Our cover story in the week lists out 10 such immutable rules of borrowing that potential customers must confine mind. Follow them and you’ll never end up enslaved by debt.

  1. Don’t borrow quite you’ll repay
    The first rule of smart borrowing is what the older generation has been telling us all the time: don’t live beyond your means.
  2. Keep tenure as short as possible
    The maximum home equity credit tenure offered by all major lenders is 30 years. The longer the tenure, the lower is that the EMI, which makes it very tempting to travel for a 25-30 year loan. However, it’s best to require a loan for the shortest tenure you’ll afford. during a long-term loan, the interest outgo is just too high.
  3. Ensure timely and regular repayment
    It pays to be disciplined, especially when it involves repayment of dues. Whether it’s a short-term debt sort of a MasterCard bill or a long-term loan for your house, confirm you don’t miss the payment. Missing an EMI or delaying a payment are among the key factors which will impact your credit profile and hinder your chances of taking a loan for other needs later in life.
  4. Don’t borrow to splurge or invest
    This is also one of the essential rules of investing. Never use borrowed money to take a position. Ultra-safe investments like fixed deposits and bonds won’t be ready to match the speed of interest you pay on the loan.
  5. Understand the fine print
    Loan documents don’t bring light reading. Paragraph after paragraph of legalese printed during a small font is often a put-off. Yet, read the terms and conditions carefully to avoid unpleasant surprises.
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