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Freedom from debt burden is definitely a good idea. Debt is definitely the worst four letter word in the financial dictionary. No body wants to live a life of mounting debt burden, unwanted call from multiple lenders and a meager amount left after the payment of debt installments.
There is no spoon-feed solution for debt freedom. You actually need a systematic financial plan to put you off the debt-trap. The plan should be designed keeping your current financial condition in mind and should be adhered strictly.
The first step of effective debt planning is ranking your debt. Rank your outstanding in terms of interest rates. That will give you a clear cut idea regarding every loan and costs attached to each of them. generally, loans without any security such as credit card or personal loans eat a huge portion of your monthly income. In India , credit card loan comes at 40% plus rates(as interest is calculated on the monthly basis) while a personal loan costs anywhere between 25%-30% per annum. Home loan is a long-tenure loan and is also one of the cheapest loan types. Its rates counts around 14% per annum. After home loans, other cheap loans are the education loans (12%-14%), car loans (15%), consumer durable loans (16%). You can convert the higher interest loans to a lower interest loan by opting for the loan against property. This process is called debt consolidation.
How to consolidate loan burden?
If you are burdened by high-cost debts like outstanding on multiple credit cards, transfer it to one card or you can take one loan against property. The main reason being that it will be easier to manage a single debt and maintain regularity in the repayments.
How to avail finance to pay dearer loans?
You can substitute your expensive loan plans with a low cost one by applying for the loan against property. it is the best way to find a low cost loan. The loan availability follows a simple process. You have pledge your asset as security against the loan amount. That could be a loan against residential property or you can take loans against your shares or mutual fund units. These loans typically come at an lower annual cost of 12%-14%. These loans enable you to repay your huge cost debt easily. By doing so, you will save a significant sum from your interest costs.
Category: LoansFreedom From Debt - Your Cup Of Tea Now was written by:Author:Addi VardhamanAdded: Tue, 01 Apr 2008 04:52:22 -0400 This Article Has Been Read 107 times View all Addi Vardhaman's articlesAbout the Author: For more information about loans and personal loans in India. Please visit our website: http://www.paisawaisa.com/ |
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