Contrary to a popular belief, taking a personal loan instead of using up your savings is actually a better idea. This is because it's important to have an emergency fund for unexpected expenses and emergencies. That said, you still need to be careful when you apply for a loan.
The following are 4 of the biggest mistakes that you can make you applying for an axis bank personal loan, SBI bank personal loan, etc.:
If you want the best personal loan available, then you have to work for it- there is no way around it.
First and foremost, you must educate yourself on the various types of personal loans that you can apply for, what your chances are as a personal loan for low CIBIL score or high CIBIL score, fixed interest rate vs floating interest rate, etc.
In fact, there are a number of things you must have a clear idea of before you even send an application. This is because when you actually approach a bank, then you can understand their terms and conditions better if you are already familiar with the procedure as well as the terminology commonly used.
Your CIBIL report is an extremely important document for your finances. It's checked by all the banks when you apply for a loan, credit card, insurance, and even jobs!
Although you must check your CIBIL report periodically, it's most important to do it when you are about to apply for a loan or a credit card. The following are some of the main reasons why:
Different banks offer different personal rates to their customers. For instance, as of today, axis bank personal loan is offering a rate of 15.50%-24%, SBI personal loan of 12.55%-17.65%, HDFC Bank of 11.49%-20%, etc.
Depending on your credit profile, past financial history, current debt, and other relevant factors, your bank will offer a certain interest rate. However, the thing is that you don't have to say "yes" to it if you are not satisfied.
You have the right to negotiate with your lender regarding the interest rate offered. In fact, if your credit rating is good, then you can easily get a better rate than the one initially offered. Unfortunately, many people don't know about this and simply agree to whatever rate is offered by their banks.
One of the biggest mistakes that you can do when picking a personal loan is to skip asking about the prepayment charges. But what are they anyway?
A prepayment fine is a penalty that you have to pay if you decide to repay a loan sooner than the actual date of the final payment. Although this may sound strange as you are actually clearing the debt sooner which should be good from the bank's perspective, the truth is that the bank actually loses money when you save yours on interest (shorter term=lower interest amount paid). So, you can inquire if your bank imposes a prepayment fine (not all banks do). In case it does, then be sure to ask how much it is.
Take a note of major common errors to apply for a loan, and be careful. Good luck!