Personal Loans are good to borrow as they are unsecured in nature and we don’t have to give any collateral or guaranty for this loan. But on the other hand its Interest rates are also high because this kind of lending bring more risk to the lenders. Beside all these reasons people go for this loan in emergency situations as its processing is very fast and even disbursal. There is another one big advantage with personal loan and that is- this loan is not any purpose or term specific. You can take personal loan for any purpose you want. Apart of all these benefit there are certain mistakes which people do while they apply for this loan. So in this article we have come up with all those small points where people do mistake with personal loan.
- Not Comparing Options Before Applying
Even if you buy any small thing or a big thing you shop around and check for the better and best options available regarding the cost as well as quality. When it comes to borrowing, how can you neglect this part here? It is your right to know the options available and one important place to avoid being lazy. There are many things such as interest rates, processing charges and other fees as well which can vary from lender to lender. So before applying for the loan always check with all the possible (available) option whether do it by visiting online portal of different bank or it can be done by visiting banks but in person, you can’t visit all the banks, so go online and know the best option for you!
- Borrowing More Than Required
However easy it might be to avail a personal loan, never apply for a loan amount more than your need. End of the day, a personal loan is a loan, which you would need to repay every month throughout the tenure of the month. This will be an additional burden, should a tough time come. Also the amount that needs to be repaid every month is directly proportional to the amount borrowed. Personal loans just like all other loans are offered at some interest, which adds to the total amount that you need to repay, hence higher the amount borrowed, higher will be the interest paid on it. Before you apply for a personal loan, work out the numbers and find out the exact amount that you need.
- Not Checking Eligibility before Applying
When availing any loan, just knowing the right amount to be borrowed and the right lender to borrow from is just not good enough. The success of the application will depend on the lender’s will to lend to you. Hence, your chosen lender might not be ready to lend to you. As such, it becomes very important to check your eligibility in advance, before applying. Different lenders look for different borrower profiles, based on the factors such as age, income, credit report, employer, job stability, loan amount and desired loan tenure. Owing to these you might not be eligible for one lender, but eligible for two others. Before you apply for a personal loan, go through the eligibility criteria of the lender and find out the lender for which you match all or most of the criteria. Apart from the eligibility criteria, check out the documents that you would need to provide, should you choose to apply and whether you have all the required documents available with you.
- Lying in the Application
Lenders, whether it is a bank, a NBFC or a loan marketplace, lend money to borrowers to make money from the loan. Till the time a borrower has completely repaid the loan, the lender’s money is at risk. Hence the lenders always look for credible borrowers who they can lend to being sure about getting their money back. Also before approving and disbursing a loan, lenders go through different lengths to verify the authenticity and genuineness of the borrower. Hence it is a very bad and naïve to provide false information in the application to manipulate the lender into lending. The lender, without a doubt is going to find out the discrepancy in the application and decline the application and blacklist the borrower as fraud in their database, and report it to the CIBIL and other credit rating organizations. Hence, lying in your application, will not only lead to the rejection of the application but end all your chances of getting a personal loan from another lender. Always provide all the genuine information in the personal loan application, as they are. In case of any doubts always reach out to the lender and proceed as instructed.
- Ignoring the Fine Prints
It is not common for a lender to have fine prints in their brochure. These fine prints, generally, cover the fees and charges which the borrower will need to pay in case of certain events. For example, for every loan application to get processed, each lender will charge a processing fee from the customer, which gets deducted from their loan amount before disbursal. Hence, someone applying for ₹ 600,000 will end up getting around ₹ 590,000 disbursed in their account. Hence, it is a good idea to find out the processing fees in advance, and apply for a loan amount which will still serve your needs even after the processing fee has been deducted. Apart from processing fees, there are other charges involved as well, like fee on prepayments and part-payments and fee on delayed payments etc. Hence it is advisable to find out and know these fee and charges in advance, so that you don’t face a surprise later on.
If you are in need of a personal loan, and planning to apply for one, please go through these points and make sure to not commit them while applying. A personal loan application without mistakes and discrepancies increase the chances of approval. Personal loans are and have been a tried and tested method of securing capital in times of need and taking care of the above mentioned points will make your personal loan application a simple, quick and hassle-free process. Happy Borrowing!