Personal loans can be your best financial solution in times of need. NBFCs offer different types of personal loans to satisfy your varied purposes, be it a wedding, education, travel, home renovation, medical emergency, or debt consolidation. However, a single mistake can make or break your chance of loan approval.
Now that you are applying for a personal loan, avoid these common mistakes at all costs.
Applying for Multiple Loans Simultaneously
When you desperately need money, you might feel it right to apply for multiple loans so that you can end up grabbing at least one of them. But that’s one of the biggest mistakes you can make while applying for a personal loan. Whenever you apply for a loan, it shows up in your credit report as a hard inquiry. These inquiries reduce your credit score, and too many of them may become a reason for your loan rejection.
Accepting the First Loan Offer Without Doing Research
While you must not apply for multiple loans at a time, applying for only one loan without doing some research is also not a wise thing to do. Instead of applying for several loans, compare the loan plans of different lenders, go through their eligibility conditions, interest rates, loan terms, and other factors before shortlisting a few. Finally, apply for a personal loan that comes with the lowest interest rate with easy eligibility conditions, minimal documentation requirements, and hassle-free loan application and approval procedures.
Accepting EMIs More Than Your Repayment Capacity
While applying for a personal loan, don’t forget about your income and expenses on which your repayment capacity depends. Your EMIs should not be more than 30-40% of your monthly income. You can use a personal loan EMI calculator to get an estimate of your monthly instalments and choose a loan plan with EMIs you can comfortably afford.
Hiding Previous Debts
Lenders go through your credit report before approving or rejecting your loan. Your credit report has complete details of your income, expenses, repayment history, financial obligations, etc. So, if you think you can hide your previous debts in your loan application, you are wrong. Hiding previous debts can only lead to distrust and eventually loan rejection.
Not Understanding the Loan Conditions Clearly
Before applying for a personal loan, go through the loan conditions carefully and understand all the terms and conditions, hidden charges, possible penalties, etc. If you don’t understand anything, talk to the lender’s customer care and get it cleared before submitting your loan application. Once you accept the loan offer, you will be bound to abide by their terms and conditions.
Applying Without Checking the Credit Report
Lenders determine your creditworthiness and approve your loan depending on your credit score. Ranging from 300 to 900, most lenders accept loan applications from borrowers with a credit score of minimum 750. So, check your credit score first, go through your credit report, and find ways to improve your rating. There might be errors in your credit report that you must get rectified first to improve your credit score. Applying for a personal loan with a low credit score will only lead to loan rejection and further reduce your rating.
Looking for funds to meet your expenses? Apply for a personal loan at Clix Capital, but ensure that you do not make the abovementioned mistakes. Check your credit report, do some research, carefully read the loan offer, and calculate your personal loan EMIs before sending your application.
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