Before taking a personal loan, you should check five areas: affordability, total cost, eligibility, repayment conditions and the amount you need to borrow. Reviewing these factors can help you understand the financial commitment before accepting an offer.
1. Can you afford the personal loan EMI?
You should first check whether the proposed EMI fits your monthly budget after accounting for your existing expenses and financial commitments.
Your EMI depends on the loan amount, interest rate and tenure. A higher loan amount increases the EMI, while a longer tenure can reduce the monthly payment but increase the total interest paid.
For example, suppose you borrow Rs. 2 lakh at 15% p.a. for 24 months. Your approximate EMI would be Rs. 9,697, and the scheduled repayment would be about Rs. 2.33 lakh, excluding applicable fees.
| Loan detail | Example |
|---|
| Loan amount | Rs. 2 lakh |
| Interest rate | 15% p.a. |
| Tenure | 24 months |
| Approximate EMI | Rs. 9,697 |
| Approximate total repayment | Rs. 2.33 lakh |
You can use a personal loan EMI calculator before applying to compare different loan amounts and tenures.
- Longer tenure: Lower monthly EMI, but higher total interest.
- Shorter tenure: Higher monthly EMI, but lower total interest, assuming the same interest rate.
2. What is the total cost of the personal loan?
You should look beyond the interest rate when calculating the cost of a personal loan. The total cost can include interest, processing fees, applicable Flexi facility charges, stamp duty and other applicable charges.
For Bajaj Finance Personal Loan, the current interest rate is 10% to 30.5% p.a., while the processing fee is up to 4.13% (Inclusive of applicable taxes) of the loan amount.
When estimating your total borrowing cost, check:
- Interest rate: The rate applicable to your loan offer.
- Processing fee: The applicable fee charged on the loan amount.
- Stamp duty: Payable as per state laws and deducted upfront from the loan amount.
- Flexi facility charges: Applicable to eligible Flexi loan variants, as per the applicable terms.
- Bounce charges: May apply if an instalment or payment mandate is dishonoured.
- Penal charges: May apply when instalment payments are delayed.
Review all applicable charges before accepting the loan so you can estimate the total repayment amount more accurately.
3. Do you meet the personal loan eligibility criteria?
You should check the eligibility criteria before planning your borrowing amount. Meeting basic criteria does not guarantee approval because the final decision remains subject to verification and applicable terms.
For Bajaj Finance Personal Loan, the stated eligibility includes:
| Nationality | Indian |
| Age | 21 years to 80 years |
| Employed with | Public, private, or MNC. |
| CIBIL Score | 650 or higher. |
| Customer profile | Self-employed or Salaried |
The applicable income requirement can vary based on your profile and location. You may also need documents such as KYC documents, PAN, salary slips and bank statements.
You should check your eligibility before choosing the loan amount. This helps you avoid planning your expenses around an amount that you have not been offered.
4. Which repayment charges should you check?
You should understand the charges that may apply if you miss an EMI, make a part-prepayment or close the loan before the scheduled tenure.
For a Bajaj Finance Personal Loan, applicable bounce and penal charges may apply when an EMI is not paid on time. The applicable charges depend on the loan terms and circumstances.
Part-prepayment and foreclosure charges may also vary by loan variant. The applicable charges, calculation method and conditions are provided in the relevant loan documents and applicable terms.
Before making an early repayment, check the applicable charges and compare them with the interest you could potentially save.
5. How much personal loan should you borrow?
You should borrow the amount required for your eligible expense rather than automatically using the maximum amount available to you.
Start with your total expense and deduct the amount you can comfortably fund from your available savings.
Funding gap = Total expense − Available savings
For example, if your planned expense is Rs. 3 lakh and you can use Rs. 1.5 lakh from your savings, your initial funding gap is Rs. 1.5 lakh.
You can then assess whether the EMI on the required loan amount fits your monthly budget.
| Particulars | Example |
|---|
| Total expense | Rs. 3 lakh |
| Available savings | Rs. 1.5 lakh |
| Initial funding gap | Rs. 1.5 lakh |
| Loan requirement to assess | Rs. 1.5 lakh |
Keeping some savings available for emergencies can also reduce the risk of relying entirely on borrowed funds for an unexpected expense.
