Watch payments on your personal loans
Personal loans are short term loans and are repayable over a period of 12 to 60 months. These loans are generally not extended for period beyond five years.
As with other loans, you can pay back these loans via simple EMIs. However, the EMIs you pay include a high interest (and hence, effective rate of personal loans is high). Be vary of the basis for interest rates and it is recommended that you opt for reducing balance rates. You must check rates with different banks and negotiate on offered rates to get lowest rates possible.
The prepayment fee on these loans is very high - check out for same when deciding to borrow to meet your short-term needs. It is advisable that you understand the stated terms and conditions before accepting the ‘loans offer'! Check if there are another additional charges or specific penalties.
An alternative to these loans are credit cards. However, the rates of interest on these credit card advances are comparatively very high, where interest can go up to 35 percent for rollover credit.
Irrespective of the fact that personal loans can be taken for fulfilling any personal need or desire, you must borrow only when in dire need. If these loans are not appropriately used and repaid, they increase your overall debt burden. Hence it is must that your prudently decide on your borrowings to ensure future financial stability.