7 Blunders To Avoid In Personal Loan

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When we have financial obligations to pay such as sudden medical bills, wedding expenses, education fees, etc, having a financial tool which acts as a safety umbrella is helpful. This is where a personal loan has always been a reliable financial resource for many people.

Getting an instant personal loan is very easy these days with the banks offering online loans and giving approvals in minutes. However, with a lack of the right knowledge of getting and using personal loans can be harmful and cause a dent on our credit profile in the long run.

What are these major personal loan blunders? Read this blog to know all about the personal loans mistakes to avoid when securing a loan from a bank in India.

Here are the key personal loan mistakes that you need to avoid when using a loan for your financial needs:

1. Not checking your credit score

This is one of the key mistakes when taking a personal loan. Not checking your credit score when securing a loan can be harmful while loan approval as it may increase the chances of your loan rejection.

Always check your credit scores before applying from a lender. With a higher score, you can expect good interest rates and fast approvals, whereas a lower score may lead to rejection.

2. Applying for multiple loans

We know personal loans offers can be very attractive, with instant approvals, minimum paperwork, applicants get lured to apply for multiple loans from numerous lenders. However, this could be a major mistake and can cause rejection and cause hard inquiries on your credit profile.

3. Not selecting the right repayment tenure

It is also one of the key mistakes where applicants do not choose the right repayment tenure for the loan. The tenure plays a key role in your personal loan lifecycle as it decides your EMIs and not choosing a right tenure can cause a dent on your financial obligations.

4. Not researching lenders

The initial and key phase of applying for a personal loan is researching your lenders. Look out for lenders who offer the best interest rates, flexible repayment tenure, etc. Stay loyal to a single lender with whom you can negotiate for better loan terms.

5. Not reading the terms and conditions

When dealing with a financial product such as a personal loan, there should be no room to make mistakes like not reading the terms and conditions. Always read the loan terms and conditions before committing to the loan and accepting it.

6. Ignoring eligibility criteria

Eligibility criteria for personal loans can differ significantly based on the type of loan and the lender. While standard KYC details are always required, specific loans like education or medical loans may need additional documents. Assuming one set of criteria applies to all loans is a common mistake.

Always thoroughly check the specific eligibility requirements for the loan you're applying for to avoid unnecessary rejection and disappointment.

7. Sending multiple loan requests

If your first loan application hasn't received a response, it's important to be patient. Submitting multiple loan requests in quick succession can negatively impact your credit score and give lenders a poor impression of your financial habits. This hasty action often leads to loan rejections.

Allow plenty of time for the processing and verification of your initial application before considering applying again. Patience can prevent these avoidable issues.

Conclusion

Now that you understand all the key personal loan mistakes that need to be avoided everytime you apply for a personal loan, it is helpful to remember and follow these along the way. Always avoid these top seven mistakes during personal loans to make the most out of your loan lifecycle.

Secure your financial obligations today and apply for a personal loan from Kotak811 and get attractive interest rates, application with minimum documentation and fast approvals.

FAQs

1. What are the eligibility criteria for a personal loan

You need to be an Indian resident between 21 and 60 years old.
Salaried individuals should have a minimum monthly income of Rs. 25,000, while self-employed individuals should demonstrate a stable income.
Additionally, you need to have a good credit score and a minimum of 1 year of continuous employment with your current employer.
For self-employed individuals, a stable business history of at least 2 years is required.

2. How much can I borrow with personal loan?

Bank offers personal loans ranging from Rs. 50,000 to 40 lakhs. The loan amount you qualify for depends on various factors, including your income, credit score, and repayment capacity.

3. What is the interest rate on personal loans?

The exact interest rate offered depends on your credit score, income, employment history, and loan amount. A higher credit score and stable income result in a lower interest rate.

4. How can I apply for a personal loan?

To apply online, visit the Kotak Bank website, and fill out the application form, along with the required documents. For in-person applications, visit a branch with your documents and speak to a representative.

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This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.