Five things to consider when taking a personal loan

As far as interest rates are concerned, personal loans attract them high enough to the point of not being financially prudent. Personal loans are unsecured loans, thereby the rate of interest, could vary.

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New Delhi: Personal loan, as the term dictates, could be utilized for an array of personal financial needs. For instance, gazing at a lavish diamond set for your wedding or basking in the sun on an international holiday seems possible when you can have cash instantly in your wallet with personal loans at your disposal. Personal loan can be a lifesaving agent in an event where either you don’t have a health insurance or it’s not sufficient to meet unexpected medical expenses. These unsecured loans have the ability to sail you smoothly through both good and hard times. Known for quick disbursal and rapid processing, personal loans come with their own set of pros and cons. Let’s take a sneak peek into things you must consider when delving on taking a personal loan: Rate of interest: As far as interest rates are concerned, personal loans attract them high enough to the point of not being financially prudent. Personal loans are unsecured loans, thereby the rate of interest, could vary anywhere between 10% to 29% per annum. Know the rate of interest you would be paying on your personal loan and calculate how much you’ll actually end up paying back in the total loan tenure. Sore Long Term Credit: The longer the term of personal loan, the more you are going to shell out of your pocket. It is always prudent to take a personal loan for not more than one or two years. You may have to pay more on EMI every month, however, as a whole, you’ll not batter your pocket as gravely if you choose otherwise. Your Credit Score: Credit scores really matter while processing any kind of loan. From getting your loan sanctioned to offering you a better interest rate, your Credit Score has lot in store for you. However, while your application is under process, your credit score is negatively impacted every time a credit agency does a credit check. Thereby, survey the market well before applying for a personal loan and do not apply at multiple banks or financial institutions. Keep it for Emergency Only: If you really need to take a loan, it is best to initiate it in the times of emergency or while meeting financial liabilities only. Personal loans should not be taken rather lightly, because of the interest cost that implies, and shall only be utilized in case urgencies or when other options just dry out. Know Additional Costs: Lastly, check with your lending institution the processing fee, pre-payment fee and late payment fee to steer clear of any bad surprises later.