Being unsecured loan, the personal loans have high interest rate associated to it. Thus, one must consider taking personal loan if:
- You have visibility on the cash flows and also are sure you can repay EMIs on time. Or you’re bound to enter in the debt trap.
- There’s an emergency so you need immediate funds. Personal loan is taken because processing time is lesser with minimal documentation.
- You don’t have asset or security to get the loan. For example, if you’ve FD you can request, secure loan may make sense.
Look for the lowest interest personal loan to meet any essential needs that can’t wait. It must be your final resort. Getting it just to satisfy your leisure needs will prove very costly that is for gambling, purchasing new car etc.
Before selecting your personal loan:
- Processing fee: You have to remember processing fee or other fees that are levied while you apply for the personal loan.
- Calculate cheapest loan offer: The loans come with high rates of interest ranging from 14% – 25%. Compare the interest rates & get complete picture just by understanding the interest rates for every offer.
- EMI & tenure: Evaluate your loan offers. First condition for the loan offer choice is total money outflow a loan can cost. Second factor is EMI. The loan offer with lower EMI and longer tenure will appear attractive, since it can be simple for you.
- Prepayment penalty check: Know upfront if there are any penalty payments of prepayment of personal loan in any point.