Getting a personal loan is easy these days, just login to your net banking there will be pre-approved loan options available for you, tailored according to your incomes and eligibilities and there you have the loan amount credited within a few clicks away. But not all of us understand the terms and conditions laid by the bank and end up hampering our cibil rating. There are many factors which one should take into consideration before going for a personal loan to avoid future problems with the bank.
To keep you avoiding such mishaps we will be sighting some common mistakes one makes while applying for a personal loan,
Purpose of loan
Before you go for a personal loan, just ask yourself do you really need it? Many try opting for a loan at time of emergencies, but there are a few who would consider taking a loan for fun and luxury spends. Do not take a loan until you are in a desperate need of money and this is the only option available for you. Emergencies like hospitalization of family members can knock your door anytime; you should always keep your finance lending options open for such situations. Do not waste your line of credit on luxury spends which you shall regret later.
These days we have tele callers calling us offering loans from different bank, if you are in need of money at that particular time, you will go with the same lender the tele caller suggests, this is wrong! We are living in a digital age and information on anything is just a click away, there is ample number of website which would suggest you different loan options from different banks and you can choose wisely which suits your need and budget. If your cibil score is bad, some website also suggests personal loan for cibil defaulters, but the interest rates will be relatively high as per market standards.
Not knowing your repayment capacity
Before taking a loan many people look for sanctioning maximum loan amount failing to understand their repayment capacity. Before taking a personal loan do understand your payment capacity and choose the loan amount accordingly which would not keep you on toes every month while making EMI payments.
Not disclosing existing Loans
Always disclose your existing loans to the lender before going for a loan. Eventually after a credit check the lender will come to know about your existing loans and may reject your loan proposal on integrity issues. You may get sanctioned a higher amount by not disclosing the existing loans but you will then find it difficult to make the monthly installments on time.
Not knowing your credit score
Credit score plays an important role on your loan sanctions. Higher the cibil score, you can go for a higher loan at the same time you stand a chance to negotiate your personal loan interest rate, in some cases you can also negotiate on the processing fees. Before you go for this, do check your credit rating and if your credit score is low, try to enhance it and then go for a loan.
Not understanding the loan terms and conditions
As personal loans are one type of unsecured loan, there are a lot of terms and conditions attached to it. many of us do not read the terms and conditions while signing the contract with the lender and end up losing big if a mistake happens in the future. It is suggested to take the booklet home and read the terms properly before signing it and if you find anything which was not told to you while you were going for a loan you can raise that doubt with your relationship manager.
Not taking your family’s opinion
Your family’s opinion matters. A loan is an unsecured short term loan which has high interest rates and short tenure which results to high EMIs. Your family will also be sharing this burden of EMIs and it is important to take their opinion on this weather you really need to take this loan or not.
Need is greater than want, is something which is thought to us from a younger age. One should not take a debt if not needed and if the circumstances demand where you need to take a line of credit from banks avoid small mistakes which can cause you big trouble in the future.