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It is important to understand the interest rate before taking a loan. The bank or NBFC from which you are taking loan is offering loan at fixed rate or floating rate. Also, how much will you have to pay as interest on the loan. In a fixed interest rate loan, the interest rate does not change during the entire term. Floating rate means that the interest rate can change during the tenure of the loan. It is also important to consider the annual percentage rate (APR). Loan APRs often increase due to processing fees and administrative charges.
Don't underestimate the cost of debt
Many borrowers do not correctly estimate the cost of the loan. If you are taking a loan to buy a house, car or for education or starting a business, estimate the cost accurately. With this you will not have any problem in repaying the loan. Many people miscalculate their expenses, which directly impacts their financial plans.
Choose your payment schedule wisely
Many people choose aggressive debt repayment schedules. This affects their essential expenses. Therefore, it is important to choose a loan repayment schedule keeping your financial condition in mind. You can choose the payment schedule keeping in mind the future growth in your income. You should also understand the foreclosure rules of the bank. Sometimes a foreclosure fee of 5 percent is charged. This reduces the temptation to repay the loan early.
plan a quick loan
Many people delay planning for a loan. The sooner you take the loan, the sooner you will repay the money and close the loan account. Financial experts do not recommend taking a home loan at an older age. This makes the loan a liability. If a person's age is 30 years or a little more then he can easily consider taking a loan.
Don't stop saving and investing
Many people stop saving and investing after taking a home loan. Because of this you lose the opportunity to get good returns on investment in the long run. Home loan repayment alone will not be able to meet your post-retirement expenses. For this you will have to save and invest regularly. Therefore, along with paying the loan installments, also use some of the money for investment and savings.
