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So you want to buy that high definition TV and thinking of taking a small personal loan to tide over the difference in the price and your finances?


If you start hunting for a personal loan, online or offline, within minutes you are most likely to be swarmed with calls from banking and financial institutes offering you the loan. Don’t jump into acquiring the loan without thinking it through.


Meet borrower criteria

These loans are forwarded to individuals without any security. That’s why banks are a little strict with the paperwork and your credit worthiness. So make sure your credit cards are all paid on time and you have not defaulted on any payment, before you apply for a personal loan. All these will help you attain the required borrower profile for the loan.


Your repayment capacity

You should be very careful in calculating how much can you repay in instalments for your personal loan, and for how long. Defaulting on such a loan can create havoc with your credit rating, and can cause you enough trouble when you need to apply for other loans, such as a credit card, house mortgage, a student or car loans.


Your existing credit balance

If you are already having a loan running, and paying monthly instalments on it, think twice about taking a personal loan. A couple of loan payments running together can seriously dent your financial budget, and if not managed properly can throw you into a debt trap. Also make sure that you have disclosed your existing debt to the lender before you take a personal loan.


Loan rates and fine print

Most of the time we are in such a hurry to take a loan, we often forget to read the loan document in detail and understand all the clauses. A loan document is legally binding, so make sure you don’t sign blank papers, or sign without properly understanding the implications of the loan you are accepting. It’s for your own benefit, so read the pages.


Your organising capability

A personal loan will be putting an extra strain on your household income, and only by being organized and disciplined in your approach, can you get an upper hand in managing your finances. So get organised. Make a budget and stick to it. Pay loan instalments on time, and keep a track record of all the documents in a separate file.

Have you ever apply for a personal loan?