Obtaining a personal loan from traditional sources in India is still a time-consuming process, and the industry hasn’t evolved to meet the needs of the borrower. Fortunately, additional assistance is on the way. Despite technology developments, innovations, and other factors, obtaining a personal loan remains a time-consuming process. We’ll try to give you a heads up on everything that can go wrong while applying for a Personal Loan in this article.
Problems with credit scores
Your credit score is an accurate picture of your money management and creditworthiness. And this is one factor which no bank considers the most. To avoid the danger of default, banks must assess your creditworthiness before lending. No bank will invest in someone unless they are certain that they will be able to return the loan.
An Income Source That Is Consistent
No bank will lend money to someone who does not have a steady source of income to pay back personal loan EMIs on time. When it comes to lending money, financial stability is crucial. If you change employment frequently or conduct freelance work, your loan application is likely to be denied.
Charges that are not disclosed
The majority of individuals overlook the costs that are not included in the interest rate. You are not permitted to do so. In actuality, these fees can add up quickly. The following are some fees that are not clearly stated:
- Fees for processing
- Penalties for late payments
- Prepayment penalties
- Pre-closure charges
- Fees for transactions
Read More: How to Get a Good Deal on a Personal Loan
Interest Rates That Are Too High
When looking for a personal loan, the interest rate is the most crucial factor to consider. It is critical to look at multiple lenders before accepting an offer to prevent ending up with a high-interest loan. One approach to do this is to go to each bank and see what they have to offer. Alternatively, one can just go to any financial consultant’s website to compare and obtain the best personal loan deals.
Paperwork that is too long
Isn’t it true that great benefits come with great paperwork? When you apply in a bank branch, you will almost certainly have to go through a lengthy documentation process. It is preferable to apply for a loan online because a single application and a single document upload can get you a long way while avoiding the paperwork.
Emi Management
It’s time to return your loan at EMI and interest rate once you’ve obtained your loan approval and had the loan amount withdrawn from your bank account. Even before you apply for a loan, you should plan your EMIs. Maintain a good budget, keep your costs in check, and put your EMI payment ahead of all other responsibilities. This is not only beneficial for you but also your financial life. You cannot skip your EMIs on a regular basis. It is important to pay timely EMIs to have a balance on budget and avoid paying heavy fines
The Bottom Line
Now you know the most common traps that people who are seeking for a personal loan face, as well as how to avoid them. When you have a good credit score, a steady job, and no other pending EMIs, getting the best personal loan lowest interest rates is not difficult. However, if you have excellent credit, lenders will often lend you money for other purposes. However, once you have a personal loan, it is critical that you pay your payments on time and keep track of your EMIs. If you don’t, you’ll have to pay fines and your credit score will suffer. Keep the above factors in mind to avoid problems with your personal loan approval and disbursement.
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