With the ever-growing advancements in FinTech, you can avail financial offerings in just a few clicks. This is especially true in the case of an instant personal loan, as you can opt for one via your smartphone without having to visit a lender. While this has several advantages, to ensure that you have a pleasant borrowing experience, ensure that you avoid these 5 mistakes when taking an instant personal loan.
Borrowing Purely Because of Easy Availability of Finance
Today, you can avail a personal loan in minutes by logging on to the internet, but this doesn’t mean that you should apply. It’s best to apply only when you have a clearly defined need. Even when you’re borrowing for a specific need, borrow only as much as you require. Over-borrowing will simply strain your finances and you may find it difficult to keep up with repayment.
Ignoring the Fine Print of the Loan Policy
Due to the fact that instant personal loans offer you finance in a flash, you may be tempted to overlook the fine print of the policy in an effort to secure funds quickly. However, as you’re signing a legal document, do not do so until you thoroughly read and understand the terms and conditions listed within the policy. This is important, as the terms have a direct bearing on your repayment experience. By reading the loan document you ensure that you’re fully aware of the terms and costs that you’re agreeing to.
Borrowing Without Checking the EMI Structure
In your effort to secure finance instantly, you must not neglect your EMI structure. Once you take the loan, repaying it on time is crucial to preserve your credit score and ensuring that you don’t fall into a cycle of debt. To this effect, always calculate your EMI using a personal loan calculator before you sign up for a loan. By entering the principal and tenor in an interest calculator. you can view your EMI in seconds. If it’s too high, you can adjust loan parameters until you arrive at a figure that fits in your budget. By taking a few minutes to determine your EMIs, you can simplify repayment and ensure a default-free journey.
Omitting Accounting for Existing Loans
In your rush to avail an instant personal loan, you may fail to take stock of your existing debts. Your debt-to-income ratio determines how much of your income is going towards servicing debt and this ratio should be less than 40%. If you fail to evaluate existing debts and cross this threshold, you may find it extremely difficult to repay the instant personal loan later on, as well as keep up with prior loans and fixed monthly expenses. Checking your DTI beforehand gives you a clear indication as to whether you should apply for a loan now. It also gives you an idea of how much you can safely borrow.
Applying for a Loan Without Knowing Your CIBIL Score
Before you apply for an instant personal loan, check your CIBIL score. As it is an unsecured loan, this is the first thing lenders check to determine approval. You can carry out a free CIBIL score check via the official CIBIL website and make a borrowing decision, based on the results. In fact, if you have a high score, you can use it to secure instant financing at a lower rate. On the other hand, if you have a below-average score, work on improving it before you apply to maximise chances of approval.
These 5 mistakes to avoid when you avail a personal loan. Once you have done your part with due diligence and are ready to apply, consider the Bajaj Finserv Personal Loan as it comes with swift financing alongside transparent loan terms.
With this loan you can get a sanction of up to Rs.25 lakh at a competitive interest rate and repay it conveniently over a tenor of up to 60 months. Also, you can use the flexi loan facility to make withdrawals from the sanction on the go and pay interest only on what you use from the total amount. Additionally, you can pay interest as EMIs for the initial part of the tenor.
Best of all, with this instant personal loan you can get approval in 5 minutes and have the entire sanction disbursed to your account within 24 hours. All you have to do is meet the relaxed eligibility criteria and apply online with the required documents. To best enjoy these services, it’s recommended that you check your pre-approved offer before you apply.
