Introduction
5 Important Things to Know Before Taking a Personal Loan include understanding how personal loans work, especially during emergencies like medical expenses, wedding costs, travel plans, or home repairs. While a personal loan can be a financial lifesaver, applying without proper knowledge may lead to unnecessary stress. Knowing the key factors that affect repayment helps you borrow wisely and avoid future financial problems.
In this blog, Sanchi Finance explains the five most important things you must know before taking a personal loan.
1️⃣ Check Your Credit Score
Your credit score plays a major role in loan approval and interest rates.
A higher credit score increases your chances of approval
It helps you get a lower interest rate
A low score may lead to rejection or higher EMI
👉 Tip: Always check your credit score before applying for a loan.
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2️⃣ Understand the Interest Rate
Personal loans usually have higher interest rates compared to secured loans.
There are two types:
Fixed interest rate: EMI remains the same
Floating interest rate: EMI may change based on market conditions
Always compare interest rates from different lenders before deciding.
3️⃣ Check Loan Tenure Carefully
Loan tenure is the time you take to repay the loan.
Short tenure → Higher EMI but less interest
Long tenure → Lower EMI but more interest
Choose a tenure that balances affordability and total interest cost.
4️⃣ Read All Charges and Fees
Many borrowers only look at EMI and ignore other charges such as:
Processing fees
Late payment charges
Prepayment or foreclosure charges
These costs can increase your total loan burden if not understood in advance.
5️⃣ Borrow Only What You Need
Taking a higher loan than required may seem easy, but it increases:
Monthly EMI
Total interest payable
Financial pressure
Borrow responsibly and only for genuine needs.
Conclusion
5 Important Things to Know Before Taking a Personal Loan highlight that a personal loan can be helpful when taken wisely. Understanding your credit score, interest rates, loan tenure, and applicable charges helps you make a smart and stress-free borrowing decision.
At Sanchi Finance, we guide you in choosing the best loan options that match your financial needs.