If you currently have a shortage of money and want the requirement to be paid in the near future, what generally do you? Increase a personal loan?
Well, in certain cases it can work, for example, if you urgently need money for medical emergencies, to renovate the house or even for the training of your child, but if you forgave a loan if you want to go on vacation – this Is a gray area, but more often than not, you have to refrain from this.
Here we mention some important scenarios in which you should not rely on a personal loan:
1. High interest: If the bank offers a personal loan at an interest above 15-24 percent, this may not be a good deal. In particular, loans with high interest rates increase the total repayment amount, which means that it is financially driven out.
2. The lack of a stable job: If your job is uncertain whether you have an irregular income, taking a personal loan can be risky. Remember that missing EMIs can damage your Cibil score and lead to fines and legal steps.
3. If you have too many debts: If your debt / income (DTI) ratio is above 40%, taking another loan can overload you. It is vital to note that managing multiple loans (home credit, car loan, credit card debt) together with a personal loan can lead to financial stress.
4. For luxury: Personal loans for weddings, holidays, high-end gadgets or shopping are unnecessary costs. You ultimately pay much more because of interest, making these purchases more expensive.
5. Invest in the stock market or crypto: Investing borrowed money in shares, crypto or risky assets can lead to enormous losses. If the markets crash, you can lose money while you still have to repay the loan with interest.
Instead, you must take into account a secure loan such as a gold loan, loan against FD or PPF for a lower rate.
(Note: Increasing a loan comes with its own risks. So it is carefully advised)
