Connect with us

Finance

6 Mistakes That You Should Never Make When Applying For A Personal Loan

6 Mistakes That You Should Never Make When Applying For A Personal Loan

A personal loan is an unsecured loan. You can use the loan to meet any financial requirements you may have. It is one of the most popular funding tools with relaxed eligibility criteria. However, to apply for personal loans, you need to adhere to certain criteria for easy approval and maximum funds you can get. There are few mistakes that you should never commit when applying for this type of loan. While it is possible to research on the requirements of a personal loan, you may miss some crucial considerations or things not to do, but we list it out all here for you.

6 Mistakes That You Should Never Make When Applying For A Personal Loan

Features of Personal Loans

Below mentioned are some of the features of a personal loan:

  • This loan is given to fund personal expenses such as wedding, home renovation, medical treatment, holiday trip, etc. There is no restriction on how you use the funds.
  • Minimum amount and maximum amount that can be availed is Rs. 1 lakhs and Rs. 20 lakhs, respectively.
  • No security or collateral is needed against the funds.
  • Employment is one of the major factors for the approval of the loan.
  • A credit score of 750+ helps in getting easy personal loans.
  1. Not Comparing Personal Loan Offers: If you are interested in taking a personal loan, you would probably look for offers from your current bank. After all, you already have an established relationship with it. However, if you fail to look beyond the first choice of bank or NBFC, then it can be a terrible mistake. It is possible that other lenders could offer better rate of interest or favourable terms than the bank you are already a customer of, and thus, it is crucial to never settle for the first choice you make. Always compare offers from financial institutions, study the terms and details before finalizing on a personal loan offer and provider.
  1. Avoiding the Aspect of Credit Score: For unsecured loans like personal loans, financial institutions will take into account the borrower’s credit score. Based on the financial behaviour, especially repayments and EMIs, a credit rating is given to the loan applicant. If the credit score criterion is not fulfilled, the loan application could be rejected. Thus, when applying for a personal loan, you must check if you meet the credit score requirement. If you do not have the needed credit score, it will be difficult to get the personal loan, or even if you get one, it would be at a higher rate of interest.
  1. Ignoring the Eligibility Criteria: If you do not fulfil the eligibility criteria for a personal loan, then the loan will be rejected. Thus, it is important to check with the loan provider about the loan eligibility criteria. The criteria could be specifically about the minimum and maximum age requirement, type of profession, existing liabilities, identity and residence proof, monthly income necessary, credit score, documents needed, financial proof, ITR copy etc. It is advisable that you apply for the loan with a provider, whose eligibility criteria you can easily comply with.
  1. False Details in Loan Application: When filling the personal loan application, you should provide accurate and true details. Lying is one thing you should never do when applying for a loan, even if it is as minor as saying you have a full-time job, but it is actually a part-time affair. Even if you are worried that the application would be rejected, do not put out incorrect details in the application form.

You can be prosecuted if an action is taken against false claims you made when you applied for the funds. The penal action can include jail time. So just be truthful about every detail asked.

  1. Overlooking Fees and Charges: When you compare banks and NBFCs, do not just compare the personal loan interest rate to finalize a good deal. You have to compare other costs, such as prepayment charges, processing fee, penalties on foreclose etc. Some financial institutions can waive off processing fees to attract customers, while others demand at least up to 2 percent of the loan amount. Few institutions can charge higher than 2 percent of the loan amount. If you are not aware of these costs, then you can end up with a loan that costs more than you expected.
  1. Unwise Debt Consolidation: While personal loans are great means to consolidate debt (pay off multiple debts by taking a single loan), it could harm your financial situation, if you consider debt consolidation without taking necessary precautions. For instance, if the majority of pending debts are more expensive than the new personal loan, then you could be in a worse financial fix.

Personal loans are taken to consolidate those debts that are usually more expensive than the new loan taken to repay unpaid bills and EMIs. If you keep your spending habit easy and do not try to restrict unwanted expenses, then it would be harder to repay the personal loan, even if your other debts stand paid-off.

Keep in mind the above-mentioned mistakes that you need to avoid when applying for a personal loan.

Continue Reading

Recent Posts

Business1 week ago

The Invisible Hands: Unveiling How Food Distributors Influence the Quality of Our Foods

Ever found yourself wondering why the tomatoes in your salad taste particularly fresh or why your preferred brand of coffee...

Marketing1 week ago

Webflow CMS: A Comprehensive Guide

Webflow is a powerful tool that allows you to create and manage dynamic websites without needing to code. It’s a...

Business1 week ago

The Three Most Important Benefits You Should Offer To Your Employees

Offering your employees a range of benefits on top of regular salary increases will really help to show that you...

Business4 weeks ago

Business Tips For Protecting Your Finances During A Recession

In 2024, taking the necessary steps to protect your finances for your business is now more important than ever. The...

Green & Energy1 month ago

Air Conditioning Installation: What You Need to Know

When it comes to getting an air conditioning unit installed, can significantly improve your comfort and home environment, especially during...

Marketing1 month ago

Marketing Tips For A Gym Wear Brand

When starting a gym wear brand, there are a few things you need to do and one of them is...

General2 months ago

Social Media Marketing: What Are All The Types?

Social media marketing is a tool that is a must-have in today’s digital age. it’s very rare that businesses can...

Business2 months ago

How To Become A Property Developer

There are several reasons why an individual will want to become a property developer. One of the main reasons for...

Business3 months ago

Remote Delivery Innovations: Case Studies from Leading E-commerce Brands

People have gone through much change in the past few years when it comes to online shopping. Nowadays, when delivery...

Business3 months ago

Why are Brits turning to online-only banks?

For years, large, conventional banks held all the aces when it comes to citizens’ finances in the UK. HSBC, Lloyds...

5 Important Web Design Considerations to Make For Better SEO 5 Important Web Design Considerations to Make For Better SEO
Tech3 months ago

5 Important Web Design Considerations to Make For Better SEO

Ever since the birth of search engines, practices in optimising websites for better search rankings have changed considerably. Where it...

SEO4 months ago

The Importance of Local SEO for Small Businesses

There are many different types of businesses and all of them will require online marketing however, with a small business,...

General4 months ago

Understanding The Unsung Heroes: Cool Rooms And The Importance Of Regular Repairs

Everybody loves a breath of fresh air when entering a superstore! But have you ever wondered who’s working backstage to...

Home Improvement7 months ago

How To Add More Value To Your Home

If you have some spare cash in the bank, it is likely you would like to spend it on your...

Lifestyle8 months ago

What is a Deep Plane Facelift

Cosmetic surgery is a choice that needs a lot of research and when it comes to thinking about a facelift...

Categories

Archives

Trending