A Brief Overview
You might seek to avail of a personal loan for a wide range of reasons, but before doing the same, it is essential to stop and ask yourself a few questions to make sure you’re making the right decision.
A personal loan refers to an unsecured loan from a bank or via a non-banking financial company for the uninitiated.
Questions to Consider Before Availing of a Personal Loan
Read on to understand the most pressing questions one must ask themselves before purchasing a personal loan.
Question #1. What are your reasons behind availing of a personal loan?
This is the first and foremost question you must ask yourself. You should consider the gravity of why you need this loan and discern whether it is potentially trivial and pertains to an event in your home or whether it is for something more pressing such as for paying your credit card debt.
This question must be reiterated, and the reasons governing it must be gone over multiple times and pondered. You must consider whether you can potentially delay this expense or save for it instead of taking out a personal loan. If either of these is not a possibility, you should select a personal loan with a lot of care and consideration.
Question #2. Are you eligible to avail of a loan?
You must ask this next question as lenders ordinarily consider several factors before providing you with a loan directed towards your personal loan eligibility. These factors pertain to your credit score and income, whether or not it is affordable, what the value of the loan is and whether you provide collateral for the same or not.
As a potential borrower, therefore, you must consider the eligibility criteria and whether you pass the same or not.
Question #3. Can you afford to repay the personal loan?
It is essential to sit back and assess whether or not you will be able to repay the loan with ease or not. Ideally, you should only take a loan that you know you will be able to compensate with ease. Not only should the money you borrow fulfill its requirements, but it should also be a sum that you will be able to repay. To ascertain whether the same will be feasible for you, you should use an EMI calculator to understand where you stand and what sort of a repayment trajectory you would be looking at. You will also understand what amount you are expected to repay each month, the interest applicable, and for how long these payments are due.
Question #4 What is the time frame applicable to the loan?
Equally important is an understanding of what the tenure of the loan is. This will give you a good idea of the time frame within which you will be expected to repay the credit extended to you.
You should then assess whether the time frame interspersed with interest applicable is worth availing of the loan in the first place.