Precautions while taking Personal loans

 “Quick to borrow is always slow to pay”

Credits economic times

In Earlier times the process of taking loans from banks was quite tedious and people actually thought twice before applying for one, but nowadays with improvement in technology personal loans can even be taken from the comforts of your home via internet banking or through personal loan apps. With such ease and comfort comes great confusion and risk of falling into a debt trap. So one needs to be very careful while opting for personal loans and with due diligence do every research on repayment schedules, interest charges, and much more. In today’s article, we’ll be talking about the precautions one needs to take while taking a personal loan so let’s begin

Personal loans

A personal loan is like any other loan where the borrower opts for credit for any purpose like a child’s school fees, buying the latest gadgets, or for your wedding plans. If you want to know more about personal loans, eligibility, sources you can check our previous blog by clicking here

Anyways in comparison with any other form of a loan, it can be arranged quickly, interest charges are less, all the formalities can be done online and you’ll get funds credited to your bank account within two to three working days. But with such benefits young professionals and employees are lured in only to pay a large chunk of their monthly salary as EMIs later on.

Understand you financial background and current loan obligations

One should before making any personal loan application be very sure of the current EMI installments and whether he/she can afford to take a loan. Generally, people do undermine this and later on face cash crunch as more loans will lead to a large part of your income going for regular monthly installments.

Make sure you have good credit score

It is one of the first things that lenders look into when evaluating loan applications. Your ability to pay determines whether you’ll be eligible for credit or not. Generally, a credit score of 650 plus assures that you get personal or home loans without any difficulties. Want to know more about CIBIL Score, its importance, and how to maintain a good Cibil score do check our previous blog by clicking here.

Understanding whole processing and Interest cost associated while talking up loan

There are few costs involved while availing of personal loan facilities like one-time processing fees, late fee charges, penalty charges. Before applying for a loan make sure you check and compare all these costs among the top lenders and make a rational decision.

Don’t go for flashy and eye catching offers

Does that zero cost interest program looks lucrative beware there might be hidden cost involved in it!

Sometimes lenders offer a floating rate of interest that at one time might seem to be very affordable and lucrative but can substantially increase over a period of time and can put you in real trouble finding a lender who is aim is transparency and smooth experience. MoneyLoji is a  unique digital marketplace in which the products which are available for applying will be processed and approved or sanctioned or issuance happens within 24 hrs time. So you get the best deals and offers by top banks and NBFCs and that too at NO hidden cost.

Always opt for personal loans in emergency situations

The newly launched car that you saw last weekend in the car showroom or you want your hands on the latest sneakers as I mentioned you can take a personal loan for any of your needs but taking one should be your extreme option.  This is because, after credit card loans, personal loans are the most expensive loans that are available in the market. Struggling with credit card bills or your child\’s education expenses you can surely apply for a personal loan but if you’re planning for buying any depreciable item like a car, laptop then my friend you are really playing with fire. I mean I’m not saying it’s a bad option but taking a loan for items that will lose the greater part of the value on the purchase itself is quite risky if you believe you’re not financially sound and repayment of the loan might be a burden on your existing income. Take loans for building assets, not liabilities.

Conclusion

It might seem very easy to opt for a personal loan that can rescue you from your financial obligations but make sure to use this one with the utmost care. Personal Loans are one of the best financial products available in the Markets but things can go wrong if you don’t plan in advance and take some of the necessary precautions mentioned above. But don’t worry we are here to enlighten you with all hacks and tips that enable you to manage your finances well so stay tuned.