Planning to take a personal loan? Do you have the clarity on how much you should borrow or how long the repayment tenor should be? If you lack the clarity on these subjects, the process of applying for a personal loan and the time after that can be really tough for you. Hence, in order to avoid those qualms and quandaries, take a look at the 5 crucial prerequisites to follow before applying for a personal loan.
1) Identify your needs: First of all, identify all your needs. As a part of the process, you’ll be deciding the type of loan you need based on whether you have the required assets to mortgage or not. Accordingly, you will have to find out the right scheme for the purpose. Financial institutions in India have purpose specific credit schemes as well as a multipurpose personal loan. Hence, identify your needs and find the right scheme for yourself.
2) List the expenses and add them up: List all the expenses on paper and add them up. Make sure you are considering all the expenses - the significant and the insignificant ones. Find out the total money you’ll be needing.
3) Find the right EMI and tenor for the loan: Use the EMI calculator and find out the incurring EMI. The aim is to find the right EMI and tenor combination as per the repayment capacity.
4) Explore and compare your options: Now, take on the internet and explore the personal loan options in your area. Compare them based on the loan amount and the repayment time you need.
5) Create a repayment plan accordingly: Lastly, create a viable repayment strategy which can help you manage the repayment conveniently.
Last but not the least, don’t forget to check your CIBIL score before applying for the loan.
Aman Khanna is an experienced financial advisor who is well known for his ability to foretell the market trends as well as for his financial astuteness. He has an MBA in finance from Toronto University as well as years of experience delivering seminars on sound financial practices and debt management.