A Personal Loan is a simple solution to your quick financial needs. What’s more, with trouble free online procedures and pre-endorsed offers, taking a Personal Loan has never been this simple. In any case, you should be mindful when applying for a Personal Loan, as a solitary misstep can lead to enormous financial trouble. Carelessness and lack of awareness, when applying for a Personal Loan, can lead you to a major debt trap and make a financial calamity that may adversely affect you and your family. Here’s a list of pitfalls you should be aware of to make the best out of your personal loan:

Unaware of your capacity:
While a Personal Loan can help you get rid of the financial crisis, it might likewise bring you one. Before applying for a specific loan amount, guarantee you can pay it back. Try not to obtain past your moderateness. Avoid more than your repaying capacity. Use an online EMI calculator to choose the loan amount that best fits your financial status, before you apply for the loan.

Seeking excess lenders:
Each time you look for a loan from a bank, a query is raised and it shows up on your credit report alongside the date. With each query, your credit score diminishes. At the point when a few queries are generated in a limited amount of time, you are branded as ‘credit hungry’, which diminishes your chance of getting the approval for your loan or higher interest levels.

Not revealing your existing loan details:
Details of your current loans and other financial obligations must be unveiled to the moneylender, due to the fact that the loan amount will rely on your responsibility regarding other existing liabilities. If you try to hide these details, your bank will reject the application or else go for higher interest rates.

Skimming through the conditions:
Read the conditions of your loan deliberately to understand your obligations related to the loan. Thoroughly inspect the interest rates and other minor charges. It’s important that you understand every minor detail of the loan to avoid any subtle charges and liabilities later.

Failure to research on other options:
Before picking your bank, guarantee you do intensive research on all loan choices accessible to you. Analyse loan costs, prepayment provisos and pertinent charges on loans from various banks and financial providers.

Picking a longer tenure with lower EMIs:
Borrowers frequently have a tendency to settle on a more extended tenure for repayment of loans because of lower EMIs. However, remember the longer the loan repayment tenure, the higher sum you pay. Depending on your monthly repayment capacity, choose the shortest loan tenure possible.

Neglecting your credit report:
Your credit score is a major factor that the approval of your loan application depends on. Before applying for a loan, you should check your credit score and get any rectifications required. Likewise, if your credit score is low, odds of your loan application getting rejected is high. This dismissal will additionally cut down your score. Henceforth, it’s imperative to assess your credit report before you apply for a loan.

Comments

  1. Have a personal loan whenever you just badly need money to sustain important expenditure and you need to make sure that you have expected cash inflows to avoid too much interest and to maintain good credit score. Before entering into a personal loan, it is advisable to compare interest rates of many banks.

    1. I definitely agree with you. Comparisons can almost always bring benefits. A personal loan is a very serious decision although I have seen people taking it lightly as “quick cash.”

    2. That’s true! you have to be aware that having a good credit standing is very important because it is probable that you might need to have a loan a gain in the future. And if your credit standing is not good (if you did not maintain it from your previous loans) then there would be a bigger chance that you won’t be able to get a new loan anymore.

  2. This is very helpful for someone like me who does not know anything about loans. I’ll make sure to remember these tips in the future!

  3. Personal loan is only good when you received it. After sometime that you have already paid all your debts and other money matters, time comes and you will be thinking of how you can pay the monthly amortization. If you fail to pay them, your credit score will be in bad situation.

  4. Queries about your loans help get you a clearer picture of how your lifestyle will be after the loan has been made. You might get surprised that your loan has an unforeseen effect on your household budget. Having this knowledge will help you decide wisely.

  5. Getting a personal loan is a big responsibility. You need to ensure that amortizations are paid on time otherwise your credit score will go down. Having a low credit score will make it difficult for you to get higher ticket loans such as housing or auto loans in the future.

  6. Loans should be sort only when really necessary otherwise it would be better if they are avoided. Preferably, one can use their personal savings to sort financial complications.Development loans should be properly evaluated on how the loan is going to be repaid from money from the investment to curb losses.

  7. This article is great as it covers most of the fundamental aspects to take into consideration before applying for a personal loan. Many people ofted overestimate their loan capacity and end up in a swamp of debt because the payback amount is too much of a burden. Thanks for the information!

  8. This is a very beneficial article, as it makes a person to understand the risks and the complexities while taking or applying for loan.one should be careful of a number of aspects while applying for the loan.
    One should avoid long time and very less installments as well for a good loan experience.

  9. It’s nice to know that there is an immediate source of funds that would help you pay out some bills and perhaps to pay off another loan. Happy now then sad later on. That’s the reality of it. Best thing to do is to save money for the rainy days.

  10. When you’re applying for a personal loan, be sure to check the interest rates of different banks and money lending companies. remember, the lower the interest the better.

  11. This seems like an obvious point but it’s important to plan out how you intend to repay the debt. Will you be paying weekly, fortnightly or monthly? Do you plan to pay it off sooner than the term? These key factors will help you choose the right loan to ensure that you avoid any unnecessary costs.
    By considering these 6 points you can arm yourself with all the necessary tools you need to make the right decision for your needs and can be confident you are on the right path to achieving your financial dreams.

  12. Very informative and insightful article. Apart from the 8 common personal loan pitfalls mentioned, borrowing from someone closed to you like friends and relatives could lead to serious problems as well. When the loan plan and procedures are easily simplified due to close relationship, occasionally embarrassment may happen. If the loan procedures are not well handled, one’s social network would face tragedy.

  13. I can say that personal loan is really much more easier to apply for since it will help you in your needs whenever you have emergency that comes up.

  14. This article is very helpful when it comes to all financial aspects. Thank you for this article because I really learned from it. I gained knowledge about personal loan and it clears all the questions which I keep in my mind that are left unanswered for quite a long time.

  15. I think personal loan is very important service in society . as it provide finance to smart people so they can succeed .
    and provide more projects and works for society . so this return with benefits for all, banks that make benefits and investment the money in right way, people can execute their idea and get higher.

  16. This is the word that should really be avoided, as much as possible never get a personal loan just to buy things that you don’t need. Think a million times before applying for a personal loan.If it’s really a life or death situation then go ahead, but as much as possible please don’t.

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