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Everything You Need to Know About Loans
In today's fast-paced world, loans have become an essential financial tool for individuals and businesses alike. Whether it's for buying a home, funding education, starting a business, or handling emergencies, loans help bridge the gap between dreams and reality. However, borrowing money comes with responsibilities and risks — which makes understanding loans crucial.
What is a Loan?
A loan is a sum of money borrowed from a bank, NBFC (non-banking financial company), or digital lending app with the agreement to repay it over time, usually with interest. The borrowed amount is known as the principal, and the extra cost paid for borrowing is called interest.
🧾 Loan Eligibility Criteria
Eligibility may vary based on lender, but generally includes:
- Age: 21 to 60 years.
- Income proof (salary slips, ITR, bank statements).
- CIBIL score above 700.
- Stable employment or business history.
💡 Key Loan Terms You Should Know
- Interest Rate – The cost of borrowing money (lower is better).
- EMI (Equated Monthly Installment) – Your monthly repayment amount.
- CIBIL Score –Your creditworthiness rating (ranges from 300 to 900).
- Tenure – Duration of your loan repayment.
📝 Things to Consider Before Taking a Loan:
1. Fixed Interest Rate –The rate remains constant throughout the tenure.
2.Floating Interest Rate –The rate varies based on market conditions (RBI repo rate, etc.)
⚠️ Loan Scams & How to Avoid Them
Thousands of borrowers are scammed every year by fake loan apps. Here’s how to stay safe:
- Always verify the NBFC registration number.
- Read user reviews and complaints.
- Never pay upfront fees.
- Avoid apps that ask for unnecessary permissions.
📊 Compare Before You Borrow
Before applying, compare:
- Interest rates.
- Processing fees.
- Prepayment/foreclosure charges.
- Lender reviews.
📉 What Happens If You Miss an EMI?
Missing a payment can:
- Reduce your credit score.
- Lead to penalty charges.
- Trigger legal action or harassment (especially in app-based loans).
Choosing the right loan requires careful consideration of your financial situation, goals, and the various options available. Whether you need a personal loan for home improvements, a mortgage for your dream home, or a business loan for entrepreneurial ventures, understanding the lending process empowers you to make confident decisions.