These days, most people believe in living beyond means. This is achieved by way of Buy now pay later. The most preferred way to pay is in installments- EMI. The installments include interest also besides Principal. You pay more interest and less principal to begin with. But the later installments include more principal and less interest.
https://in.finance.yahoo.com/news/emi-computed-023548672.html
When a person opts for a EMI payment he/she enters with his/her eyes open and knowing all the facts, so they should make sure that it suits their life style and earning capacity. Housing loans can be very taxing because when you take the loan and buy the house you dont realise how big a dent it would make on your monthly earnings. I know of a couple of people who bought apartments taking loan and wanting to live and enjoy the new house, have now given it on rent because it fetches higher rent than their own rented places and the difference helps them pay back the loan. But again without the EMI they probably wold never be able to buy an apartment of their choice. It is the same with other things as well unless they lose expensive gadgets like mobile phones before completing the loan repayment !
Personally, I feel loan should be avoided. But housing is an exception. Housing is not only consumption need but also a wise investment. The rents increase year to year but EMI remains the same. So by building house by payment of EMI, you avoid payment of rent that would have to be paid for rented house. The rent payable would increased with inflation. You may rent a portion of your house and earn some rent. In most cases, the rent that you save on rented accommodation and that which you get by giving on rent a portion of your house, would suffice to finance the EMI. Also your income should increase year by year and payment of EMI would be easier.
Gulshan Kumar Ajmani wrote:Personally, I feel loan should be avoided. But housing is an exception. Housing is not only consumption need but also a wise investment. The rents increase year to year but EMI remains the same. So by building house by payment of EMI, you avoid payment of rent that would have to be paid for rented house. The rent payable would increased with inflation. You may rent a portion of your house and earn some rent. In most cases, the rent that you save on rented accommodation and that which you get by giving on rent a portion of your house, would suffice to finance the EMI. Also your income should increase year by year and payment of EMI would be easier.
I am agree with you that as much as possible one should avoid loan. Loan is mental tension what may be interest rate, even if it interest free. Housing loan is another matter. If we have not own house we are living in rented house. So we took loan for house some part of EMI we will pay with amount which we are paying as rent. Desires have not limit, so one must not have habit of taking loan for a small needs which we can avoid.
There is nothing wrong in taking loan for buying things. However, personally, I don't favor any loan except Housing loan. However, it may be okay to buy consumer goods by taking loan if EMI does not eat away most of monthly salary. I once noted that Bank employees usually pay of their salary in just paying EMI for various household items. I feel it is better to wait for some time and accumulate cash through short term investments for buying consumer items. Even if loan is taken, total payout as EMI should not be too much.
Gulshan Kumar Ajmani wrote:There is nothing wrong in taking loan for buying things. However, personally, I don't favor any loan except Housing loan. However, it may be okay to buy consumer goods by taking loan if EMI does not eat away most of monthly salary. I once noted that Bank employees usually pay of their salary in just paying EMI for various household items. I feel it is better to wait for some time and accumulate cash through short term investments for buying consumer items. Even if loan is taken, total payout as EMI should not be too much.
Consumers items have any limit. It is better to keep needs in limit. If cooler is enough than no need to buy AC. It is easy to buy car on EMI but it is not easy to bear it running exp. today higher education is must expensive, so it not bad to get education loan.
Long ago, I took a loan for building my House. After the completion of my home, I moved in to the newly built home. This has saved my House rent which I was paying till I moved here. With the saved amount kept in Recurring deposit, Whenever I get some returns I started buying some household items. Never I took loan for buying household items.
usha manohar wrote:Babu saroj wrote:Loan is really a headache i suggest nobody should take it unless it is very urgent
You are contradicting yourself....No one takes a loan unless it is urgent and they do no have the means to buy whatever it is they want to !
you are right but what i am saying that there are many people who take loan just to spend it on party and other rubbish things and which i think that it is a waste of money and one way increasing burden on our head
Babu saroj wrote:usha manohar wrote:Babu saroj wrote:Loan is really a headache i suggest nobody should take it unless it is very urgent
You are contradicting yourself....No one takes a loan unless it is urgent and they do no have the means to buy whatever it is they want to !
you are right but what i am saying that there are many people who take loan just to spend it on party and other rubbish things and which i think that it is a waste of money and one way increasing burden on our head
If people are so careless with their money either they do not have value for hard earned money or else they are beyond help..
@gkajmani