There are times in life when we are short of money. At that time, we are looking for a friend or relative who can help us in this difficult time. If for some reason no one is able to help you at that time, then it becomes more difficult.
There are times in life when we are short of money. At that time, we are looking for a friend or relative who can help us in this difficult time. If for some reason no one is able to help you at that time, then it becomes more difficult. In such a time, personal loans can help you. It is also a good option to raise money immediately in an emergency.
You must have seen many such advertisements which talk of giving you a quick personal loan at a low interest rate. There are many types of personal loans such as travel loan, medical loan, education loan, wedding loan, home improvement loan and credit card refinance loan. However, it is your responsibility to verify the authenticity of those claims before selecting any loan.
Before and after taking a personal loan, keep these things in mind:
Before applying for a loan
Please check your eligibility before applying
If your credit card or loan application is rejected, it is duly registered by the Trans Union CIBIL (and other credit bureaus). When this happens, other lenders become cautious and you may have trouble taking a loan in the future. That is why it is important to note here that whenever you think of taking a loan, you must check your eligibility before that. “Most lenders have free eligibility calculators to help customers,” says Aditya Kumar, founder and CEO of Quebera.com.
Do not take personal loan for investment
Personal loan is an unsecured loan due to which it is given at a huge interest rate. That is why you are advised here that you should not use personal loan to increase your business and invest in such stocks which are not seen in your favor.
Borrow only when you can repay it
Before taking a personal loan, do check your current debt to income ratio. Ideally, the total EMI of your loan should not exceed 40 percent of your income.
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Take a loan for a short time
A personal loan is an unsecured loan so its duration is longer than other secured loans. Most lenders approve a limited amount (maximum of 5 to 10 lakhs), which they expect you to return within 2 to 4 years.
Read the terms and conditions carefully
Many times you have seen some paragraphs written in small letters on official documents, which you ignore. They are written there for many reasons, never ignore it. Many companies write most important things in such small letters. Here you should note that if you want to save yourself from any embezzlement, then read it carefully before signing such documents.
Keep these things in mind after getting loan
Pay on time
Your late payment can have a negative impact on your CIBIL score. Delayed payments can cause problems in the future, you may have trouble getting new loans. Also, you may have to pay additional interest along with penalty for late payment made by you.
Never use retirement funds to repay a personal loan
If you have not repaid the installment of personal loan for a long time, then it can become a big problem for you. The irregularity in paying installment not only reduces your CIBIL score but it also increases your stress which is harmful for your health. Keep in mind that for the correction of the mistake made in the present, you should throw your future in the dark. Never use your retirement fund to pay for a personal loan. Retirement funds are the sticks of your old age, use it wisely.
Return money only when possible
Diwali bonuses, increments, promotions, freelance work, “There can be many occasions when you have extra money and use them to pay the installment of your personal loan. Kumar explains, “By doing this you will not only be able to avoid paying extra interest but you will also be able to save from your salary in the coming time.”
Keep an eye on fluctuations in interest rates
According to RBI guidelines, the base rate often undergoes minor changes, which in turn affects the interest rates charged by lenders. If another lender is giving you a better rate of loan then you can get your loan refinanced. However, before taking such a decision, you should talk to your loan manager, because you may come across their valuable customers whom they would not like to lose.
Eliminate old loan before taking a new personal loan
It can go against you by continuously taking unsecured loans. It is often seen that people keep taking personal loans even after having sufficient income, due to which their CIBIL score decreases. By doing this, you may have trouble taking a loan in future.
