Loan and EMI: Most people look only at EMI while taking a loan. If EMI is included in the budget then people start planning to take the loan as soon as possible. In such a situation, this method can also put you in some trouble. Lower EMI means longer tenure due to which you may have to pay more and more interest burden over time. Therefore, whenever you take a loan, always keep these rules in mind.

1. Borrow only as per your need

Always keep in mind that all your EMIs should be within a limited portion of your monthly income. Borrow as per your capacity.

2. Disadvantages of long tenure

Apart from this, the longer the tenure, the interest will also keep adding up with time. Therefore, choosing a shorter tenure by paying slightly higher EMI is the best option for you.

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3. Interest rates and hidden costs

Not only this, one should stop comparing only the interest rates shown in advertisements. You need to understand the hidden costs like processing fees, prepayment charges and late payment penalties properly.

4. Big impact of small prepayment

Always keep one thing in mind that do not wait for a huge amount to close the loan early. That means, small payments made from time to time also help the most in reducing the loan. By doing this, the future interest and loan gradually reduces.

However, a loan is affordable only when it does not put any strain on your future. Instead of just looking at the EMI, it is essential to consider the tenure, total interest and your actual repayment capacity.

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