When you are facing an intense financial crunch, Personal loans could be your perfect answer. Whether it is home renovation, education need or medical expenses, personal loans fulfill every need. One could avail them with hassle-free online processes and pre-approved offers. With time and innovation, borrowing loans have seen a turn and it’s now very easy to apply loans and get sanctioned it from banks or personal lenders. However, most of the borrowers commit mistakes in course of loans which end up in a bad debt or a huge loan liability for them.
Here’s a list of pitfalls you should avoid doing with personal loans to mange debt comfortably.
Not considering your repayment capacity
A personal loan aims to help you get out of financial crisis, but immature decision could cause one. Many a times borrower stretches out more than its repayment capacity, as an outcome they get deeply churned in much bigger crisis. One have to understand that personal loans are unsecured loans hence they pose much higher interest rate. It means taking a larger amount would end much costly. Before taking loans calculate your necessary expenses, apart from the EMI. It is best to take smaller loans and repay it back soon, instead of larger amount.
Approaching too many lenders
Those who had taken any type of loans earlier would know the importance of credit score. When a borrower applies for loan in any bank, his/her all queries are reported on their credit history along with date. Any unsuccessful query reduces the credit score. Mostly, at time of need, borrower rapidly apply for loans with different lenders in a very short span of time, hence bank blacklist them as a ‘credit hungry’. This would reduce your chances of banks approving your loan application or may charge higher interest rate.
Disclosing existing loan
When you apply for loans in any institution, you must disclose information about all yours existing loans and obligation to the lenders. This is very important as your overall repayment capacity along with your commitment to existing liabilities, decide about loan being sanctioned to you. If you try to hide these details, you may end up on rejection of your application and also losing points in credit score.
Skipping market survey
Before sealing your deal, it is very necessary that you do a thorough market research on all options available. Every bank and lenders have their own set of benefits. You must take advantage of modern technology and compare all the aspects like interest rates, prepayment clauses and applicable charges on loans. Also, do negotiate the charges before signing any document.
Not reading the final print
Read the fine print carefully to understand every term and condition of the loans. Do not get carried away with glib talks of your lender. Examine your interest rates, pre-payment clauses and specific condition. This is very beneficial in a long term run with the institution.
Along with several traditional banks, there are some other lenders who offer exciting deals to the borrower. Do remember, do not blindly trust any agent, instead research by your own.