Moneylife Foundation Credit Help Get Informed
Get Informed
  • Borrowing for Individuals

    Question 1: How much should I borrow?

    Answer: There is no defined limit for borrowing. Ideally banks and financial institutions lend based on the ability of the borrower to repay but in order to ensure that you don’t fall in debt trap, it is recommended that you should never borrow more than 40% of your gross income. Also borrowing should be avoided for personal consumption. Borrowing should be done only for asset creation as far as possible.

    Question 2: Is the borrowing related to level of income of an individual?

    Answer: Please note that borrowing is generally linked to ability to repay, however it is also linked to income levels. People with lower income have limited ability to borrow. This happens because they have to spend a significant portion of their income on essential items such as food, clothing and shelter. With increase in income levels, the spending on essential items goes down as percentage of income. This creates larger disposable income.

    Question 3: How to decide which bank or financial institution you should borrow from?

    Answer: There are various factors which decide from which bank or financial institution an individual should borrow. These are 1) Rate of interest on borrowed money, 2) Tenure of loan, 3) Paper work involved and 4) Service quality. It is also important to check for hidden charges in a loan. Ask bank or financial institution to provide details of all charges. This should be obtained in writing.

    Question 4: After borrowing, what are precautions to be taken?

    Answer: After borrowing money one must ensure that payment on loan is never delayed. Delayed payments result into delinquency which can have adverse impact on the credit score of an individual making borrowing in future very difficult. It is advisable that modes of payment such as auto debit are used in place of cheques wherever possible. This will reduce the probability of delayed payments due to manual errors.

    Question 5: What are precautions to be taken with respect to credit cards?

    Answer: Ensure that credit cards are used very judiciously. It is important to avoid demonstration effect. Card usage should be need based and should be done as a replacement of cash payment. It is prudent to avoid card usage in such cases where you won’t have done cash transaction otherwise. If you are not using you card, cancel it and get acknowledgement from the issuer of the card. If a credit card is lost, there is a possibility of misuse.

    Question-6: If I have paid all my EMIs, is my loan account automatically closed?

    Answer: Answer is both yes and no. Yes, because after paying all your EMIs (Equated Monthly Installment) logically your loan should be closed. But it is important that you talk to bank and obtain a letter of closure from the bank. Banks report loans to credit bureaus and hence if the loan status is not report correctly to the credit bureaus you may issues in future.

    Question 7: How important is it to preserve documents related to loans?

    Answer: Preserve all documents related to loans with you. The records should be preserved even after loan is closed. This will help in taking up issue with regulator or the bank concerned if any dispute arises in future. You can also keep a scanned copy of document as a backup for reference periodically.

    Question 8: My friend is asking me to be guarantor of his loan, should I be his guarantor?

    Answer: When you become guarantor of a loan for somebody, you become the borrower as well indirectly. In event of default of the loan by the borrower, the bank will ask you to pay the loan. If you don’t pay loan, this will impact your credit history and borrowing money in future will become extremely difficult for you. So you should never be a guarantor of a loan for somebody you don’t know well and cannot trust completely.

    Question 9: Is the date of deposit of cheque, date of payment as well?

    Answer: Many people deposit cheque on the last date of payment and assume that the payment has been made. Please remember that the payment is done only when the bank has realized the money i.e. cheque has been honoured. In order to do so, deposit cheque in advance so that the bank or financial institution receives money in advance i.e. on or before payment day.

    Question 10: How do I know that I am falling in a debt trap?

    Answer: The first indication of debt trap is that you have started delaying payments of loans, unless it is just a one off incident. If you forced to borrow from your friends or relatives to pay your loans because you are not able to pay from your own income source, this is also an indication of the fact that you are now about to get into a debt trap.

    Question 11: I have lost my job, what should I do for my outstanding loans?

    Answer: It is better to inform you bank or financial institution about it. Also, one should logically try to manage payment of loans by taking help of friends and relatives, if possible. It makes sense to take help of experience credit counselors as well.

    Question 12: If I have defaulted in past, will my credit report always remain negative?

    Answer: Credit history will not remain negative always even if you my default on any of your loan. It makes sense to regularize payments and clear all the dues. Once you start making payments regularly, credit record will start improving. Credit bureaus use parameters to score an individual. You will need to know them to understand how much time it will take to get your credit score back on track.

    Question 13: When should I refer to my credit reports provided by credit bureaus?

    Answer: It makes sense to refer to your credit report periodically to identify how your credit performance as per report is. However, it makes sense to check credit report after you have paid your loan completely to ascertain whether it is getting reflected correctly in the report.

Credit Crossroads Series courtesy of Experian


India gets its own space observatory, joins select group
India on Monday joined a select group of nations owning space observatory with the successful launch of ASTROSAT by its rocket, which also put into orbit six other foreign satellites.
With the successful launch of ASTROSAT, India gained an entry into the select club of nations having its own space observatory after the US, Japan, Russia and Europe.
Exactly at 10 a.m. the 44.4 metres tall weighing around 320 ton polar satellite launch vehicle's XL variant (PSLV-XL) blasted off the first launch pad at the rocket port here, around 80 km from Chennai.
The PSLV-XL rocket with seven satellites cumulatively weighing 1,631 kg climbed up steadily gathering speed amidst the cheers of Indian space agency officials and the media team assembled here.
The expendable rocket carried Rs.180 crore ASTROSAT, India's first dedicated multi-wavelength space observatory that will help in understanding the universe, and six other foreign satellites.
While ASTROSAT with a five year life span weighed 1,513 kg, the six foreign satellites (four from the US and one each from Indonesia and Canada) together weighed 118 kg.
Incidentally, this is the first time that an Indian rocket launched satellites from the US.
According to an official of Antrix Corporation - the commercial arm of India Space Research Organisation (ISRO) - a deal has been signed to put into orbit nine American nano/micro satellites by the end of 2016.
While four US satellites have been put into orbit on Monday, the remaining five would also piggy back on a bigger satellite later.
At the mission control room, space scientists at Indian Space Research Organisation (ISRO) were glued to their computer screens watching the rocket escaping the earth's gravitational pull.
Just over 22 minutes into the flight, the rocket slug ASTROSAT at an altitude of 650 km above the earth.
Soon after, six other satellites were put into orbit and the whole mission ended in just over 25 minutes.
For the third time a PSLV rocket has launched seven satellites in a single mission. In 2008, ISRO had launched 10 satellites in one go, including India's Cartosate-2A satellite.
Immediately on the successfully ejection, scientists at the mission control centre were visibly relieved and started clapping happily. In the process India crossed the half century milestone when it its rocket injected the six foreign satellites successfully into their intended orbit.
Till date, India has launched 45 foreign satellites for a fee.
ISRO chairman A.S.Kiran Kumar described it as an "eventful day" and congratulated the entire ISRO team.
P.Kunhi Krishnan, director, Satish Dhawan Space Centre, said: "PSLV's success is continuous. Today it injected seven satellites in
precise orbit."
However, it will not be right to call ASTROSAT as India's 'Hubble'. The Hubble owned and launched by the US in 1990 is 10 times heavier than the ASTROSAT and is said to cost $2.5 billion.
While the Hubble space telescope is still working now, India's ASTROSAT's life span is five years.
ASTROSAT, will observe the universe through optical, ultraviolet, low and high energy X-ray components of the electromagnetic spectrum, whereas most other scientific satellites are capable of observing through a narrow wavelength band.
The five payloads/instruments of ASTROSAT are selected to facilitate deeper insight into the various astrophysical processes occurring in the various types of astronomical objects constituting our universe, ISRO said.
The payloads are developed by different institutions-domestic and foreign- on their own or collaborating with ISRO.
Of the five payloads, the Ultraviolet Imaging Telescope (UVIT) is jointly developed by Indian Institute of Astrophysics (IIA), Bengaluru and Inter University Centre for Astronomy and Astrophysics (IUCAA) at Pune in collaboration with Canadian Space Agency and ISRO.
This instrument can observe the sky in the visible near ultraviolet and far ultraviolet regions of the electromagnetic spectrum.
The second payload Large Area X-ray Proportional Counter (LAXPC) is developed by Tata Institute for Fundamental Research TIFR), Mumbai and Raman Research Institute (RRI), Bengaluru.
The third payload Soft X-ray Telescope (SXT) is developed by TIFR in collaboration with the University of Leicester, UK and ISRO.
The fourth payload Cadmium Zinc Telluride Imager (CZTI) was developed by TIFR and IUCAA in collaboration with ISRO.
And the fifth one Scanning Sky Monitor (SSM) was jointly developed by ISRO Satellite Centre at Bengaluru and IUCAA.
The Indonesian 76 kg LAPAN-A2 is a micro-satellite from the National Institute of Aeronautics and Space, meant for providing maritime surveillance using automatic identification system (AIS), supporting Indonesian radio amateur communities for disaster mitigation and carrying out earth surveillance using video and digital camera.
The 14 kg NLS-14 (Ev9) of Space Flight Laboratory, University of Toronto Institute for Advanced Studies, is also a maritime monitoring Canadian nano satellite using the next generation AIS.
The remaining four LEMUR nano satellites from Spire Global Inc., San Francisco, US, are non-visual remote sensing satellites, focusing primarily on global maritime intelligence through vessel tracking via AIS and high-fidelity weather forecasting using GPS radio occultation technology, the ISRO said.
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.


SEBI attaches Saradha's property to recover over Rs.774.3 crore
The Securities and Exchange Board of India (SEBI) has attached 134 properties of Kolkata-based Saradha Realty India Ltd. and its managing director Sudipta Sen to recover Rs.774.3 crore along with returns due to investors.
The market regulator, on its website, said notice to recover the amount was sent to the company and Sen but it went unanswered and the dues were not paid.
The properties which SEBI has attached mostly include land, buildings, flats and resorts under the immovable assets category while the notice also mentions seizure of movable properties as well to recover the dues.
"It is also felt they (the defaulters) may dispose or transfer or alienate the assets with a view to obstruct or delay the recovery proceedings, which needs to be prevented immediately by attaching the said assets," the SEBI said in a notice on its website.
In June this year, the regulator had attached various bank and demat accounts of the two defaulters for recovery of the dues and investors' money besides others, but these have proved insufficient.
"The funds available in the bank accounts and the securities available in the demat accounts of the defaulters are not sufficient for recovery of the dues," the notice said.
In April 2013, SEBI first passed an order against the company and Sen barring them from the market and asking them to refund the money to the investors. It also ordered the firm to shut down all its monetary schemes.
Most of the property to be attached is spread across widely in West Bengal with a flat in New Delhi.
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.


We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)