Don’t Make These Mistakes While Applying for a Personal Loan

While a personal loan application is simple, flexible and can get approved easily, you should think carefully before opting for a personal loan. Otherwise, it could end up being quite an expensive affair.

Following are the examples of a few mistakes that you should avoid while applying for a personal loan online:

  • Lack of Clarity Regarding Reason for Personal Loan Application

It needs to be understood that applying for a personal loan for non-essential needs is not wise. With high interest rates to pay off, personal loans should be opted for only in certain circumstances.

  • Lack of Adequate Research

You should explore all your options for a person loan before zeroing down on a personal loan institution. You could use online tools to compare interest rates, tenures, and other details of other loans, such as loan against property, top-up home loans, etc. This research will save you a lot of future stress, especially if other options are better.

  • Borrowing More Than You Can Handle

Before everything, you must be aware of your capacity before deciding on a loan amount. You should not take on an amount that will be difficult for you to repay. As for Equated Monthly Installments (or EMIs), they should not be consume more than 10-15 percent of your monthly income.

  • Not Keeping Track of Credit Score

Having a healthy credit score influences a financial institutions decision to give you a personal loan. Additionally, you should keep track of your credit score for future possibilities as well.

  • Focusing Only on Interest Rates

There are many other aspects to consider when comparing personal loans with other loans, such as processing fees, pre-payment clauses, late payment charges, eligibility criteria, etc. You shouldn’t only concentrate on the interest rate at which you are applying for the loan, since other elements of a personal loan are equally important.

  • Hiding Details of Existing Loans

While hiding the deals of an existing loan(s) may get an individual a higher amount on a personal loan, this will invariably cause several complications in the future during the repayment phase.

  • Submission of Multiple Personal Loan Applications

If a financial institution finds out that an individual is applying for two or more personal loans at once, there are high chances of the loan being declined or the interest rate being highly increased.

  • Signing Without Reading the Loan Terms and Conditions

Read the terms and conditions written in fine print and clarify your doubts before signing any legal document, such as a personal loan agreement.

You can be sure that the personal loan application process will be a positive experience if these mistakes are avoided within time.