Financial Planning Tips Before Taking a Personal Loan

Deciding to take a personal loan is a big financial move that demands careful thought, not impulse. Without proper planning, you risk drowning in debt or derailing your financial stability. But with the right preparation, you can borrow confidently and keep repayment stress-free. Once you have prepared yourself a suitable financial plan, you can look for a smart personal loan like IDFC FIRST Bank’s FIRSTmoney that offers flexible loan tenures, zero foreclosure charges, and competitive interest rates to efficiently manage your borrowings.

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Curious how to set yourself up for success? These essential financial planning tips will guide you to evaluate your situation, align your loan with your goals, and ensure your finances stay solid. Here are some key financial planning tips to consider:

Tip #1. Take Stock of Your Overall Finances

The first step is to get a 360-degree view of your finances - income, expenses, assets, liabilities, and credit report. This includes:

• Documenting your monthly income from all sources
• Listing out essential and discretionary expenses
• Tracking current debts like credit cards, auto and education loans
• Maintaining an updated record of assets and investments
• Reviewing your credit report and score

This complete picture will reveal if your cash flows allow room to absorb a personal loan EMI. It also helps determine a loan amount that is aligned with repayment ability. To estimate your monthly instalments beforehand, you can use an IDFC FIRST Bank personal loan EMI calculator. It helps you accurately determine the loan EMI for planning better finances for your upcoming expenses.

Tip #2. Build Your Safety Net First

It would also make sense for you to save up and build an emergency corpus covering 3-6 months of household expenses before taking more loans. This would cushion any adverse effect brought about by medical emergencies or temporary job loss, which can otherwise put a dent in one's loan repayment capacity. Also, having liquid reserves eliminates the need for debt in many cases. You should consider borrowing only if the loan is for essential purposes not fundable through savings.

Tip #3. Have a Clear Purpose for the Loan

Specifying what the loan is for and whether that purpose is truly an urgent, unavoidable need is important. Personal loans should be reserved for high-priority life goals and unavoidable necessities which cannot be funded otherwise. They should not be taken for casual discretionary spending, which can wait.

Tip #4. Research Interest Rates Thoroughly

Interest comprises a substantial proportion of the EMI. Compare prevailing interest rates offered by banks and NBFCs, as they vary significantly across lenders. Online tools help identify the lowest interest loan customised to your parameters like amount, tenor, and risk profile. The savings from a lower rate often offset higher processing fees charged by some lenders. With IDFC FIRST Bank’s FIRSTmoney, you can acquire a personal loan of up to ₹10 lakhs with interest rates starting at just 10.99% per annum. This keeps your overall loan cost affordable and easy to manage.

Tip #5. Buffer Some Funds for Repayment

Mark a portion of your monthly income towards loan repayment by cutting down on non-essential expenses. Build in contingencies like salary delays or medical emergencies that can impact the ability to pay EMIs on time. Automatically transferring the EMI amount to a separate account every month creates this buffer.

The small effort required for financial planning prior to borrowing goes a long way in ensuring loan repayment does not become stressful. Responsible borrowing within your means is vital to safeguarding your financial health. Evaluating preparedness and putting your finances in order sets you up for successfully managing loan obligations.

What to do next?

Once you have planned your finances, the next step is to choose a suitable personal loan. You can find several lenders offering personal loans without favourable terms. However, IDFC FIRST Bank’s FIRSTmoney stands out by offering:

• Instant Approval– Get a loan approved in minutes with zero paperwork.
• Loan Amount– Borrow from ₹10,000 to ₹10 lakh instantly.
• Flexible Repayment– Choose tenures from 9 to 60 months as per your convenience.
• Zero Foreclosure Charges– Repay your loan anytime at NO extra cost.
• Attractive Interest Rates– Enjoy rates starting from 10.99% p.a.
• 100% Digital Process– Apply and manage your loan entirely through the IDFC FIRST Bank instant loan app.
• Multiple Loans Access– Get multiple on-demand loans without having to submit a new loan application.
• Customisable EMIs– Choose your EMI repayment date for better financial planning.

Conclusion

Undertaking diligent financial planning before borrowing money allows you to accurately determine the loan amount your existing income streams can sustain. This prevents taking on excessive debt obligations. Further, research to secure the most favourable interest rates saves money over the long run. Prudent upfront preparation sets the foundation for repaying any personal loan responsibly without compromising your financial safety net.

For those seeking financial solutions with competitive interest rates and flexible repayment options, institutions like IDFC FIRST Bank offer a range of products designed to align with diverse financial needs. Ensuring that the loan fits your repayment capability is key to maintaining long-term financial stability.

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