Banks and lending companies have made it easy for borrowers to secure a loan to capture
more of the market. One approached they did in this digital world is to make online
application available. People in need of cash are moved easily to file an online application
without much thought and incurred most common mistakes.
Below are three most common but crucial mistakes to avoid.
Mistake # 1 : Not being clear about the appropriateness of applying for a loan
The main consideration most loan applicants ask is how much it will cost? Yet even before filling in the application form you need to ask serious question. Ask your self; do I really need to make a personal loan? Ask if it is for a real need or just a want. If you are just enticed by friends for an exotic vacation for which you have not prepared yourself and have no budget for it, then you may not need a loan. Or, assuming that it is a real need, ask if that can be postponed to a distant future or if not, whether there are alternatives you can opt for at lower price where you will never need to make a loan. See if saving for your planned home improvement or purchase of appliance would be a more cost effective move. The over-all cost of loan may negate your expected savings from a sales promo.
Mistake # 2: Not evaluating your budget and capacity to pay
Focusing on how much you can loan is not the wise way to determine the amount of loan to
Rather, considering well the state of your finances should be your prior and most
important consideration. You must first determine all of your budget needs each month and
know if there is something left you can set aside for loan repayment without sacrificing the
important basic needs. You may be confident of paying capacity in anticipation of future funds
coming or have alternative source. These must be evaluated in a realistic way.
What you expect may not materialize or what you assume as an alternative source, like your wife’s salary or business income may not become available since you have failed to consult with her and she turned out to have future planned expenditure as well.
Mistake # 3: Not reading and studying the details of loan’s terms and conditions
You may just be eager to get your hands on the cash you need and in you’re in a hurry to have your loan processed fast. So before the loan officer ask more questions that could risk rejection of your application you just take an over-all view of the loan conditions and sign immediately, without reading the details of the contract and the terms and conditions. And then it will be late to discover prepayment clause, hidden charges, penalties for late payment which could be burdensome during the paying period.