower owns. Unsecured Loans are the type of loans that are not backed by any guarantee such as collateral or assets. To make it simpler, a loan is the money borrowed with a promise to return within a specified time period. Lender, the one who avails the loan amount gets the power to decide the interest rate that would be incurred when the borrower returns the loan amount. The rate of interest is generally fixed when it comes to secured loans. However, this rate of interest is altered when it comes to unsecured loans as the lender here is generally not entitled or obliged to be operating under government.

In a country where majority that resides belong to the middle-class, loan plays a vital role in the economy and finances of almost every household. It is an availability using which, a person can live a smooth life with very less financial difficulties. However, in today’s India, loan seems to be haunting many and is majorly considered a taboo. This consideration is not limited to the ones who doesn’t utilise loans, it also extends to the ones who utilise. This is because of lack of knowledge about the WHATs and HOWs of loan. Loan may appear to be an asset but it eventually turns to the biggest liability when not handled well. On the other hand, it becomes a blissful item when handled efficiently and rationally.

There are various things that are to be kept in mind before opting for a loan, so that one enjoys it like an asset. One must know about different type of loans that are currently operating in India. After understanding about different type of loans, that are purpose-specific, one must know about Interest Rates. Interest Rate is the rate at which the loan amount is to be returned. One must be wary of the thugs in the market and must thoroughly go through the documents of loan, also having interest rates in it. The duration of a loan is considered to be a deciding feature that determines the level of your ease. The Down Payment Amount is another factor that must be given full consideration while seeking a loan. Most of the times, organisations attract customers by availing them commodities on zero down payment. Studying about loan would help you understand that lower the Down Payment Amount, higher the loan amount and vice versa. Assessment of  the Current Financial Situation of yours and the market would not only let you to choose the right thing, it would also empower you to make wise decisions. Before opting for a loan, do the two Es to yourself. EDUCATE and EMPOWER yourself.

 

 

Author: Utkarsh Bhardwaj

Image source: iStock

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  • Author : Utkarsh Bhardwaj

    2021-04-08 10:44:31

    Content Writer