A personal loan can be taken during emergencies to meet an urgent financial crisis. Any salaried employee under any private or government organization, who is above the age of 21 and has a net monthly income of at least INR 15,000 is eligible for a personal loan. With technological advancements, we have come to a point where everything is happening online, even in banking.
Thanks to net banking, taking a personal loan online has become easier than ever. As a result, you can opt for a hassle-free, smooth personal loan just in few simple steps. Nevertheless, there are a few blunders that you can avoid, to gain the most out of the entire process.
Here are five personal loan mistakes that you can avoid making for a better loan management experience:
- Overestimating Repayment Capacity
Whenever taking any loan, make sure you calculate the number of repayments needed through an EMI calculator. It would be best to use this tool made available online to enhance your loan management experience. Why? Because this tool helps you to calculate and estimate your personal loan interest rates. It is important to calculate these rates in advance to determine your EMI payments and consider your capability to make
timely repayments. If you don’t do so, you’ll find yourself spending most of your monthly income repaying the loan funds that you utilized. Besides, spending no more than 30% of your monthly salary on EMIs and repayments would be ideal for affording a standard lifestyle. So, take your time and decide wisely.
- Choosing A Personal Loan With Long Tenure
Opting for personal loans with long tenures has several advantages and disadvantages. When you take a personal loan with long tenure, you pay a lower EMI amount but for a longer period of time. Thus, it has the potential to become a future financial burden, while a shorter tenure personal loan that is repaid in fewer days can be a bit too much on your monthly income while ensuring a tension-free future. So, it would be advisable to go for the shortest loan tenure, depending on your ability to repay the personal loan interest rates.
- Applying With Too Many Lenders
In a time of crisis, it is possible for you to apply for too many loans. But it would make you look like a “needy borrower” in the eyes of the lender, as whenever someone applies for multiple loans, a ‘hard enquiry’ is initiated. This enquiry proceeds with the exchange of your information amongst the lending institutions and credit report bureaus. As a result, your credit rating will decrease and thus amount to higher personal loan interest rates and EMIs.
- Being Unaware Of The Credit Score
Often borrowers miss out on maintaining a good credit score, but it plays a significant role in deciding your personal loan eligibility criteria. It is possible that someone with a low credit score can be denied a loan. Try to maintain a good score of 750 or above to be categorized as a creditworthy borrower.
- Hiding previous debts
It is a mandate for all lending institutions and banks to go through your credit history before providing you with a personal loan. Thus, hiding or suppressing any information regarding your past debts might lead to the rejection of your application.
So, it is very important to be transparent and open about your existing or prior debts without concealing anything at all.
Avoid These Blunders For A Hassle-Free ExperienceIf you can manage to avoid making these five common blunders when applying for a personal loan, you can effortlessly get through the entire process. Besides, you can take a loan from reputed banks like Axis Bank, which offers personal loans at affordable interest rates. Browse through their online website to apply for personal loans starting from INR 50,000 up to INR 15,00,000 with minimal documentation and effort!