EMI Tricks: Adopt this formula while taking loan, EMI will not become a burden..
You already know that banks provide loans for everything like cars, shops, and houses. A good Credit Score is very important for a loan. If your credit score is excellent, banks are ready to give you a loan immediately. But after taking the loan you also have to repay it.
After taking the loan, you repay the loan every month in the form of EMI. EMI will depend on your loan amount. The longer you take the loan, the more interest you will have to pay. Often the EMI of a big loan has to be paid for a long time. Therefore, the loan should always be taken after calculating your earnings (how to calculate home loan EMI) so that you can easily pay its EMI every month.
Keep track of your expenses
To estimate the amount you can pay as EMI every month, first calculate your expenses. If you live in a rented house, prepare your budget by including rent, ration, children's school fees, and extra money for some emergencies. After this, the money you save will make it easier to estimate how much EMI you will be able to pay. Keep in mind that you should take only that much loan whose EMI you can easily pay.
Know what should be the EMI compared to the income?
Let us tell you how much part of a person's income should go towards EMI, you can also estimate it by calculating the debt-to-income ratio. It will be known what percentage of the income is spent on repaying the loan. It is generally believed that one's debt-to-income ratio should be only 35 to 40 percent. Suppose your monthly income is Rs 40 thousand, then EMI should be between Rs 14,000 to Rs 16,000. However, you can change it at your convenience.
Don't compromise on savings
To reduce the EMI amount, one should avoid extending the loan repayment period. This increases the cost of the loan and you have to pay more interest. While deciding on the loan EMI, you should also keep your savings in mind. If you are already investing money in a SIP, do not stop it. Because it is an important means of saving. If you take a loan keeping all these things in mind, you will easily be able to pay its EMI every month.
Do not compromise with your savings while taking a loan. Especially if you are saving some money for your children's education (saving while paying EMI), then do not stop it under any circumstances. If you take a loan according to the amount saved after calculating all the expenses, then you will be able to easily pay its EMI and repay the loan. Before taking a loan, compare the interest rates with other banks.
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