You have some visibility on your cash flows and are sure that you will be able to repay the EMIs (Equated Monthly Installments) in time. Else you are bound to enter into a debt trap. If you want to get a loan service then you can also apply ‘mini-credit immediately’ (also known as ‘kleinkredit so forth’ in the German language).

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There is an emergency and you need funds immediately. A personal loan can be taken because the processing time is much lesser on account of minimal documentation.

Opt for personal loans only to meet your essential needs which cannot wait. It should be your last resort. Taking it for satisfying leisure needs can prove to be costly i.e. for buying a new car (a car loan is a better bet with a lower interest), etc.

Before you choose your personal loan:

Calculate the cheapest loan offer: These loans come with very high-interest rates ranging from 14% to 25%. Compare interest rates and get the complete picture by understanding the annualized interest rates for each offer.

Then figure out the total amount of repayment you need to shell out with all the offers before opting for the loan of your choice. Processing fee et al: You need to keep in mind the processing fee and other fees that will be levied when you apply for your

personal loan.

Prepayment penalty check: Ask upfront if there would be any penalty payments for prepayment of the personal loan at any point in time. More often than not loan consumers tend to pay up their loans earlier than planned to be rid of debt.

Hence, it's important to know if your personal loan offer allows part prepayments. If that is the case, then you should be aware of what time frame in the loan period you can start prepaying and understand the cost you incur due to such prepayments in part or full.