Car loan strategy, European holiday plan: Top personal finance stories

Stories from our weekly newsletter tell you about how to manage and spend your money

Vehicle loans are surging at the rate of 22 per cent year-on-year, according to the latest data from the Reserve Bank of India. With the onset of the festival season, the growth rate is likely to pick up pace. This week’s lead story by Sanjay Kumar Singh and Karthik Jerome emphasises the importance of having a good credit score before you apply for this loan. It also explains the factors that impact loan eligibility and explores the pros and cons of fixed and floating rates. Reading this article will also help you make an informed choice when deciding on a lender.

The second article, by Namrata Kohli, provides insights into the growing popularity of Europe among Indian travellers. It provides information on travel costs, destinations, and visa application procedures for Europe. The practical knowledge gleaned from this article will help you prepare for your European adventures.

Health insurance should be purchased early. If left until their forties and fifties, customers may find it difficult to get a policy. If at all they get one, they may be saddled with a high premium or a long waiting period for pre-existing elements. If you are a 30-year-old, look up PolicyBazaar.com’s table on health insurance premiums of leading players.

If you want an all-in-one fund, consider buying a multi-asset fund which must invest a minimum of 35 per cent of its portfolio in each of the three market caps: large, mid and small. If you plan to buy a fund from this category, look up Morningstar’s review of ICICI Prudential Multi-Asset Fund.

NUMBER OF THE WEEK: 7.44%, retail inflation in July

Retail inflation rose to a 15-month high, from 4.81 per cent in June to 7.44 per cent in July, according to data released by the Ministry of Statistics. This is the highest reading since May 2022 when inflation was 7.79 per cent.

The rise has been attributed to a steep spike in vegetable prices due to a mismatch between demand and supply. Prices of other items, including pulses, spices, and cereals, have also seen an increase.

Food prices, which account for almost half of the consumer price index (CPI) inflation basket, have soared in the last two months, largely due to erratic monsoons throughout the country. Prices of tomatoes, a staple in Indian cuisine, rose by more than 1,400 per cent in wholesale markets during the past three months.

Core inflation, however, eased to a 21-month low of 5.1 per cent in July 2023.

The latest inflation reading means that interest rates may not be cut anytime soon. If food inflation lasts for a long time, there is a risk of it leading to generalised inflation, which could lead to rate hikes. Borrowers expecting some respite on the interest rate front will have to tighten their belts, save more, and prepay their loans whenever possible.