Personal loans are popular because they are easy to avail, the lender doesn't monitor the usage and doesn't ask for a collateral. But don't take a loan just because you can. Before you borrow, consider how the repayment will affect your finances.
Here are a few questions a potential borrower must ask himself before he applies for a loan.
Is it really necessary to buy now?
We may feel a compelling need to buy something but the purchase may not be necessary. Using credit cards for small transactions like daily purchases, casual shopping and dining out is fine. Customers can also earn reward points against such purchases, and the outstanding can be easily paid in full before the due date. Don't be tempted to use your credit card to buy something you can't afford. These unnecessary purchases can wait until you have saved up the money to buy the item with a debit card.
Can I afford the EMI?
This is a crucial question that demands an honest response. Personal loans have a rigid repayment schedule. If a borrower is unsure of his ability to service the EMI, he should rethink his decision to take a loan.
Should I borrow for a vacation?
You may be in desperate need for a break, but go for it only if you have enough cash to meet the expenses. Taking a loan for funding your holiday isn't the answer. Vacations give you a chance to relax and not complica ..
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