In a world of frequent financial ups and downs, individuals sometimes require quick monetary funds. These financial needs can arise for an infinite number of reasons, some of which can be an upcoming wedding in the family, the educational needs of your children or the renovation of your home. Sudden financial requirements can occur at any point in life, and one can find it challenging to find a solution to such situations.
Some may seek financial help from local lenders or sell a valuable thing to acquire funds even though it would not be a feasible option. So, in such times personal loan can be a knight in shining armour. Personal loans are a versatile kind of loan that can be used for anything, irrespective of the purpose. Certain essential things need to be paid attention to while applying for a loan.
Stepping forward, in this blog, we will go through the dos and don’ts of a personal loan. We will also understand how these dos and don’ts can affect the application process and disbursal time.
Do’s of Personal Loan
- Do Assess the Reasons for Availing of a Loan: Personal loan is a multiutility loan that can be utilised for many reasons. Asses what is your reason to apply for a personal loan. Is it a medical emergency or a long-awaited trip with your spouse? Finding the exact reason is a must before stepping further.
- Do Estimate Your Borrowing Amount: The borrowing amount depends on the reason you have for getting a personal loan. Estimate the amount you will need to fulfil your financial requirements.
- Do Thorough Research on Lenders: The market has many lenders who are willing to offer you a loan with attractive interest rates and minimum documentation. Before you settle for the first lender that comes through, research for a while and compare multiple lenders.
- Do Make a Repayment Plan: Repayment depends on two things: the EMI amount and the tenure. Both are inversely proportional. If you choose a longer repayment tenure the amount of monthly repayment will be less. If you choose a short-term repayment tenure, you will have to pay higher EMIs. You can also have a plan B of repaying the loan in a lump sum in one payment. Wisely choose the repayment tenure for a personal loan that fits your monthly budget.
- Do Pay Attention to the Terms and Conditions: Lenders always portray their best offers and benefits. Do read all the terms and conditions and understand them thoroughly. When in doubt, cross-check with the lender first and then only apply for a personal loan.
Don’ts of Personal Loan
- Don’t Rush the Application Process: An application process with accurate information is the key to a faster approval process. Fill out the application form accurately with the correct and up-to-date information. Provide all the information asked for; do not miss anything, as it can jeopardise the application process.
- Don’t Borrow Money from Unknown Lenders: Always check the authenticity of a lender before you apply. Do not borrow from an illegitimate lender, as it can land you in trouble. Go to a recognised and trusted lender to get maximum benefits and ease of application process.
- Don’t Miss a Payment: Pay your EMIs on time. Not doing so can have a negative impact on your credit history, and it will increase your EMIs due to the addition of a penalty. The lender may start losing trust if it happens frequently. Also, pay your other bills on time.
- Don’t Apply for multiple Loans at a Time: Applying for numerous personal loans can disrupt your budget. Don’t make the mistake of applying for multiple loans at the same time because keeping track of their repayments may be difficult, and it can lead to financial mismanagement.
- Don’t Use a Personal Loan for Unnecessary Spending: A personal loan is easy to avail, but don’t make the mistake of using these funds to spend on extravagance. Doing so can land you in an unstable financial situation. Don’t forget to understand your spending patterns and make decisions wisely. Apply for a personal loan to acquire funds for any financial emergency.
Stay informed and apply wisely!
Applying for a loan is more accessible nowadays because of online lenders, but selecting the right one is tricky. So, stay informed by checking all the do’s and don’ts of a personal loan and decide accordingly. There are multiple lenders present, online as well as offline. If you are thinking about applying for a personal loan, you can consider Tata Capital as one of them. They provide personal loans with minimum eligibility criteria and hassle-free documentation process.