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A personal loan is a type of unsecured loan and helps to meet your current financial needs. The following are the mistakes need to be avoided while taking a Personal Loan.
1.Borrowing beyond your capacity:
As a primary rule your borrowing limit should not exceed your repayment capacity. The EMI component of a personal loan should not be more than 10%-15% of monthly net income. Ex if your income is Rs.100000 your EMI to be paid should not be more than 15000.
What is Borrowing Capacity?
The amount of money available for a person to borrow based on his current financial state. A lender may also consider available collateral in determining his borrowing capacity.
Factors influencing Borrowing Capacity: