It's the festival season. There's so much to buy. It's the age of online shopping and Flipkart and Amazon are planning another big sale event closer to Diwali. Unfortunately, you have spent all your money buying clothes, shoes and God knows what in the Big Billion Days sale and the Great Indian Festival sale. There's just no money left for more shopping.
This is when a friend whispers....Take a loan and buy whatever you want. You go to the bank and make enquiries and there's good news. Your bank is offering personal loans. Why, several other banks are also offering you personal loans. Now to the big question....Should you avail a personal loan and go shopping this festival season?
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What do you need this festival season? Gifts for relatives and friends, your home has to be painted and decorated, perhaps new clothes or your wife wants jewelry? All this costs a lot of money. You just have to avail a personal loan and banks are tempting you with lucrative offers. And then there are the banks....They are offering you personal loans at lower interest rates and even waiving off the processing fee. Should you grab this festival offer or is there something more to check before you avail the personal loan?
The first thing you must do before availing a personal loan is check your credit report and your credit score. You can check your credit report issued by a widely accepted credit reporting agency like CIBIL. It is very important to have a good credit score, if you want to avail a personal loan from the bank.
Credit report is very important because it has details of your borrowing history and repayment discipline. Credit score ranges from 300 to 900 points. A lower credit score around 300 reflects poor credit history. A high credit score around 750 is a good score.
If you have a bad credit score, improve it by clearing your EMI's. If you have a good credit score, your loans are easily sanctioned.
SEE ALSO : Personal Loan For Holidays: A Very Bad Idea
If you are availing a personal loan, go through the fine print like a detective. First check the eligibility criteria of the personal loan. If you apply for a personal loan at the bank and you don't meet the requirements, your loan gets rejected. If your loan is rejected, it affects your credit score.
Check the eligibility criteria, loan processing fee, penalties and interest rates before applying for a personal loan.
SEE ALSO: Easy Loans: Loans Against Mutual Funds
You might come across an Ad which lures you to avail a personal loan. Avail a personal loan and go on a European tour. Take a loan and have a lavish family function, throw a party for friends or go luxury shopping. But should you take this personal loan? A personal loan taken for lavish spending, is never a good idea. A personal loan charges a very high interest. Using your savings would be a better idea.
If you have to avail a loan, make sure to avail a good loan like a home loan or an education loan. A home loan helps you buy a very important asset, a home, which is a roof over your head. An education loan gives you a good education and a bright career.
Yes...it's the festive season. There are so many things to buy. But, avail a loan wisely. If you avail a personal loan to splurge, you may land in the debt trap. It's really difficult to get out of it. Be Wise, Get Rich.
The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.