7 Personal Loan Blunders to AvoidPersonal loans online help to get easy money instantly for various personal reasons. Many young aspirants tend to acquire personal loans, to accomplish their goals quickly. But lack of awareness about personal loans can lead to blunders that can incur a heavy financial loss in the future. Hence, borrowers applying for personal loans for the first time should gain enough knowledge about the basics of personal loan.
Even experienced borrowers should time and again stay updated with the recent loan related norms to avoid any blunders. Stay well informed, be a smart borrower and prevent yourself from making the 7 loan related blunders:
- Not verifyingcredit score: Not checking your credit score for long will only increase the chances of loan rejection. So, a decent and improved credit score becomes vital for your loan application to get approved. A higher credit rating ensures your repayment ability and may prompt the financial firm to offer a low interest rate. Thus, it is very essential to maintain your credit score by paying off your credit bills and existing loans without any delay.
- Not choosing the right repayment tenure: Most borrowers want to finish off paying EMIs soon and so they choose shorter tenure like 6 months to clear the personal loan. However, things don’t go as planned always and unforeseen expenses can break your financial plans. Hence, it is better to take at least 1 year of repayment tenure for easy clearance of EMIs. Calculation for the same can be done using loan EMI calculators available on lender’s website or personal loan app.
- Taking excessive loans: Personal loans are advertised with attractive promotional offers. This lures many borrowers to apply for a higher loan amount which is not actually needed. Always check the terms and conditions applicable for such loan selling offers. Taking undue loans can increase your financial burden during the repayment cycle.
- Not comparing lenders: Lenders and loan providing financial firms operate with different percentage of interest. A smart borrower will always make interest rate comparisons to get the best interest applicable on the loan amount. Staying loyal to a single lender is a good habit, however paying a higher rate of interest just because you deal with him for years is not a wise thing to do. Hence, think practically about your finances and start comparing the interest, processing fee and other hidden charges, if any.
- Not reading the fine print: Clear terms and conditions as given by the financial firm is listed and described in the fine print copy of the loan application. Though it is a lengthy document, take time out to read the clauses to get clarity on different loan related aspects. Lack of document reading can lead to unpleasant disclosures as borrowers hardly know about the mentioned T & C in the loan papers.
- Not examining the eligibility criteria: The personal loan eligibility criteria differs based on the type of loan and the financial firm. Except the KYC details of the borrower, an education loan or a medical loan will require different set of documents for verification. Hence, assuming a single eligibility criterion will be applicable to all the loans is a wrong perception. Before the loan application, borrowers should check the eligibility thoroughly to avoid loan rejection blunder.
- Sending Multiple Loan Requests: No response to your first loan application? Do give time for processing and verification. Impulsive borrowers or those in need of super urgent money tend to post multiple loan requests. This affects your credit score, reflects an unprofessional attitude and can lead to loan rejection.
Hence, stay alert, stay aware about causing any personal loan related blunders. If you have any doubts, always reach out to the customer care or online technical assistance for clarity about personal loan procedures.