It is not that uncommon for the breadwinner of a middle-income family to opt for loans when planning a big purchase or an event. And, personal loans are the most popular means of finance as they can be utilised for multiple purposes and can be availed without pledging any collateral. However, many people make themselves vulnerable to falling in a debt trap when they take loans without planning.
Therefore, when applying for a loan, it is crucial to carefully consider the interest rates, tenure and EMI into account; otherwise, the repayment can take a heavy toll on finances.
Nowadays, there are specific options for personal loans for self-employed or salaried professionals. In both scenarios, it is crucial to ensure that you can smartly manage the EMIs. To do that, it is necessary to create a financial plan and allocate a budget for the repayment tenure.
Here are a few tips on how you can make smart repayments without compromising on your other financial needs.
Select tenure wisely
Opting for short repayment tenure would reduce the burden of repayment as you will have to pay fewer EMIs, but this can come at a high personal loan interest rate. Opt for a short tenure only if you can afford to pay hefty EMIs for a small period.
Alternatively, longer tenures ensure that the repayment gets distributed over a long duration, thus making the monthly EMI amount easily payable. Therefore, carefully evaluate your monthly income, savings and expenditure before finalising on the tenure.
Follow the 50-50 rule
Being financially disciplined means evaluating your personal loan repayments and interest rate beforehand. It is always advisable to go for an EMI that is not more than 50% of your monthly income. This ensures that you have a certain amount available for your monthly expenditures and savings.
Use an EMI calculator
Before applying for a loan, do thorough research and compare the available interest rates and offers, if any. After which, ensure preparedness by using a personal loan EMI calculator which is provided by most lenders online. You can enter the desired loan amount and expected interest rate to calculate the EMI in real-time.
Never miss an EMI
It is imperative to select the tenure and loan amount wisely so that you are in a position to make the repayments without missing a single EMI. Defaulting on repayment will not only make you incur extra penalties and charges, but it will also add to your financial stress and have a detrimental effect on your credit score.
Get competitive rates with Tata Capital
Want to enjoy quick loan application and disbursal? Your search for the perfect lender ends at Tata Capital. With years of experience, minimal eligibility criteria, competitive personal loan interest rates and relaxed documentation process, we provide the best service in the industry.
Additional Read: Have the Personal Loan interest rates gone down this festive season?
Furthermore, with Tata Capital, you can choose flexible EMI repayment terms and even apply for a personal loan online.
For more information, visit our website or give us a call today!