Loans Explained: What Every Woman Should Know Before Borrowing

Over the past few weeks, I have been receiving many emails from you. Some of you wrote to say that this column gave you the confidence to open your own bank account. Some told me you finally started that SIP you had been thinking about for years. Others shared that you asked questions about insurance or emergency funds for the first time at home. Reading these messages has been truly heartening. Change does not always begin with big steps. Often, it begins with one small push.

As we move forward in this journey of financial literacy, there is one topic that touches almost every household at some point: loans.

Why Loan Touch Every Household 

Most families use loans quietly in the background. A home loan EMI that runs every month. A credit card bill that comes like clockwork. Sometimes a gold loan taken during a tight phase. Even arrangements like a kitty, where money is taken upfront and repaid gradually, work on the same basic principle. You use money today and commit to paying it back over time.

The truth is simple. A loan is not good or bad by itself. It is a tool. Used thoughtfully, it can help you move ahead. Used without clarity, it can quietly become a long-term burden.

Different Kinds of Loans

There are different kinds of loans, and understanding the difference matters. Home loans are long term and usually come with lower interest rates. They help you build an asset. Education loans help build future earning capacity. Business loans support income generation. These loans often make sense when taken within limits and with planning.

Then there are personal loans and credit cards. These are quick and convenient but expensive. Interest rates are higher, and delays in repayment can snowball into stress. Gold loans can be helpful in emergencies, but they come with the risk of losing valuable jewellery if repayment is delayed.

Before taking any loan, I want you to pause and go through this simple checklist. These five questions can save you years of pressure.

Questions To Ask Before Taking A Loan 

• First, why am I taking this loan. Is it helping me build something meaningful, or is it only helping me manage day-to-day expenses.
• Second, can I comfortably pay the EMI every month without cutting essentials or touching my emergency fund.
• Third, what is the true cost of this loan. Not just the EMI, but the total amount I will repay over time.
• Fourth, what is the interest rate, and is it fixed or floating. Many people do not realise that interest rates can often be negotiated, especially if you have a good credit score, an existing banking relationship, or multiple offers. Never hesitate to ask for a better rate.
• Fifth, what happens if I miss an EMI. Understand penalties, impact on credit score, and how flexible the lender is during difficult phases.

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Credit Card Loans 

Credit cards deserve special attention because they are commonly used but rarely understood. A credit card is not extra income. It is borrowed money. Paying only the minimum due may feel harmless, but interest quietly builds up. A simple rule works best. Use your credit card like a debit card. Spend only what you already have and clear the full bill every month.

Now let us talk about something that affects many women deeply: credit history. Many women find it difficult to get loans not because they are irresponsible, but because they have no credit record in their own name. Assets are often not registered in their names. EMIs are paid from someone else’s account. Utility bills are not in their name. As a result, there is no formal trail showing their financial reliability.

You can start changing this slowly. Make sure at least one regular bill is in your name, such as a mobile phone bill, electricity bill, or broadband connection. Use a small credit card responsibly in your own name. Pay on time. These simple actions help build your credit score over time and make future borrowing easier and cheaper.

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Household Loans

One important thing every woman should remember is this. Even if a loan is not in your name, it affects your life. Household loans shape household peace. You have every right to understand the interest rate, tenure, total repayment, and risks. Asking questions is not interference. It is responsibility.

This week, take a notebook and write down all the loans and credit your household currently has. Home loan, personal loan, credit cards, gold loan. Note the EMI, interest rate, and remaining tenure. Then check what credit history exists in your own name. Awareness is always the first step towards control.

Loans can help build a life, but only when taken with intention and repaid with discipline. Credit should support your journey, not control it.

If you have questions about loans, interest rates, or building credit history, write to us at [email protected]. Your questions guide what we discuss next.

Next week, we will step into a space many people talk about but few truly understand: the share market. We will begin by answering a very simple question. What exactly is the share market, and why does it matter to you.

Because true Laxmi does not shy away from money decisions. She understands them and makes them her own.

Image credit: Freepik