Do’s and don’ts while taking a loan

Taking a loan is often is the only way many people can afford to purchase important big-ticket items like a home. Being aware of the best options available and seeking expert suggestions can go a long way in fixing your financial situation.

Money9 Helpline hosted Finscholarz’s Renu Maheshwari to explain the do’s and don’ts of taking a loan.

Avinandan Ghosh, Kolkata: If I have the option of buying something by breaking an FD and taking a personal loan without breaking an FD, what should I do? I already have a personal loan running. Will the bank give me another loan? I need just about Rs 1 lakh.

Maheshwari: You should calculate the cost of your loan and analyze your finances before taking any loan. If you avail of a personal loan then you owe the lender at least 12-13% interest. Your fixed deposit is giving you a return of 5-6 %. So I would suggest you not take a personal loan instead break your FD if you need money. The purpose of the fixed deposit is that only to help you when you are in dire need of money.

Anurag Sah: Is using a credit card a good option?

Maheshwari: Credit card is a good option if you use it as a facility only. It is plastic money and you don’t have to carry around cash. If you use, you must ensure that you clear off the dues on time. But you should strictly avoid using it for a purpose of availing of a loan. Credit card loans are the worst loans and exorbitant interest rates.