A personal loan is an ideal financial tool when it comes to mitigating your financial issues. There are many reasons to take personal loan India such as renovating your home, debt consolidation, medical attention, etc. however, you will have to consider a few factors before you avail it. You should avoid mistakes else it will make a dent in your wallet. So, here are five personal loan mistakes that you need to watch out for and avoid them.
Don’t Shop around
There are a lot of personal loan options in India; however, it’s not a mandate to pick the first one. Since you have options, you should compare deals amongst top banks & financial companies and shortlist the ones that will match your financial requirements and affordability. Go ahead and see if you have any pre-approved loan offers, as lenders will give you the best personal loan deals. You might want to consider things like interest rate, processing fees, disbursal time, repayment options and loan tenure.
Taking higher interest rates
It’s would be wise to see that if you’re taking a loan for debt consolidation, the interest rate should be low enough to save your money else it won’t make sense. You will find that a variable interest rate has its own negatives and positives such as it might rise in the near future as well. Keep the entire picture of average personal loan interest rate you would pay during the tenure and then decide if you should go for it or not. Else, you have a fixed rate on a safer note.
Not calculating other charges
Personal loan India come with a lot of other charges such as processing fee, late payment charge, pre-closure charges, cheque delay charges, etc. The processing fee is a percentage on your loan amount, pre-closure is implacable if you close your debt early. Consider all these fees, and try to speak to the lender to waive them off. Consider all the fees that come with your personal loan, and then decide which one is the best offer for you.
Choose right loan tenure
We take a personal loan for a variety of reasons. Lenders offer flexible tenure of 1-5 years, and at times we’re happy to see a loan that gives lower monthly payment option. The deal might be great, but you would’ve to shell out more interest rates. If your goal is to get rid of the debt faster, short repayment tenure will make sense for you.
Due to the prevalence of online facilities, it’s easier to get loans at attractive deals. Lenders try to lure potential customers with low personal loan interest rates deal. However, with convenience comes the increased risk of falling prey to frauds as well. You should figure out lender authorization and only then approach them. Read reviews online and talk to a financial expert before you plan to avail loan form a particular lender.
Missing your monthly payment
It’s important you make your payments on time. Missing it will damage your credit score and would cost you late fees. If you’ve taken a secured personal loan, and you keep missing out payments, you might lose on the collateral pledged with the loan.