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Top 3 Questions to Help Decide How Much Personal Loan to Borrow

best personal loans
best personal loans

When facing a cash crunch, we can take a personal loan. But applying for one should be a well-thought-of decision. Many people take large personal loans without a second thought and regret it later. The goal should be to secure a personal loan that can be repaid easily. A personal loan should not turn into a debt spiral for the borrower. The first step should be choosing the right personal loan amount according to one’s repayment capacity. Here are some crucial questions to decide the right personal loan amount.

What is the minimum loan amount required to fulfill your requirements?

Personal loans are available to meet financial emergencies. Individuals must refrain from taking a personal loan when they don’t need it. Why pay interest charges on a personal loan when you don’t need it? Personal loans must be only used to get out of crunch financial situations. When in need of urgent cash, deliberate and decide the right loan amount. One must borrow what is required in any situation. The best personal loans are available, and borrowers must use them wisely.

In some situations, choosing the required personal loan amount might be easy. For example, let us say someone is taking a personal loan to repay their debts. In such a situation, the borrower will know the exact loan amount required to pay all the debts. However, identifying the required loan amount might be difficult in some cases. For example, someone might not know how much personal loan amount would be needed to host a wedding.

Even if it seems complicated, you must decide on the exact loan amount required to fulfill the needs. Once you take a personal loan, you cannot return it. However, you may choose to prepay the personal loan. Why go through the hassle when you can decide on the right loan amount before applying? When borrowers aren’t sure of the amount required, they must go for a line of credit. If your personal loan eligibility is INR 8 lakhs and you only need INR 50,000, don’t go for the extra money.

How much can you pay back to the loan provider?

Let us say you need a personal loan of INR 5 lakhs to buy a car. However, your repayment capacity in the next few years is only INR 4 lakhs. You might miss some personal loan EMIs due to cash shortage in such a case. As a result, your credit score might plummet, and your eligibility for future loans will be affected.

Most individuals forget to assess their earnings over time before taking a personal loan. People cannot pay whatever they earn monthly to the lender. If they do so, how will they meet living costs? A lender will also asses the EMI-to-income ratio before approving a personal loan. Fullerton India offers the best personal loans, but only when the borrower can repay them timely.

Ideally, lenders do not offer a loan if the EMI goes beyond 60 -70% of the monthly earnings. However, individuals must make a rule that the EMI must not go beyond 50% of the monthly income. By doing so, a borrower will ensure that they do not default on the EMIs. Also, the living costs aren’t affected due to the personal loan EMIs.

How much interest are you willing to pay?

It is crucial to note that a personal loan comes with an interest rate. Every personal loan EMI will consist of an interest charge on the principal balance. The interest charge also depends on the repayment tenure of the personal loan. When the repayment tenure is lengthy, the interest is applied throughout the tenure. Therefore, borrowers must choose a suitable loan tenure and pay the minimum interest possible.

Most individuals struggle to calculate the interest charge associated with a personal loan. They search for personal loan agents to help them calculate the interest charge. Reputed lenders like Fullerton India offer an EMI calculator on their websites.


Individuals often make the mistake of taking a personal loan they cannot repay. Besides checking personal loan eligibility, it is vital to choose the right personal loan amount. Don’t go for extra money just because the lender is offering a large personal loan. Individuals should use the online EMI calculator to get an idea of the right loan amount. 

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