October 30, 2020

5 Common Mistakes to Avoid Before Getting an Online Personal Loan

New age borrowing

New age borrowing

Did you know that an online personal loan is available these days on the website of a lender to help you save your time and efforts? 

Yes, you can apply for an online personal loan and cover many of your needs without any restrictions on the use of funds. But before doing that, you need to check many aspects like personal loan eligibility. It will help you avoid your loan application getting rejected! 

In the post that you are going to go through, you will come to know about 5 common mistakes that applicants make while applying for an online personal loan!  

  • Not checking your cibil score 

An online personal loan is an unsecured loan, which means that you don’t need to submit any collateral or security for the loan approval. If your creditworthiness is good, then your lender may sanction the loan. And what is the parameter to check that? It is your credit score that lenders check to know if you are the right candidate for the loan. If you have maintained your cibil score at around 750 or more, then you will have no issues in getting the loan approval. What’s more, you can also get the approval at lower personal loan interest rates. Thus, it becomes vital to check your credit score before applying for a personal loan. You can improve your cibil score by repaying your existing loan EMIs and credit card outstanding on time. 

  • Applying for too many loans at a time 

Many people have this habit of applying for a personal loan with many lenders at a time thinking that at least they will get approval from one of them. But it is not the right way to apply for an online personal loan. When you do that, lenders check your cibil score, which is considered as a hard enquiry. Now, so many hard enquiries at a time may affect your credit score negatively. Hence, your loan application may not be approved, and lenders may also consider your credit hungry. Thus, always ensure to apply for a personal loan once at a time. If you are rejected, then wait for 5-6 months before making a fresh application. 

  • Applying for a way bigger loan amount 

When you apply for an amount larger than what you are eligible for, then your loan application is bound to be rejected. Thus, what you can do is use the personal loan calculator like the personal loan eligibility calculator on your lender’s website free of cost. This way, you may know an amount that you can currently and apply for the same for a hassle-free approval. 

  • Not comparing loan offers 

If you don’t compare all online personal loan offers, and settle for the first offer, then you may have to deal with higher loan interest rates. In turn, it may increase your EMIs and affect your monthly outlays. Thus, make it a point to compare all available loan offers and go for one that is best as per your needs and repayment ability.    

  • Not reading loan terms and lender’s policies 

During the course of your loan tenor, you may have to pay an extra amount. It may be related to activities like making prepayment, foreclosure, late payments and EMI defaults. It may surprise you if you are unaware of how much will be payable. Therefore, it is crucial to go through the terms and conditions of the loan and lender’s policies to stay clear. 

If you can avoid these discussed mistakes, then your experience of opting for an online personal loan will be smooth.