It is always better to save up and be prepared to meet an emergency, rather than getting hassled to borrow and gather the finances at the neck of the moment. Despite having a well-planned financial backup, there may be times when it might not be sufficient, or maybe you need that little extra amount, for which canceling your FD or your investments might not be the right thing to do. At such times, you might feel inclined to borrow a small amount as the personal cash loans, and overcome your temporary financial needs with it.
As easy as it may sound to get the quick personal loans to meet your temporary economic requirements, it comes with its own set of risks, and so, it is essential that as a borrower, you be careful and take proper measures to avoid any disputes or undesired surprises in the future. There are plenty of possibilities where things can go wrong while availing personal loans and they could lead to upsetting outcomes.
Few instances which you should consider and avoid while getting the instant cash loans.
1. Applying Without Considering Factors
There are many factors that you need to consider before applying for a small personal loan, and the first one to analyze is - If You Really Need To Borrow This Personal Loan! Just because the low interest personal loans are out there does not mean you need to avail them for the nitty-gritty purchases. Unless the utility reason is a real necessity, you should probably think twice about borrowing a loan. And, if you have decided that you definitely need financial assistance, you will have to look for the right lender who offers favorable terms. Explore & compare your options and their terms to know which the more suitable choice is, and do not jump at the first available opportunity.
2. Not Checking Eligibility Criteria
Any financial agreement comes with its own pros and cons, and it is essential to check if they suit you well. There are many factors and rules that should be considered while getting a loan and the most important ones are the eligibility criteria. Lenders consider various factors like your age, income, financial history, employment criteria, etc., before approving a loan. So, before you apply for it, you need to check if you tick all the qualifying boxes. If you are not eligible under any of the criteria, there are high chances that your application may get rejected, and this could adversely affect your credit ratings. So, it is wise to check if you fit well into all the specific eligibility aspects imposed by a specific lender, and then apply for the suitable loan.
3. Borrowing More Than Needed
All loans come imposed with interest rates that have to be repaid in addition to the borrowed amount. The more loan amount you borrow, the more interest amounts you will have to repay. If you borrow an amount that is more than what you need, you will have to repay more interest amounts, which could have been used for a more productive purpose otherwise. Although there are factors like your credit score, income, etc., that determine your borrowing rates, it still makes sense to borrow only the amount that you really need than going for more than what you need. There are many EMI calculators available online using which you can analyze your repayment capabilities, and decide for yourself the amount you set aside for repaying the loan after meeting your regular monthly expenses.
4. Not Going Through Documentation
This is probably one of the most common pitfalls where many people take the hit. The financial representative and the financier may seem good to you, but at the end of the day, they are just doing their job. It is your money that is at stake, and you should be careful with every financial deal that you make. Documentation plays a major role in guiding through the mentions of the agreement and all the details regarding your loan amount, repayment tenure, and other additional costs. The documents are proof that could help you during any future discrepancies with the lender or the loan. So, it is crucial that you go through all the details in the fine print and sign it only when you agree with it all.
5. Choosing An Impractical Tenure
Another vital factor that should be considered while finalizing a loan deal is its tenure. The loan tenure decides the total interest and the EMI that you will end up paying, and they are usually chosen for bigger loans like the quick business loans, etc. Although a longer tenure will reflect lower EMIs, it will increase the overall interest burden. Also, there will be pre-closure penalties, and your other borrowing capacities will be restricted. On the other hand, having a shorter tenure may increase the EMI burden, and it might make it difficult to handle all the regular expenses. So, you will have to consider many factors before deciding on the loan tenure, as it will decide the other financial planning factors.
There are many other factors that should be considered and bloopers that should be avoided while borrowing personal cash loans. Although loans could be the savior during financial crises, it is imperative to consider the various aspects of borrowing a loan to avoid any missteps in the future. At Finfree Enterprises, you can apply to get connected with reputed providers of personal loans in Hyderabad & Bangalore, and if approved, you can resolve your temporary financial crunches, at the earliest. So, stay aware of every step and make the right decisions while availing any loan.