Bank of Baroda's (BoB) plan to e-auction Bollywood star Sunny Deol's expensive villa in Juhu, Mumbai, due to loan default took a new twist on Monday morning after it withdrew the decision citing 'technical reasons'. The villa was scheduled for auction after the actor failed to repay his Rs 55.99 crore loan due in December 2022.
Deol earned acclaim for his role in the movie 'Gadar: Ek Prem Katha'. His new film, Gadar 2, sequel, has reported business of over Rs 300 crore. Deol's loan default underscores the importance of responsible borrowing and proper debt management. With inflation rising, borrowers must adopt proper strategies to manage loan burdens effectively.
Though most borrowers may not have big loans like Deol's, they still often grapple with loan repayments, whether home or personal loans or loans against property. Deol's current situation is a lesson for others. Ordinary borrowers should explore various alternatives before resorting to a loan against property, as your home is precious.
Here are some key takeaways that borrowers can consider to avoid similar financial struggles:
Exhaust All Options: Before considering a loan against property, explore alternatives such as loans against fixed deposits, shares, mutual funds, gold, or insurance.
Choose any of these options or a combination of these options.
Effective Debt Management: Merge multiple loans into a single personal loan to simplify repayment and potentially secure lower interest rates—Prioritise repayment of high-interest debts like credit card loans to alleviate financial stress.
Refinancing Strategies: Engage with your bank officials to understand the impact of rate hikes on your EMIs. Then consider refinancing the loan with your existing lender to adjust the loan tenure, interest rates, and EMI payments according to the current interest rate regime. Choosing an existing lender may help due to differences in associated charges, such as application processing, as it is cheaper than going for a new lender.
Balance Transfer: Explore transferring your home loan to another lender offering lower interest rates. You can move from an NBFC to a bank. Before deciding, weigh the pros and cons, including total repayment amounts, charges, and potential savings. Also, look at prepayment penalties before opting for a balance transfer.
Sunny Deol's loan predicament serves as a reminder that even celebrities are not immune to challenges from debt repayment. So borrowers should adopt responsible borrowing practices and manage debts efficiently using these tips.
