If you find your score low (below 600), take the time to improve it. You can do so by repaying existing debt, making timely EMI payments, not making too many loan application and decreasing the use of your credit card.
2. Failing to choose the right loan:
In your eagerness to get a loan quickly, you may skip exploring various types of loans. As a result, you may find yourself saddled with a loan that isn’t as flexible as you would like it to be. More importantly, choosing the wrong kind of loan can work out to be expensive. But, when you opt for a loan that caters to all your needs and provides features like a flexi loan facility, it will help you keep costs to a minimum while catering to unpredictable financial needs. Specialised loans such as loans for engineers also offer nominal interest rates as compared to regular loans. So, choosing the right loan goes a long way in ensuring that you make a financially wise decision.
3. Not checking your eligibility:
Every lender has different application requirements that need to be complied with. Most often, you will need to meet the following requirements:
• You must be self-employed or must be a consultant engineer
• Self-employed engineers must have at least three years of work experience
• You should have graduated at least five years ago
• You must be aged between 26 and 65 years
If you check whether you meet the eligibility criteria right at the start, you will be able to ascertain whether or not you are a good candidate for a loan. Ignoring this step while applying for a loan may lead to a rejection later on and even bring down your credit score.
Additional Read: How Can Engineers Temporarily Increase Their Manufacturing Capacity
4. Dismissing loan documentation:
If you don’t submit all the required documentation for the loan, you may not get approval. This also holds true for when you submit incorrect documentation. With most lenders, the application form can be submitted online, but before you do so, gather all your documents. Generally, the following documents are required:
• Completed application form
• Photographs (of all applicants, in case of more than one applicant)
• KYC documents (of all applicants, in case of more than one applicant)
• Business vintage of three years
• Certificate of practice as a business proof
• Details of your engineering degree
5. Overlooking the terms and conditions:
Before finalising a loan, be sure to read and understand the terms and conditions of the loan. In case you find it difficult to understand legal jargon, get help from a lawyer to understand what the document states. Look out for conditions that levy penalties on prepayment and foreclosure. It is in your best interests to opt for a loan that doesn’t levy these charges or has low charges. Also, studying the fine print will give you necessary information such as what happens in case you miss an EMI payment. On the whole, you must ensure that the loan document’s wordings reflect the information that you have gotten from the lender thus far.
You could also take an Engineer Loan to consolidate all your existing debts into one single loan and get a better interest rate.
Additional Read: How To Maximise The Value Of Your Company With An Engineer Loan
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