Here is my first post. I once asked my father when I was a child , why do people take loan to buy things even if they already have sufficient money to buy it. He said something which i did not understand at that time. But the reason is pretty simple. The reason is that loans are available at different interest rates from different places. If the interest rate which the bank pays, of which you are an account holder, is greater than the interest rate charged on taking a loan(from same bank, different bank, company, individual or anybody else) then clearly we get benefit. e.g. I wish to buy a bike worth Rs. 50,000 and say, Rs. 50,000 are deposited in my bank account (assume zero balance is possible) at an interest rate of 10% per annum. But I do not use this money. Instead I take a loan from some place at say 9% per annum for an year. At the end of the year I will pay back Rs. 54,500. It seems I had loss of Rs. 4500 as bike's actual cost is only Rs. 50000. But hey, bank payed me interest of 10% over Rs. 50000 that I kept deposited( i.e. Rs. 5000 return in an year) which I would have not got had I spent the money from bank a/c. So actually I got a benefit of Rs. (5000-4500) = Rs. 500.
So I guess, taking loan is not always a burden. :-P :-)
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