You will agree with the fact that personal loans are nowadays easily accessible. Interestingly, people are also getting interested in personal loans that have evolved its demand to the next level.
Personal loans have become a boon for people who experience emergencies. However, taking a personal loan isn’t mandatory. Everyone who has heard about the personal loans must know the mistakes that others make and take lessons from them.
Here are the common mistakes that most people make when selecting a personal loan.
Equating Cash Advance Loan with Personal Loan: Yes, both the loan options are short term and unsecured loans. Yet, there are differences between them. Cash advance loan is better known as payday loan which is offered with a maximum of 60 days repayment tenure.
However, you can get a personal loan for up to 5 year tenure. Moreover, the maximum loan amount in a cash advance loan is lower than a personal loan. Hence, it’s essential to understand the difference and choose the right option matching your needs.
Shortlisting With Research: Regardless of your loan amount, it’s always important to research thoroughly and find a legit lender. Nowadays, you will find countless lenders offering personal loans with exciting interest rates. This doesn’t mean you should proceed with them.
You should check their existence and customer reviews before proceeding. You should take customer feedback seriously as it gives you a clear picture of how you will be treated after loan disbursal.
Not Using EMI Calculator: It looks like a silly point, but matters a lot when budgeting the loan repayment. During documentation, lenders always recommended taking a personal loan for a long duration as they get interest for that duration.
However, selecting a short repayment time makes you debt-free and saves your interest. Hence, you should play with the EMI calculators and check your expected EMI.
Not Communicating with Lender: A lender is always liable to answer all your queries before signing the contract. However, many borrowers directly proceed with the documentation and skip the questionnaire season that results in numerous queries post loan disbursal. Unfortunately, some answers remain unsatisfactory for the borrower.
So, you should take enough time to communicate and negotiate with the lender before final paperwork.Only proceed further if you are satisfied with the results and have no doubts further.
Sign Without Reading: Lenders always appreciate the borrowers to read their T&Cs before signing. Yet, many of you skip reading lengthy documents and sign them for quick disbursal. This is a big mistake that you should never commit with any sort of paperwork.
Signing the documents without reading means you agree to their terms, without knowing them. Unfortunately, when you know some hidden T&Cs, it’s too late to roll back.
Taking Loan Without Necessity: The biggest mistake people make is getting infected by FOMO (Fear Of Missing Out) and applying for a peonal loan without having any emergency or necessity. This is a false practice that add financial burden and degrade your money instead of growing it.