A personal loan can be a great tool to improve your credit score while solving your short-term cash needs
Personal loans are a great way to meet your short-term cash requirements. These could be anything from remodeling your home to emergency medical expenses or making a big electronic purchase or simply clearing out credit card debt.
A personal loan is an unsecured loan, which means that you don’t have to put up collateral for the loan. An Axis Bank Personal Loan is one of the fastest loans to get processed. You can get an Axis Bank Personal Loan approved in less than five minutes.
While it is quite easy to avail a personal loan when you need some quick money, make sure that you are making the most of your personal loan.
- EMI Should Not Exceed 10% of Income: Make sure your EMI does not exceed 10% of your total income. Today, new-age technology makes it very easy to verify documents and disburse a loan. But you have to keep in mind the old principles of borrowing money. A personal loan EMI should never exceed 10% of your monthly income. If your EMIs on personal loans get too high, it will affect other financial goals like your retirement savings or saving for your child’s education. To calculate your EMI for an Axis Bank Personal Loan, click here.
- Make Regular Payments: Personal loans are a great way to inculcate fiscal discipline. Personal loans can boost your credit profile if they are paid regularly and on time. Never miss an EMI on a personal loan. A personal loan might be unsecured but that doesn’t mean it is not tracked. Banks and credit agencies keep records of all loans that have been disbursed. A good repayment record means your credit score goes up and it makes it easier for you to get loans for cars, your home and your child’s education.
- Keep a Short Tenure: A longer tenure on personal loans means you will end up paying more interest on the loan. A personal loan is generally a smaller amount than an auto loan or a home loan, and you must ensure that it is paid off quickly. Quickly paying off a personal loan means that your credit score improves faster, and it frees your finances up for other loans.
- Don’t Borrow for Frivolous Spending or to Invest: People are always coming up with great tips for investing all the time, and the lure of a quick buck might entice you to take a personal loan to invest in a financial product. Do not make that mistake. Equities are too risky to play on borrowed money. A personal loan should be availed of for a good reason, such as remodeling your home so that the value can go up, or in case of an emergency.
- Take Insurance for Personal Loans: These days, personal loans also come with insurance. In the event of something untoward happening to the borrower, insurance kicks in to ensure that the family does not have to bear the cost of paying off the loan. Banks that offer personal loans also offer insurance to protect the loan. It’s a very smart idea to avail of insurance when you pick up a personal loan.