Financial emergencies can arrive at your doorstep anytime with no prior notice. Whether it is a medical complication of your family member, a marriage celebration, education fees, or any such instance, you will require instant cash. And unsecured/ personal loans are a boon at such times. You get instant loans without providing any collateral/ security to the lender through personal loans. Online application processes, minimal documentation, and quick disbursal of loan amounts make the process faster and easier.
It is essential to follow these processes with zero errors. To avoid small mistakes that people often make while availing personal loans, here are some dos and don’ts that will serve as a ready reckoner while applying for a personal loan:
Know the exact amount that you need
Even if you qualify for availing higher amounts of personal loans, stick to the amount that you need. If you apply for a loan for an amount that exceeds your need, you will pay more interest for that extra amount.
Compare the interest rates offered by different personal loan lenders.
Always check for the personal loan interest rates that different lenders in the market offer to the borrowers. Choose the loan with lower interest rates and convenient repayment tenure.
Check the personal loan eligibility criteria set by the lenders.
Before filing the loan application form, it is essential to check the lender-specific personal loan eligibility criteria. If you skip this, you might face rejection after applying for the loan if you prove to be ineligible. This rejection can ultimately affect your credit score, which might be a hurdle for availing personal loans in the future.
Check for the document requirements.
Going through the list of documents a lender requires for disbursing a loan is essential before applying for the loan. Although the online processes have zero paperwork, you will need to upload a copy of the required documents with the application form. Checking the document requirements will allow you to collect all the documents beforehand to not miss out on any of them while applying for the loan.
Check the maximum turnaround time for loan approval and disbursal.
This step is crucial when you are in a time-sensitive situation and require the loan amount in the shortest time. Check for the lenders who take the least time for loan approval and disbursal.
Don’t ignore checking the hidden fees and charges
Though the loan amount, repayment tenure, interest rates, and all other personal loan parameters are clear to you, it is essential to check the final loan document for any hidden charges or terms and conditions of the lender. Sometimes these hidden charges can inflate your repayment amounts.
Don’t depend exclusively on lower personal loan interest rates.
A lower interest rate can land you in rigid repayment rules. Moreover, as mentioned above, some hidden charges can also be the factor behind lower interest rates. Thus, it is essential to check for every parameter right from interest rates to repayment and extra charges before applying for a personal loan.
Don’t apply for the personal loan without planning the pending as well as current repayments.
If you already need to repay previous loans, think twice before applying for a new loan. Quickly plan the repayments for all the loans and apply for the amount that you can repay easily. Delays in repayments of the personal loans can directly affect your CIBIL score that further affects your credit history.
Wrapping it up
Financial emergencies may strike you at any time, but take mindful decisions and follow all the above-mentioned do’s and don’ts to ensure zero errors in availing a personal loan.