Personal financial assistance seems to be an easy escape when you are facing a financial crisis, but sadly, we all end up making similar mistakes while applying for one. People can actually ignore it, but only if they know about it. We don’t want you to be one of them, so here is a list of those mistakes.
Checking with other lenders
In the market, there are several lenders who are ready to give you personal financial aid. They serve their own set of terms and interest rates. People seem to often opt for those money lenders who approach them first instead of doing a comparison. What you need to understand here is you are taking the loan to reduce your burden and not to increase it. Compare the rates of similar service providers and choose the one that might add more benefits to you. Even the interest rates are different. You will end up saving your hard-earned money if you carefully choose the one that takes less interest during the repayment timeline. Never be in a hurry! Check if the terms mentioned are okay and what your financial situation is. Check all the charges that you have to bear that might include:
- Documentation fees
- Processing fees
- Bank/ Organisation fees
- Others
It will help you decide if it is the right decision and will not fetch a lot from you.
Avoiding the master – your credit score
A credit score is a position that decides whether you will get approval on your personal loan and what interest rate you need to pay. Make sure you check your credit score and improve it if needed before applying for a loan. If your credit score is on the higher side, you will get the loan easily and need to pay lower interest rates, whereas in the other case, the situation might be vice versa. You can save a lot with the reduced interest rates. A good credit score will also fetch increased repayment periods, easy payments, and features that are easy to avail of.
Taking excess loan
You will find people who keep taking out loans as if they never have to repay them. You need to remember that repayment is important, and you should only take it if you are in a situation where you need to return it. Check how much EMI you need to pay every month and if it is something you can easily afford. Personal financial assistance may sound simple, but they are not. The monthly instalment will disturb your budget, and if you miss any of the instalments, your credit score will go haywire. A low credit score may disturb your future loan and other financial-related capacity. Not to miss the stress that you will bear throughout the process.
Missing every detail
If you have ever read a loan contract, you must know how complicated it is, and often, people miss some points and end up signing it. The reason can be carelessness, the length of the contract, and the language used. What you should never miss here are the fees that you have to pay, the interest that will be charged, and the repayment conditions that you need to follow through the tenure. Remember, every detail is important here. Minute details like initial charges, late payment fines, or if you decide to repay the loan earlier, the process and charges involved may call for a big difference. The plan also summarises the repayment plan, involving the interest you will pay and the final amount you need to come up with. Remember, you are a borrower, and paying the loan money at the earliest will save you from future financial burdens.
Unable to pay the instalments on time
If you miss any instalment, it can directly hit your credit score adversely, adding a late fine to it. Your loan EMI should be on your priority list, and try to set it up for automatic payment. Missing them can actually add up to several issues. Out of all the EMIs, if you miss even one of them, your credit score will take a long time to recover.
Wrapping Up
Before taking out any loan, you need to be clear about how you will repay it. This mindset can only help you to sustain in the financial market. Check and recheck all the terms and conditions before availing one. A comparison of different plans is a must for repayment.