5 Golden Rules for Borrowers in India

    Simple but effective recommendations on taking out loans.

    25th Sep 2018
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    The instability of the world economy raises the interest of the society to the personal loans. The popularity of the possibilities to increase your financial abilities for some time varies in different countries as well as its permanence. The Indian market has the significant level of the public concernment in the matter. In accordance with recent studies of Credit Rating Information Services of India Limited (CRISL), its rising will continue with the annual growth percentage over 15% during the half of the upcoming decade.

    Such an environment stimulates the rise of the number of propositions. It includes the ones that allow acquiring the necessary amount of money completing the much simpler procedure than before. The concurrence in the scope brings the benefits to the customers. It has resulted in the liberalization of requirements an applicant has to meet and ergo the decrease of the time spent on the whole process.

    Another factor that has contributed to the current field situation is the development of the online segment of the business. Universal access to the platforms offering installment credit options distributes the service even quicker. But it simultaneously makes clients more vulnerable. To avoid difficulties potential borrowers should investigate the local loan market in advance. They should also scrupulously go through the listed terms and deliberately analyze own financial situation.

    It can appear as a complicated and tedious task without guidelines. That’s why we’ve completed the list of tips that will clarify the fundamental aspects of the acquirement of additional funds. Get familiar with them to seize this opportunity without stress and high expenses.

    Be Reasonable and Open in Your Intentions

    A loan isn't a helpful remedy that you should take on the slightest hint of need. It also shouldn't be used for meaningless spending or risky investments. You can also attribute your child's education to this category on some occasions.

    If you’re in a relationship the application to the service should be a common decision since it will influence all of you. Even if you have successfully coped with the particular loan at the finish line one missed EMI can significantly and negatively affect your credit scores.

    Define Your Loan Eligibility

    Determine the amount range that you can get at appropriate institutions or on online platforms. Then calculate the sum returning of which won't require excessive efforts. No matter how tempting offers are available, you should always take into consideration the ratio of EMI (equated monthly installment) to your net monthly income.

    To stay in the comfort zone, you should not excel 10% for personal, 15% for car and 40% for real estate loans. All together it should be less than a half of your 30-days earnings. It'll help you to maintain your net worth positive and ergo establish and achieve other financial goals.

    Pick the Best Options

    Do a thorough research of the market. Investigate the offers, check the reputation of institutions, consult with acquaintances and professionals. Keep in mind that the lowest EMIs won’t assure you the most comfortable returning conditions. They usually come with the longest loan period and hence prolong your commitment.

    Opt for the shortest tenure you can afford. This way you’ll be able to plan your expenses more certainly and ensure the fulfillment of regular repayments. If it’s not possible, with time you can consider increasing the EMI amount yearly and proportionally to the rise of your income to reduce the liability period.

    Acknowledge All Conditions

    Big colorful ads for such services never mention fees, penalties, charges, and other specific stipulations. They will come into effect after you sign the fine print. That’s why it’s important to get as much as possible valuable itemized information about the process in advance. Don’t be afraid to ask additional questions about any issues that appear unclear to you.

    Get familiar with the list of required documentation and assure that you can provide it. It usually includes identity and residence proofs, bank and salary statements. Consider that its processing can imply an extra charge and can take from 2 to 10 business days.

    Get Insurance for Significant Loans

    When you deal with the big amount lending like car or home ones the must-do action is to ensure its covering even under worsening conditions. It’s vital since on the occasion of the payment inability you can lose not only the money but the property itself.

    Agencies and banks themselves offer insurance plans to their customers that can help with the fulfillment of this liability. Offerings that connected to loans directly appear more convenient. But they usually aren’t as cost-effective as independent ones. Be aware that no lending provider can force you to buy the plan if you apply for a loan.

    India has the one of the highest bank loan growth in the world. For the period 2012-2018 the average percentage is 11.63. From May till August 2018, the weekly readings have exceeded this number at least on 1%. It indicates that the service development adheres to the CRISL forecast so far.

    This environment is pleasant for the appearance of lending companies that like to take advantage of the situation. That’s why you should always take care of your future safety by yourself by taking only a deliberate approach to the possibility.

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