A Personal loan can be taken in an emergency to deal with an urgent financial crisis. Any salaried employee of a private or government organization over the age of 21 with a net monthly income of at least INR 15,000 is eligible for a personal loan. With advancements in technology, we have come to a point where everything is happening online, even in banking.
Thanks to net banking, taking out a personal loan online has become easier than ever. As a result, you can opt for a simple and hassle-free personal loan with just a few simple steps. Nonetheless, there are a few mistakes you can avoid, to get the most out of the whole process.
Here are five personal loan mistakes you can avoid making for a better loan management experience:
- Overestimation of repayment capacity
Whenever you take out a loan, be sure to calculate the number of repayments needed using a EMI calculator. It would be better to use this tool made available online to improve your loan management experience. Why? Because this tool helps you calculate and estimate the interest rates for your personal loans. It is important to calculate these rates in advance to determine your EMI payments and to consider your ability to make
one-time refunds. If you don’t, you’ll end up spending most of your monthly income to pay off the loan funds you used. Plus, spending no more than 30% of your monthly salary on IMEs and reimbursements would be great for living a standard lifestyle. So take your time and decide wisely.
- Choose a personal loan with a long duration
There are several advantages and disadvantages to opting for long-term personal loans. When you take out a personal loan with a long duration, you pay a lower EMI amount but for a longer period. So, it has the potential to become a future financial burden, while a shorter term personal loan that is paid off in fewer days can be a bit too heavy on your monthly income while ensuring a stress-free future. So, it would be advisable to go for the shortest loan term, depending on your ability to repay personal loan interest rates.
- Apply to too many lenders
In times of crisis, it is possible for you to apply for too many loans. But that would make you sound like a “needy borrower†in the eyes of the lender, because every time someone applies for multiple loans, a “full investigation†is launched. This survey proceeds to the exchange of your information between credit institutions and credit bureaus. As a result, your credit rating will decrease and hence lead to an increase in the interest rates for personal loans and EMIs.
- Not being aware of the credit score
Often times, borrowers fail to maintain a good credit rating, but this plays an important role in deciding your eligibility criteria for a personal loan. It is possible that a person with a low credit rating will be refused a loan. Try to maintain a good score of 750 or higher to be classified as a creditworthy borrower.
- Hide past debts
It is a mandate for all lending institutions and banks to review your credit history before granting you a personal loan. Thus, hiding or deleting any information regarding your past debts may result in the rejection of your application.
It is therefore very important to be transparent and open about your existing or past debts without hiding anything at all.
Avoid these blunders for a hassle-free experienceIf you can avoid making these five common mistakes when apply for a personal loan, you can go through the whole process effortlessly. In addition, you can take out a loan from reputable banks like Axis Bank, which offers personal loans at affordable interest rates. Browse their online website to apply for personal loans ranging from INR 50,000 to INR 15,000,000 with minimal documentation and effort!
