Emergency can come at any time without your permission! And they can put a significant stress on you and your financial health. The emergency can be any type whether it’s a medical emergency, urgent home repair or any unexpected events, that’s why having access to quick funds like personal loan is an essential way to deal with any emergency situation but you should know how to use personal loan to avoid falling into debt! Without knowing this you will be in trouble to manage your financial crisis. Here we will discuss the strategies, helpful tips, important considerations and many more. Let’s get started!
Before getting started with the actual things let’s quickly understand the basics, this will help you to understand this topic in a more clear way!
A personal loan is a type of unsecured loan provided by banks and financial institutions, such as SBI, HDFC, and ICICI in India.Personal loans are different from home or car loans. You don't have to give any valuable thing like a house or car to get a personal loan. That's why many people choose them when they need money quickly, like in emergencies.
You need to understand 5 things to use personal loan for emergency expenses without falling into debt trap such as:
Before you apply for a personal loan, it's really important to know between genuine emergencies and non-urgent expenses:
Genuine emergencies include:
Medical Emergencies: Hospitalization, surgery, or critical treatments.
Home Repairs: Urgent repairs like plumbing leaks or electrical faults.
Unexpected Travel: Sudden travel due to family emergencies
Figure out exactly how much money you need for the emergency. Borrowing too much could mean you owe more than you need to, but borrowing too little might not help you enough. Write down all your expenses in detail and only borrow the amount you really need.
List Expenses: Write down all the things you'll need to pay for, like medical bills or repairs.
Add Them Up: Add together all these expenses to get a total amount.
Consider Extras: Think about any extra costs that might come up
Total It Up: Add everything together to get an estimate of how much money you might need
Different banks and NBFC have different interest rates. Look at these rates from a few places to find the best one. Lower interest rates mean you pay less each month, which can make it easier to handle your money.
Here’s a quick summary of the personal loan:
| Interest Rates | Loan Amount | Income | Age | Documents required | Loan Tenure | Processing fees |
|---|---|---|---|---|---|---|
| 10.50% onwards | Up to 1 crore | Minimum 20,000/ month | 21-60 years | ID proof, Address proof, Income proof,Bank statements | Up to 7 years | Up to 6% of the loan amount |
Tip: Always check for any hidden charges or processing fees that might add to your loan cost
The loan tenure is how long you take to pay back the loan. If you choose a short tenure, you'll have higher monthly payments (EMIs) but pay less interest overall. A longer tenure means lower monthly payments but more interest in total. Pick a tenure that you can afford and keep your total interest costs reasonable.
Answer: Up to 7 years.
Answer: Click here to check the details
After you borrow money with a personal loan, it's important to plan how you'll pay it back. Here's how you can do it:
Budgeting: Make a monthly budget that includes your loan payments. Make sure you have enough money for these payments and for all your important expenses.
Automated Payments: Set up automated payments from your bank account to avoid missing EMI payments.
Extra Payments: If possible, make extra payments towards your loan to reduce the principal amount and interest cost.
If you don't pay your EMI on time, you might have to pay extra fees and it can make your credit score go down. It's important to have a plan ready, like having savings, to help you pay your EMIs even if things get difficult
Tip: A good credit score can help you get lower interest rates on loans. Aim to maintain a score above 750.
Know Your Loan: Understand how much you owe and the interest rate.
Budget Carefully: Make a list of your monthly expenses and income.
Set Aside Money: Keep enough money each month for your loan payment.
Plan for Emergencies: Have savings to cover payments if something unexpected happens.
Avoid Late Payments: Pay on time to avoid extra fees and protect your credit score.
1. First you need to borrow Only What You Need: To stay out of debt, it's important to borrow only what you really need. Borrowing too much can mean higher monthly payments and more stress about money. Figure out exactly how much you need and stick to that amount.
2. Avoiding Multiple Loans: Having several loans can be risky because it means you owe money to different places and have to make many payments. If you already have loans, think about combining them into one before getting another personal loan.
Did you know? Debt consolidation is the process of combining multiple loans into a single loan with a lower interest rate or better repayment terms.
3. Seeking Financial Advice: If you're unsure about taking a personal loan or managing your debt, seek advice from a financial advisor. They can provide personalized guidance based on your financial situation. We would be glad to help you. Reach out to support@eazybankloan.com
How much should I borrow to avoid falling into debt? It totally depends on you how much money you earn, how you spend on other things and a great confidence to repay the payments.
Helpful tip: Please consider future expenses for example: If you are planning to switch a job in near future the risk of taking heavy personal loan can lead to the worst financial crisis.
| Section | Key Points |
|---|---|
| Understanding Personal Loans | Unsecured loans, quick approval, flexible usage |
| Evaluating Emergency Expenses | Identify genuine emergencies, estimate required amount |
| Choosing the Right Personal Loan | Compare interest rates, understand loan tenure |
| Planning Your Repayment | Create a budget, automate payments, maintain a good credit score |
| Avoiding Debt Traps/td> | Borrow only what you need, avoid multiple loans, seek financial advice |
Using personal loans for emergencies can be a good idea if you're careful. Understand how the loan works, plan how you'll pay it back, and borrow only what you really need. This way, you can manage emergencies without getting into too much debt. It's important to think about your money situation and get advice from experts if you're not sure what to do.
We EazyBankLoan understand the process of procuring a loan can be stressful. That is why we take care of your loan application process, saving you time and hassle by handling the paperwork and communication with the loan providers.
Compare and Apply different loan Here
Need help? Reach out at support@eazybankloan.com
The maximum amount varies by lender but up to 1 crore. depending on your credit score and income.
Yes, most lenders allow prepayment of personal loans, but some fees require a paid prepayment penalty. Check the terms with your lender.
A higher credit score increases your chances of loan approval and getting lower interest rates. Aim for a score above 750 for the best offers.
No, personal loans do not offer any tax benefits.
If you anticipate difficulty in repaying your loan, contact your lender immediately. They may offer solutions such as restructuring the loan or providing a temporary deferment.
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