Personal loans can be extremely useful in dire situations. At the same time, loans must be repaid within the suggested tenor and not defaulted. It’s always advisable to review your financial situation and ensure that the loan you are applying for is appropriate for you. The key is to follow certain tips and save yourself from future hassles, losses or any kind of burden.
Say NO to late payments
Late loan repayments do no good and only bring your CIBIL score down. Besides, who wants to burden themselves with penalties? A CIBIL Score defines one’s credit and financial history, and late EMIs negatively impact the CIBIL Score. This affects the borrowing credibility and makes future loaning difficult. So, always repay your EMIs before the due date.
Avoid taking a personal loan for investment
Personal loans come with high interest rate. So, taking a personal loan for any investment purpose might not sound wise. It is practically uncertain that personal loans will bring any profit, if taken for investment purposes. You may even face issues while repaying your dues later. While investing, one is supposed to earn on the invested amount. This does not generally happen, as the loan amount which you’ll invest already has interest levied. Hence, avoid the idea in the first place!
Borrow only as per your need
It feels superb when you receive a desired loan but it is only when you start repaying it, the real trouble surfaces! Besides paying EMIs, you must have adequate money for your other monthly needs too. The loaning process should not necessarily choke you. Therefore, always and always take a loan which you can easily repay.
Go for shorter tenors, if possible
Yes, we know it looks inviting when we have the option of paying less with longer tenors. But inevitably, less amount for longer timelines increases your interest too. So, you end up paying a lot more than the borrowed amount. When the tenor is short, the EMIs would be a bit more but then, the loan can be closed off in lesser time, saving you the interest.
Always take insurance for a large loan amount
A loan insurance protects the borrower’s family’s future by repaying the loan, when the borrower fails to repay. So, always opt for an insurance for bigger loans. Many loan insurances cover job loss, major accidents, death, etc. So, in these cases the insurance company will pay the remaining EMIs. This can save one and one’s family from so many future hassles, right?
Research well, compare & pick the lowest interest rate
Before taking up a personal loan, one must always spare enough time online. There are a wide variety of options available for personal loan, with varied interest rates and other overhead charges. So, research well on different banks’ offerings and compare them online. Lastly, go for the one which offers you the best interest rates.
Prepay whenever possible
Save whenever it’s possible, so as to prepay the loan you’ve taken. Utilise your bonus, incentives, hike, etc. to foreclose or prepay the personal loan. The same will help you to save a considerable amount on the interest which would have been paid throughout the tenor to the lender.
Personal loan can strengthen you to fulfil your choices and achieve few personal goals. The only thing you need to take care of is timely payment. We hope the aforementioned tips can make your loaning experience a smooth one without you compromising too much on your daily life needs.