Things to tell your child when they apply for their first Personal Loan

Worried about your child availing of a personal loan? Here’s some advice that you should impart as a parent

Even today, in many households, elders in the family (most likely parents or even grandparents) are our go-to financial advisors. Of course, their financial backgrounds were very different from that of the current generation. They probably ran the house on a tight budget, and lifestyle expenses were never on the list. Since they took financial decisions after much deliberation, the number of people who fell into a debt trap was minimal. 

Here are a few things you should advise your child as they embark on their journey to avail of their first personal loan.

Evaluate your reasons for applying for the loan

Any form of debt should be taken on for the right reasons. It has become a fad to avail a personal loan even for lifestyle expenses, which would only lead to a severe debt trap later. There is also the trend of borrowing to invest money in attractive financial products or schemes. Naturally, this could be disastrous, especially if the investment does not pan out the way you expected. In the olden days, a personal loan was taken only for an emergency after exhausting all possible avenues. This should be the case even now. Evaluate your reasons, and only after you are completely sure that the need is genuine, go for the personal loan.

Check if the EMIs are affordable

Earlier, there were limited means to arrive at the EMI. Calculating the repayment amount and schedule was a complicated affair. Today, there are free online personal loan emi calculators that provide a ballpark figure of how much you should pay every month and for how long.

IDFC FIRST Bank’s Personal Loan Calculator provides the option of ascertaining the EMI for various tenures and different rates. It is ideal if you assess the EMI and choose the one that you are most comfortable with. Evaluate your reasons, and only after you are completely sure that the need is genuine, go for an instant personal loan.

Make EMI payments on time

IDFC FIRST Bank Personal loan charges are explicitly mentioned on the website. If the financial institution does not mention this upfront, it is crucial to seek this information. It is best to budget for the EMI as soon as your salary is credited; this way, there is less likelihood of dipping into these funds for any other expenses. Letting your EMI lapse could result in a penalty, so it is always recommended that you pay the EMIs on time. This practice will also reflect in your credit score – after all, having a high credit score is beneficial while availing of a loan in the future. 

Avail of a competent personal loan

In earlier days, one availed of a personal loan from the nearest/local lender. Nowadays, thanks to technology, we can compare personal loan features across various financial institutions. Personal loans offered by IDFC FIRST Bank are also competent in terms of interest rates. For one thing, the documentation is easy and convenient. IDFC FIRST bank has digitised its entire personal loan application scheme, ensuring that the whole process is contactless and paperless with its mobile banking app.

Determine the right tenure

If it is your first personal loan, it is likely that you chose your loan based on the interest rate alone. However, this is imprudent. You will have to calculate the EMI that you can afford to pay comfortably. The best way to achieve the optimal EMI if the interest rate is already given is by altering the tenure. There are financial institutions that offer only short-term loans that could burden you with a high EMI. IDFC FIRST Bank Personal loans are available for a period ranging from 6 months to 60 months. Choosing the appropriate tenure is essential if you don’t want your monthly finances to be affected.

Insure your loan

If the personal loan is of a higher amount, you should insure the same. By doing so, your family will never be under financial stress in the unfortunate event of your demise.

Empowering your offspring with these tips will ensure that they make their financial decisions prudently.

To know more about IDFC FIRST Bank Personal Loans, click here.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.