Credit Wisdom

8 Things You Should Not Do While Taking A Personal Loan

Category: Personal Loan

A personal loan is similar to other loans where borrowers usually pay back borrowed amount in fixed installments ranging between one to five years. With technology advancement, one can apply for personal loan online. Let us look at some features of the Personal loan.

Typical features 
  • The loan is given to fund personal expenses like marriage, home renovation, etc.
  • Different banks have different limits on the amount that can be borrowed under the personal loan.
  • A credit score of 750 or above is usually guarantees easy personal loans
  • One can take personal loan without any collateral
  • Employment is important factor for approval as it assures that you have sufficient income to pay back.

Make your loan easy breezy by following the below practices:

While taking a personal loan is easy, you can still make mistakes that can cost you dearly. Here are some mistakes to avoid to ensure it does not hurt you in the long run.

Compare and Save Money
The interest rate and other charges on personal loan may vary with each lender. So check online for easy personal loans offering. Be a strategic and smart negotiator to ensure you get a good deal. Don’t sign a deal with the first lender you meet. 

Don’t ruin your advantage while going easy with tenure
The loan is a debt, so it’s wise to pay back the amount as soon as possible to solve the money problem. The longer, one takes to pay off the amount, the more interest is charged by the bank over a period.

Before borrowing – Decide what you need more “Money” or “Trouble.”
The first step is to take control of your money. Don’t borrow more than you need. Be mindful that personal loan interests are higher compared to other loans. Instead of resolving temporary financial assistance, the difficulties can build into a crisis. 

Use money with a sense of purpose
Apply for personal loan to meet emergencies such as health issues. Avoid greediness and temptations while using loan amount. It’s a two-way process – Once borrowed, also need to re-pay back. So avoid spending the money on shopping or vacations unless you are sure of what you are doing.

Avoid creating your own storm by restricting to one personal loan
One usually opts for a personal loan to come out of the temporary financial hardship. However, this could worsen by taking a series of personal loans. Applying for loans from various banks is a completely bad idea. Your credit score also gets affected if you take too many loans which could be a mistake for the future.

You shouldn’t invest in Speculative purpose if you don’t have cash flows
Don’t get crazy with the availability of money through Personal Loan. Avoid your temptation to invest in speculative activities to be richer soon. Speculation in the stock market or other activities can have a disastrous impact if the table doesn’t turn in your favor. It can get out of hand and lifestyle can sink into debt.

Remember and Pay every installment
One must make timely repayments. Any missed payment will affect CIBIL score. Each loan disbursement comes with benefits and drawbacks. So, be proactive as forgetting the deadline could cost you heavily. 

Nothing succeeds without preparation
Preparation is the key to success. Don’t just walk into the bank expecting them to hand over the cheque to you. Research about the documents required and ensure you have your file ready even before you start zeroing on the lender of your choice.

A personal loan can rescue you from temporary financial crunch. It can bail you out in emergency situations but spell disaster if you handle it carelessly. So think and assume risks when getting a personal loan. And lastly, if you are looking for personal loan, apply online.

Tags: Personal Loan Articles