It’s always a stressful situation whenever you’re bombarded with numerous financial responsibilities at the same time – you know, those instances when your house bills, children’s tuition fee bills, business expenses are piling up on you. This kind of situation might force you to seek for immediate financial refuge, and in this context, a personal loan might just be the most comfortable solution for you to take. There’s nothing wrong in acquiring for a personal loan – that’s your decision and if you, think that this is the only way you can resolve all our financial woes, by all means, go ahead and file for one! However, if this is your first time to apply for a personal loan, there are certain things which you should avoid to make sure that your entire personal loan experience will be hassle-free.
Applying for a personal loan requires your time. It entails a lot of processes which you’re required to go through. The entire process is something that you should be careful since it will require resources from you. And to ensure that this process will go as smoothly as possible, stray away from committing any of these mistakes:
● You don’t have the clarity for the purpose of the loan: You might be enticed to apply for a personal loan because it doesn’t require rigorous background checking and it only requires minimal requirements from you. If these are the sole reasons pushing you to get a personal loan, you’re doing it all wrong. You should get a personal loan because you have an immediate financial need – you might be financing your sibling’s studies abroad or you might be saving up for a business. Whatever it is, you should have a clear picture of where the money will be spent on. Sure, personal loans might have low interest rates but you’re still paying more than what you’ve borrowed, that’s why you should be very keen on how and where you should spend your borrowed money.
● You don’t consider your repayment capacity: Once you’ve decided to apply for a personal loan, the only thing you might have in mind is how you will spend your borrowed money. This is normal, and there’s, nothing wrong with that notion but you should also remember that in this process, you’re a borrower and you’re expected to pay a certain amount to your lender. You should think first if you can actually repay the amount you’ve borrowed within the time frame given to you. Don’t borrow an amount which will require you to have significant adjustments in your life. Instead, opt for an amount which you’re confident in repaying from your monthly income.
● You approach too many lenders: While it’s always good to look for possible lenders which you can acquire personal loans, going overboard with this might have negative effects on your credit score. This happens because whenever you approach too many lenders in a short span of time, all of these queries will gradually reduce your credit score. In the eyes of banks and other credit company, you’re now considered as a credit hungry person and that’s not a good thing. Banks and other companies might have the assumption that you don’t know how to manage your finances that’s why you ended up asking help from too many lenders, and this might hinder you from securing approval for your loans in the future.
● You don’t disclose existing loan details: Remember the quote that says, “Honesty is the best policy”? Yep, this one’s still applicable in the financial context. The moment you talk with your lender about your personal loan application, be honest in informing the other party if you have existing loans. This is important because by doing so, you’re giving the lender more reasons to trust you (so it’ll also be easier for them to trust you with their money), and you can make negotiations with your lender regarding your repayment terms to ensure that you can still manage to pay all of your loans on time. But if you decide to mum this information to yourself, you might end up paying higher interest rates or worse, your loan application might be disapproved once the lender learns about this information from other sources.
● You don’t read through the fine print: Not everyone has the patience and the willingness to read through a document which consists of, let’s say, five pages of texts. Yes, it’s something that requires too much time and focus but if you’ve decided to apply for a personal loan in the coming days, you should be able to change your mindset. You should know how important it is to read whatever documents you and the lender might share throughout the entire process. Once you’re handed with any document, take the time to thoroughly read everything – and not just skim through it – and make sure that you understand everything that was written there. If you see terms or charges which are unclear to you, never be hesitant to ask your lender. You might trust the lender but all of your agreements will boil down to your signature, being used in the supporting documents.
● You don’t check your credit report: Your credit report plays a vital role in the approval or disapproval of your personal loan. Since personal loans do not require any collateral before the lender can allow you to borrow a certain amount of money, your credit report might be one of the strongest determinative factors for a lender’s decision. This will be an evidence of whether you have a good credit standing and if you still have enough finances to pay for another loan. If you want your personal loans to be approved, religiously check your credit report and get necessary corrections if needed. You don’t want to check your credit score the moment you apply for a loan as this might delay the entire process, check this for LendingKey reviews.
If the concept of personal loan is still new to you, you might have endless questions of how this works. While personal loans can give you the financial salvation you need right now, you should also be careful in managing it because failure to do so might damage your financial standing in the long run. Since you know what mistakes to avoid when getting a personal loan, you’re now a step closer to securing that seal of approval for your personal loan application!
Recent Comments