Outlook Money
Before 2026 starts, take stock of every loan you hold to ensure it aligns with your goals. A smart debt check can boost liquidity, reduce stress, and strengthen long-term financial health.
A debt check is like an annual health check-up – it verifies that your borrowings are intentional, under control, and support your long-term financial goals.
Every loan should have a clear reason, such as asset building (home, business), emergency needs, or essential lifestyle improvements.
Good debt helps you create long-term value and contribute to wealth creation or personal growth. Bad debt is short-lived and consumption-driven, such as credit card bills.
Borrow what you need, not what you qualify for.
Look beyond the rate of interest and consider processing fees, insurance add-ons, and prepayment penalties. Compare offers periodically, and refinance.
Your total EMIs should ideally stay within 30–40 per cent of your monthly income. Higher ratios can reduce your ability to save and invest.
Maintain a healthy credit score (750+). Review your credit report annually for any discrepancies that might affect your loan eligibility.
If your income has increased, or you have received bonuses, consider making partial prepayments. Try reducing the tenure, and not just the EMI. This helps in cutting down the interest cost remarkably.