A Personal Loan helps an individual to achieve a number of desired financial goals. However, a borrower should be very cautious while availing a Personal Loan. Many a times a small mistake can lead to a vicious debt trap.
Here is the list of mistakes which you should avoid at all cost to manage your loan comfortably:
1. Overestimating your repayment capacity :
Do not borrow beyond your repaying capacity. Before availing a loan, ensure that you have the ability to repay it completely without much difficulty. Use our online EMI calculator to arrive at the loan amount which is easier to repay according to your capacity.
2. Credit hungry behavior
With each time you put loan application in the bank, your credit score reduces. Several loan queries in short period are considered as ‘credit hungry customer’. It negatively affects your loan application. Sometimes, your case is rejected for the same reason.
3. Not disclosing obligations
The lender is supposed to know all your current liabilities. That helps them in calculating final loan eligibility amount correctly. If you have hidden any details, and if found out then they may reject your loan application.
4. Not reading the fine print carefully
Usually, borrower’s main focus is on interest rate and loan amount only. In this hurry, people sign the document without reading terms and condition properly.
It is also crucial to know about foreclosure charges, part payment charges, bouncing charges etc. to avoid any ‘surprise’ later.
5. Not looking at alternatives properly
Before availing loans, everyone should compare all possible loan options. You need to compare charges, clauses of loan repayment, terms & conditions of different financial institutions.
6. Choosing longer tenure for shorter EMI
Generally, a loan borrower chooses longer tenure to reduce EMI. But, they forget the fact that the higher tenure means you have to pay more interest amount. If your income allows, then you should better go for a shorter tenure.
7. Don’t be emotional while taking decisions
Many times the personal loan is taken at a higher interest rate in the spur of the moment. Sometimes, you want to purchase a higher segment car or want to go overseas for a holiday. To put it simply, when availing loan, you should think wisely and choose the option which works best for your life.
Applying for a personal loan is a pretty simple and straight forward process. However, every borrower should be cautious and never take chances in the matters of money.
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