If you take loan for buying a Car, iPhone, Emergency Fund, Personal Loan, Housing Loan etc., remember you should not fall prey to the debt traps by taking loans. The following points can give idea how to avoid debt traps of loans.
1. If you take LOAN for BUYING A CAR, remember to pay atleast 20% downpayment and car loan tenure should be maximum 5 years. For paying EMI should not increase more thant 10% of your monthly income.
2. If you take LOAN for BUYING iPHONE Remember to look at the price and the price should not exceed 3 times of your monthly income. For tenure of paying EMI try to be as short as possible say 6 months only. Your EMI should not increase more than 15% of your monthly income.
3. If you take a PERSONAL LOAN, remember that EMI you are paying of all loans including existing and new one should not increase 25% - 30% of your monthly income. Try to squeeze the Tenure of the Loan to a maximum of 5 years. Look at the rate of interest (because it differs from one bank to another) on your personal loan and it should not increase more than 15% on your loan.
4. If you take a HOME LOAN, ensure yourself that your extra income say like house rent etc., is atleast covers half of the EMI you are paying to the bank so that it will not affect your monthly salary. Your EMI on home loan should be maximum 50% of your salary taken home. Try to minimize on tenure of paying the total loan, try to clear as early as possible.
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