Pitfalls to Avoid while Availing a Personal Loan

Pitfalls to Avoid while Availing a Personal Loan

04 Jan 2020
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A personal loan is a fixed amount of money borrowed at a fixed rate and repaid over a fixed amount of time. You can avail a personal loan from a bank, credit union or online lender. Personal loans are the unsecured type which means it requires some type of collateral. In that case, lenders look at factors like your credit history, credit score, income and sometimes employment to determine the credibility of the borrower. But financial experts generally advise against getting a personal loan for discretionary purchases.

Personal loan rates are also fixed, meaning they can’t change over time like credit card rates. This means your monthly payments will be the same each month until the loan is paid off. This makes it easier to keep track of your payments. Taking a loan can make sense when you can comfortably afford the monthly payments for the duration of the loan term. This makes it easier for you to manage your finances and repay the loan amount conveniently.

Check your eligibility criteria

All banks and financial institutions have a set of eligibility criteria that needs to be fulfilled by the borrowers. To avail a loan you need to first check with your eligibility criteria. Different lenders run a check with the applicant’s age, income level, employment type details, etc. to determine their credit-worthiness. Checking that you fulfill all the eligibility criteria is the first important step and it makes the loan application process smoother and faster. You can also take the help of an eligibility calculator to calculate your loan eligibility criteria. This saves a lot of time and makes the process quite simpler and hassle-free. Personal loans available at Finserv MARKETS have simple eligibility criteria and require minimal documentation.

Keep a track on your credit score

Your CIBIL report keeps a track of your past repayment on loans and credit cards. Lenders consider your past behavior along with your present activity to determine your loan repayment intent in the future. Your credit score is an important factor to be considered when availing a loan. The lenders make the final decision based on your CIBIL Score. If you have a low CIBIL Score your loan application might get rejected or you may be charged with a high-interest rate on the loan. With a good CIBIL Score the lender gets convinced that you will be able to repay the loan on time. Hence your loan has higher chances of getting approved. To reduce the rejection chances of your loan application, you must check your credit score before availing a personal loan. You can easily check your credit score online on Finserv MARKETS. A good credit score will make you eligible for a higher loan amount at a reasonable interest rate.

Browse all available options

It’s best to do your research and look at other options available. Avoid moving ahead with the first available choice due to the dire need for funds. With a whole range of financial players flooding the market, chances are that you might miss out on the best offers if you apply without comparing your options.

Pay attention to the Terms & Conditions

This step is the most crucial part as a lot of people make the mistake of skipping the fine print on the loan agreement. However, it is advised that one should carefully go through all the regulations on your personal-loan to understand the terms. Also, make sure about service tax, processing fee, and other additional charges.

Your loan Tenure

Most of us think that opting for longer tenures will be beneficial as it would lead to lower EMI amounts which would be affordable. What we overlook is that by opting for longer tenure the borrower ends up paying more in terms of interest charges. If you go for a tenure that is short your EMI amount is automatically spiked. So finding the right balance in terms of tenure is what we should look for as a borrower. You can avail personal loan at Finserv MARKETS for a tenure ranging from 12- 60 months. Moreover, you can also customize your personal loan to best suit your needs. Flexible repayment option is yet another advantage of availing a personal loan at Finserv MARKETS.

Take a loan only when you need it

It's best to take a loan when you actually need it. Personal loans are an easy way to avail instant cash. But keep in mind these are debt that needs to be paid off. So, you need to avoid temptations at all costs, by putting the money to good use. You can use the loan amount to clear your outstanding bill and other payments. If you fail to make your loan repayments on time you will have to face severe consequences on your CIBIL Score. Thus, you need to be well aware of your finances and the capability of repaying the loan in a timely manner.

Multiple loan applications

When you're planning to get a new home or auto loan, you'll probably apply for several loans to compare terms and see which lender will offer the highest loan amount and the best interest rate. Some people tend to apply with multiple lenders for loans. However, too many hard inquiries will affect negatively on your credit score.

While multiple loan applications can be treated as a single inquiry in your credit score, these single inquiry can cause your credit score to drop. However, the impact on your credit score should be the same as if you'd applied for just one loan. Also, it will decrease over time as you minimize your future loan applications and make timely payments.

A personal loan is one of the most preferred forms of borrowing and it is the easiest way to get access to funds. At Finserv MARKETS you can avail a Personal Loan without a guarantor. Before applying for a loan, you need to check whether you are eligible for the same. With Bajaj Finserv Personal loan you get flexible repayment tenure with easy access to EMIs over a period of 12-60 months. You can get a loan at Finserv MARKETS to meet a wide range of financial requirements.

With personalized pre-approved offers, instant approvals, and quick disbursal of loan, on Finserv MARKETS. You can get these loans at attractive interest rates. There are no hidden charges on your loan and you can easily access your loan account anytime, anywhere. Their hassle-free online application process with minimal documentation of loan makes it an ideal choice for getting a loan. They also provide you with an EMI calculator that gives you the exact monthly outflow of your EMI amount, this makes your loan repayment much easier.

 

Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.”