It’s an unprecedented time we live in. A time when most of us are scouting ways to make life a little more content, a little more secure. Security is essential. Arranging funds is a must, but not at the cost of being stressed. What are the ways then, to arrange funds at a low cost?
The big driver in arranging funds at a low cost is time, and by that we mean, you have to have the time to go about making the arrangement. You also need to ensure that you are not stressed about funds at that very point in time, which is to say, your emergency fund should first be in place. When you have the time to plan your purchases, which are not emergencies, you can afford to look up products, compare prices and find what’s available at a much cheaper rate.
The second most important driving factor in arranging funds at low cost is awareness, and by that we mean, you need to research, be aware of the various options available to you for you to scan, take an informed decision and make the best choice. And for this, you need to have time on your side. Hence, the two factors are interlinked.
Look for offers available – on credit cards (eg: HDFC card, ICICI card, and the like, that offer 10 per cent discount), Fintech, PayLater, and more. All you need to do is research and find the right fit for the right product at the right price for yourself. For instance, Independence Day would have been a good time to buy a phone if you were to look for one, or any other electronic item. Dussehra and Diwali are a good time to revamp your wardrobe. There are zero per cent interest loans available on large electronic products if you wish to buy.
At the crux of arranging funds at low cost, like we already said, are two things – you have to have the time, and the knowledge or the awareness of options. For you to have the luxury of both, you need to make sure that you have an emergency fund, either an emergency savings fund or access to a digital line of credit like the FlexPay, for all other contingencies in life. Once that is sorted, the two parameters will help you in arranging funds at a low cost.
That’s not all. An important aspect to take into consideration is to be careful not to fall prey to unlicensed lenders, or any scheme that is too good to be true. Again, you can be aware of these only if you have the time to research. Do you see how the two factors are deeply connected?
Look out for legitimate lenders offering funds; but more importantly, find out if there are any hidden costs or prepayment penalties. These will help in making sure that you have the right fit of a financial product for your need at that time.
However, the fact is, like everything else, what is low-cost is relative. The total cost of ownership of a product is the total of all the payments that you make. To that effect, if you are paying a little bit of interest, it doesn’t matter because you are getting the freedom to buy a legitimate product. Understand this: If you want to buy a house, you can’t make a down payment of Rs 4-5 crores. It has to be timed out. Similarly, you can buy a 70in TV when you have cash for 40in TV. Yes, there is a small amount of cost involved, but interest isn’t that bad really as there are so many offers that you can cash in on. If you have time, there are a plethora of shopping options on the internet. There are comparisons made easy for you too (something like what Paisa Vasool does). What else do you need!
Perhaps, a good credit score.
Better credit history will mean better loan availability. Therefore, be prompt in repayments. Don’t take any loans easy. With that habit formed, and stress kicked away, you can then go back to buying yourself the time to research and arrange for funds at low cost, again.
It’s a process. It’s a process. It’s a process.
by Anil Pinapala, Founder and CEO of Vivifi India Finance