5 Mistakes to Avoid in a Personal Loan

Availing personal loans considered as a good option when there is a need for financial support. As it is an unsecured credit which is convenient to obtain. A personal loan is a multipurpose loan, unlike others. A borrower can use it for any purpose he/she wants, be it for marriage preparations, home renovation, for starting a business or even for an exotic destination vacation.

Now day, obtaining a personal loan is easier than ever as a borrower can apply for a personal loan in minutes. However, amidst enthusiasm, a borrower may face a loan rejection or settling for second best. But this can be avoided by steer clear these five common mistakes while applying for a sbi personal loan.

• Availing more than the requirement

Before applying for the loan make sure that you have the answers to questions like, how much amount do you need? Where you will use it? Etc. A borrower should always remember one thing that may be personal loan comes with exciting possibilities, but along with outstanding debt and interest to repay. The key is to decide the required loan amount and find a lender. A borrower can also calculate the monthly EMI after deciding the loan amount. This will not only give an idea about how much he/she may have to pay as a monthly EMI. But also enable the borrower to know whether he/she can afford the loan amount within the repayment tenure. If not then he/she can think about to extend the repayment tenure or reducing the loan amount. The EMI can be easily calculated with an online available Personal loan EMI calculator.

• Failing to compare the lenders

A borrower should always compare the various available options. The comparison provides a clear view of the benefits, limitations, etc. basically a picture of a realistic offer. We agree that it is difficult to choose the best personal loan among so many options. But that doesn’t mean that a borrower should go always with their existing bank if he/she can get better options from others. As it says pain is gain. Even comparison is so easy with online available tools. So always compare the lenders before applying for a personal loan.

• Not choosing the correct repayment tenure

Almost everyone wishes to close the personal loan sooner than later. And this may lead the borrower towards choosing a shorter repayment term with higher monthly EMIs. This also has its pros and cons, so it is advisable to be practical while availing a personal loan. A borrower should never go with an unnecessarily high EMI plan, which could shake up his/her monthly budget. As a strain on the finances may even lead a borrower to loan default. Always choose the reasonable and affordable repayment tenure.

• Overlooking the charges

Before availing the personal loan a borrower should always check all fees levied on the loan. Lenders charge certain fees when disbursing the personal loan. These can be in the form of processing fees, administrative fees, and foreclosure fees, etc. Read the clear print of the offer document very carefully and ask for the clarity in case of any query.

• Ignoring the credit score

Whenever a borrower applies for a personal loan concerned lenders always investigate the credit history to know how a borrower has managed the finances till now. A credit score becomes much more at the time of Personal loan as it is unsecured.