Feature Image

DO’s AND DON’Ts TO REMEMBER WHILE TAKING A PERSONAL LOAN

Posted on Wednesday August 5th, 2020

Taking a personal loan and using the loan money to fund your vacations or to buy yourself a new gadget is great, as long as you manage the timely repayments and don’t get into debt trap. Personal loan is a most popular financial product that an individual can avail when in need. Most of the lenders have sweetened the pot with minimal documentation, quick approval, flexible tenure and comfortable loan terms. This type of loan is very useful when you need funds in short time such as wedding, travelling, vehicle purchase or home improvement. Before securing it based upon your needs, plan a budget and figure out if your income can accommodate the monthly installments. If you are going to apply for the loan, there are some do’s and don’ts to remember while taking a personal loan for you given below in this article:

1. Borrow as much as you need: This is the best way to avoid getting into debt trap. You may meet the eligibility criteria for higher loan quantum but it’s advisable to borrow just what you need. If you are not sure about your requirements then opt for Personal Loan Overdraft, where you are sanctioned with full loan amount in one go but withdrawals can be done as per need and you only have to pay the interest rate on the amount you use.

2. Borrow according to repayment capacity: As a thumb rule for loans, a loan EMI should not exceed 20-25% of your monthly income. So, before you Apply For Personal Loan calculate how much monthly installment you can accommodate after meeting all you’re your expenses and adjust the funds accordingly.

3. Choose the right tenure: If you opt for long tenure, it will reduce the EMI and short tenures are suitable for short term cash needs where a borrower expects the money from other sources in few days. Therefore, choose carefully and make timely payments as it can affect your credit score and reduce your chances of getting the loan approvals in future.

4. Don’t use loan money for luxuries: A personal loan is multipurpose, it does not come with a restriction on use and sometimes, it is easy to give in to the impulse of spending the loan amount on luxuries. Well, it’s great to treat yourself occasionally but spend the borrowed money carefully and make sure to repay it on time before making an unpleasant loan journey.

5. Read the terms and conditions carefully: Nowadays, there are innumerable digital lending platforms providing you the Online Personal Loans to save your time and make you aware about the terms and conditions applicable on loan processing and approvals. Before, signing the loan agreement read the terms and conditions carefully and ensures yourself what you are getting into.

Personal loans are convenient because they are fastest and easiest form of credit available in the market. It should be a wise decision to identify your needs first, plan out your budget and to opt for a Personal Loan.