Top Points to consider before taking personal loans have you ever think about it.? so we are back with our new posts on top points to consider before taking personal loans. so there are few points which every one needs to consider before taking any personal loans. the main point is need of that loan, do you really need it.?? ask this question from your self first. is personal loan is the last option left. even if the personal loans is last option please considered the given points.
Check Interest Rates before taking personal loans – interest rate is the most important point which needs to be considered. do not fall for the lowest interest rate only, do check weather the interest rate is FLAT rate Or REDUCING balance basis. Flat rates loan are given on less interest and where as the reducing balance rates may be higher but in overall you will pay more in flat rate of interest as compared to reducing balance rates.
CHECK ALL cost inclusion before taking personal loans – Interest rate is not the only cost you have to bear on personal loan there are some other costs like Processing Fee, prepayment fee & Late payment fee
Processing fee is the amount is 1-2% which bank charges to grant a personal loan, these charges are added to the personal loan amount.
prepayment fee is the fee which bank charges when one pay the loan before the tenure of the loan , Banks use prepayment penalty as a tool to ensure that the borrowers stay in the loan and bear the full interest cost. Lower the prepayment penalty, the better.
Late payment fee is lived when one don’t pay the EMI on time. if you are facing some cash flow issued considered this as a cost to loan.
Consider your needs not Eligibility before taking personal loans: if you need to borrow Rs.2,00,000 ONLY , sometimes bank executive will lure you for taking extra then your need because you are eligible, try to borrow the exact amount what you need. Why do you want to pay interest for the money you don’t need? Don’t fall for the ego massaging sales pitch. Borrow only as much as you need and not more.
GO for better interest rates before taking personal loans: Check for the best interest rates do not apply for the personal loan itself. because applying for personal loan will get more cibil queries and may adversely affect your cibil score. you may check your free cibil score here. you can check the interest rates by calling the bank or executives.
Make sure you can pay the EMI on time: Be honest with your self, check weather you can pay the EMI on time No one knows about your repayment ability better than you. Not even your bank does. Do an honest assessment. If you feel you cannot service the personal loan EMIs, do not take a loan. Try talking to friends and family. Failure to service EMIs will result in penalties and also spoil your credit history.
Avoid Add-on Offers while taking personal loans : some banks offer you extra add-on with their loans avoid any such add-on offer like, personal insurance, accidental insurance, any insurance plan, the bank personal will tell you that you don’t need to pay any up-front cost, but it will get added to your Loan EMI for sure. avoid These at any cost.
Avoid personal loan if you can – the best choice you can choose is not to get any personal loan first. until unless its an emergency Sometimes, due to short term cash crunch, a personal loan might be the need of the hour. However, personal loans taken for vacation and latest fancy gadget is a strict no-no. A personal loan, with the exception of credit card debt, is the most expensive debt available in the formal banking sector. The interest rate may range from 12% to 30% per annum. Hence avoid such loans to the extent possible.