5 mistakes to avoid while taking a loan

It is very important to keep certain factors in mind while taking a loan. When people apply for a loan, it often happens that they tend to skip a couple of important factors that are essential to keep in mind in order to get a good loan plan. Here are the 5 mistakes people should avoid at all costs while applying for a loan:

Don’t forget to compare

People often take the first loan option they get. This is a mistake as they are losing out on the opportunity of getting a better deal. There are numerous financial institutions providing cash loans today, and each of them looks to offer various benefits as part of their financial offerings.

This is all thanks to the heavy competition between the financial institutions, and the people should take full advantage of this. So do not forget to compare the different loan plans from various financial institutions before finalizing on one.

Always check the eligibility criteria

Each financial institution will have its own set of rules and regulations that applicants have to follow in order to get a loan. A common mistake made here is that people do not check what each financial institution requires from them before they apply for a loan.

Some lenders have higher monthly salary or credit score requirements than others – fail to meet these criteria and your personal loan will be rejected, worse still, your processing fee will be wasted. Some lenders do not even accept self-employed applicants!

This is problem you won’t have with RapidRupee as we accept you even if you have a minimum monthly salary as low as Rs. 10,000. We don’t even require a credit score and we accept both salaried and self-employed individuals!

Do not take more than you require

People sometimes take an amount that is slightly additional to what they require. They do this so that they do not fall short of funds in case the expenses go overboard.

While this does make sense, it is not an ideal option. You should never take a loan amount which is more than you actually require, as repaying a bigger amount becomes more of a task. Moreover, a higher loan amount equals more interest paid!

There is no need to take this added burden when you could have taken a smaller loan amount, which would have been easier to clear, not to mention the lesser interest that you would be paying.

Try not to go for a long term loan

A lot of loans are paid over long-term repayment plans. Sure, this option is definitely more relaxed as they applicants then do not have to give big amounts as part of the EMIs.

But this again is not a viable option. Repaying a loan in a short term is obviously more stressful as the amounts of the EMIs are higher. However, you would be paying less interest and also clearing off the loan as soon as you can.

Ignore prepayments.

During the course of your prepayment process, you might run into a bonus at work or get a hike! In this case, you can redirect your surplus funds toward the repayment of your loan and get out of debt quicker. Not only would you be ridding yourself of quick loans, but you would also be saving a lot of money in the process!

We hope this article helps you avoid making these common mistakes in the future, all the best!