Mistakes to avoid when applying for a Personal Loan
Published on : September 19, 2019

A Personal Loan, in simple words, is an unsecured loan which can be easily availed to meet the financial needs of individuals. Unlike a home loan or a car loan, a Personal Loan is collateral free. This simply means that you don’t need to offer any form of physical assets, in order to secure this loan. All you are required to do is- provide the details of your income level, employment history, and few basic documents. Based on these, the lender determines whether your application for a Personal Loan can be approved or rejected.

Moreover, Personal Loans can also be used for any legitimate purpose that you deem fit. You can employ them to make a down payment, renovate a house, plan a vacation or purchase an electronic gadget. The usability of the total loan amount is left entirely at your discretion. This is why it comes as no surprise that Personal Loan is a growing segment in retail loan sector, throughout the country!

However, when you decide to apply for this pocket-friendly, low-interest loan, make sure that you do not commit the following mistakes:

  1. Sign Without Reading ‘Terms and Conditions’Signing the loan documents without reading through their fine print, is one of the major mistakes that you can commit. The terms and conditions prescribed in these legally binding documents have a tendency of springing up surprises, especially when you least expect them. For instance, most Personal Loan carries hefty prepayment charges which can increase the total loan cost in cases wherein you would like to close early. If you haven’t read through the T&C details, you will end up paying extra money for a loan that you thought was affordable!
  2. Not Considering your repayment capacityEach Personal Loan comes with a fixed amount of monthly EMI, which is essentially a sum of both, the principal and the interest. Although financial institutions generally ensure that no loan with an EMI exceeding 40%-50% of your net income is sanctioned, what happens when your budget is stretched thin? How do you make the repayments without venturing on the brink of a default?This is precisely where the EMI Free Loan come to your rescue. Their flexible repayment schedules allow principal and interest costs to be calculated separately. As a result, you are only required to pay the interest amount every month while the principal amount can be paid in every 6 months! This doesn’t just reduce your monthly payout by 40%, but it also gives you the power to manage your monthly cash outflows with every bullet payment you make.
  3. Submit multiple loan applicationsThe more loan applications you submit, the lesser are your chances of actually getting a Personal Loan. This is simply because every time you apply for a loan, the lender checks your credit record. With a higher number of loan applications in your name, a greater amount of background checks turns up. This only goes on to show that your need for availing a loan is arising out of sheer desperation. Consequently, the chances of your application being approved get severely limited.
  4. Avail more loan than requiredIn age of digital lenders, when loans are convenient to avail, many a times, applicants end up availing more loan than they really need. Either because loans get sanctioned faster or by virtue of lifestyle expense. While this can be a feasible option for some, for others, it can prove to be an expensive affair.
  5. Remain unclear about purposeWhen you apply for a Personal Loan – make sure that you are absolutely clear about the purpose for which you need it. Do you want to renovate your house or are you looking to purchase a new car? Is the Personal Loan needed to meet a wedding expense or are you availing it for making a rental deposit? A clear objective would help you prepare a proper budget while utilizing the loan in a hassle-free way. In this way, you will minimize the chance of applying for a lower amount and falling short of funds nor will you end up with excess funds and higher instalments, by applying for a higher amount.

LoanTap enables you to identify your specific purpose by drawing a line between your essential and non-essential requirements. Its loan products are tailor made to suit different situations which might arise from time to time. This doesn’t just equip you to fulfill your life-stage based goals but it also prepares you to make a productive, need-based and informed loan choice. You may choose between house owner loan to rental deposit loan to wedding/ holiday loan or even premium bike loan.

LoanTap also offers built-in eligibility checks to ensure that your loan application is processed without running multiple CIBIL checks and loan approval is determined on the basis of your meeting the eligibility criteria. The terms and conditions of granting a loan are clearly displayed on the LoanTap website where each clause is explained accurately and with complete transparency. Before applying for loan at LoanTap, check your eligibility and related terms and conditions upfront.

Check your personal loan eligibility

Other benefit of choosing Personal Loan from LoanTap is customer friendly terms and conditions. We understand if you have additional cash inflow, you would like to prepay your loan. So, at LoanTap, after the first 6 months of servicing the loan, prepay your Personal Loan at no extra cost.

Also, the impediments of availing higher than expected loan amounts can be resolved by availing a Personal Overdraft Loan. This is a kind of specialized Personal Loan, wherein a certain line of credit is sanctioned to you for a predefined tenure. You can withdraw any amount of money within this credit line and pay interest only on the amount that you have used. The remaining amount remains non-chargeable through the loan tenure, thereby, giving you the benefit of availing a loan that fits your pocket!

In an era of financial complexities, the cost of leading a comfortable lifestyle is rising each day. The expenses incurred in procuring basic amenities and meeting unexpected emergencies have increased disproportionately to income increase. As a result, the financial management of many people is going completely haywire. They are increasingly being forced to break into their savings and withdraw their investments, merely to fulfill their immediate requirements. This has led to the creation of a situation where any extraneous expenditure harbors the capability of quickly turning into a potential debt trap!

If you too want to avoid such testing situation, getting a tailor made, low-instalment and quick disbursal loan from LoanTap might actually be your best option.

Download our Instant Loan App – Google Playstore / Apple App Store