How much Amount should you Borrow in Personal Loan?
By Anupama Deshpande | Sep 14, 2018

People having stable and consistent incomes are the main targets of all the Personal Loan Providers. This is the reason why such persons keep receiving regular phone calls, emails and SMS for getting Personal Loan at very attractive interest rate.

Personal Loan is an unsecured loan which is a very popular product of banks and NBFCs and is available in a hassle free manner very instantly to the people having a source of income and good credit score.

Adding one more benefit for personal loan borrower, the lender does not want to know the reason why you are availing the loan and how are you going to use this amount. What they are interested in to earn a handsome interest on the loan they extended to you. Personal Loan is a very favourite instrument for the banks and NBFCs to offer to its customers which is a very fruitful source of income for them.

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Now the question that arises in the minds of the customers is that how much amount should they borrow in personal loan? Although the answer is subjective, still there are several important things that should be considered before applying for a loan :

It is the first and the most important point to be considered before applying for a personal loan. One should always remember that he should not avail a personal loan that he/ she cannot afford to pay in future and will come in a huge financial stress. Loan is anyways a liability or debt that has to be repaid along with the interest in a fixed period of time. Moreover, personal loan being an unsecured loan is offered at even higher interest rate than other types of loans.

If someone takes a personal loan over his/ her repayment capacity, it will become very problematic to repay the same in due course of time. In such a scenario, his other responsibilities and priorities will get hampered. He may also make defaults in payment of loan EMIs.

It is always better to assess the amount/ EMIs of loan that one is able to pay without any difficulties and then only he/ she should go for availing the personal loan.

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You must initially do proper analysis and calculations of actual amount of personal loan that you actually need to fulfil your needs. You should not avail personal loan of any amount just because it is being easily offered to you without any hassles.

If you take personal loan of more amount than actually required, you will definitely spend that amount unnecessarily but the burden of payment of higher EMIs will come on your shoulders afterwards that too for a long period of time.

Ratio of Total EMIs to Net Monthly Income is known as Loan to Income Ratio. You should always check and be sure that the ratio of Loan to Income should be below 40%. It is considered that 60% of your income is required to fulfil your mandatory household necessities. If your above mentioned ratio goes beyond 40%, you may face a financial problem in running your house in a desired manner.

Suppose you are having net monthly earning Rs 1 lakh than you should borrow only that much amount (including all the loans) whose EMI is maximum upto Rs 40,000 per month.

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