Having a financial emergency in your life? Are you weighing your options to get additional financial help from outside? Taking a loan for personal use from lenders is one of the most reliable and convenient options to avail, but you don’t want to make any blunder. Spare a glance to steer clear of making these five mistakes while applying for a loan.
It is normal if you are facing a financial crunch in your life, and the simple solution to avail additional funds is approaching financial institutions for it. Consumer loans are readily procurable for anyone having a decent credit history and a regular source of income. There is nothing wrong with taking personal credit to satisfy your financial obligations. However, one should be heedful that taking a loan is a future liability, and one should have all the right reasons to apply for a loan.
Shun these grave mistakes if you don’t want to damage your financial health and credit history for good.
- Not Weighing your Repaying Capacity: One should carefully evaluate one’s ability to pay the EMIs before considering applying for a loan. Take a practical route to list down the liabilities and capacity to clear those liabilities. Overestimating your payment capacity can dent your credit history if you fail to pay timely instalments and default on the loan payment.
- Concealing your Other Loans: It may seem tempting to withhold your current loans from the lender to get approval for extra loan credit, but this may backfire if your budget gets overburdened and you fail to pay EMIs on time. In most cases, a lender examines your credit history before sanctioning a loan and forging documents can tarnish your chances of getting the approval at first place.
- Not Reading/Understanding the Fine-print Agreement: Once you sign any document, you enter a legal arrangement to comply with all the terms and conditions written in it. To avoid any future disputes and legal battles, it is highly recommended to read the fine-print agreement and understand the pre-requisites and provisions related to the loan. There is no going back if you make this blunder while getting a consumer loan.
- Not Comparing Loan Options Carefully: One of the most common mistakes people make is they don’t do thorough research and compare all the loan options well while applying for credit. Don’t focus merely on the low-interest rates while comparing multiple lenders. Most lenders levy high transaction fees while disbursing the loan amount. Also, match other details like speedy loan disbursal, easy procedure, tenure, loan amount etc. before making a decision.
- Choosing Inappropriate Repayment Tenure: Tenure is another crucial factor to consider while taking a personal loan, and many people make a mistake when selecting the apt tenure for loan repayment. It may appear easy to repay the loan having low EMIs with a longer-term, but they cost you more. It is best to pay the loan sooner rather than paying an additional credit amount. So select suitable tenure considering your monthly budget for paying instalments regularly with ease.
Eschew these Mistakes and Use the Loan Smartly
You should exercise the option of procuring additional credit from financial lenders when you lack funds. Taking a loan for personal use may be an economical and sensible way to meet the financial obligations, but making the above rookie mistakes, can spoil your future credit prospects. So, it is always advisable to be conscious and do your homework before, to find the appropriate lender for you.