Remember these points before you apply for an unsecured loan
A number of people have taken loans to finance the major events of our lives. One must have Several people take loans to finance the significant events of their lives. One must have taken a loan for buying a car/ house/daughter’s marriage or paying for a medical emergency. We all know this thing that taking a loan helps us to circumvent our lack of large sums of liquid cash. Sometimes there are circumstances when we are not able to repay our loan EMI on time. The inability to repay a loan can lead to the unaccepted relationship between the borrower and the lender. Such a situation needs active management.
Don’t miss out on these reminders when you apply for a loan.
The first and foremost question you should ask yourself before applying for an unsecured loan is, “Do I need an unsecured loan?”.
If you possess an excellent credit score, you will get notifications that prompt you to buy an unsecured loan. But that shouldn’t be the reason to obtain an unsecured loan. Remember, there are no free lunches. So you should think hard about loan utility and necessity before applying.
You should compare and then decide. It’s easy to explore different banks who offer you the loan. You need to consider various parameters like tenure, interest rate, and processing fees which you have to pay. After which you can make a sensible decision as per your repayment capacity.
Avoid excess borrowing
While you apply for an unsecured loan, the central factor banks look upon is your CIBIL score and your income. If your CIBIL rating is excellent, there is a probability that banks would lend you more. But you should stick to your requirements rather than accepting excess offers. Remember, the higher the amount higher the repayment burden.
While you apply for an unsecured loan, you have to consider other factors apart from amount or tenure. Factors such as income, age, credit history, employer, job stability, etc. are taken into consideration before your loan is sanctioned.
Eye for detail
You may trust the financial institutions, but your trust towards them can make the worse situation for you. Remember not to miss out on reading and to understand the fine print that mentions details of processing charges, prepayment penalty, and other hidden charges. Once the agreement is signed, you cannot plead ignorance.
Do not hide
Hiding your loan is not a good idea. Lenders will eventually find out about it while checking your credit history, and that might affect or might even lead to rejection of your application.
Decide your EMI
Choosing the loan tenure must be done with great care. That should not add a burden to your savings. If you select a shorter duration than you can, it might add load with the other monthly installments which are challenging to pay. So make choices based on your risk appetite, financial situation, and obligations.
So make your decisions wisely. Do not make a choice just because another person has done it. You are unique, and so is your financial goal. So think individually and carefully, after all…
Prevention is better than cure.