Avoid ‘Diwala’ This Diwali: Four Ways To Celebrate & Stay Debt Free!
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Avoid an impulse purchase
Diwali
Read the fine print
A consumer durable loan may seem tempting because you do not have to pay a steep rate on interest like that in a credit card (where the annualized rate of interest may anything between 36-40%) or a personal loan (12-14%). However, do check out the real
Loans are not available on every product
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Check out your current liabilities
It may seem easy to make a down payment on the device you want with the Diwali bonus you have just received, but before you avail of any new loan, take a careful look at your existing liabilities and ask yourself honestly whether you are in a position to take on an additional debt burden. Not only should you be comfortable making timely repayments it should not influence your debt to income ratio negatively (financial wisdom suggests that it should ideally be under 35 %). A high debt to income ratio may negatively impact your chances of getting a loan when you are really in need of one.
It surely feels good to buy sparkling new things during Diwali, but if you don’t really need it and do not have the money saved up for it, it is perhaps a better idea to postpone your purchase for a while rather than blindly increasing your debt burden right after Diwali!
About the author: Rajiv Raj is the director and co-founder of www.creditvidya.com
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