Don’t Make These 9 Mistakes While Applying for a Personal Loan
Personal loans are the solution for innumerable financial requirements. You can fund your small requirements or your dream vacation, house renovation, pay off sudden medical expenses, etc., with an easy personal loan on card.
Getting a personal loan is easy with minimal documentation, like just with your aadhaar and credit score. You can pick pre-approved offers from financial institutions. These loans are available at competitive rates. A flexible tenure for repayment of loans makes them even more attractive. However, the personal loan interest rate depends on a number of factors.
Here are the common mistakes that one can make while applying for a loan. Avoid committing these mistakes.
1. Selecting a random amount for the loan
You can not fill a random amount in the loan application form. You need to evaluate the loan amount you are eligible for. It may lead to application rejection and higher interest rates. Rejection of loan applications impacts credit score negatively.
2. Delayed payment of your dues
Personal loans are unsecured loans. Lenders do not ask for collateral, but they are inclined to know your credit history before loan approval. Therefore, you have to maintain a high credit score.
3. Not having the required documents handy
Not having all of your documents organized can prove to be the worst nightmare for a lot of people. Without all your documents in place can hamper your loan approval process unnecessarily. While we all have common things like a driving license, Social Security card, passport, or birth certificate ready, paystub is something we often forget. If you are also one of those who doesn’t have a paystub, make sure to contact your employer about the same. A paystub creator generates the paystub that you need when applying for a loan. Also, make sure to always have all of your paystubs organized in a folder.
4. Opting for unnecessary long tenor
A longer loan repayment period involves more expenses in the form of interest. Thus, a long tenor will lead to a raised cost of your loan.
5. Hiding existing loan details
If you have an existing loan, disclose it to the lender. It is vital information for a lender. In case they find it during the analysis of your credit history, it will impact your loan application adversely.
6. Ignoring the supplementary costs involved
A number of lenders levy extra charges for providing online services. They can charge you extra costs, management fees or processing fees, etc. Check for the supplementary costs involved.
7. Signing the loan agreement blindly
It is necessary to read the agreement print with full concentration as it carries your loan details. A lending institution can also make spelling or numerical errors.
8. Picking a random lender
You can find a number of financial institutions offering pre-approved loans. But you need to compare their interest rates and the benefits they are offering before finalizing a lender. Careful observation is necessary for considerable savings on interest.
9. Borrowing more than requirements
Loans are sought to meet urgent requirements. Do not overflow the borrowed money that you cannot repay. It will be an unnecessary burden for you. Utilize a loan facility to meet your financial needs only.
10. Making an application without knowing the lender’s rules
Every lending institution has its own rule book. Most of the regulations have complied with the market regulators. Still, they are allowed to add a few rules that segregate them from other lenders. It can be specific requirements, eligibility criteria, income parameters, CIBIL score, documentation, and others.
Expert Says
When you decide on the amount of the loan, it is always best to plan the repayment also in advance. It will be very helpful to repay your loan without stress. You know well how much EMI amount you can afford to pay without feeling any burden of loan. It is a thumb rule, avoid borrowing more than what you can afford to pay.
The Bottom Line
This is all about personal loans and important considerations. It would be best for you to save on a loan cost if you follow these pointers.
While comparing, you will be able to find the best pre-approved loan offers for you. One of the easy loans with a number of benefits is Bajaj Finserv’s personal loan. Bajaj Finserv’s best products include personal loans, home loans, and credit cards. You can visit their website to find a personalized and pre-approved offer for you. Get it just by entering your basic details.
