A personal loan is a lifeline when you need money for emergency purposes or for a big
purchase that you need to finance. It is easy to avail and offers flexible terms of payments.
However, if you fail to repay your loan on time, it becomes a financial burden.
Be smart and avoid stress, consider the following before taking the plunge:
#1 – Do not borrow more than you need
Do not be tempted to take more than you can pay. Examine all the options and determine
which one works for you. If you have existing debts, analyze if your monthly paycheck will
accommodate another one. If your monthly repayments exceed your income, you got a real
problem. Make sure that your living allowance will not be affected. Plan before you borrow
#2 – Failure to compare the credit invites
Do not submit your application to the first lending company that comes your way. Check
out other companies. Compare their loan charges and interest rates. Check the flexibility of
the repayment plan. Consider the best options for your current need.
#3 – Carefully read the fine print
Most people do not really read the fine prints in the contracts. Once you sign your name as
borrower, you submit to the terms and conditions of the agreement. Failure to read the fine
print thoroughly can put you on a disadvantageous situation when you miss payments. You
should take time to know about the hidden or additional fees that may incur for late
payments, premature closure, and others.
#4 – Opting for a longer payment period
A longer payment schedule may look advantageous for the pocket, but in reality, you are
paying more. A shorter term is better if you can afford it. The sooner you pay your loan, the
better for your finances.
#5 – Taking Care of Your Credit Score
Your credit score history is one vital factor that credit companies consider before
approving your application. Your credit score shows how you manage your finances and
loans in the past. A low credit score usually leads to higher interest rates.
Try avoiding these mistakes to prevent financial stress. Pay your loan on time.