Nowadays personal loan is considered by people when it comes to financial support during difficult times.
Getting a personal loan may seem easy as innumerous lenders are opting online service for the personal loan. You need to take responsibility on your shoulders when you apply for personal loans, otherwise, it will be difficult for making moves in your personal finance. There are some personal loan mistakes we might come across hence we should avoid:
Taking more financial products:
A personal loan is the costliest product and you go for it, only if you need, fulfill your commitments and there is no other way around to bail you out financially. You can resort to the personal loan as the final option. Just for the sake of personal loan, never get into the personal loan as it can have the negative impact in your life.
Applying for more than one personal loan at times it will damage your savings and make a negative impact on your credit score as well. Always try to live within your earnings than getting the personal loan and later find yourself in financial trouble.
Just apply for personal after analyzing all the options of getting financial assistance.
Never borrow more loan than what you can
Now a day’s getting your hands on personal loan may seem easy. Just because you can, don’t borrow more money because you might be in the difficult position later when repaying the same amount. Think twice before going for it as it has high interest and more risk involved with it particularly if you have too much to repay. It makes an impact on your credit report.
If and If only you need it go for the personal loan, that too according to your needs, nothing more and nothing less.
Always look for shorter tenure as it helps you financially, whereas in the longer tenure you end up paying a more repayable amount for the same amount.
Let’s consider this case:
If you take personal loan of Rs 100000 with an interest rate of 17.5% over 3 years, you end up paying EMI, Rs.3590 (Rs.129240)
In the above the case if the tenure is 5 years then the calculation has to be EMI is you end up paying Rs.2512 on the total loan amount would be Rs.150720 which is around Rs 20000 more than the earlier option. Generally, lenders are okay with the longer tenure for personal loans. In personal loan longer, tenure may seem the easiest option but you may end up paying more amounts overall, hence prefer shorter tenure over the longer one.
Read the fine print before taking the Personal loan
When you apply for personal loan, just read the fine pints otherwise, you might be in financial trouble later point of time.
A personal loan may be the good option during difficult times but you need to thoroughly go through the terms and conditions before signing the agreement. If you need any clarity on the terms, have a word with the lender and get it addressed.
Taking the personal loan without comparing
Always compare your personal loan offer to the other bank’s personal loan like how much the interest rate you are offered, loan tenure timing and EMIs.
If one bank is promising you low-interest rate, just analyze how the interest rate is being determined and have a cross check with other banks for interest rate, EMI you are eligible based on your profile and credit score.
Just don’t blindly say okay one bank which commits that gets you the lower interest rate and affordable EMI.