5 common mistakes related to personal loans
that you should avoid
Personal loan or personal loan is often the most reliable means of meeting the needs of extra money. Not only this, the increment is easily available to individuals with a credit score and regular income, but it also gets processed immediately, because of this, it becomes a clear loan option for those who are in dire need of money.
Regardless of the easy availability of personal loans as a credit product, it is important to know about the biggest mistakes that can arise while taking a loan. Otherwise, it could turn into a huge mistake in the hurry for you.
1) First mistake - do not keep information about your credit score
Your qualification for a personal loan depends largely on your credit score. The more credit score, the more credit you will have.
That is, with more scores, the lender will easily give you a loan, if low score is possible, then your loan application will be rejected. And many times your credit score will be even lower if you decline it.
Knowing your score before applying for a loan will give you the power to negotiate better terms and conditions on the personal loan agreement. Therefore, it is always better to know your credit score before applying for a loan.
With less scores you can think of improving your score before applying and can wait a few days.
2) Second mistake - not being pre-qualified
When you think of taking a personal loan, first select your lender and meet with them to make sure that you are eligible for a loan or not. Then the lender will do a soft check on your credit and see whether you are eligible for a loan or not.
Doing this will not affect your credit score, but will help you understand your credit eligibility. In fact, at this point most banks or lenders will give you an estimate of your loan rate and terms.
In this way you will be able to prepare yourself mentally and economically before applying for a loan.
Therefore, make sure you do not miss this small but effective step before taking a loan.
3) Third mistake - just pay attention to EMI
Before taking a personal loan, you will have to pay EMI; It is natural to pay attention to this.
While EMI will cover your principal and interest component to a great extent, there may be some other charges that may or may not be related to you.
This includes process fees (upto two and a half percent of the loan amount), late fees, prepayment penalties, etc.
Therefore, make sure that you know every aspect connected to your EMI and try to keep it at a minimum.
4) Fourth fault - Use the personal loan to buy an elegant item.
Even if the personal loan becomes easily available, but in the end it is a loan that you have to pay interest on time and efficiently.
Therefore, if you are planning to take personal loans for expensive gifts, gadgets, elegant items, or to celebrate the great holiday, then you must think once.
As far as possible the loan should be taken for those things which are necessary or urgent, such as -
debt consolidation
home renovative
business expansions
medical emergencies / medical emergency
Otherwise, you must have a repayment plan, otherwise it can be very difficult for you to pay a loan.
5) Fifth mistake - rely on sales person with a blind eye / Blindly Trusting the Salesperson
Buying a personal loan means committing yourself financially with a higher interest rate. However, it is very tempting to trust and sign on the terms and conditions of the contract without the terms and conditions of the contract, but at any cost you should refrain from doing so.
You should take the time to read the fine print of the loan and if possible, seek help from someone who has a better understanding of financial transactions.
If you feel very confident about the salesperson, or even if he insists on signing the contract, do not sign the contract until you are convinced by understanding its terms.
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