A personal loan is the most suitable option when you’re in dire need of money, however, it’s not easy as baking a cake to get your loan application approved. You have to make sure your loan application is so perfect that it gets accepted on the first go. Having said that, there are some common mistakes that you must be avoided if you’re planning to apply for a personal loan and getting it approved without any trouble.
1. Know how much you need:
If you're going to apply for a personal loan, you must know how much you need. Get some clarity or else even the lender is going to have some trust issues while viewing your application.
2. Interest rate comparison:
Different personal loan institution offers different interest rate. Thus, it is important for you to compare all offers and chose the lowest one to avoid overpaying.
3. Avoiding credit score:
Checking your credit score is of utmost importance if you really want your loan application to get approved. The RBI has made it mandatory for banks to check every applicant's credit score, or CIBIL score and deny them a loan if it’s below 750.
Hiding your existing debts:
If you have existing loans and you're not disclosing them in your loan application, you're doing a big mistake. The lenders will find out using your credit score and lose trust in you, rejecting your application eventually. Be upfront and share all the details of your existing loan.
Not considering your loan repayment capacity:
Before you chose your EMI amount, kindly calculate your monthly income and expenditure to find out how much you can afford to spare as EMI for this new loan. A proper budget with some space for little savings as an emergency fund can do the job.
Aman Khanna is an experienced financial advisor who is well known for his ability to foretell the market trends as well as for his financial astuteness. He has an MBA in finance from Toronto University as well as years of experience delivering seminars on sound financial practices and debt management.