Personal Loan is an Unsecured loan, You can avail this loan for any purpose. It is a multipurpose loan you can use this loan amount for marriage, construction, renovation and any other personal use. Personal Loan is an unsecure loan and it has high-interest rates than any other loans.
Here are the 8 common mistakes most people commit when opting for a personal loan, so don’t be one of them:
Opting for more than one personal loan
One thing to remember about personal loan, it is the costliest form of credit when compared with other. Holding multiple personal loans is a mistake and will affect your credit score and decreases your repayment capacity in the eyes of lenders which will backfire you with high-interest rates for the future loans. So try to figure out your requirements and choose the best lender from the available market.
Borrowing more money than what you can afford
When Borrowing it is easy to get tempted, especially when it is on so easy to apply for a Personal loan on your smartphone. Surely, technology had come a long way and almost every service is digitalized so as Financial Services. Now you can calculate your EMI’s using EMI calculators online.
You just should not commit a mistake of borrowing more amount than you needed or eligible for so eventually you should not feel difficulty in repayment. Firstly, Know your requirements and capacity of repayment and then opt for a Loan as Personal loans are unsecured they charge a high rate of interest when compared to other types of Loan.
Taking a loan without reading the documents.
The biggest mistake almost all do….
Think for yourself, How often you read and understand the whole terms and conditions documentation before availing the service? If you are signing the documentation without referring and understanding it you are inviting the trouble.
Now it is obvious that if you sign an agreement you should follow all obligations listed in the document. Make sure you carefully read and understand the policies, terms, and conditions including – pleasure charges, interest rates etc.
Opting for a longer term
Most of the lenders offer long-term period in case of Personal loans, but it’s not compulsory to agree for it. Most lenders offer personal loans with the maximum tenure of 7 years. If you opt for a long-term the amount repayable is also higher
You may feel positive about the EMI on long term but at the end of the day you will end up paying huge interest. Thus it is important that you choose a short-term plan and clear your debt as early as possible.
Taking a loan without doing a market survey
Blindly taking a loan without knowing the available offers in the market is a foolish thing that one can do, you will surely regret after knowing the opportunities what other banks are ready to provide.
Take some time and get knowledge on interest rates prepayment clauses and offers served by all the lenders in the market and choose the best which suits you. You can negotiate on application processing charges and documentation.
Not maintaining records
You should maintain the records of the loan disbursal and all the payments you made. It is a crucial thing that you have to hold a record of negotiated interest rates, waivers, and processing fees. This must be done at times banks charge for agreement copies and additional statements.
Not checking your credit report
Always keep an eye on your credit report. If your lenders have not updated the credit bureaus about your repayments will affect your credit score which may lead to issues like loan rejection, charging the higher rate of interests etc. Most lenders watch your credit score to calculate your capacity of repayment. Low credit score will project you as the risk factor and they will have a probability to charge you the higher rate of interest.
And Do not perform more eligibility enquires while seeking for a personal loan, this will affect your CIBIL.
Not disclosing your existing debts
At most times borrowers will be showing low debts than they hold to get high loan amount possible when this reveals in the cross-check your application will face rejection straightaway.
So make sure to avoid all the mistakes discussed while applying for a Personal Loan Online. Thus, Avoid getting rejected for Personal Loan