Nowadays, the consumption rate has increased a lot, which primarily drives the economy. Human beings spend money on various products/items to fulfill their needs and dreams. It's easy to spend money on small items like smartphones, shoes, outfits, etc. However, you don't own enough funds when it comes to big items like a car, house, and motorcycle.
You either save money from day one to pay full upfront or find another option to pay the small amount as a down payment and turn the rest into EMI. Some people prefer saving money for their dream items, and there arise a few questions w.r.t your strategy.
The interesting part is that you will start saving from today and make a target to save as per the product's current price. However, till you save enough money to pay upfront, the price will increase drastically due to inflation. It means even if you have the entire amount (as per the current price), you won't be able to get your dream car/home/bike.
It is a crucial question as you are saving money that grows compounded every year. Interestingly, you are saving money for the team whose value will depreciate with time. It means the price of your invested money will continue to decrease with time.
That's why most investment experts recommend renting a home/bike/car instead of buying one and depreciating that amount.
That's why most people prefer buying their dream item within a few months. Even if you fall short of funds, a financing facility is easily available at every store/dealer.
However, the best credit facilities are only available to those with high credit scores. A good credit score can be the key to your good fortune. Your entire financial journey somehow depends on your credit score and how you manage your money.
With a sound credit score, you can get the benefit from various financial aspects, some of which are:
According to the data, nearly 32 million people will be categorized as middle class in 2020. It means a huge portion of the Indian population is marked under the middle-class category. Among them, most people have a plan for their dream home, car, or higher education. Among them, everyone has applied for a home loan at least once in their life.
They are granted massive loans based on their credit score and credit risk. All the credit facilities come with an interest rate that fluctuates based on your credit score.
If you are at higher credit risk, it's tough to give you an adequate lending amount with low-interest rates.
Being credit healthy results in considerable savings in the interest paid on loans.
|
Loan Type |
No Of Loans in Life |
Savings |
|
Home Loan |
1 |
12.09.001 |
|
Car Loan |
5 |
1,19,688 |
|
Personal/Education Loan |
2 |
1,62,238 |
|
Total Savings |
14,90,927 |
|
|
Home Loan |
Interest @10 % |
Interest @11 % |
|
Loan Amount |
75,00,000 |
75,00,000 |
|
Loan Years |
20 |
20 |
|
Total Amount Paid |
173,70,890 |
1,85,79,391 |
|
Car Loan |
Interest @10 % |
Interest @11 % |
|
Loan Amount |
5,00,000 |
5,00,000 |
|
Loan Years |
5 |
5 |
|
Total Amount Paid |
6,37,411 |
6,67,333 |
|
Personal Loan |
Interest @10 % |
Interest @11 % |
|
Loan Amount |
5,00,000 |
5,00,000 |
|
Loan Years |
5 |
5 |
|
Total Amount Paid |
7,13,698 |
7,94,815 |
It means with Higher Score; you can achieve Higher Savings.
This table gives you a clear picture of how your credit score is considered throughout your life. However, it can only fluctuate based on your financial actions.
Also Read- CIBIL Score Improvement Agencies : A review
This table also gives you an estimate of the saving potential of the person having a higher loan amount. Remember, the saving potential for a credit history account can go up to 14-15 lakh.
Above all, a good credit score keeps your pride at the top. It will help you nurture your soul. Moreover, it brings pride and self-respect in society.
A good credit score has numerous benefits. The biggest benefit of having a good credit score is the easy and quick loan approval process. Most of you even get tons of calls that are all associated with the credit facilities that you can get with zero processing fees and documentation.
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