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
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
While checking out from your favorite shopping app, you could get one of the following payment options on your credit/debit card or Buy Now, Pay Later (BNPL). Full payment (no cashbacks or discount) Interest-based EMI (without cashback or discount) No-cost EMI Upfront discount Cashback Upfront discount/cashback and interest-based EMI Upfront discount/cashback and no-cost EMI Over… Continue Reading
While digital lending apps are all the rage, I am a bit paranoid even about downloading and browsing through such apps. I worry about the Machiavellian design of their user interface and that I may be fooled into taking a loan I didn’t want. And while it may sound surprising, this can happen. Recently, I… Continue Reading
You need Rs 5 lacs to fund an important event in your family. You have 2 options. Sell your debt funds (you had built up an emergency fund using debt funds for such situations only) Take a personal loan Selling your debt funds seems a superior decision over taking a personal loan. Why? Because the… Continue Reading
It is not easy to get a home loan. You must have the right job/profession, age, income, and creditworthiness to get a home loan. Many times, the lender is willing to offer you the loan but not the quantum you desire. And don’t pin the blame on lenders. The lenders have a reason to adhere… Continue Reading
You want to buy a laptop online and you don’t want to look beyond Amazon and Flipkart for this purchase. Let’s further assume that, on both the sites, the laptop is listed at the same price. However, there are discounts and cashbacks on specific cards. In such a case, unless you have a preference for… Continue Reading
Yes, that’s possible and it is all mathematics. In this post, let’s understand how this can happen. Before we go there, let’s do a quick recap of how No-cost EMIs work. How No-Cost EMIs Work You purchase an item worth Rs X. You opt for the No-cost EMI option (let’s say 6 months) on the… Continue Reading
Not all credit is bad. In this post, I will show how an overdraft facility can be useful in certain cases. What Is an Overdraft Facility? An overdraft facility is a revolving credit facility just like a credit card. You pay interest only on the drawn (utilized) amount. You can draw from the facility up… Continue Reading