Effects of MCLR in Financial Planning
Now a days with a lot of lenders available in the market people have become dependent on loans and EMI’S to fulfill their basic needs. So in this article we look at the effects of MCLR in Financial Planning.
Whether it may be a matter of purchasing a new car or a new house or any other basic requirement in daily life people have started choosing loan as the easiest options to fulfill their needs. One can take loan from a variety of vendors available in the market SBI being one of them and fix their monthly EMI’S accordingly. Using these facilities one can manage his/her financial goals easily and can hope to fulfill their dreams .
But currently India’s largest bank State Bank of India raised its marginal cost of funds based lending rates by 10 basis points across the tenors. So basically the MCLR has been raised to 7.9 percent for overnight, for one month it is again a 7.9 percent hike, for six months the hike is 8.1 percent and similarly for one, two and three years the hike is 8.25 percent ,8.35percent and 8.45 percent . Now just think that how this kind of action of one of the biggest lenders will effect the financial conditions and planning of a middle class family.
Increase in MCLR means increase in EMI’S and all kinds of installments which a person pays while purchasing something keeping in mind the financial assets.
For example if six months back a family bought a new sedan car worth rs 15 lacs and choose an EMI of 10000 per month as a paymet option to afford that particular car. Now before choosing this amount of the EMI he/she must have calculated the net amount that they will pay after completion of the loan so that their financial planning and goals should not get effected with their new purchase. But now as the MCLR being raised by the banks the EMI’S on all products whether it may be a car or a house or any other things will increase there by effecting total cost of the product. Automatically this will effect family’s financial budget and will shake the financial planning of the family.
This does not mean that people should avoid or stop using loan as their options to maintain their financial conditions because it is wise taking loans and choosing EMI’S but these kind of sudden actions taken by various banks can ruin each and every financial planning of a family which will surely effect one’s future.