Don't apply for a loan before judging its pros and cons..enhance your knowledge and then make a right decision.
Following are some issues to be considered before you apply for a loan:
- Ascertain actual need for loan: See if you can pull out any of your savings instead of taking a loan because returns on your savings are always lesser when compared to the interest outgo that happens on a loan. So do not be penny wise and pound foolish.
- Credit Score: Know your credit score before you apply for a loan. If you know your credit score is low, you can work towards improving it and then apply for a loan instead of being rejected by a bank straight away which could further pull down your score.
- Interest rates and other charges: Interest payment is a tough part of loan and thus before applying for loan compare the rates of all banks and compare other charges as well,then choose wise.
- Equitable monthly installments: Know your (EMI) before you borrow. See if you can afford that EMI during the loan tenure. It is advisable not to overleverage in terms of debt beyond a limit.
- Tenor of loan: The cost of your monthly repayments will obviously depend on the amount you are looking to borrow, but it is also dependent on the period over which you will repay the debt.You can reduce your monthly repayment by opting for a longer term. However, long tenor will attract huge interest thereby making it expensive.
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