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1 Minute Read – Things You Should Know Before Availing A Loan

Team BankBazaar

Loan an effective tool to fulfil our aspirations, which our regular income cannot afford. Not all loans are bad, but a loan taken without considering your repayment capacity can result in a debt trap. You should thus weigh whether acquiring a loan is the ideal solution or whether you should you wait it out and save instead. Borrowing is a long term commitment, involving repayments for a certain period at a certain interest rate, and has a great impact on your finances. If planned well, loan is a great way to build assets, so make a wise decision by going through these crucial points.

 Advantages Of Borrowing

  • You can finance your needs immediately
  • You can avail an affordable loan with a good credit score
  • You need not put off purchases that are likely to be subjected to inflation and increase in cost
  • You can avail tax benefits in certain cases such as using the loan for home renovation or for education
  • You can build your credit score by repaying it on time

Questions To Ask Yourself When Determining If A Loan Is The Right Decision

  • How urgent is your requirement?
  • Can you afford the EMIs?
  • Will you be able to pay added expenses like processing fees and other charges?
  • Are there alternative funding solutions?
  • Are you saving money by taking a loan instead of cashing in your investments?
  • Can you make prepayments in the future to reduce your interest and tenor?
  • Are you getting an affordable deal based on your existing or past borrowing experiences? 

This checklist can help you make a smart decision about availing a loan, so your finances remain strong and steady.