We plan for regular monthly expenses. We call it budgeting. We plan for long term goals through a diversified asset allocation portfolio. However, we tend NOT to plan properly for non-monthly but periodic expenses. Common examples are: Insurance premiums Travel and Vacations Birthdays and Anniversaries Vehicle maintenance Gadget purchases Annual Subscriptions We know that these… Continue Reading
A car is an expensive purchase, and many families take a car loan to purchase the car. In this post, I discuss aspects that you must keep in mind while taking a car loan. #1 Processing Fee Car loans are short to medium term loans. Usually, 3 to 5 years. Hence, the impact of processing… Continue Reading
The simplest way to assess the affordability of the loan is to look at the EMI. Lower the EMI, the more affordable the loan is. Because that’s the hard cash you must pay every month. The EMI depends on the loan amount, the loan tenure, and the interest rate. And you can tweak around these… Continue Reading
A loan is a contract. And a contract can be worded in any way. Minor changes in the wordings or the product structure can make a huge difference. A borrower must understand the loan structure properly before choosing among the various loan options. We have all read about SBI Maxgain and other home saver loans.… Continue Reading
There are many ways to own gold. You can buy gold coins, gold biscuits, or even gold jewellery. You can also hold gold in financial form. Gold mutual funds, Gold ETFs, and Sovereign Gold Bonds (SGBs). SGBs deserve special mention since these bonds also offer 2.5% interest. No other form of gold ownership pays you… Continue Reading
Why do we have to make down payments for home purchases? Why can’t the banks lend the full amount for the purchase? Two reasons. Firstly, the banks get a wider security cushion while lending. So, if the bank lends Rs 80 lacs for purchase of Rs 1 crore house, in the event of default, the… Continue Reading
You do not pay any interest during the interest-free period on the credit card. But the bank cannot afford to lend you money for free. The bank must be compensated — two major ways and a few minor ways. High Interest on Unpaid Amount First, when you do not pay your bill on time, the… Continue Reading
An interest rate hike hurts all borrowers. For the same service (loan), you must pay more every month. Or pay the same amount but for a longer period. Neither is a desirable outcome for a borrower. And yes, the rate hikes hurt the borrower running a tight budget a bit more. In such cases, the… Continue Reading
RBI has come out with additional guidelines on digital lending. This is much needed. All of us have read news of unsuspecting borrowers being threatened for loan repayment. All kinds of methods were used to embarrass and harass borrowers. A few borrowers even ended their lives in the face of this continuous intimidation. Access to… Continue Reading
You open a bank fixed deposit of Rs 5 lacs for 2 years at 7% p.a. After a couple of months, you need Rs 2 lacs to meet a planned expense. To meet the expense, you take out an overdraft facility against the FD of Rs 5 lacs. The interest rate on the overdraft facility… Continue Reading