The festive season is always special—it’s filled with activities like decorating the home, shopping for gifts, and visiting relatives. While excitement reigns, expenses also rise rapidly. Sometimes, these expenses become so high that they begin to overwhelm your monthly income. This is why people often consider taking out a personal loan or credit card. If you’re going beyond your budget this Diwali and considering a loan, it’s important to understand a few important things. Loans can be helpful, but if not used wisely, they can become a significant financial liability.
Take a loan only when it’s truly necessary
Sometimes, we take out loans just to enhance the festive atmosphere—like buying expensive gifts, new clothes, or planning vacations. But you should honestly ask yourself if these expenses are truly necessary. If these expenses can be reduced or avoided, it’s best to avoid taking a loan. Recognizing the difference between need and want is crucial for financial stability.
Is a credit card a better option
If you have a credit card and can repay the full amount within 30-45 days, it may be a better option than a personal loan. Many credit card companies also offer festive offers and cashback, which can help you save money. But remember that timely payments are essential; otherwise, you may have to pay high interest, which can prove to be even more expensive than the personal loan itself.
Borrow only as much as you really need
When taking out a personal loan, people often borrow a little more than they need to have some extra money on hand, but this extra money can prove costly later in the form of high interest. Therefore, borrow only as much as you really need and plan to repay it as quickly as possible. Keeping the loan amount to a minimum is excellent for your financial health.
Keep the loan tenure short
The purpose of taking a personal loan is to meet immediate needs. Therefore, keep the tenure as short as possible—ideally between 6 months and 1 year. Paying EMIs over a long period not only disrupts your monthly budget but also dampens the joy of the festive season. Repaying the loan over a shorter period also reduces the total interest.
Don’t let your big financial goals suffer
If you’re planning to take out a large loan for a car, a home, or your children’s education in the next few months, taking out a personal loan this festive season could severely impact your credit score and loan eligibility. Make wise decisions so that today’s small pleasures don’t overshadow tomorrow’s big needs. Balancing financial priorities is the key to long-term success.