Before taking such loans, compare the interest rates charged by various players, advises Sanjay Kumar Singh.
With the Reserve Bank of India reducing the risk weight on all categories of consumer loans from 125 per cent to 100 per cent, banks will be more willing to extend personal loans.
A recent survey by consumer finance firm Home Credit India showed that personal loans are the third most popular category of loans after consumer durables and two-wheeler loans.
Banks are nowadays willing to offer pre-approved personal loans, especially to their existing customers.
Fintech companies also offer pre-approved loans based on the customer's credit profile, income and stability of employment.
Before taking such loans, a person should compare the interest rates charged by various players.
Remember that the sum total of your EMIs should not exceed 40-45 per cent of your take-home salary.
Taking a longer tenure loan will lower EMI but will enhance your overall interest burden.