How To Become Rich By Taking Loans in 2024

How To Become Rich By Taking Loans | Best Use Of Loans ?

Hello friends. In this article, we will discuss about a very interesting topic. The title written here is about how we can become rich by taking a loan. Now, in this video, we will not discuss any point that is not practically possible. 

We will only talk about points that are realistic and can be implemented in our actual lives. There are many points here. In this presentation, I have covered various points throughout. Before I explain each of these points, let me share a real-life story with you. You know, it’s been 6 years since I started working for various banks in different states.

 I’ve worked in Maharashtra, Bangalore, and even in two districts of Punjab – Ludhiana and Mohali. I’ve also worked in Haryana, the story about Haryana. When my branch was there – the branch of the bank, there was a very large grain market in front of it. 

Now, if you go to North India, the basic scene in such grain markets is that farmers come with their crops. Big vendors are sitting there, and these vendors buy the crops from the farmers and pay them on the spot. 

Alright, now no matter what you say to farmers, they don’t easily get loans from the bank. Why? Because, in a way Bank… well, it might sound a bit wrong… the farmers often can’t get loans from the bank. So, what do they do? When they don’t get loans, they resort to the vendors in the market for borrowing money. 

Alright, now let’s assume they are vendors, they provide loans to the farmers. Now, what is this loan? Let’s say they mention an interest rate of 24% annually. For example, they say, “Take it at 2% per month” or “2.5% per month.” So, the calculation works like this, then assume that if he is taking it at 2.5%.

so it adds up to around 30% annual interest rate according to the bank’s calculation. Now, these vendors don’t just keep the money in their pockets They are vendors. Let’s say their shops inside the grain market, which could be worth Rs. 3-4 cr or 5 cr as well.

 What do they do? They take loans against this shop, which means they take loans against their properties or sometimes what they do is show their business and get a limit from the bank. Let’s assume some vendor got a Rs. 2 crores limit approved. Some vendors have made a Rs. 3 crores limit, and some even have a Rs. 5 crores limit. 

They don’t actually need this money, they just got the limit sanctioned by the bank. Suppose, considering an 8% interest rate, if someone has an Rs. 2 crores limit, and they don’t need Rs. 2 crores they already have enough money for their business. So, why are they getting this limit sanctioned? They thought from the bank, I received 8% on Rs. 2 crores. 

Now, how much do I use from this – well, what does the limit mean? Let’s say I use Rs. 50 lakh then I only have to pay interest on that Rs. 50 lakh. I don’t have to pay interest on the entire amount. Let’s say he’s got a limit of Rs. 2 crores. 

Now, a farmer comes to me and says, “Sir, I need a loan of Rs. 10 lakh.” Alright, no problem. Now, from this limit, he has to pay only 8% interest to the bank. What will he do? In a way, he’ll give Rs. 10 lakh to that farmer. From farmer, he might end up taking an annual interest of 24% or even 30% annually, because 2.5-3% per month is the common interest rate nowadays.

which you get in the grain market or from anyone. It is called unsecured loans, which in the local language it is called loan is taken from moneylenders. So, let’s assume, it will be offered to forward with a 25-30% interest rate, then here you can see for yourself how this person took a loan and made money by lending it further. 

Now, there is this much difference. Let’s say this person lent money to 100 farmers, and even if 10 farmers default, still, let’s say 90 farmers if they pay on time, even then let’s assume this person, who became a middleman, who took a loan from the bank and lent it further, even then this person, called vendors in the local language – you might have a different term in your state.

benefits of taking loan

 this person is still winning, and still making a profit. So, look, it’s a simple concept that is how he took loan and then lent the money to increase his money, right? 

So, it is a way into the market. I’m not saying everyone should do this or that this is the way to become rich by taking a loan. I just used an example that I witnessed this example. Now, let’s start with the points. First, if I may introduce, there’re 2 types of debt. One is the kind of debt which we call “good debt.” Alright, here, let me write. 

The meaning of “good debt” is that suppose I am taking a loan which I intend to use for my education, okay? I want to spend it on education. Later on, I know that if I study, I will get a good job, so it’s an investment for me. 

Suppose I want to build a house or buy one, then it’s very good to take a loan for it, or suppose I want to invest after taking a loan. That’s also very good because I want to increase my money. On the other hand, if I talk about bad debt – if we talk about today’s dating scenario in India, then if debt is mentioned – if we talk about our generation, many people are taking loans and such.

 They’re repaying them timely. They’re taking unnecessary loans too, but if I talk about my father’s generation, they would say that no one’s work should be done if they have to do it by taking a loan. It means they stay far away from debt, because if you look at your family as well, the entire scenario is the same. 

Debt is still has a very negative connotation in India. Why so? Because many people prefer bad debt. What is bad debt? Suppose I don’t need a car, but still, I’m driving one around, so in a way, it’s bad debt for me. But if I argue that my business requires me to be a salesperson, or let’s say I’ve started a business for which I have to go to different markets.

 I want to create my image like that I own a car. Let’s suppose that I’m a property dealer, alright? I’m a broker. Now, if I roam around with a bike, then I won’t be able to handle any case. The reason is that if a party comes to me and says, “Show me a plot”, “Show me a house”, they won’t trust me if I’m riding a Splendor Plus.

 the party in front won’t trust me – if they want to buy a house worth 2 or 3 crores and I’m riding a Splendor Plus. So, will they trust me? They won’t, right? If I’m roaming around in a Fortuner or if I’m roaming around in a BMW, obviously, then obviously – well, why did I need the car? So that an image of mine can be created for my business. 

That’s why I bought a new car, so it’s a good investment for me. But if suppose my salary is Rs. 25,000, and I’m thinking, okay, an instalment of Rs. 8,000 to 10,000 will be made, and then I go and buy an i10 or buy an i20 or buy Brezza, which are average cars. It will establish their style. I could have gone to the office by Rapido or could also go by Auto. and if you assume that I’m paying the instalment for this, I could have invested it somewhere. 

Then I could’ve had more benefits. So, we have to save ourself from expenses where we are wasting our money. So, in a way, the main thing is that we need to understand the difference between a good debt and a bad debt and it’s the most important thing.