How should you select a Chit Scheme?

How should you select a Chit Scheme?

Selecting a chit scheme suitable to you helps you better in the long run. Let us look at the parameters that influence you while deciding on a chit scheme suitable to you through a small story. Manoj is a student in high school with an ambition to be an engineer in the next 8 years. Understanding his ambition, his father Venkat has been saving money from the past few years for Manoj’s fees. In the process of saving for Manoj’s education, Mr Venkat has explored many options to save and invest money safely.

Venkat was trying to make Manoj understand how he has been saving money through Chits and why he chose eChits. Mr Venkat Said, “It is very important to choose a saving tool based on your objective. In our case, I needed a tool that gives me instant borrowing facility and the ability to withdraw money as per our need. I quickly understood registered chits are safe and secure. The challenge has been to find the right chit scheme as per our need.”

Manoj then exclaimed, “I have seen you managing chits many times on your mobile and you have been choosing different chit schemes at different times. Why so?”

Venkat explained, “Choosing a right scheme depends on five aspects – Choosing a right company, Understanding company charges, Your personal objective/requirement, your ability to pay a monthly subscription on time and your commitment to stay through the chit period.”

Choosing the right company

Venkat continued, “Choosing the right company that is registered entity both with Ministry of Corporate Affairs and Registrar of Chits is a must. Registered Chit fund companies offer security and trust. You also need to check for the history of the company and its promoters reputation. Choosing a safe and trust oriented company ensures your chit prize money is paid to you on time. In this technology generation, you can further choose a company that offers digital chits or eChits leveraging technology.”

Understand the company charges

Manoj asked. “You once said company charges are also an important point to consider. What kind of charges do we need to look for?”

Venkat replied, “Before making a final call, please compare the commission the company charges and also know your pre-closure charges and verify them with market standards. At this stage, you need to once again ask for the value addition the company offers when compared to the competition. The value addition may be in the service or the charges.”

Subscriber’s objective

Venkat continued saying, “Next three aspects are related to us as subscribers of a chit. Out of the chit scheme options available with the company, you need to choose the one that is very close to your needs or objective. In our case, I have a goal of saying 10k to 12k every month for your higher education. There was no scheme from the chit company closer to this, then I have asked for a customized chit scheme, which the company can offer. I have chosen a chit scheme of 10k per month.”

Monthly subscription

Manoj asked, “Does the subscription amount keep changing?”

Venkat said, “Yes. They vary, but it is always less than the amount you paid in the first month. Based on your ability and comfort, the subscriber has to choose a chit scheme with subscription amount that he can comfortably afford only. In our case, I can comfortably afford 10k subscription amount per month.”

Chit Period

Manoj asked, “I have one final question, How long do you need to pay the monthly subscription?”

Venkat replied, “This is a very good question. While choosing a chit scheme, you also need to consider the chit period and check for yourself if you can pay the chit subscription amount monthly till the end of chit period. In our case, as we have time for the next 8 years, I have gone for 24 months chit period. As a subscriber, your prime responsibility is to continue with chit scheme for entire chit period as there are a lot of people in the same chit group who can be affected, if you step out midway, hence choose a chit scheme that is suitable to you considering both subscription amount and chit period.”

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