People often make some common mistakes that not only put their chances of availing personal loan in jeopardy but also make repayment very difficult. It is therefore very important to exercise extreme caution before availing personal or any other loan. Read on to learn about 5 mistakes people make while availing personal loan

Not Checking the Options Available

Personal loans available in the market come with different terms and conditions and not comparing them can be dicey. Interest rate, processing fee, tenure options, maximum loan quantum, eligibility requirements, digital loan processing facility are some of the important points for comparison. Also, abstain from ignoring the pre-approved offers of your bank and your chosen online marketplace for swift loan disbursals.

Not Checking The Credit Score

The credit score is an important factor in one’s bid to avail any type of loan. If the applicant’s score is above 750-800, he can expect the lowest available interest rates on personal loans as well as other benefits. However, if it is lower than 750 then consider the interest rate to be on the higher side and in the worst case lower credit score can also lead to the rejection of your loan application. It is therefore important to check the credit score before applying for any loan.   

Not Reading The Terms & Conditions

This is probably the biggest and the costliest mistake that any loan aspirant can make. Some lenders charge heavy penalties for loan foreclosures while some might not charge a penny for this. All this as well as several other important points can only be known if one is thorough with the term and conditions of the lender he is willing to zero in on.  

Borrowing More than Requirement

Even if you are eligible to avail greater loan amount you should not fall into the temptation and strictly stick to your requirements. Over borrowing puts unnecessary strain on the resources and makes it very difficult to repay the loan on time which would lead to penalties and spoiling the credit score that can seriously affect the chances of future loans.  

Not Judging the Affordability of the Loan

One of the mistakes that every loan applicant must abstain from committing is availing a loan whose EMI is too high for him to afford. It is very important to judge the affordability of your personal loan EMIs especially if you also have other loan repayments to make as well. Ideally, the applicant must ensure that all his EMIs put together for a month should not exceed 40% of his monthly income.

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