How To Borrow Smartly And Realize Your Financial Dreams
Outlook Money|July 2016

Digital revolution is changing the lending environment and the way consumers borrow. Majority of borrowers now prefer to apply for loans online, especially young borrowers. At the same time, increasing consumerism is another factor that is driving people to embrace life on credit. This mantra to use credit to realise life’s aspirations is becoming the way of life for an entire generation.

Aakar Rastogi, Anagh Pal And Shipra Sharma
How To Borrow Smartly And Realize Your Financial Dreams

This young borrower believes that the most important factor in choosing a lender is the speed at which the loan is processed. Lenders, on their part, are able to process loans at an amazingly fast pace. In the hurry burry of getting the loan, the instant gratification generation forgets about the very basis on which lending works. Borrowing is no more about the costs involved; it has everything linked to the convenience, which makes the borrowers forget the years it will take to repay and the cost of repayment interest component of a loan.

Responsible use of credit involves working out how much you can afford to repay on a regular basis, how long it will take you to repay a debt, and from there how much you can afford to borrow. The side effect of this borrowing frenzy is also resulting in the tendency of several people overestimating their income, resulting in a situation where many are not only servicing expensive debts but they are doing so with great difficulty. There are many getting into a debt trap.

The first step is to understand the power of credit, its advantage, convenience and benefits before blindly getting into one. Once understood, it is a tool that offers you tremendous financial empowerment.

Dial-in for instant gratification

Go back a couple of years in time and talk to people who borrowed money to buy a house or a car. Chances are that they will recount the paperwork, filling of forms and the time they had to wait for the approval to come through. Cut the chase to today rarely do you need to fill application forms. Everything happens instantly, you tap on your phone or log on to a website and enter information, wait briefly in some cases for an approval to come through. “I used my credit card to apply for a loan to by the new iPhone in 2015. It all happened so fast that I started using the phone within hours,” recounts 32-year-old Neha Rajput.

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