Top 5 High-Cost Mistakes To Avoid When Getting A Personal Loan?
Personal loans provide a great financial relief to an existing monetary problem, especially when you are in a fix. In the current market scenario, personal loans are seen as the perfect option to get out of any financial problems. If you are opting for an unsecured loan, these type of loans do not need collaterals whereas if you choose a secured loan, you will have to put down some collateral like property or gold or insurance papers, etc.
Loans and debt consolidation shouldn’t be looked at like your first ticket out of trouble every time. You should apply for a loan only if you are in dire need of some financial relief. The first thing that your lender or financial institute will look for when you apply for an Instant Personal loan is your credit score. Your credit score is something that the lenders and financial institutes use to evaluate your creditworthiness and your repayment ability. Your credit score can be affected by a lot of things and it takes about 12–18 months to form a good credit score.
The CIBIL score is the credit system used in India. The CIBIL score ranges between 300 to 900 and a good CIBIL score is considered somewhere in between 700 and 850. If you have a low credit score any bank or lender might hesitate to approve your personal loan.
Here are the top 5 things to avoid when getting a personal loan:
1.Poor Spending Habits:
Your CIBIL score factors in your income and the expenses that you make. If you spend more than you earn if will affect your credit score which will, in turn, affect your Personal loan approval. So avoid spending on non-essential things every month. This will also help you save money.
2. Incomplete Paperwork:
It is necessary to submit all your proper paperwork as incomplete paperwork will only lead to a long and tedious application process. Check with your lender or financial institute about all the papers that are needed while applying for a loan.
3. Running With the First Offer or Company in Sight:
If you want to make a loan, make sure you do thorough research beforehand and consider all your options. Different lenders and financial institutes offer different interest rates for personal loan. If you end up taking a loan from the first lender or financial institute that you see, you might end up paying a lot, in terms of interest, that you originally would have.
4. Lying On the Application:
This is one of the biggest mistakes you can do while applying for a loan. Lying on your application, for whatever reason, it may be, will not only affect your credit score negatively but also land you in jail. Always be clear with your lender or financial institute about everything. Hiding something from them or lying to them isn’t worth going to jail for.
5. Checking the Reputation of the Lender:
It is very important to check the reputation of the lender or the financial institute. Check their marketing strategies, research about their customer service, look at what they are offering. This will also help you stay away from falling into a trap.
