I am a management executive in an automobile manufacturing unit with a decent pay package. I tried to run my life as simple as possible and managed all my expenses within my salary limit. But life proved me that it is always challenging. I entered a point where some other essential need for money knocked at my door. My kids’ education expenses and an emergency medical need for my family member stood in front and hardy I had very less time to collect money from others to meet my needs.

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Other than those immediate expenses I had some other thing to buy for my house to meet my daily activities. I stood at a point where I had only two options. One to borrow from my friends/relatives and the other is to avail personal loan. Both have its’ own pros and cons but considering the amount of money I needed and the time involved, I was forced to opt for a personal loan.

I had my own apprehensions about availing personal loans and I started enquiring about getting a personal loan. I was advised by my friends to avail personal loan either from commercial banks or non-banking financial companies which will have easy EMIs according to my repaying capacity. I wish to share why I opted personal loan and the details that satisfied and kept my fear behind in availing personal loan.

Total amount: I had very big doubt whether I will get the required amount to meet my expenses if I avail personal loan and my other doubt is whether I am eligible for applying it or not. I cross checked with many commercial banks and other non-banking financial companies and calculated the total amount I can get. My search showed that I can avail an amount up to 60 times my salary.

Of course the terms and conditions apply here too. While calculating the amount my basic pay plays an important role and few other allowances can be included here. Many sectors exclude the allowances that are allotted for medical expenses and travel. As I am not paying any other EMI, have no other unpaid loans and no credit card balances, my eligibility for availing the maximum amount as per my pay package became high.

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Equated Monthly Installment (EMI): The major part that should definitely be taken into consideration before availing personal loan is EMI. Even after paying a considerable amount of money as EMI, one must be able to meet his basic and necessary needs. I should definitely mention this as my main reason for concern towards personal loan. Generally it is calculated for about 40-50% of your monthly salary. I chose 41% EMI of my salary according to my circumstances.

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If I go for much less EMI options, it will be a difficult part to complete my loan with the total tenure period. Finally I had gone for the most comfortable EMI that kept me away from all major concerns. There are also options for fixed EMI payment that means we can pay a fixed rate throughout the tenure every month without any change. Another option is floating rate where the EMI can be changed every six months or 1 year. I was very much comfortable with floating rate because I can pay the EMI according to my existing circumstances.

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Total Tenure Period: Most of the financial sectors have fixed the total tenure period from one to five years. We can choose the number of months/years as per our convenience within the specified limit. I heard that there are also options for pre-payment (paying an amount that is equal or not equal to the total amount), part-payment (paying partial amount before the total tenure period) and pre-closure (paying full loan amount within the total tenure period ends).

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If we go for such options it becomes mandatory to pay a penalty of about 1-5% total amount. This may vary according to the sectors. The above facilities made my repaying time comfortable to move with.

Other procedures/benefits/cons:

1) The application process requires submission of salary slip, address proof, identity proof and photo copies of qualification certificates (if required by the financial sector).

2) The most important thing to be noted is that the approval process takes considerable less time say within seven working days. Generally it takes minimum 48 hours to 14 days for approval depending upon the applicant’s record and needs.

3) There are no tax benefits except for restoration or down payment needs (eligible for IT deduction).

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4) In case of failure in paying EMIs, the effect will reflect in the overall credit score chart which will affect future loan applications and other penalties like applying for maximum loan etc.,

All my doubts, wary thoughts had an answer finally with satisfactory personal loan options. The wide variety of choices allowed me to pick up my convenient options and go for applying personal loan without any fear or doubts. I found out that these personal loans are indeed hassle free and realized that availing personal loans is not as bad as I felt before applying for it. My experience in availing personal loan helped me to fulfill my needs in time.

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