Snippets about Personal Loans and Personal Loan Calculators

The ease of availing a personal loan is often outweighed by the fact that it is mostly an unsecured loan and requires you to furnish no reason whatsoever when applying for it at any financial institution. This ease and convenience of this particular type of loan often leads us astray while managing our finances as far as the loan is concerned. Where does the safety net end and where do the hellholes of debt crunch start? It is imperative to understand the limits of both to maximize the benefits of a personal loan. Let’s take a quick look at how this double edged sword can help you slash your worries and how to shield yourself if and when your slash bounces back at you.

Many of us have salary accounts, savings accounts and/or current accounts and with the age of internet banking in full swing, I can presume almost 90% of people reading this article are as tech savvy as to conduct most if their transactions online. Based on one’s income and transactions, most banks take about 4 to 5 months before starting to contact you about pre-approved personal loans, home loans, car loans and the ubiquitous credit card. All that sounds really fascinating, considering that a bank is actually offering you something without being asked for. You are on cloud nine. Take a moment and look down at the hard ground that is your real financial life.

Banks generate pre-approved offers based on mainly three aspects, your income, your credit history and the organisation that you are working for. Let alone a year, even if have been with a bank for close to a decade, it hasn’t got the foggiest idea about your personal financial life. All it sees is the balance sheet which shows how much you get and you much you spend. If you have your kid’s education to take care of, a cool bike’s EMI to pay off or are saving up for that memorable Valentine’s Day gift, the bank doesn’t care a damn straw. This is the first pitfall that most newcomers to personal loans fall prey to. Your best financial manager is you, provided you keep a tab of the cash inflows and outflows. The personal loan amount that you checked using a personal loan calculator is just a ballpark figure that the bank is comfortable to part with, temporarily.

Personal loan calculators, though nifty and time-saving, often give a rough estimate of what interest rate you would be offered, considering the loan amount that you have applied for. Take that interest rate with a grain of salt, or rather, with a molecule of salt. Based on your actual credit reputation and earlier financial transactions with other banks and institutions, along with your company’s listing in the bank’s charts, the oddities might land you with a higher rate of interest. Speak to the bank for a clearer picture before rushing headlong into that sweet credit beeline.

Always remember that in the world of personal loans, a loan calculator’s result might be mathematically correct, but has chances of differing when it comes down to the actual doubloons. Always bear in mind that whatever EMI you get out of a personal loan calculator has to be less than 30% of your monthly income. Keeping that point in the fore, you can safely wade the waters of personal loans without a risk of gulping down a few forced mouthfuls into your financial re breathing tank.