Personal loan is the easiest option these days to fulfill your much-cherished dreams. However, there are some common issues to note while negotiating it in order to avoid complications.
Lack of clarity
The reason behind taking the loan should be of utmost importance, as however accessible as it may be, all loans come with an interest. More often than not, personal loans, due to their easy availability are taken for not-so-essential purposes. The borrower should always judge the emergency of taking the loan, by discriminating between urgent needs and luxury before deciding. It is advisable to discuss the loan requirement with your immediate family members to judge the various issues related with loan proposition as the monthly EMIs affect the family budget directly.
Absence of Homework
Personal loans are alluring enough to make you forget certain ground rules of the money market. Relative comparison of the loans as being offered by different banks, alternative options of borrowing like loan against property etc., essential terms and conditions of the loan like interest rate, tenor, prepayment charges and repayment terms etc. must all be studied in details through as many sources available in order to ensure a full-proof borrowing. Quick advertisements like SMSs and Internet teasers should be avoided for deciding.
It is important to maintain a monthly EMI consisting of not more than 10% to 15% of your monthly income to make both ends meet without any financial burden on you. You can use a Personal Loan Calculator to know your monthly EMI well in advance and manage accordingly. It is also advisable to opt for a personal loan with a shorter tenor with an affordable repayment amount than loans with longer tenor and competitive EMIs.
Non-awareness of personal credit score
A sound financial profile maintains your creditability in the market, availing loans easily for you. Hence keeping a healthy history of loaning, meeting all the pre-requisites of lending and projecting the same at the time of taking a loan makes your chances of loan approval better.
Non-furnished information on already existing loans
For personal convenience, the borrower should furnish the details of all the already existing loans with the financial institution one is borrowing from to ensure clarity. Concealing the same can facilitate easy availing of the loan, ultimately affecting EMI payments and the borrower’s monthly budget.
Borrowing from unfamiliar lenders
One must always take a loan from the financial institution one has been having a working relationship with in form of, for example a salary account, a fixed deposit or pre-existing loan.
Additional Read : 5 reasons to apply for a Personal Loan from Bajaj Finserv
Parallel multiple loans
Running multiple loans at the same time, as presented in your credit report, reduces you chance of availing another one, if at all, with a higher rate of interest than usual for you losing your credibility as a borrower.
Indiscriminate signing
It is advisable to be well-versed with all the terms and condition of the loan by reading the offer documents clearly before committing. That helps in being sure and solvent of your obligation.
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