<div>Have you never felt any requirement for any loan? <br /><br />If your answer is yes, then congratulations! You are amongst the 10 per cent of the world to enjoy this status so revel in it. Not that it speaks well for your credit score. <br /><br />For the rest 90 per cent, we may think that life without loans is stress-free but despite that, our life cannot be loan-free. But considering today's spiraling inflation, to maintain a lifestyle and manage and create assets for an individual has become next to impossible just on the basis of the salary or savings. Taking a loan has become a part of most of us. Opting for a loan or a life of credit is not a problem. The problem starts when an individual takes a wrong loan/credit with a high interest rate without considering his other expenses. The catch is to understand which loan to take so that you don't end up in a debt trap. <br /><br />Effectively managing your loan portfolio ensures you are debt-free sooner and saves money. Managing your loan portfolio efficiently ensures repayments without defaulting. So here we will discuss a few tips which can help you lead a stress free life despite being a borrower.<br /><strong><br />Take Only Two Credit Cards</strong><br />Indian banks have suffered credit card delinquencies. Between December 2012 and February 2013 the outstanding have risen by Rs. 700 crores to Rs. 25,500 crores. The defaulters or delinquents suffer from a bad credit health as a result. Hence, it is advisable to apply or subscribe to not more than two credit cards. These should only be used only if the user is able to pay the total amount due by the time of the due date to avoid fines or excess interest. In case, if one pays just 5 per cent or the minimum amount due the rest is payable at above 40 per cent increasing the financial burden. One should also avoid taking credit card loans.<br /><br />Credit cards are for the customer's convenience but it is the user's responsibility that he should use it consciously and up to the limit where he can pay back 100 per cent on due date and enjoy its rewards and cash backs.<br /><strong><br />Education Loan</strong><br />Ideally the first loan that a person should go for is an education loan and that too for a reputed institute or college. An education loan should be avoided for non-reputed colleges. So if you covet that top notch MBA institute, but lack the finances, go for that loan.<br /><strong><br />Home Loan</strong><br />Taking a home loan not only saves tax but also creates asset. While applying for this loan one should ensure that the EMI is less than 30 per cent of the borrowers' total income. Buying an expensive house/property which takes away 50-60 per cent of the income in EMI is not desirable and should be avoided. Always go for a property within your budget. <br /><br /><strong>Car Loan</strong><br />A car has become a necessity in today's time. With the market flooded with new models every month suiting all budgets it's understandable that an individual wants to opt for a 4-wheeler. While going for a car loan, it should be ensured that the EMI of the loan doesn't exceed 10 per cent of the total salary. An individual with a Net salary of Rs. 30,000 should not opt for a car which will make him pay an EMI of more than Rs. 3000. Settle for a car slightly lower than your budget as car brings in additional expenses like fuel, insurance, maintenance etc which can trouble your budget. Moreover it is a liability and not an asset.<br /><br /><strong>Personal Loan</strong><br />A Personal loan should be avoided as far as possible. It's advisable to go for one only in case of dire need as personal loans tend to serve up a higher interest rate. Do not take this loan to go for a holiday or to buy gadgets etc. Taking a personal loan for investment purpose hasn't worked for nearly 95 per cetn of the people and chances are it won't work for you either. <br /><br />Loans and credit expenditures which are done with proper planning and thought will do you better than harm. Let's revise some mantras to follow while planning out your credit:</div><ul><li>Follow a life which gives you a credit card at 25</li><li>Pay 100 per cent</li><li>Take a home loans when above 30 years with an EMI percentage of 30-35 per cent</li><li>Take a car loan whose EMI isn't more than 10 per cent of your salary.</li></ul><div>Any further loans should be avoided. Investing in health insurance and other insurances will protect you and your family in times of need and also help you stay away from borrowing at such times.</div>
