Guidelines for Loan decision

Guidelines for Loan decision

1. Analyse the need and priority
It is very important that one does a fairly detailed self-analysis and introspection on the need and the usage for which the loan is to be used.
– Avoid buying luxury appliances on loan
– Avoid as far as possible usage of Credit cards and loan conversion options on those purchases
2. Budget expenses
It is always a good practice to budget the major expenditure on a monthly basis.
– Cover regular expenses including credit card payments and existing loan repayments
– Apportion for future investments for tax savings
– Apportion for unforeseen medical expenses
– Plan at least for 10% of the monthly income as savings
3. Plan your purchases
A good and intelligent consumer is one who plans his purchases based on the past experiences of seasonal offers offered by retail outlets. (Festival offers, New year sale etc)
– Identify the essential items and the timing of purchase (Lean months when expenses like school fee, insurance premium payments etc are not there)
– Review the budget and see if any accommodation could be done within the income or from the savings.
4. Decision to avail a loan
If the need is identified and existing budget does not allow scope for purchasing within the existing available sources, the last resort should be a loan from some authorized financial institution.
– Identify the right financial institution
– Be clear about the repayment schedule (It has to be within the savings component budgeted)
5. Rework the budget
Whenever a loan is availed, the budget will have to be revisited and the necessary changes incorporated.
6. Problems and alternatives while repayment
Whenever a problem is encountered leading to temporary break in the loan repayment, the best practice would be to look for cutting down some budgeted expenses, which are within ones control or look for patrons who would provide temporary relief.

7. Last Resort
When all routes are closed to resolve the financial crisis in loan repayment and the harassment commences from the recovery agents, the best alternative is to approach Support groups which have been formed with this specific objective of providing counseling sessions.

CAUTION IS THE BEST SOLUTION
PREVENTION IS BETTER THAN CURE