Personal Finance · 4 min read
Loans and Debt
A loan is future income spent today, plus interest. Different loans have very different costs.
Why it matters
Debt at 12% cancels out investments at 12%. Cheap debt can accelerate goals; expensive debt destroys them.
Advantages
- Access to big purchases
- Home ownership
- Business capital
Risks
- EMIs reduce flexibility
- Compounding interest
- Collateral risk
Real-world example
A ₹50L home loan at 9% over 20 years costs ~₹58L in interest — nearly the principal.
Key takeaways
- Prioritize paying off high-interest debt
- Compare total cost, not just EMI
- Prepay when possible if allowed
Quick quiz
1. Which is typically the most expensive form of debt?