A personal loan can come in handy and can rescue you out of the immediate financial requirement. However, easy processing and quick transfer of approved money into the bank account should not prompt you to avail one. Experts do not recommend personal loans, unless unavoidable. If you are looking to avail a loan, consider these factors before deciding.
Right Time and Right Reason
The first thing to do is to analyze your current and future financial status. Analyze the reason for availing the loan. If it is not for an immediate need, just postpone. If the reason is valid and needed, check for the right time to avail it. Monthly EMIs should neither become a burden nor disturb your regular commitments. In short, a personal loan has to be availed only for a valid reason and at the right time to avoid unnecessary financial stress. After all, a loan should be a tool to solve your financial issue, not create one!
Seek an expert advice from fiduciary-like ArthaYantra on how and when to avail loans without disturbing any other financial goals of life. A complete financial planning is needed to make a decision on any money-related matter, including loans.
Next, comes researching on interest rates. Personal loans attract very high-interest rates as they are unsecured. The nature of the loan does not make it easy to obtain, unlike secured and collateral loans. So, compare different lenders and take a call. Most times, banks do not automatically lower the interest rates even if there is a fluctuation unless asked for. Thus, keep a tab on the fluctuating interest rates and keep updated.
If you are opting for a personal loan with the longer duration, go for the one that gives more flexibility with payments. If you already with an existing loan, keep a regular check on the lenders offering lesser than the current interest rate. If you identify one and qualify for it, do not hesitate to avail the same and get the balance transfer done. Pay less and save more.
Banks charge a heavy penalty on your loan account if you miss out on paying your EMI before the due date. Be aware of the penalty charges. Check for the loan tenure and decide if you can manage payments for so long. Take a decision based on the affordability factor. Ensure to maintain decent credit history for good CIBIL score.
In conclusion, ensure to avail personal loan for a genuine reason at the right time. Do not go for it just because it is handy. Be wise when dealing with your hard earnings. Maintain a financial discipline and work towards setting up an emergency fund to combat crises, so that you do not have to rely on loans.
Additionally, set clear financial goals and work towards contributing regularly towards them. Make investments through right platforms to let your money grow. Complete financial planning helps!