An instant personal loan or a digital personal loan can be an ideal financing option for individuals during an emergency. Getting a quick loan with a high loan amount can also help them meet their diverse financial requirements, but it is advisable to make an informed decision before signing up for any loan, to avoid penalties and unpleasant surprises in the future.
Personal loans are collateral-free loans that generally offer multiple facilities, such as a high loan amount, flexibility in repayment tenor, instant approval and disbursal, etc. Borrowers can also get competitive personal loan interest rates on their applications. All these features make an instant personal loan online the most desirable option for loan applicants. However, you must use your discretion and avoid these mistakes while applying for a personal loan.
1. Not Comparing Options
The charges and facilities on personal loans differ from lender to lender. You must not finalize any deal before checking out other available options. You can use the digital marketplace or visit the branch offices of different financial companies for this task. Compare loan offers against your eligibility and financial requirements. Personal loan interest rates, loan amounts, repayment tenors, eligibility parameters, processing charges, are some of the vital features to check out. It will be a good idea to enquire whether your lender offers the facility of a digital personal loan on their online marketplace.
2. Ignoring Credit Score
Your CIBIL credit score is one of the primary ways your potential lender will evaluate your creditworthiness. If your score is 750 or above you will qualify for the best possible low personal loan interest rates. Whereas if it is much lower than that, at best you will not get the lowest possible rate of interest and at worst your loan application will get turned down. So, take account of your credit score before approaching any lender. If your score is not looking good then take corrective measures such as settling outstanding dues, to qualify for better repayment terms.
3. Not Reading Fine Prints
As mentioned earlier, the terms and conditions on personal loans differ from lender to lender. It is important to carefully read your loan agreement to fish out any hidden charges. Some lenders, for example, will levy a prepayment penalty if you foreclose the loan sooner. Reading the fine prints can thus give you clarity on all the aspects of the loan repayment process and save you a lot of money.
4. Over Borrowing
It is tempting to get a lump sum amount of money through an instant personal loan but remember your repayment obligation. Borrow only the amount you need. If you go overboard with your loan amount, repaying on time can become a big challenge. If you falter on your repayments, it will bring you penalties, ruin your credit score, and in the process jeopardise your chances of getting loans in the future.
5. Not Calculating Affordability
Do not forget to calculate the loan EMI and rate of interest applied to you while applying for a personal loan. Evaluate the duration of repayment tenor and check the affordability of your EMI payments. If you want to reduce the burden of your monthly payments, go for a longer tenor, and if you want to save money in the long run, choose a shorter repayment tenor.
Do not ignore the various pre-approved offers available in the online marketplaces. You can also apply for a completely digital personal loan. Bajaj Finserv provides pre-approved offers on their multiple products, including personal loans, home loans, credit cards, etc. Submit your name and contact information to check your eligibility.