Enjoy now, pay later, is unarguably the mantra of our times. With loans available for every reason, and every season, the debt trap is all too easy to get into. And it’s not just homes and vehicles anymore that are available on supposedly customised and convenient EMIS, but also weddings, consumer durables and foreign travel. Heck, there are loans available for paying off existing loans!
Now, take a look at the other side: The costs the banks never told you about: the emotional ones. Stories of mounting stress levels, strained relationships, and constricted choices. Suddenly, the picture doesn’t look that exciting.
“Sooner or later, everyone discovers a fineprint they didn’t give a thought to when they took the loan,” rues Heera Singh, software engineer. Three years ago, it made perfect sense for Singh and husband Viren, also an IT professional, to take a loan of Rs 45 lakh for their penthouse in Kalyaninagar at an EMI which today amounts to Rs 40,000 per month. After all, they were both earning well. They also had limited expenses to consider: a three-year-old daughter, and each other. So, it wasn’t difficult to buy two luxury cars on loan too. “Our EMIs add up to a whopping Rs 80,000 per month,” says Singh, which means, Singh, who is going through a difficult second pregnancy has no option but to continue working. “If I quit, how will we pay the bills?” she despairs. “My older daughter has been diagnosed with juvenile diabetes, she needs a stay-at-home mom. But with the kind of EMIS we are paying, I can’t consider it.”
Then there’s 30-something Mohini Sharma, who attributes the demise of her marriage to the EMI trap. “We were paying off loans for our home, car, household electronic items, yearly foreign vacations, not to forget the loan we took to hold a lavish launch for my ex-husband’s new office,” she says. With bounced cheques and angry phone calls from banks being a regular feature, Sharma says she simply couldn’t take it anymore. “My former spouse was a compulsive borrower,” she says. “With an export business to run, he was a great one for keeping up appearances. His logic was that people would only do business with a prosperous-looking operator. So, we had two cars, entertained lavishly, travelled frequently with his business associates. Despite my pleas not to borrow, he wouldn’t listen.” But when he sold her jewellery to pay off a private money lender he had borrowed from – to play the stock market, if you please,” Sharma decided to call it quits.
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For his part, 38-year-old businessman Mahesh Joshi, reacts 'pretty violently’ to calls from banks offering various loans. “I have just finished paying up loans for my home, car, education and fancy electronic gizmos. I can finally live again – provided the wretched banks don’t give my second wife any ideas on how their loans can upgrade our lifestyle,” he drips sarcasm. Joshi’s first marriage broke up because he was too busy working to repay his loans. “After five years of waiting for me to get home, she had had enough, and I don’t blame her. My logic then was that I was earning well, so what was the point in depriving myself ?” Time and experience ensured he changed his opinion. “This generation borrows for every stupid thing. I have been one of them. Unlike the older crowd, we don’t save for anything. The buzzword is: right here, right now. Add to that, glib-talking sales representatives, who shove their schemes down your throats. What people don’t realise is an EMI is a relentless commitment to be met, month after month for X number of years. Credit cards only add to the problem. The irony of it all is that easy loans, one of the most important tools of a growing economy, supposed to be equated with freedom, end up taking it away from you.”
(Names have been changed to protect identities)
Financial consultant Sachin Gujar prods you to consider the following:
a. Ask yourself whether you really need a loan. Ask your financial consultant too.
b. Think ahead. Are you going to be a double-income family five years from now ? Will your priorities change?
c. If you have taken several loans, transfer them to other names in the family. This will aid your credibility.
d. Pre-paying loans quickly is the best option.
e. Private money-lenders should be avoided.
f. Above all, file your income tax returns on time.
