Life @ 13.99%

Many people take loans for various reasons. Some take it  for unavoidable reasons and others for avoidable ones…or for ones which can be easily delayed, like vacations, purchase of electronics, luxury watches, etc.

But before you read further, I would request you to understand that I am not against those who take loans. Everyone’s needs and situations are different. Even I have taken loans in past.

Since last few days, the following image is popping up on the website of a large private bank whose services I use to conduct my financial transactions.
Personal Loan - Vacation
As you can see, the bank is telling you few important things…

First is that ‘Life is waiting’. And that is a fact. Nobody can be wrong by making such a statement. There are so many things to do in life that sometimes I feel one life isn’t enough to fully experience life. 🙂

Now second thing to observe is that the image above shows a couple enjoying vacation in Europe (probably). Now a decent European vacation for two costs around Rs 4 Lacs. This picture pops up just before one logs into bank’s website. Therefore, my assumption is that bank is showing this image to everyone irrespective of whether person logging into bank’s website is or isn’t a suitable candidate to pitch such visual advertising to sell loans for luxurious expenditures. 

It means that bank does not take into account customer’s past average balance, repayment histories before making the (very first) pitch for the personal loan.

Once again, I am not saying that one should not take loans. But vacation is something which can be delayed. Or should be planned well for. Vacations are generally not spur-of-the-moment decisions.

So it is better to plan for them from the very day the final decision is taken. Isn’t it? And some people actually don’t want to take loans for such discretionary spendings. They plan well and well before the day funds are actually required. Just sometime back, I received a mail from a reader to help him plan his funding of a trip to Dubai he wanted to gift to his wife.

For the time being, lets not judge whether what bank is doing is correct or not. Bank can anyways justify its marketing actions by saying that there are proper processes in place for approving loans to check suitability of candidate.

And they are right in saying this. They can also give an example that there are no checks on who sees the hoardings on sides of highways offering home loans for budget(!) homes costing 1+Crore. Once again they are not wrong.

This brings us to a possible conclusion that onus and responsibility of applying for loans of any kind lies with customer and not with bank. 

Bank only evaluates suitability of the applicant and then decides to lend or not to lend to him / her. Bank is there to lend you money for all your expenses. But it is for you to decide whether you need to take a loan for something which is as discretionary as a vacation, or something which has the potential to generate future wealth like property or commercial vehicles. 

Always have limits to how much you will borrow and for what reasons you are willing to borrow. Because eventually, this will be a major determinant of whether you will be rich or not.

By the way, I feel that banks are generally ready to give loans to those who don’t need it. What do you think? Also, if you have any stories about your loan related experiences which you think will be beneficial for others, please feel free to share the same in comments or drop me a mail at


  1. Personally I feel we should first save money and then use it for discretionary spending like vacation. If it is unavoidable, one should make sure that that loan gets repaid in not more than 3-6 months.

    It is not necessary to visit expensive foreign places which can make our future budgets constrained) when India provides more than enough places to give us memorable experiences at less price.

    Though as a banker I would like to lend to everyone who can pay back the loan on time. But as a responsible citizen, I would like debtors to use money for their personal growth & wealth creation.

  2. I took a loan here in Dubai last year nov. at int. rate 2.2% per anum for 2 years so the total I pay to the bank here in dubai for 2 years (5 %, including processing fee)
    same amount i have parked as an FD in one of the private banks in India which gives me 8.65 % per anum…so in 2 years I get (17.2 % )

    advantages of this loan
    1) i earn a profit of 17.2 – 5 = 12.2 % (in 2 years)
    2) interest earned is debited to my account every month, my parents get to withdraw it easily on a fixed date and I save transaction and exchanges rates every month.
    3) the EMI what I will be paying for next 2 years now is like a forced savings…the same amount of money which is giving me 12.2% return till nov. 2016 will fetch me complete 17.2 % every 2 years thr after.
    4) moreover…15% of the total amount I have invested in a MF in the same I will start an SIP as well.

    so basically….where loans are NO NO for vaccation like expenses, they are a definite GO GO sometimes hehe 😉

    nice blogs mate….been reading tthem for past 2 hours now…eyes hurting but still wana read more!!

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