Personal loans are great. They offer an easy way out during financially trying times. The best part is that the internet has made it very easy to get such loans. In fact, you can apply, get approvals & enjoy sanctions to your bank account in less than 2 days, all thanks to the World Wide Web. However, ever since it has become so easy to apply, people breeze through the application process without doing their research & properly preparing for the loan. This often results in mistakes that cost them dearly later on. To keep this from happening to you, we have highlighted some of the most common mistakes people make when opting for personal finance.
1. Not comparing.
This is one of the most common blunders. People have a preferred bank or trust in the opinion of others and put in an application without comparing the market. However, the personal loan space is extremely competitive; there are numerous lenders all vying for your business. Each lender will offer a different benefit or advantage to ensure you apply with them. There, applying without comparing could mean you miss out on a stellar deal just because you didn’t take out the time to evaluate all your options.
2. Not using calculator.
Calculators are another amazing benefit the internet has brought to personal loans. Now you can check your eligibility, find out every installment of your repayment & find ways to efficiently prepay your loan in seconds with these online calculators. However, not all borrowers use these tools before applying. This could result in a rejected application, lost processing fees, turbulent repayments & costly prepayments.
3. Not checking the terms & conditions.
In a bid to get the loan quickly, some people sign the sanction letter without reading the terms & conditions. This could prove to be a costly mistake later on. They could miss out on some bank rules that could give them an unpleasant surprise while repaying personal loans. Therefore, always read the terms documents and proceed with the application only when you are up to speed with the conditions mentioned.
4. Opting for the wrong tenure.
Repayment tenures are important when it comes to personal loans. Choose a longer tenure and you’ll enjoy smaller monthly installments at the cost of higher interest amounts. Choose a shorter tenure and you’ll pay less interest but your EMIs will be much higher. You need to strike the right balance to ensure you are able to repay the loan comfortably and save on the internet payable at the same time.
5. Opting for more than you need.
The thing about personal loans is that they are not like auto loans or home loans. The quantum of financing does not depend on expense you are covering – it is simply decided by your financial profile. Some borrowers opt for loan amounts that are beyond their needs, this would mean paying interest on amounts you don’t actually need.
Stay away from these mistake and you should enjoy an efficient borrowing experience. Good luck and all the best!