Everyone has a dream to own or build something of their own. Be it that exciting sports car you've always dreamt of since you were a child, or even that dream house you have been planning for. After all those years of dreaming and planning, you still may not have had the opportunity to make it true. All you really need is a bank loan for it. Availing a loan in India is now easier than ever. But, repaying it isn't that easy. That's why you need a budgeting strategy especially if you are a first time borrower. The following advice by financial experts will help create the perfect budgeting strategy:

Start a RD for down payment:

When you are applying for a loan, you are required to pay a down payment. This down payment is proportional to the amount of the loan. If the loan amount is high, then there is a high possibility that the down payment will also be high. Normally, if the applicant is unable to come up with sufficient funds to match the amount, the bank can reject the application. Thus, in order to have sufficient funds, the recurring deposit can aid you. Invest in this term deposit with a tenure that will finish before you submit your loan application. That way, when the time is right, you should have sufficient funds for a down payment when you are applying for a loan.

Create a cash reserve for emergency repayments:

With a term deposit like a recurring deposit, you can control your finances and income. If you have applied for a loan and suddenly find yourself with insufficient funds to pay off your EMI, this deposit will come in handy. The trick in this situation is to ensure that the investment tenure matches your loan repayment tenure. If there are insufficient funds, you can easily transfer the funds from this termed deposit, while having more than enough funds left for any other payments.

Make early pre-payments for car loans and home loans:

Certain loan products like car loans and home loans have a special feature known as the pre payment feature. With this attribute, you can pay off your loan early. If you repay a higher amount, you can reduce the repayment tenure. However, there is normally a pre payment penalty which includes additional funds. Invest in a term deposit that has a maturity period that matches your repayment scheme. If you have enough funds, you can easily pre pay your loan and reduce the loan tenure. In addition, you will also be able to pay off the penalty sum, with the extra interest earned.

For first time borrowers, there is always a fear that you will be unable to gather the funds. However, with research, understanding and planning, you can come up with a budgeting strategy that will help you manage your finances.