Nowadays, more and more people are opting to take a personal loan because of the rising costs of everyday and luxury commodities. Personal loans help individuals and families fill the gap between accumulated income and expenses. A personal loan is a loan which is completely unsecured and not backed by any security or collateral. People usually take personal loans from either banks or non-banking financial companies (NBFCs). Since the risk of giving out a personal loan is so high to the lenders, the personal loan interest rate is also higher than what the interest rate would be for a car loan or a home loan. Taking a personal loan is a decision that should be taken with careful consideration of the outcomes and in-depth research of the lenders. Some things you should keep in mind while taking a personal loan are:
Make sure you are eligible for a personal loan. You must have a stable occupation, be between the ages of 21 and 65, and have a proof of income to be eligible for a personal loan.
Personal loans have higher personal loan interest rates. Make sure you are prepared to pay the EMI with your income.
Your credit score is the first thing a lender will look at before giving you a personal loan. Make sure your credit score is up to mark so your application won’t be rejected.
A longer tenure means lower EMIs and a shorter tenure means higher EMIs.
Prepaying for a loan means you have to pay the prepayment fee. You can only prepay after 12 EMIs have been paid.
Now that you know what the criterion for taking a personal loan are, here are some things you should do after you have taken a personal loan.
Pay off your EMIs on a timely basis-
if you do not pay off your EMIs on the date it has been decided by the bank of non-banking financial company, it will negatively affect your credit score and you will have to pay a penalty charge that might burn a hole in your pocket.
Make a monthly budget-
in order to pay the EMIs fully and on time, make a monthly budget with your salary. When you stick to your budget strictly, there is a higher possibility that you will pay the EMI on time and you will not be penalized for the same. Another advantage to budgeting is, you can save some of your money and that money won’t be used to pay off your personal loan.
Prepay a part of your personal loan-
if you suddenly get a salary hike or a holiday bonus, you can use some of it to prepay a part of your personal loan. However, do not pre-close the loan before the tenure is up because it can affect your credit score negatively.
Close all previous loans-
if you have any existing loans, clear then off and then only apply for a new one. If you apply for a loan back to back, it seems as if you are desperate for money.
We hope this article helps you! Good luck!