Accompanied by a robust annual growth rate, the $50 billion Indian wedding industry is one of the biggest benefactors to the hospitality and travel industry. Since weddings are an essential family affair, individuals do not abstain from spending substantial money to organize the event.
To finance this lavish event economically, individuals often rely on a marriage loan, also known as a personal loan for a wedding. However, there are certain factors that one must consider before opting for a marriage loan. Find them below:
- Loan tenor and amount
Before applying for a personal loan for marriage, the most crucial things that borrowers need to know are the loan amount and its tenor. Computing the amount one needs and comparing it with the amount one can repay quickly is a crucial factor determining loan affordability.
Concerning this, individuals can use a personal loan interest rate to calculate monthly installments for this credit in a convenient way. Major lending institutions provide this online tool with sliders. One can modify these sliders to calculate the EMI obligation and reach a budget-friendly monthly outgo.
- Interest rate and other associated charges
After determining the amount and tenor of a loan, borrowers must inspect the interest rate, as it determines the overall affordability. Lending institutions consider various factors before levying the best personal loans interest rate to applicants. Consequently, borrowers must meet the eligibility criteria, including specific parameters, such as income, CIBIL score, employment, and more.
Even a minute difference in the interest rate can significantly affect the cost of a loan. With proper planning, a lower interest rate can deliver lower EMIs and a reduced borrowing cost. However, various other fees, such as processing fees, late payment fees, or default fees, can also affect a loan’s affordability.
- Credit/CIBIL score
CIBIL score is one of the crucial factors determining a borrower’s creditworthiness. However, two out of three borrowers in India are unaware of their CIBIL scores. This three-digit score indicates the overall financial health of borrowers regarding repayment history, disposable income, existing debt, etc.
There are certain things you can do to improve your personal credit score and meet/exceed the lender-specific eligibility. A higher CIBIL score of 750 or more guarantees quick and hassle-free marriage loan approval.
Major lending institutions like Bajaj Finserv also extend attractive personalised offers to existing customers with a high CIBIL score who meet the personal loan eligibility criteria.
These offers, also known as pre-approved offers, help in making the application procedure hassle-free and quick. They are available across a varied range of financial products, including personal loans, business loans, etc. You can check your pre-approved offer simply by entering your name and contact details.
- Part-payment charges
Situations may arise when individuals seek to part-prepay the loan amount before the tenor ends. During such times, one must be aware of the charges associated with this facility beforehand and make an informed decision.
If a part-prepayment is done early into the marriage loan tenor, one can save substantially on the interest payable.
For example, an individual borrows a personal loan of Rs. 2 lakh at an interest rate of 15%. Consider the repayment tenor for this loan is five years. Here, he/she would have to pay Rs. 4,758 towards EMI. At the end of the tenor, he/she would have to pay Rs. 28,056 towards interest and Rs. 29,040 for the principal.
If the borrower decides to prepay the entire loan amount, he/she will save interest payments worth Rs. 57,423.
- Equated monthly instalments (EMIs)
Before borrowing, individuals must evaluate their financial obligations and monthly expenditures to set aside enough cash for the monthly instalments.
You must know how to efficiently manage your personal loan EMI repayment and ensure that your monthly income accommodates the EMI payments without imposing any financial strains.
Simply put, one’s EMI obligation must not exceed 40% of the total disposable income for hassle-free management of a loan.
Individuals planning a wedding can rely on the various ways in which a personal loan can help meet the expenses. Before knowing how to apply for a personal loan for marriage, the factors mentioned above are crucial for borrowers to make an informed borrowing decision.
After considering these factors, one must determine a trusted financial lender offering the most affordable marriage loan terms. Individuals must consider additional charges and fees that lenders levy as these charges affect the loan affordability to a considerable extent.