Be mindful and do not commit these common mistakes while applying for personal loans

by Kudrati Ayurved Parkinson Treatment in India

Personal loan is one of the best solutions for an individual during financial crisis. Also, factors like easy availability, low interest rates, hassle-free application processes, etc. have added much comfort to borrowers and thus increased the demand of such loans. However, one should always do a good research before applying for personal loans to avoid loan application rejections.

There are multiple personal loan providers in Delhi and across India who offer such loans at lower interest rates. But before you go for it, keep an eye on the following silly errors that are routine in the lives of borrowers.

No doubt financial crisis makes you desperate to look out for funds, but it is always advised not to apply for multiple loans from multiple lenders. When you do this, banks follow a process, whose first step involves ‘hard enquiry’. It is a process where various lending institutions and credit report bureaus exchange information among themselves to find out whether an applicant has made similar applications to other lenders as well or not.

Asking for personal loans from multiple lenders weakens your credit rating, after hard enquiry is conducted. It can also result in an increase in the personal loan interest rates, tagging you in the category of ‘credit-hungry’ borrower. Instead you should go to any leading NBFC as they offer so many benefits with minimal chances of rejection. Just try maintaining a credit score around or above 750.

Another common mistake that a borrower often does is not keeping in mind the personal loan interest rates or overestimating. Loan repayment will suck a major portion of your savings or income, and you should realize it. Therefore, use tools like online EMI calculators to find out how much EMI needs to be paid before you apply for a loan. Ideally, you shouldn’t spend 30 per cent of your income on repayment to avoid compromises in living a decent life.

Do not go for extremely long tenors. Lengthy loan tenor no doubt has pros as well as cons. While on one hand, you will be required to pay small installments every month if you have opted for a long tenor. On the other hand, it will also increase the amount of interest to be paid by the borrower. So, be mindful when you decide which tenor you are choosing.

These are a few pointers that every borrower should keep in mind before applying for a personal loan because leniency can lead to loss.