5 steps to ensure your personal loan not becoming a debt trap


Personal loans are regarded as the best borrowing option to fulfill any short term financial needs. The easy availability and unsecured nature of the loan are its other highlights. Yes, it is true that getting a personal loan is a no big deal. But, often it’s easy availability makes people careless and the result is a debt trap. This trend is highly increasing in the youngsters. According to”business headline”, 15 percent of personal loan defaulters are in their 20s. The growing economic recession has made this even more common. The level of repercussion comes for a defaulter of an unsecured loan is very high and can leave you in a complete despair.

Hence, to avoid such condition you need to be alert from the starting and apply certain steps to avoid becoming a defaulter.

Don’t go for multiple loans

Learn to say no to multiple loan options, even when it seems to be the easiest solution. The desperation to raise funds in an emergency can make you seek loans from various banks. However, this not only decreases your chances of a sanctioned loan but it also heavily affects your credit score. A person with a poor credit score will be charged way higher than otherwise. This increases your chances of delayed or low paying EMIs due to the overburden of a higher interest. Also, it pushes you towards a debt trap.

Assess your re- paying capacity thoroughly

Getting loan more than your repaying capacity is a very common trap and with the facilities like “pre- approved loans”, this seems even more often. People are usually carried away with the instant availability of the loan amount and fail to analyze their repaying capacity. But, as the repaying period is usually long, hence, there are greater chances that your EMI cycle breaks in between. Thus, to remain on the safe side, it is important to scrutinize your repaying extent.

Select the loan tenure smartly

Often EMIs for a long period seems a big burden and people opt to go for a small tenure. However, the longer duration of EMIs might seem tempting, but they also give you the scope of paying the EMIs calmly and not crunching your budget beyond a limit. However, if shorter loan tenure seems a favorable option to you then you must opt it. You must decide your loan tenure depending on your repaying capacity.

Ensure timely payments

Delayed EMIs not only reduces your credit score, but it also burdens you down with hefty late payment charges. Both the things heavily impact your future borrowing possibility. Hence, you must stick yourself with regular payments. One good way is to opt for an auto debit facility for your EMIs from your salary account.


Personal loans are very tricky and hence one should fully prepare them to ensure a safe ride. These are some steps which will automatically prevent you from becoming a defaulter. Also, it will boost your credit score, which will work as an asset for your future loan requirements.


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