A Personal loan is a debt that the bank provides to an individual for a certain period. It serves as a one stop solution for most of the short term obligations you have. A personal loan is a short term loan and can be availed for 5-7 years*. Here are some mistakes that you should avoid for personal loans;
Not being clear on the loan requirement:
Before taking a loan, you need to plan and estimate if the loan is actually needed. Taking a loan just because your bank is giving you a very good deal doesn’t mean you need to splurge on a luxury. You need to understand that a loan is a debt and hence you will have to repay it. Only after carefully considering your requirement and finances, you must go ahead and take a loan.
Not being clear on how much to borrow:
If you are given an option of a loan amount which is more than what you need, it might result in you going ahead and taking the loan amount. You need to be realistic in planning how much EMI you can afford with the income in hand. There are emergencies and expenses which can strike at anytime. Hence be clear on how much you need to borrow. If you need any help in planning, use our highly proficient loan calculator which can help you understand how much EMI you will need to pay.
Not reading the terms, details and conditions of the loan:
One more error which you might be prone to committing is that you might not read all the terms and conditions. Doing this will harm you in the future as once you sign the agreement; there is nothing that can be changed. You need to be cautious of fees like processing charges and penalty fees which are needed to be paid in the event of prepayment.
Borrowing for an unrealistic Tenure
You need to be very careful with regards to the tenure of the loan. Choosing a shorter tenure will mean that you will pay a higher EMI but a lesser interest burden. Choosing a longer tenure means you will pay lesser EMI but end up paying more interest throughout the tenure. Hence plan accordingly and choose a realistic tenure sufficient to handle your debt and expenses.
Choosing without Comparing
Just because you have got a good interest rate as compared to other banks, doesn’t mean you need to go ahead with the same lender. You need to compare many options like fees and penalty charges, processing time of application and documentation etc. You can use our highly proficient loan calculator which will help you to decide what the suitable loan option for you is.
A personal loan is easily available throughout the market but you need to be very clear on your requirement and usage of the loan amount. It is a huge responsibility and hence avoiding the above mistakes will help you in choosing the correct loan. To know more about how you can apply for a personal loan, Click Here