Festive Loan : Banks offer various special loans to their customers during the festive season. Most of the people prefer to take a loan during this period as they wait for the best offers throughout the year to buy home, car, jewelry etc. at low interest rates. Apart from this, the festive season is the time when banks announce various exemptions including processing fees. However, one should always be careful while taking a loan, because during festivals people often end up spending more by taking loans. However, sometimes a loan has to be taken for some important expenses. Still, people should be careful while taking a loan.
Read the terms and conditions of the bank carefully before taking a loan
Before taking a loan from any bank, you should read the terms, conditions and privacy policy of the bank carefully. With this you can avoid problems in future. Many festive offers have a variety of conditions, such as having a good credit score, profession of the borrower, etc. That’s why only a few people are able to take advantage of these offers. Apart from this, sometimes some hidden charges are also associated with the loan, the borrower should also be careful about this. Also, be sure to go through the repayment schedule and all charges.
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Compare offers and interest rates from all banks
There is a difference in the festive loan offers of different banks. Therefore, before choosing any one, you should compare the offers of all the banks among themselves. During the festive season, banks offer free gold coins and similar items for home loan buyers. Instead of getting caught in such tempting offers, you should focus on the interest rate, tenure etc. Also, borrowers can choose the best lending arrangement based on repayment capacity and financial planning, keeping in mind the interest rates. The lower the interest rate, the lower will be the installment that you will have to pay every month. Check the interest rates for different tenors and then determine which one is best suited for you.
Avoid taking on too much debt
You should take loan as per your requirement. You can get into trouble by taking too much debt. Therefore, it is always beneficial to take a decision by understanding your situation. While taking a loan, keep in mind that you also have to repay it. Along with this, the interest rate and many other charges are attached to the loan. This should also be taken care of.
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Avoid taking multiple loans at once
Taking multiple loans at the same time increases the chances of default, which can affect the credit score and make it difficult for you to get the loan in future. Experts believe that you should take a loan for all your financial needs.
Understand your loan requirement.
You have to understand whether the loan is really needed or not. You should not take a loan just because it has good offers attached to it, as you have to repay it later along with interest. Therefore, before applying for the loan, it is important to understand your needs. When you take a loan according to your need, it is neither less nor more. Along with this, you should take a loan keeping in mind your repayment capacity. With this you can avoid getting trapped in any debt trap.
If you are in need of a big loan, the festive season is a great opportunity. Low interest rate loans are being given by banks to people with good credit scores. Taking advantage of this, you can take a home loan or car loan.
(This article has been written by Bhaskar Karkera, Chief of Wheel, AU Small Finance Bank.)
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