How to borrow money smartly
Many of us normally borrow money from our relatives, banks, family, friends or even your boss. But, most of the times we end up taking wrong decision and borrowing money from the wrong people. There are a number of tips and tricks that will help you borrow money at a lower rate of interest or you might even end up earning more! Read on to know more.
#1 Which bank to prefer?
Most of us normally look at the brochures and see there written 3% interest with a star on the top right. Now people who are financially educated may know what it means but not everyone knows what it is and ends up ignoring it. The star means “terms and conditions apply” and when you really look at the brochure, there is the star and the terms written down in the smallest font available. This is normally found in the private banks and the terms describe 3% interest monthly. However, most of us end up thinking 3% yearly. That’s right, it’s a trap.
So, always check the terms and conditions before you take up a loan. It’s better to go for government banks which offer around 12 to 18 % yearly interest i.e. 1% monthly.
#2 Banks over lenders
Always prefer banks over lenders because banks are more careful about the loans because that’s their major source of income and they won’t try to sabotage the terms of the agreement as they know their goodwill is in danger. The lenders also normally charge more interest as compared to the banks.
#3 RBI bonds
The Reserve Bank of India, to keep the inflation, depression and other economical trends in control, buys and sells bonds from the general public. So, this might be like an opportunity to save up for the future where you think you might need to borrow. The RBI also pays interest when you buy the bonds and pay them the money you want to invest. Yes, it’s like investing in shares, except, you have no risk factor because the RBI will redeem those bonds after a period of time previously specified.
Normally, all the banks have similar terms as they are all controlled by the RBI, but it’s better to be safe than sorry right? So, go and consult a financial consultant or your very own Chartered Accountant who manages your firm’s accounts. He will show you the right way to select a bank for getting loans and also whether to get a gold loan or a loan with the bank having leverage on your property.
It’s also advisable to compare the banks based on their rates of interest and terms of agreement as these things differ from bank to bank. So, take some time deciding rather than taking a hasty decision.
So, now these were some of the many tips on how to borrow or save money smartly, go on and make full use of this new exciting information! Good luck!
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Armed with engineering degree, Co-founder of RoofnRoom.com and Fidato Research & Services.He is Talker. Listener. Foodie. Music lover. Traveler. Singer. A colour outside the colour box.
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