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Must Know Tips for Managing Your Personal Loan in an Easier Way
For representational purpose
Personal loans help us regain financial stability and meet urgent expenses. A borrower can address his financial crisis with a personal loan.
Personal loans help us regain financial stability and meet urgent expenses. A borrower can address his financial crisis with a personal loan. The loan amount availed has to be returned to the lender through EMIs. However, some borrowers mismanage their loans and end up defaulting on them. They fail to repay the personal loan EMIs timely and suffer due to increased interest and penalties. Financial management is a must for individuals thinking about securing a personal loan. Read on to understand how to manage your loan more efficiently.
Review your credit ratings and find the right lender
One must invest time to research before getting a personal loan in India. The goal is to apply for an affordable personal loan with minimum interest. The greater the interest on the personal loan, the more the burden for repayment. Choosing a reputable lender like Fullerton India can be a smart decision when seeking a personal loan. By offering attractive interest rates, Fullerton India makes the loan more affordable. This is important because high-interest rates can result in missed payments, which can have negative consequences for borrowers. By selecting a lender that charges less interest, borrowers can feel confident in their ability to manage their loan repayments and avoid financial difficulties.
While finding the right lender with an affordable interest rate, evaluate your credit report. The borrower becomes eligible for a lower interest rate when the credit score is good. On the contrary, lenders charge high interest to borrowers with poor credit ratings. Borrowers with poor credit ratings might default on their loans. The lender applies a high interest to hedge the risks associated with such borrowers. With a credit score of 750 or above, one can get an affordable unsecured loan in India. If your credit score is low, try clearing old debts first.
Choose the right loan amount
A personal loan must be manageable for the borrowers. It means the borrower must not face financial problems while repaying the personal loan. The first step should be analysing the financial requirements for a situation. If you need INR 10 lakhs to solve a financial emergency, don't take a personal loan of INR 20 lakhs. The personal loan rates might be high, and you might land in debt. Once you have assessed the financial requirement, it is time to assess your repayment capacity. Let us say the repayment capacity of an individual is INR 10 lakhs in five years. It would be foolish to take a loan higher than INR 10 lakhs in such a situation. Think before applying for a personal loan and decide on the right loan amount.
Choose the right loan tenure
When individuals require a large personal loan, they may consider extending the repayment tenure to reduce their monthly EMI. However, it's essential to note that a more extended repayment tenure also means paying interest for a longer period, which can increase the overall cost of the loan. Borrowers who are confident in their ability to repay the loan on time may opt for a shorter repayment tenure. It's critical to carefully analyze monthly income and EMI affordability before making a decision on the repayment tenure. This can help borrowers select the right repayment tenure that aligns with their financial goals and abilities.
Calculate your EMI-to-income ratio
Lenders typically do not approve personal loans if the EMI amount exceeds 60-70% of the borrower's monthly income. This is because when the borrower spends the entire income on EMIs, it can become challenging to meet other expenses. Lenders, therefore, evaluate the EMI-to-income ratio before approving a loan. Ideally, the EMI amount should not exceed 50% of the monthly income, as this can make the loan difficult to manage.
To determine the appropriate repayment tenure and EMI amount for a personal loan, borrowers can utilize Fullerton India's online personal loan EMI calculator, available on their website. This tool enables borrowers to input different loan amounts and tenures to determine the optimal combination that aligns with their financial goals and affordability. By using this calculator, borrowers can make an informed decision and select the repayment tenure and EMI amount that best suits their needs.
Conclusion
When personal loan rates are high, they become a burden on the borrowers. A personal loan might become a burden when the amount is greater than your repayment capacity. Therefore, the right loan amount must be decided before submitting the loan application to the lender. Use the online EMI calculator to find the right personal loan amount in 2023!
