Things to Avoid When Taking a Personal Loan

It has become extremely easy to apply for and get a personal loan today. However, it is very easy to take on a debt and have it spiral out of control. This article outlines a few things that you must avoid so you do not fall into a debt trap.

A personal loan can be taken for many reasons. Expenses for weddings, vacations, home renovations, emergencies and more can be taken care of with a timely personal loan. It is a good way to get a significant amount of money whenever you need it. However, like any debt, it is important to be cautious and ensure that you utilise the loan to the utmost.

So here are a few things that you should try to avoid when taking a personal loan.

Extend Repayment Time
Debt is never a good thing to have. Thanks to the magic of personal loan interest rates, it has the potential to quickly spiral out of control if not managed properly. Use a personal loan calculator or a personal loan EMI calculator to determine your loan period and try not to extend the period to avoid unnecessary fees and penalties

Take an Unaffordable EMI
This may seem like common sense but it is surprising how many people think they can manage but some unforeseen event happens and they miss the loan EMI payment. Use a personal loan EMI calculator to determine your EMI before you even apply for the loan. While parameters like the personal loan interest rates are out of your control, set tenure and other controllable values such that the estimated EMI is something that you will always be comfortable paying.

Miss an EMI payment
Your credit score is affected every time you miss a payment. Use a personal loan EMI calculator to calculate an appropriate EMI amount. Be sure to enter the appropriate personal loan interest rates so get an accurate EMI estimate. Missing an EMI may also increase your personal loan interest rates for future loans.

Ignore add-on features
Many financial institutions offer several add-on features like no pre-payment charges and flexible repayment schedule. If you have use a personal loan calculator to calculate your EMIs, you should be able to comfortably pay off your loan in the stipulated time. With the no pre-payment penalty feature, you can pay off your loan before time without any penalty, in case you lad a windfall of some type.

With the documentation, options and tools like a personal loan EMI calculator available at your disposal, it has become extremely easy to plan your finances and loans. Be smart in choosing the personal loan interest rates and repayment time period and ensure that the EMIs do not catch you by surprise.