Don’t apply yet! These 5 personal loan questions could save you thousands

If you need a loan to meet your short-term needs or wants, then you could consider applying for a personal loan. For example, if you are expecting your annual bonus to be credited to your bank account after two months, but you have an urgent expenditure lined up, then you could consider applying for an instant loan for a short amount for the time being.

It is, however, important to answer a few important questions before you go ahead with an instant loan.

Ask these questions before taking a personal loan:

I. Affordability: At the outset, you need to check whether you can afford to repay the loan. It can be determined based on the interest rate. The higher the interest rate, the more unaffordable the loan becomes.

II. Transparency around costs: An important factor to consider is how transparent the lender is when it comes to disclosing associated costs, i.e., processing fee and prepayment penalty, among others.

III. Unpredictability: Another question which is worth answering is how you can pay the loan if some unpredictability hits, be it job loss or job transition or some emergency. It is very important to factor in all these unpredictable events before taking on a new financial obligation, such as a personal loan.

IV. Impulse vs need: It is important to note that the personal loan is important to meet immediate need rather than an impulse purchase. Going on a vacation or buying an expensive gift is an impulsive decision which does not require you to take a loan.

V. Reputation of lender: Another important factor worth considering is whether the lender is reputable and trustworthy or not. It is not recommended to take a loan from a lender merely because it is offering a loan at a low rate of interest.

Disclaimer: MintMoney has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. MintMoney does not promote or encourage taking credit, as it comes with a set of risks, such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.

To apply for an instant loan up to ₹5 lakh, visit here