6 Mistakes to Avoid When Taking a Personal Loan
Posted on Friday, April 28th, 2017 | By IndusInd Bank
A personal loan is usually an easy answer to your immediate financial needs. It is easily approved and banks generally have a hassle-free process for personal loan application. Having said that, you should be cautious while applying for a personal loan because a single mistake can lead financial troubles and also degrade your credit rating.
Here are 6 common mistakes one should avoid while applying for a personal loan.
- Not Reading the Fine Print:
Bank generally prepare an elaborate document outlining the terms and conditions of the loan. Don’t sign this document blindly; make it a point to thoroughly read and understand the terms and conditions of your personal loan. This is where you will get the complete information regarding points like pre-closure charges, pre-payment charges, interest rates, etc. This is important because, in case there is a dispute between you and the lending institution, the T&C of the loan form the boundaries for the dispute resolution.
- Taking a Loan Without Comparison:
Do not settle for the first bank and personal loan you come across. Always compare the T&C of various loans and select the one that suits you best.
- Opting for Longer Tenures:
Usually borrowers opt for longer tenures to pay less on the EMIs. However, longer the tenure of the loan, the more interest you have to pay. Always choose a tenure that best suits your monthly repayment capacity.
- Opting for Instant Loans:
Many financial entities today offer on-the-spot or instant loans where you can walk up to an ATM and withdraw cash against the loan. While this may be a good option in emergencies, instant loans are always a high risk. This is because you are not made aware of the terms and conditions beforehand, and the rate of interest is always inflated.
- Taking a Loan on Someone’s Behalf
Never take a loan on someone’s behalf, be it family or friends, without being absolutely certain about the person’s intentions and capacity to pay you back. In case the person on whose behalf you have taken the loan does not want to or cannot repay the amount, your financial planning will be severely affected along with your credit score.
- Not Keeping Your Own Records
Always keeps a proper record of your personal loan including your loan account statement and your EMI payment records. In case of a dispute with the lending institution you will be required to furnish the relevant documents to support your stand on the issue.
With this knowledge of what not to do, you should be able to choose a personal loan best suited to your requirements. Visit the IndusInd Bank website today and apply for our hassle-free personal loans at competitive interest rates.