When a financial emergency arises, a personal loan comes to your rescue. You can use this multi-purpose loan for big-ticket purchases or effectively tackle an emergency. However, when applicants are in a hurry and tend to overlook crucial details, which leads to rejection and affects loan-taking abilities in the long run. To ensure your experience with a personal loan in Mumbai is smooth and straightforward, avoid the following common mistakes.
1. Not comparing loan providers
This is one of the most common mistakes. There are many aspects to a loan, like processing fee, repayment tenure, personal loan interest rates, prepayment charges, etc., which vary from lender to lender. This is why you need to thoroughly research to zero in on the perfect one by making an informed decision. Don’t forget to consider ease of applying, documentation, paperwork, and speed of disbursal.
2. Borrowing more than you need
When you know you’re eligible for a personal loan, it can be tempting to borrow more than necessary. Say you’re borrowing the money for certain renovations, you might feel you can take a little more and re-do other parts of your home. But, it’s essential to maintain financial discipline and only borrow as much as you need. Remember, the higher the amount, the more you will need to repay.
3. Not taking your repayment capacity into consideration
The personal loan EMI calculator may show you that the EMIs are higher for loans with a shorter duration. While this may be suitable for some, you need to evaluate your personal position and make a calculated decision regarding repayment tenure. Especially in a city like Mumbai, where living costs are high, you might not want to commit to a higher EMI. With financial planning, you always need to be two steps ahead and pick a repayment timeline that’s realistic and possible.
4. Not checking your eligibility before you apply
There’s more to loans than just picking the right borrower or low personal loan interest rates. The success of your application is based on certain eligibility criteria. It would help if you met this criterion to qualify. This benchmark varies from lender to lender but typically comprises a credit report, job stability, employer, loan tenure, etc. If anything is amiss, your loan may be rejected. This affects future loans. Hence, it’s always important to check your personal loan eligibility before you apply.
5. You don’t read the fine print
When you apply for the loan, you were in a financial crunch. Once you’re out of it, you want to clear the loan early and avoid any further interest. But you realize that closing the loan comes with pre-closure charges. In that haste, you’ve missed reading the fine print. You must check the fine print of your personal loan so you avoid any unpleasant surprises later on.
Keep these points in mind with a personal loan so that your application is easily approved. Plus, ensuring you follow these steps will make the loan work in your favor.
