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Finding and Repaying Finance

2.     Finding and Repaying Finance 

In this part, let’s go through some vital financing areas, such as costs related to debts and methods to counterbalance a loan. There will be some points that you are learning for the first time, while there can also be points that you already know. However, going through the points that you already know will help you understand them better. 

Costs Related To Debts 

There will be different costs related to the debts that you obtained. Interest is the common cost related to debts that are incurred due to the loan granted by the lender. 

This kind of cost might not be avoidable when dealing with housing loans, educational loans as they are a necessity. But interest concerning credit cards can be avoided if you really think about it. Additionally, the interests on credit cards are charged more regularly than the banks. 

Finding finance via loans might look great initially, but it will be meaningless when you think about the credit score. In case if you delay interest payment, you might get a bad credit score. There are two main issues in this, they are: 

  • If you have a bad credit score, you have a hard time obtaining new finance. 
  • Even if you manage to get some new finance, the interest payment rules will be strict, given the bad credit score. 

Apart from these issues, you can also come across non-quantifiable costs concerning debts. For instance, lenders’ constant reminders might annoy you and even create a lot of tension, leading to ignoring the repayments that you must make. People fear losing their jobs mainly because of the debt repayments they have to make, so their lives fully depend on the paychecks. 

Henceforth, next time your mind suggests taking a debt when you are finding finance, remind yourself that you have to go through all the costs associated. 

A Few Methods to Repay Loans 

More often than not, people get burdened with debts, which leave them with no money to utilize in other beneficial investments. A very popular loan that consumes the peace of mind is housing loan. Everyone dreams of owning a house, and that’s not wrong because the house is an asset.  

But the problem is dreaming of a house than your capacity to pay it off. Hence, you end up taking a debt that leaves you to repay loans throughout your lifetime. And cannot thank the Government enough for regulating interest rates for these loans. 

Nonetheless, we’ll offer some ways to consider if you want to pay off loans quicker: 

  • Utilize Your Savings– most people save at least some amount as savings, so if you are also one of those types, your savings will be like a godsend when struggling with repaying loans. Sometimes you might be wondering that savings are for the future, so why use it now? Well, if you think about the interest payments, everything will make sense. The interest costs will be consumed instead, and you can pay the loan with the savings and save yourself from loans. 

 

  • Try To Lessen the Loan Terms– in case you were able to increase your steady income streams, and you must try lessening the loan tenure. That’s the best thing you can do. You might have to put up with EMI burden as you are cutting down loan tenure, but you must be glad that the overall payment will be reduced, leading to financial freedom. 

 

 

  • Make Use of the Surplus Fund to Repay Some Parts of the Loan– if you are smart enough, you will use this tip to reduce your loan faster. Once you get gratuity or bonus, you must use the fund to settle your loan payments so that you can enjoy lowered interest rates. However, you must not forget to consider the opportunity cost when using the surplus fund to settle loan repayments. 

 

  • Make Use of Unnecessary Articles– some articles might not add any value to your economic status, so you can consider getting rid of those articles. For instance, things like jewelry, gold maybe somewhere in your cupboard, so make use of those unnecessary articles. You can turn them into funds and use them in repaying loans. 

Debt Ruins the Practice Of Saving 

The credit card companies are doing their job at best while ruining peoples’ lives by making them indebted. The marketing aspect of credit companies is top-notch, and they easily make you pay petty expenses through cards. As for research, people use credit cards to pay for their petty crisis. When this habit gets picked up, people hardly focus on emergency funds and savings. 

Debt might be helpful at certain times, but you need to plan before finding a way to get funds. If you don’t, you will not be able to save anything. If you plan perfectly, you will be able to manage instalment payments along with savings. As people don’t understand this simple formula, they face huge loan burdens with fewer saving. 

Of course, all those oh-so-good advertisements like costless EMIs and offers that deal with cashback options might look beneficial, but it will ultimately put you in trouble. You will be the worst hit by financial imbalance. 

Thus, every individual’s dream is to live a debt-free life, but it becomes impossible given the essential needs in life. For example, you need an educational loan to secure education. So some things are unavoidable, but make sure to plan it well to lead a happier life.