Pointers to Remember After Availing a Personal Loan

Given how easy it has become to avail a Personal Loan today, it’s no surprise that their popularity has skyrocketed. The fact that it is an unsecured loan (which means that there’s no security or collateral required while applying for one), coupled with the fact that you can use it for almost anything, has made it a very popular loan product among today’s working professionals who are looking for a quick, convenient, and hassle-free way to arrange for short-term funds. Having said that, this is also the reason why many customers end up falling into a debt-trap of sorts when they avail a loan just because it’s easier to get. Most of the time, they realize that the monthly EMI payable for their Personal Loan is too much to bear and end up struggling to pay it off.

Therefore, to ensure that you don’t fall into similar unpleasant circumstances when you apply for your Personal Loan, apart from researching and reading up about different banks and institutions that offer loans, here are a few things you should keep in mind even after you’ve got one.

Timely repayments:

Unless and until you want to bring your credit score to dangerously low levels and make it almost impossible to borrow any kind of loan in the future, you must make sure that you pay your monthly EMIs for your Personal Loan on time. Otherwise, you’ll have to bear the brunt of late-payment penalties, outstanding charges and a very low credit score, which will make it very difficult for you to borrow in the future.

Keep your family informed:

While applying for a Personal Loan, it’s always advisable to keep your family members informed about the same, along with the reason for having done so. It’s not a good idea to keep such information from them, because, should anything happen in the future that hampers your ability to pay your monthly EMIs, then your family may be able to come up with a solution or help you repay the EMIs, because they would then be informed about how important it is as a financial commitment.

Security:

This is a little like the previous point. Even though Personal Loans come without any security or collateral, it is always better to have a backup plan or an ‘Option B’ in case anything untoward happens to you in the future which may hamper your ability to repay the monthly EMIs. This could be anything, like another term loan, an insurance policy taken specifically for the Personal Loan, etc. Otherwise, the debt will get passed on to the beneficiaries, which may create a lot of problems for your family later on.

Utilize the funds wisely:

It’s common knowledge now that we must only borrow money when we are in actual need of it for a dire/urgent expense. On top of that, please make sure that you don’t avail a Personal Loan for a materialistic/unnecessary purpose you don’t really need. For example, availing a Personal Loan to pay off your child’s school fees or your wife’s Education Loan EMIs makes a lot more sense than taking one for a vacation or splurging on gifts you don’t need.

Conclusion

Ultimately, Personal Loans do come with a comparatively high rate of interest as well, and you don’t want to be stuck with monthly EMIs for a loan you never needed in the first place, do you? That’s why it’s always better to keep your needs and not your wants in mind while thinking of taking a Personal Loan.