Personal Loans are becoming increasingly popular in India. And for good reason, of course. Where else will you find such ease and flexibility with a credit line?
Personal Loans can provide the necessary funds to pay off high-interest debt, fund a home renovation, or cover an emergency expense.
However, Personal Loans are potent instruments and should be used cautiously. You should consider the following four things before applying for a Personal Loan.
Four things to consider before taking Personal Loans
1. Only borrow what you need
It is very easy to over-borrow when you're taking a Personal Loan. You should borrow only what you need and can repay comfortably without straining your finances.
This isn't easy. When looking at a credit line that can be stretched quite easily, it takes strength and mental fortitude to take only what you need. Remember that borrowing too much can lead to higher interest costs and repayment difficulties.
2. Compare the interest rates on the market
Interest rates and charges are significant factors that determine the total cost of your loan. Understanding the various charges associated with Personal Loans is crucial to making an informed decision.
Make sure you compare the various Personal Loan interest rates in the market. You can get a range of options depending on your eligibility criteria and choice of lender. For instance, Axis Bank Personal Loans offer interest rates ranging from 10.49% to 24% p.a., depending on the loan amount.
3. Calculate your EMI beforehand
If you’re borrowing an amount you will struggle to repay, you are setting yourself up for failure. You must maintain consistency in your financial plan. This can only happen if you select an EMI you are comfortable with.
Many banks offer Personal Loan EMI calculators that you can use. For instance, you can check out the Axis Bank Personal Loan EMI calculator and Personal Loan eligibility to map your financial journey better.
4. Make sure you maintain your credit history
When you have a debt to your name, you have a very interesting opportunity to cement your reputation as a financially responsible adult. You can show that you are trustworthy when repaying bank loans.
If you make your EMI payments on time, you can improve your credit score. But, if you fail to pay by the due date and miss some EMI payments, your credit score will plummet.
Also Read: [When should you avail of a Personal Loan?]
Selecting a Personal Loan
While this choice is personal and should not be imitated, you can use the following guidelines to make the screening process easier. Look for a lender who checks all these boxes:
- Flexible tenure
- Competitive interest rate
- Good user reviews
- Easy processing
Summing Up
When it comes to Personal Loans in India, it's important to do your research, plan carefully, and exercise caution. Personal Loans can be a valuable tool for managing expenses and achieving financial goals, but they can also lead to debt and financial strain if not used responsibly.
By following the right steps, such as assessing your ability to repay the loan, comparing interest rates and fees and reading the loan agreement carefully, you can make the most of a Personal Loan and avoid unnecessary stress.
Additionally, it's important to remember that Personal Loans should be used for essential expenses, and borrowing for discretionary expenses should be avoided. With these considerations in mind, you can confidently approach Personal Loans and take control of your financial future.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision
