Debt counselling: Sanjay Agarwal

I am servicing an auto loan, a personal loan and a home loan and my equated monthly instalments (EMI) are Rs 15,000, Rs 4,000 and Rs 6,000, respectively. I earn Rs 52,000 a month. I make regular payments, but occasionally slip up. Now, I want to reduce payments to a more manageable amount, so that I can start saving monthly. Should I take a top-up home loan to clear debt?
Taking a top-up home loan is a good option to consolidate all three loans into one, by foreclosing the auto and personal loans, lowering interest, increasing the tenure and, thereby, lowering the EMI. However, you need to compare the interest on the top-up loan with the existing auto and personal loans, since it will make more sense if it is available at a lower interest.

I had switched jobs three months ago, but due to some joining irregularities in my paperwork, I have not yet received my salary. This has affected my savings, even prompting me to use my credit card to incur certain large expenses. I am thinking of taking a personal loan to clear my card debts, as I have heard failure to repay can result in poor credit history, affecting ones ability to get further credit. I plan to take a home loan next year.
As long as you pay the minimum due every month, your credit history won’t get impacted, although the credit score with the Credit Information Bureau (India) Limited may temporarily come down. Nevertheless, this rollover comes at a very high rate of interest, which may exceed 40 per cent per annum, not only on the past dues, but also on the fresh purchases made on the card. If you can settle all the dues in a month upon receiving the salary, you need not go for any loan. Otherwise, you could take a personal loan to clear all dues in one go. Settling dues in a short time will neither affect your credit history, nor the score significantly. Also, it will not pose any problem for your home loan.

The writer is senior vice-president and group head (retail strategy and branding), Arcil. The views expressed are his own. You can send your queries to yourmoney@bsmail.in