Read on to know the top mistakes to avoid when opting for a personal loan:
1. Avoiding EMI calculation beforehand:A loan is a liability and a responsibility to be repaid diligently. Therefore, it is essential to calculate the monthly amount that will go as an EMI and assess if the same is comfortable for you to repay. Additionally, calculating EMI beforehand avoids defaulting of payments.
2. Choosing a long tenure:Choosing a loan tenure may look affordable but results in paying more than what you borrowed. Hence, opt for a shorter tenure that you will be comfortable.
3. Borrowing more than you can afford:Do not commit to borrowing more than you can afford. With the ease of applying for a personal loan becoming more, it is best to stick to the amount that you actually need and not what you want.
4. Not reading all the clauses and information provided:It is vital to read the terms and conditions beforehand to understand the implications completely before opting for a personal loan. This will ensure you to stay away from unpleasant experiences and surprises in future.
5. Being unaware of your credit score before applying:Although a credit score is not the only factor considered before you apply for a personal loan, it is the most critical factor. Additionally, being aware of your credit score helps you understand the interest rates you are eligible for.
6. Making late payments:Late payments of your existing personal loan will not only add a late payment fee to your existing EMI but will also affect your credit score adversely. This limits your future credit possibilities too.
7. Defaulting the loan payments:One of the worst personal loan mistakes, defaulting a loan payment will result in the lender sending a notice and further altercation with collection agents.
8. Submitting unauthentic details and documents:Lying on your application is one of the biggest personal loan mistakes one can make. Right from the income to your age, all the details provided in your form must be accurate.
A personal loan is one of the most accessible forms of meeting fund requirements. Hence, it is essential to avoid these borrowing mistakes that can turn costly later.
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The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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